10-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

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FORM 10-K

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ý ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE FISCAL YEAR ENDED DECEMBER 31, 2016

OR

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission file number: 000-52596

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Dividend Capital Diversified Property Fund Inc.

(Exact name of registrant as specified in its charter)

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Maryland	30-0309068
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
518 Seventeenth Street, 17th Floor, Denver, CO	80202
(Address of principal executive offices)	(Zip Code)

(303) 228-2200

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

None

Securities registered pursuant to Section 12(g) of the Act:

Title of each class

Unclassified Shares of Common Stock, $0.01 par value

Class A Shares of Common Stock, $0.01 par value

Class W Shares of Common Stock, $0.01 par value

Class I Shares of Common Stock, $0.01 par value

_____________________________________________________________

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.    Yes  ☐    No  ý

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.    Yes  ☐    No  ý

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  ý    No  ☐

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405) during the preceding 12 months (or such shorter period that the registrant was required to submit and post such files).    Yes  ý    No  ☐

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.  ý

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer”, “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one): 

Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	ý (Do not check if a smaller reporting company)	Smaller reporting company	☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ¨    No   ý

There is no established market for the Registrant’s shares of common stock. The Registrant publishes a daily net asset value (“NAV”), based on procedures and methodologies established by its board of directors, with an NAV on June 30, 2016, the last business day of the Registrant’s most recently completed second fiscal quarter, of $7.37 per share for its unclassified shares of common stock (referred to as “Class E” shares) and each of its Class A, Class W and Class I classes of common stock. As of December 31, 2016, the daily NAV was $7.57 per share for each of its Class E, Class A, Class W and Class I classes of common stock.

There were approximately 126,473,453 outstanding shares of Class E common stock, 1,884,288 outstanding shares of Class A common stock, 2,119,104 outstanding shares of Class W common stock, and 29,067,092 outstanding shares of Class I common stock, held by non-affiliates, as of June 30, 2016, the last business day of the Registrant’s most recently completed second fiscal quarter. 

As of February 24, 2017, 112,526,991 shares of Class E common stock, 2,027,074 shares of Class A common stock, 2,372,400 shares of Class W common stock, and 33,942,117 shares of Class I common stock of the Registrant, each with a par value $0.01 per share, were outstanding.

DIVIDEND CAPITAL DIVERSIFIED PROPERTY FUND INC.

ANNUAL REPORT ON FORM 10-K

For the Year Ended December 31, 2016

TABLE OF CONTENTS

PART I
Item 1.	Business	3
Item 1A.	Risk Factors	10
Item 1B.	Unresolved Staff Comments	50
Item 2.	Properties	50
Item 3.	Legal Proceedings	52
Item 4.	Mine Safety Disclosures	52
PART II
Item 5.	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	53
Item 6.	Selected Financial Data	63
Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	65
Item 7A.	Quantitative and Qualitative Disclosures about Market Risk	84
Item 8.	Financial Statements and Supplementary Data	84
Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	84
Item 9A.	Controls and Procedures	85
Item 9B.	Other Information	85
PART III
Item 10.	Directors, Executive Officers and Corporate Governance	87
Item 11.	Executive Compensation	92
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	94
Item 13.	Certain Relationships and Related Transactions, and Director Independence	96
Item 14.	Principal Accountant Fees and Services	103
PART IV
Item 15.	Exhibits and Financial Statement Schedules	105

Cautionary Statement Regarding Forward-Looking Statements

This Annual Report on Form 10-K includes certain statements that may be deemed to be “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, or the “Securities Act,” and Section 21E of the Securities Exchange Act of 1934, as amended, or the “Exchange Act.” Such forward-looking statements relate to, without limitation, our future capital expenditures, distributions and acquisitions (including the amount and nature thereof), other developments and trends of the real estate industry, business strategies, and the expansion and growth of our operations. These statements are based on certain assumptions and analyses made by us in light of our experience and our perception of historical trends, current conditions, expected future developments and other factors we believe are appropriate. We intend such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in Section 27A of the Securities Act and Section 21E of the Exchange Act. Such statements are subject to a number of assumptions, risks and uncertainties which may cause our actual results, performance or achievements to be materially different from future results, performance or achievements expressed or implied by these forward-looking statements. Forward-looking statements are generally identifiable by the use of the words “may,” “will,” “should,” “expect,” “anticipate,” “estimate,” “believe,” “intend,” “project,” “continue,” or the negative of these words, or other similar words or terms. Readers are cautioned not to place undue reliance on these forward-looking statements.

Some of the risks and uncertainties that may cause our actual results, performance or achievements to differ materially from those expressed or implied by forward-looking statements include, among others, the following:

• the impact of macroeconomic trends, such as the unemployment rate and availability of credit, which may have a negative effect on the following, among other things:

• the fundamentals of our business, including overall market occupancy, tenant space utilization, and rental rates;

• the financial condition of our tenants, some of which are financial, legal and other professional firms, our lenders, and institutions that hold our cash balances and short-term investments, which may expose us to increased risks of breach or default by these parties; and

• the value of our real estate assets, which may limit our ability to dispose of assets at attractive prices or obtain or maintain debt financing secured by our properties or on an unsecured basis;

• general risks affecting the real estate industry (including, without limitation, the inability to enter into or renew leases, dependence on tenants’ financial condition, and competition from other developers, owners and operators of real estate);

• our ability to effectively raise and deploy proceeds from our ongoing public offering of Class A, Class W and Class I shares;

• risks associated with the availability and terms of debt and equity financing and the use of debt to fund acquisitions and developments, including the risk associated with interest rates impacting the cost and/or availability of financing;

• the business opportunities that may be presented to and pursued by us, changes in laws or regulations (including changes to laws governing the taxation of real estate investment trusts (“REITs”));

• conflicts of interest arising out of our relationships with Dividend Capital Total Advisors Group LLC (our “Sponsor”), Dividend Capital Total Advisors LLC (our “Advisor”), and their affiliates;

• changes in accounting principles, policies and guidelines applicable to REITs;

• environmental, regulatory and/or safety requirements; and

• the availability and cost of comprehensive insurance, including coverage for terrorist acts.

For further discussion of these and other factors, see “Item 1A. Risk Factors” in this Annual Report on Form 10-K. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of future events, new information or otherwise.

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PART I

ITEM 1.    BUSINESS

Overview

Dividend Capital Diversified Property Fund Inc. is a Maryland corporation formed on April 11, 2005 to invest in a diverse portfolio of real property and real estate-related investments. As used herein, “the Company,” “we,” “our” and “us” refer to Dividend Capital Diversified Property Fund Inc. and its consolidated subsidiaries and partnerships except where the context otherwise requires.

We believe we have operated in such a manner as to qualify as a real estate investment trust (“REIT”) for federal income tax purposes, commencing with the taxable year ended December 31, 2006, when we first elected REIT status. We utilize an Umbrella Partnership Real Estate Investment Trust (“UPREIT”) organizational structure to hold all or substantially all of our assets through our operating partnership, Dividend Capital Total Realty Operating Partnership, LP (our “Operating Partnership”). Furthermore, our Operating Partnership wholly owns a taxable REIT subsidiary, DCTRT Leasing Corp. (the “TRS”), through which we execute certain business transactions that might otherwise have an adverse impact on our status as a REIT if such business transactions were to occur directly or indirectly through our Operating Partnership.

Our Portfolio

We are currently invested in a diverse portfolio of real properties and, to a lesser extent, real estate-related debt investments. Our investment in real property consists of office, industrial, and retail properties located in the United States. As of December 31, 2016, our real property portfolio was approximately 91.2% leased. Additionally, we are invested in certain real estate-related debt investments, including originating and participating in mortgage loans secured by real estate (herein referred to as “debt-related investments”).

As of December 31, 2016, we had total gross investments with an estimated fair value of approximately $2.3 billion (calculated in accordance with our valuation procedures), comprised of approximately $2.3 billion in investments in real property and approximately $15.2 million in net debt-related investments.

As of December 31, 2016, we had three reportable operating segments: office property, industrial property and retail property. Operating results from our business segments are discussed further in “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” and Note 13 to our financial statements beginning on page F-1 of this Annual Report on Form 10-K.

Whenever we refer to the “fair value” of our real estate investments in this Annual Report on Form 10-K, we are referring to the fair value as determined pursuant to our valuation procedures, unless stated otherwise.

Our Advisor

We are managed by our Advisor, which is wholly owned by our Sponsor. Our Advisor was formed as a Delaware limited liability company in April 2005. Subject to oversight by our board of directors, we rely on our Advisor to manage our day-to-day activities and to implement our investment strategy. In addition, subject to the oversight, review and approval of our board of directors, our Advisor undertakes to, among other things, research, identify, review and make investments in and dispositions of real property and real estate-related investments on our behalf consistent with our investment policies and objectives. Our Advisor performs its duties and responsibilities under an advisory agreement with us (the “Advisory Agreement”) as a fiduciary of ours and our stockholders. The term of the Advisory Agreement is for one year, subject to renewals by our board of directors for an unlimited number of successive one-year periods. The current term of the Advisory Agreement expires on June 30, 2017. Our officers and our two interested directors are all employees of an affiliate of our Advisor.

Our Offerings

On July 12, 2012, we commenced an ongoing public offering of up to $3,000,000,000 of our shares of common stock, of which $2,250,000,000 of shares were expected to be offered to the public in a primary offering and $750,000,000 of shares were expected to be offered to our stockholders pursuant to an amended and restated distribution reinvestment plan (subject to our right to reallocate such amounts) (the “Prior Offering”). We terminated the Prior Offering on September 15, 2015.

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On September 16, 2015, we commenced a follow-on ongoing public offering of up to $1,000,000,000 of our shares of common stock, of which $750,000,000 of shares are expected to be offered to the public in a primary offering and $250,000,000 of shares are expected to be offered to stockholders of the Company pursuant to its distribution reinvestment plan (subject to the our right to reallocate such amounts) (the “Follow-On Offering”). In the Follow-On Offering, we are offering to the public three classes of shares: Class A shares, Class W shares and Class I shares with net asset value (“NAV”) based pricing. We are offering to sell any combination of Class A shares, Class W shares and Class I shares with a dollar value up to the maximum offering amount.

Dividend Capital Securities LLC, which we refer to as our “Dealer Manager,” is distributing the shares of our common stock in the Class A, Class W and Class I offering on a “best efforts” basis. Our Dealer Manager is an entity related to our Advisor and is a member of the Financial Industry Regulatory Authority, Inc., or FINRA. Our Dealer Manager coordinates our distribution effort and manages our relationships with participating broker-dealers and financial advisors and provides assistance in connection with compliance matters relating to marketing the offering.

We also continue to sell shares of our unclassified common stock, which we refer to as “Class E” shares, pursuant to our distribution reinvestment plan offering.

As of December 31, 2016, we had approximately 112,325,127 Class E shares, 2,001,359 Class A shares, 2,271,361 Class W shares, and 34,038,546 Class I shares outstanding.

Our Classes of Common Stock

We have four classes of common stock: Class E, Class A, Class W and Class I shares. The payment of class-specific expenses results in different amounts of distributions being paid with respect to each class of shares. In addition, as a result of the different ongoing fees and expenses allocable to each share class, each share class could have a different NAV per share. If the NAV of our classes are different, then changes to our assets and liabilities that are allocable based on NAV may also be different for each class. Our four classes of common stock also have different rights upon liquidation to the extent that their NAV per share differs. In the event of a liquidation event, our assets, or the proceeds therefrom, will be distributed ratably in proportion to the respective NAV for each class until the NAV for each class has been paid. Other than differing allocable fees and expenses and liquidation rights, Class E shares, Class A shares, Class W shares, and Class I shares have identical rights and privileges.

Our Operating Partnership

We own all of our interests in our investments through our Operating Partnership or its subsidiaries. We are the sole general partner of our Operating Partnership. In addition, we have contributed 100% of the proceeds received from our offerings of common stock to our Operating Partnership in exchange for partnership units representing our interest as a limited partner of the Operating Partnership. As of December 31, 2016, we held a 92.6% limited partnership interest in the Operating Partnership. We refer to partnership units in the Operating Partnership as “OP Units.” As of December 31, 2016, our Operating Partnership had outstanding OP Units held by third-party investors representing approximately a 7.4% limited partnership interest. These units were issued by the Operating Partnership in connection with its exercise of options to acquire certain fractional interests in real estate that were previously sold to such investors pursuant to private placements previously conducted by the Operating Partnership. The holders of OP Units (other than us) generally have the right to cause the Operating Partnership to redeem all or a portion of their OP Units for, at our sole discretion, shares of our common stock, cash, or a combination of both.

Our Operating Partnership has classes of OP Units that correspond to our four classes of common stock: Class E OP Units, Class A OP Units, Class W OP Units and Class I OP Units. The OP Units of each class are economically equivalent to the same respective class of our common stock. We sometimes refer to our Class E shares, Class A shares, Class W shares and Class I shares, along with the OP Units held by third parties, collectively as “Fund Interests” because they all represent interests held by investors in our Operating Partnership, through which we own all of our investments and conduct all of our operations. We sometimes refer to the NAV of all of the Fund Interests as the “Aggregate Fund NAV.”

Net Asset Value Calculation and Valuation Procedures

Our board of directors, including a majority of our independent directors, has adopted valuation procedures that contain a comprehensive set of methodologies to be used in connection with the calculation of our NAV. One fundamental element of the valuation process, the valuation of our real property portfolio, is managed by Altus Group U.S., Inc., an independent valuation firm approved by our board of directors, including a majority of our independent directors (the “Independent Valuation Firm”).

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Altus Group is a multidisciplinary provider of independent, commercial real estate consulting and advisory services in multiple offices around the world, including Canada, the U.K., Australia, the United States and Asia Pacific. Altus Group is engaged in the business of valuing commercial real estate properties and is not affiliated with us or the Advisor.

Our NAV is calculated for each of our share classes after the end of each business day that the New York Stock Exchange is open for unrestricted trading by ALPS Fund Services Inc., a third-party firm approved by our board of directors, including a majority of our independent directors (our “NAV Accountant”). Our NAV is not audited by our independent registered public accounting firm. See “Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities” and Exhibit 99.1 of this Annual Report on Form 10-K for a more detailed description of our valuation procedures and valuation components, and our NAV as of December 31, 2016.

DST Program

In March 2016, we, through the Operating Partnership, initiated a program to raise capital in private placements exempt from registration under the Securities Act of 1933, as amended, or the “Securities Act” through the sale of beneficial interests ("Interests") in specific Delaware statutory trusts holding real properties, including properties currently indirectly owned by the Operating Partnership (the “DST Program”). From 2006 through 2009, we, through our subsidiaries conducted similar private placement offerings of fractional interests in which we raised a total of $183.1 million in gross proceeds. These fractional interests were all subsequently acquired by the Operating Partnership in exchange for an aggregate of 17.7 million OP Units.

Under the DST Program, each private placement will offer interests in one or more real properties placed into one or more Delaware statutory trust(s) by the Operating Partnership or its affiliates (“DST Properties”). We anticipate that these interests may serve as replacement properties for investors seeking to complete like-kind exchange transactions under Section 1031 of the Code. Additionally, properties underlying interests sold to investors pursuant to such private placements will be leased-back by an indirect wholly owned subsidiary of the Operating Partnership on a long term basis of up to 29 years. The lease agreements are expected to be fully guaranteed by the Operating Partnership. Additionally, the Operating Partnership will retain a fair market value purchase option giving it the right, but not the obligation, to acquire the Interests from the investors at a later time in exchange for OP Units.

Similar to our prior private placement offerings, we expect that the DST Program will give us the opportunity to expand and diversify our capital raise strategies by offering what we believe to be an attractive and unique investment product for investors that may be seeking replacement properties to complete like-kind exchange transactions under Section 1031 of the Code. We expect to use the net proceeds of these private placements to make investments in accordance with our investment strategy and policies, to provide liquidity to our investors and for general corporate purposes (which may include repayment of our debt or any other corporate purposes we deem appropriate). The specific amounts of the net proceeds that are used for such purposes, and the priority of such uses, will depend on the amount and timing of receipts of such proceeds and what we deemed to be the best use of such proceeds at such time.

Investment Objectives

Our primary investment objectives are:

• providing current income to our stockholders in the form of quarterly cash distributions;

• preserving and protecting our stockholders’ capital investments;

• realizing capital appreciation in our share price from active investment management and asset management; and

• providing portfolio diversification in the form of multi-asset class investing in direct real estate.

There is no assurance that we will attain our investment objectives. Our charter places numerous limitations on us with respect to the manner in which we may invest our funds. In most cases these limitations cannot be changed unless our charter is amended, with the approval of our stockholders.

Investment Strategy

Our investment strategy is designed to focus on generating income to support the quarterly dividend, protecting capital and growing net asset value over time. We seek to leverage our extensive knowledge of targeted real estate markets and property types to capitalize on opportunities where there is a disconnect between our assessment of an investment’s intrinsic

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value relative to its market value. In addition, we seek to optimize the value of our portfolio through strategic financing, diligent asset management and selective asset disposition.

We believe that the real estate market is cyclical, with different demand for property types at different times. Although we do not invest for the short term, we are active portfolio managers and we will seek to take advantage of opportunities to acquire or dispose of assets presented to us by real estate markets. One reason we focus on multiple property types and markets is to increase our ability to take advantage of these market cycles. We believe that the more opportunities we see in which to invest our capital, the more selective we can be in choosing strategic and accretive investments, which we believe may result in attractive total returns for our stockholders. Seeing more opportunities also may allow us to be consistent and meaningful investors throughout different cycles. When we believe one market is overvalued, we patiently wait and focus on another market that we believe is overlooked.

We also believe that value generally is based on the investment’s ability to produce cash flow and not what the next buyer will pay at any point in time. We generally focus on select, targeted markets that exhibit characteristics of being supply-constrained with strong demand from tenants seeking quality space.

We may target investments in four primary property categories of office, industrial, retail and multifamily. Although we may own properties in each of these categories, we are not tied to specific allocation targets and we may not always have significant holdings, or any holdings at all, in each category. For example, we do not currently own multifamily investments, although we intend to consider multifamily investment opportunities in the future. Also, through the disposition of assets, our ownership of industrial assets has declined to less than 5% of our portfolio as of December 31, 2016. From 2013 through the first half of 2016, our investment strategy has primarily been focused on multi-tenant office and necessity-oriented, multi-tenant retail investments located in what we believe are strong markets poised for long-term growth. Our current investment strategy will continue to focus on these multi-tenant office and necessity-oriented, multi-tenant retail investments. We intend to also incorporate industrial properties into our current investment strategy. We also continue to monitor opportunities to invest in multi-family assets. However, there can be no assurance that we will be successful in this investment strategy, including with respect to any particular asset class. To a lesser extent we may invest in other types of real estate including, but not limited to, hospitality, medical offices, student housing and unimproved land. We anticipate that the majority of our real property investments will be made in the United States, although we may also invest in Canada and Mexico, and potentially elsewhere on a limited basis, to the extent that opportunities exist that may help us meet our investment objectives.

To provide diversification to our portfolio, we have invested and may continue to invest in real estate-related debt, which will generally include mortgage loans secured by real estate, mezzanine debt and other related investments. Any investments in real estate-related securities generally will focus on equity issued by public and private real estate companies and certain other securities, with the primary goal of such investments being the preservation of liquidity in support of our share redemption programs.

In 2015 and 2016, we disposed of approximately $716.3 million of properties and we acquired approximately $407.8 million of properties. The properties that we sold were generally higher-yielding than the new properties we acquired, although we believe the acquired assets exhibit greater potential for future revenue growth. We believe that market conditions may cause us to continue to explore in certain markets the disposition of higher-yielding assets and in certain target markets the acquisition of assets that may generate lower yields but with greater growth potential. Although there can be no assurance that we will continue to pursue this strategy or be successful in its execution, for some period of time this may mean that higher-yielding assets are sold from our portfolio in exchange for assets that initially may produce lower current income but which we believe will generate increased income over time through increased tenant demand and rental rate growth in order to generate long term growth in net asset value.

Diversification Across Real Estate Investment Types

Our objective is to build a high-quality, diversified real estate portfolio. Although there can be no assurance that we will achieve this objective, we intend to diversify our portfolio by key portfolio attributes including, but not limited to, (1) property type, (2) target market, with consideration given to geographic concentrations, (3) average lease terms and portfolio occupancy expectations, (4) tenant concentrations, including credit and exposure to particular businesses or industries and (5) debt profile with the goal of maximizing flexibility while seeking to minimize cost and mitigate the risks associated with changes in interest rates and debt maturities.

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Real Property

We generally utilize a long-term hold strategy for strategic investments within our portfolio of real estate assets. The majority of our current portfolio consists of primarily “core” or “core-plus” properties that have significant operating histories and existing leases whereby a significant portion of the total investment return is expected to be derived from current income. In addition, we have invested in a relatively smaller proportion of “value added” opportunities that have arisen in circumstances where we have determined that a real property may be situationally undervalued or where product re-positioning, capital expenditures and/or improved property management may increase cash flows, and where the total investment return is generally expected to have a relatively larger component derived from capital appreciation. As described above, although we do not invest for the short term, we are active portfolio managers and we will seek to take advantage of opportunities to acquire or dispose of assets presented to us by the real estate market. Furthermore, we have invested in a small number of “opportunistic” real property investments, and may pursue similar opportunities in the future, that are either under-leased at acquisition or present expansion or re-development opportunities, where we may realize a significant portion of the total investment return from value appreciation. As of December 31, 2016, we had invested in a total of 55 operating properties located in 20 geographic markets throughout the United States at a total gross investment amount of approximately $2.2 billion aggregating approximately 9.0 million net rentable square feet.

Debt-Related Investments

To date, our debt-related investments have consisted primarily of (i) originations of and participations in commercial mortgage loans secured by real estate, (ii) B-notes, and (iii) mezzanine debt and other related investments secured by equity interests in entities that indirectly own real properties. As of December 31, 2016, we had three distinct debt-related investments secured by real properties located in three geographic markets with a total net investment amount of approximately $15.2 million.

Diversification Across Real Property Sectors

Through our investments in real properties and debt-related investments, we made direct investments, via equity interests and/or joint ventures, in real properties in multiple sectors, including office, industrial, and retail. In the future, we may also invest in multifamily, hospitality, and other real property types.

The chart below describes the diversification of our investment portfolio across real property type. Percentages in the chart correspond to the fair value as of December 31, 2016.

Diversification Across Geographic Regions

Through our investments in real property and debt-related investments, we also seek diversification across multiple geographic regions primarily located in the United States. The chart below shows the current allocations of our real property investments across geographic regions within the continental United States. Percentages in the chart correspond to our fair value as of December 31, 2016. Any market for which we do not show a corresponding percentage of our total fair value comprises 1% or less of the total fair value of our real property portfolio. As of December 31, 2016, our real property

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investments were geographically diversified across 20 markets. Our debt-related investments are located in three additional markets resulting in a combined portfolio allocation across 23 markets.

To date, and for the foreseeable future, the majority of our real property investments will be made in the United States, although we may also invest in Canada and Mexico, and potentially elsewhere on a limited basis, to the extent opportunities exist that may help us meet our investment objectives.

Diversification Across Tenant Profiles and Lease Terms

We believe that the tenant base that occupies our real property assets is generally stable and well-diversified. As of December 31, 2016, our consolidated operating real properties had leases with approximately 520 tenants. We intend to maintain a well-diversified mix of tenants to limit our exposure to any single tenant or industry. Our diversified investment strategy inherently provides for tenant diversity, and we continue to monitor our exposure relative to our larger tenant industry sectors. The following table describes our top ten tenant industry sectors based on annualized base rent as of December 31, 2016 (dollar and square footage amounts in thousands). 

Industry Sector	Number of Leases	Annualized Base Rent (1)		% of Annualized Base Rent		Occupied Square Feet	% of Occupied Square Feet
Securities, Commodity Contracts, and Other Financial Investments and Related Activities	26	$	26,026	15.3	%	677	8.3	%
Food and Beverage Stores	40	24,471		14.4	%	1,640	20.1	%
Publishing Information (except Internet)	3	19,044		11.2	%	413	5.1	%
Professional, Scientific and Technical Services	102	13,205		7.8	%	589	7.2	%
Food Services and Drinking Places	86	7,108		4.2	%	233	2.9	%
Clothing and Clothing Accessories Stores	30	6,248		3.7	%	425	5.2	%
Ambulatory Health Care Services	57	5,921		3.5	%	231	2.8	%
Credit Intermediation and Related Activities	34	5,815		3.4	%	156	1.9	%
Chemical Manufacturing	3	5,509		3.2	%	461	5.6	%
Hospitals	2	4,887		2.9	%	170	2.1	%
Other (2)	284	51,648		30.4	%	3,178	38.8	%
Total	667	$	169,882	100.0	%	8,173	100.0	%

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(1) Annualized base rent represents the annualized monthly base rent of executed leases as of December 31, 2016.

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(2) Other industry sectors include 41 additional sectors.

Our properties are generally leased to tenants for the longer term and as of December 31, 2016, the weighted average remaining term of our leases was approximately 4.7 years, based on annualized base rent, and 4.5 years, based on leased square footage. See “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” of this Annual Report on Form 10-K for a schedule of expiring leases for our consolidated operating properties by annualized base rent and square footage as of December 31, 2016.

Tenant Concentration

Rental revenue from our lease with Charles Schwab & Co., Inc. (“Schwab”), as master tenant of one of our office properties, represented approximately 11.8% of our total revenue from continuing operations for the year ended December 31, 2016. However, nine of Schwab’s subleases that comprise approximately 7.4% of our annualized base rent as of December 31, 2016 will become our direct tenants following the expiration of our lease with Schwab in 2017. These direct leases will expire between September 2020 and September 2032. See “Concentration of Credit Risk” in Note 3 to our financial statements beginning on page F-1 of this Annual Report on Form 10-K for information regarding the top five tenants as a percentage of consolidated annual base rent and occupied square feet.

Leverage

We use financial leverage to provide additional funds to support our investment activities. We calculate our leverage for reporting purposes as the outstanding principal balance of our total borrowings divided by the fair value of our real property and debt-related investments. Based on this methodology, our leverage was 45.9% as of December 31, 2016, compared to 45.4% as of December 31, 2015. There are other methods of calculating our overall leverage ratio that may differ from this methodology, such as the methodology used in determining our compliance with corporate borrowing covenants. Our current leverage target is between 40-60%. Although we will generally work to maintain the targeted leverage ratio over the near term, we may change our targeted leverage ratio from time to time. In addition, we may vary from our target leverage ratio from time to time, and there are no assurances that we will maintain the targeted range disclosed above or achieve any other leverage ratio that we may target in the future. Our board of directors may from time to time modify our borrowing policy in light of then-current economic conditions, the relative costs of debt and equity capital, the fair values of our properties, general conditions in the market for debt and equity securities, growth and acquisition opportunities or other factors.

Competition

We believe that the current market for investing in real property and debt-related investments continues to be extremely competitive and we continue to see a flight to quality for both equity and debt capital. Higher quality investments located in desirable markets are subject to strong competition. We compete with many different types of companies engaged in real estate investment activities, including other REITs, pension funds and their advisors, foreign investors, bank and insurance company investment accounts, real estate limited partnerships, various forms of banks and specialty finance companies, mutual funds, private equity funds, hedge funds, individuals and other entities. Some of these competitors, including larger REITs, have substantially greater financial and other resources than we do and generally may be able to accept more risk and leverage. They may also possess significant competitive advantages that result from, among other things, a lower cost of capital and enhanced operating efficiencies.

In addition to competing for attractive investment opportunities, the current leasing and operating environment is also extremely competitive. Improving real estate fundamentals, such as vacancy and rental rates, generally have provided us with opportunities to increase rental rates across many of our markets. However, we continue to compete with similar owners and operators of commercial real estate and, as a result, we may have to provide free rent, incur charges for tenant improvements or offer other inducements in order to compete, all of which may have an adverse impact on our results of operations.

Conflicts of Interest

We are subject to various conflicts of interest arising out of our relationship with our Advisor and other affiliates, including: (i) conflicts related to the compensation arrangements between our Advisor, certain affiliates and us, (ii) conflicts with respect to the allocation of the time of our Advisor and its key personnel and (iii) conflicts with respect to the allocation of investment and leasing opportunities. Our independent directors have an obligation to function on our behalf in all situations in which a conflict of interest may arise and have a fiduciary obligation to act on behalf of our stockholders. See “Item 13. Certain Relationships and Related Transactions, and Director Independence” of this Annual Report on Form 10-K for a description of the conflicts of interest that arise as a result of our relationships with our Advisor and its affiliates.

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Compliance with Federal, State and Local Environmental Laws

Properties that we may acquire, and the properties underlying our investments, are subject to various federal, state and local environmental laws, ordinances and regulations. Under these laws, ordinances and regulations, a current or previous owner of real estate (including, in certain circumstances, a secured lender that succeeds to ownership or control of a property) may become liable for the costs of removal or remediation of certain hazardous or toxic substances or petroleum product releases at, on, under or in its property. These laws typically impose cleanup responsibility and liability without regard to whether the owner or control party knew of or was responsible for the release or presence of the hazardous or toxic substances. The costs of investigation, remediation or removal of these substances may be substantial and could exceed the value of the property. An owner or control party of a site may be subject to common law claims by third parties based on damages and costs resulting from environmental contamination emanating from a site. Certain environmental laws also impose liability in connection with the handling of or exposure to materials containing asbestos. These laws allow third parties to seek recovery from owners of real properties for personal injuries associated with materials containing asbestos. Our operating costs and the values of these assets may be adversely affected by the obligation to pay for the cost of complying with existing environmental laws, ordinances and regulations, as well as the cost of complying with future legislation, and our income and ability to make distributions to our stockholders could be affected adversely by the existence of an environmental liability with respect to our properties. We will endeavor to ensure our properties are in compliance in all material respects with all federal, state and local laws, ordinances and regulations regarding hazardous or toxic substances or petroleum products.

Employees

The Advisory Agreement provides that our Advisor will assume principal responsibility for managing our affairs, and as a result we have no employees. See “Item 10. Directors, Executive Officers and Corporate Governance” of this Annual Report on Form 10-K for additional discussion regarding our directors and executive officers.

Available Information

This Annual Report on Form 10-K, our Quarterly Reports on Form 10-Q, our Current Reports on Form 8-K, as well as any amendments to those reports, and proxy statements that we file with the Securities and Exchange Commission (the “Commission”) are available free of charge as soon as reasonably practicable through our website at www.dividendcapitaldiversified.com. The information contained on our website is not incorporated into this Annual Report on Form 10-K.  

ITEM 1A.    RISK FACTORS

RISKS RELATED TO INVESTING IN SHARES OF OUR COMMON STOCK

There is no public trading market for the shares of our common stock and we do not anticipate that there will be a public trading market for our shares; therefore, your ability to dispose of your shares will likely be limited to redemption or repurchase by us. If you do sell your shares to us, you may receive less than the price you paid.

There is no public market for the shares of our common stock and we currently have no obligation or plans to apply for listing on any public securities market. Therefore, redemption or repurchase of shares by us will likely be the only way for you to dispose of your shares. Under our share redemption programs, we will redeem shares at a price equal to the NAV per share of the class of shares being redeemed on the date of redemption, and not based on the price at which you initially purchased your shares. Pursuant to tender offers, we may purchase our shares at a discount to NAV. We may redeem Class A, Class W or Class I shares if holders of such shares fail to maintain a minimum balance of $2,000 in shares, even if your failure to meet the minimum balance is caused solely by a decline in our NAV. Subject to limited exceptions, Class A, Class W or Class I shares redeemed within 365 days of the date of purchase will be subject to a short-term trading discount equal to 2% of the gross proceeds otherwise payable with respect to the redemption, which will inure indirectly to the benefit of our remaining stockholders. As a result of this and the fact that our NAV will fluctuate, you may receive less than the price you paid for your shares upon redemption or repurchase by us.

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Our ability to redeem or repurchase your shares is limited, and our board of directors may modify, suspend or terminate our share redemption programs at any time.

Generally, our Class A, Class W and Class I share redemption program imposes a quarterly cap on aggregate net redemptions of our Class A, Class W and Class I share classes equal to the amount of shares of such classes with a value (based on the redemption price per share on the day the redemption is effected) of up to 5% of the aggregate NAV of the outstanding shares of such classes as of the last day of the previous calendar quarter.

Our current Class E share redemption program is even more limited. On an ongoing basis, it is only available for redemptions in connection with the death or disability of a stockholder. With respect to all other Class E stockholders, our board of directors evaluates each quarter whether to make liquidity available through our Class E share redemption program or through a tender offer process. Although no assurances can be made, our board of directors currently intends to make a minimum amount of liquidity available to Class E stockholders each quarter (other than liquidity made available in the event of the death or disability of a stockholder through the Class E share redemption program) in an amount that is the greater of (A) (i) funds received from the sale of Class E shares under our distribution reinvestment plan during such calendar quarter, plus (ii) 50% of the difference between (a) the proceeds (net of sales commissions) received by us from the sale of Class A, Class W and Class I shares in any public primary offering and under our distribution reinvestment plan during the most recently completed calendar quarter, and (b) the dollar amount used to redeem Class A, Class W and Class I shares during the most recently completed calendar quarter pursuant to the Class A, Class W and Class I share redemption program, less (iii) funds used for redemptions of Class E shares in the most recently completed quarter due to qualifying death or disability requests of a stockholder during such calendar quarter and (B) the amount that would result in repurchases or redemptions, during any consecutive twelve month period, at least equal to five percent of the number of Class E shares outstanding at the beginning of such twelve-month period (the “Class E Liquidity Amount”), regardless of whether such liquidity will be made available through the Class E share redemption program or a tender offer, and excluding liquidity made available in the event of the death or disability of a stockholder through the Class E share redemption program. Our board of directors may at any time decide to reduce or eliminate the Class E Liquidity Amount.

The vast majority of our assets will consist of properties which cannot generally be readily liquidated on short notice without impacting our ability to realize full value upon their disposition. Therefore, we may not always have a sufficient amount of cash to immediately satisfy redemption requests. Our board of directors may modify, suspend or terminate our share redemption programs and also may elect not to make liquidity available to Class E stockholders through a tender offer process. As a result, your ability to have your shares redeemed or purchased by us may be limited, and our shares should be considered as having only limited liquidity and at times may be illiquid. See “Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities – Share Redemption Program and Other Redemptions” of this Annual Report on Form 10-K.

Our capacity under our share redemption programs to redeem shares may be further limited if we experience a concentration of investors.

The current limitations of our share redemption programs are based, in part, on the number of outstanding shares. Thus, the ability of a single investor, or of a group of investors acting similarly, to redeem all of their shares may be limited if they own a large percentage of our shares. Similarly, if a single investor, or a group of investors acting in concert or independently, owns a large percentage of our shares, a significant redemption request by such investor or investors could significantly further limit our ability to satisfy redemption requests of other investors of such classes. Such concentrations could arise in a variety of circumstances, especially with respect to the Class A, Class W and Class I share redemption program while we have relatively few outstanding Class A, Class W and Class I shares. For example, we could sell a large number of our shares to one or more institutional investors, either in a public offering or in a private placement. In addition, we may issue a significant number of our shares in connection with an acquisition of another company or a portfolio of properties to a single investor or a group of investors that may request redemption at similar times following the acquisition. As of December 31, 2016, based on the NAV per share of $7.57 on that date, we had outstanding approximately $850.3 million in Class E shares, $15.1 million in Class A shares, $17.2 million in Class W shares, and $255.5 million in Class I shares.

A portion of the proceeds raised in the Follow-On Offering are expected to be used to redeem Class E shares, and such portion of the proceeds may be substantial.

We currently expect to use a portion of the proceeds from the Follow-On Offering to enhance liquidity for our Class E stockholders through self-tender offers and our Class E share redemption program. On an ongoing basis, our current Class E share redemption program is only available for redemptions in the event of the death or disability of a stockholder. Unless approved by our board of directors, we will not make, during any consecutive twelve-month period, redemptions in the event of

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the death or disability of a stockholder that exceed five percent of the number of Class E shares of common stock outstanding at the beginning of such twelve-month period. However, with respect to all other Class E stockholders, our board of directors evaluates each quarter whether to make liquidity available through the Class E share redemption program or through a tender offer process. Our board of directors currently intends to make liquidity available to Class E stockholders each quarter (other than liquidity made available in the event of the death or disability of a stockholder through the Class E share redemption program) in the Class E Liquidity Amount, regardless of whether such liquidity will be made available through the Class E share redemption program or a tender offer, and excluding liquidity made available in the event of the death or disability of a stockholder through the Class E share redemption program. However, our board of directors may from time to time authorize funds for redemptions of Class E shares in greater or lower amounts. Our board of directors may at any time decide to reduce or eliminate the Class E Liquidity Amount.

There has been significant demand from Class E holders to have their shares purchased pursuant to a tender offer or to have their shares redeemed under our Class E share redemption program, and we plan to use a portion of the proceeds from the Follow-On Offering to purchase or redeem Class E shares. As a result, we may have fewer offering proceeds available to retire debt or acquire additional properties, which may result in reduced liquidity and profitability or restrict our ability to grow our NAV.

With respect to liquidity for our Class E stockholders, our long-term goal is to raise sufficient proceeds in the Follow-On Offering so as to be able to accommodate those holders of Class E shares who would like to have their shares purchased pursuant to a tender offer or to have their shares redeemed under our Class E share redemption program. However, if we are not successful over time in generating liquidity to holders of our Class E shares through our self-tender offers and the Class E share redemption program, we may explore additional liquidity strategies for our Class E stockholders. There can be no assurances that we will be successful in achieving liquidity strategies for our Class E stockholders within any certain time frame or at all. In any event, our board of directors will seek to act in the best interest of the Company as a whole, taking into consideration all classes of stockholders.

You will not have the opportunity to evaluate future investments we will make with the proceeds raised in our Follow-On Offering prior to purchasing shares of our common stock.

We have not identified future investments that we will make with the proceeds of our Follow-On Offering. As a result, you will not be able to evaluate the economic merits, transaction terms or other financial or operational data concerning our future investments prior to purchasing shares of our common stock. You must rely on our Advisor and our board of directors to implement our investment policies, to evaluate our investment opportunities and to structure the terms of our investments. Because you cannot evaluate all of the investments we will make in advance of purchasing shares of our common stock, this additional risk may hinder your ability to achieve your own personal investment objectives related to portfolio diversification, risk-adjusted investment returns and other objectives.

We may raise significantly less than the maximum offering amounts in our ongoing public offerings.

We presently intend to conduct ongoing public offerings of our Class A, Class W and Class I shares of common stock pursuant to registration statements filed with the Commission. However, we may raise significantly less than the maximum amounts offered pursuant to such registration statements. The less capital we raise, the less capital we will have available to make investments in accordance with our investment strategy and policies, to provide liquidity to our stockholders and for general corporate purposes (which may include repayment of our debt or any other corporate purposes we deem appropriate).

Furthermore, the estimated use of proceeds figures presented in such registration statements and the related offering prospectuses are estimates based on a maximum raise that are derived at the beginning of each offering and are not updated throughout the offering. The actual percentage of net proceeds available to us will depend on a number of factors, including the amount of capital we raise, the actual offering costs and the portion of capital raised with respect to which we pay a primary dealer fee. For example, if we raise less than the maximum amount offered pursuant to a registration statement, we would expect the percentage of net offering proceeds available to us to be less than the estimated use of proceeds figures presented in the registration statement and related offering prospectus because many offering costs are fixed and do not depend on the amount of capital raised in the offering. In our prior offering of Class A, W and I shares that terminated on September 15, 2015, before class-specific expenses, we raised total gross proceeds of approximately $183.0 million, of which approximately 89% in net proceeds was available to us for investment, redemptions, tender offers, and other corporate purposes.

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Even if we are able to raise substantial funds in our Follow-On Offering, investors in our common stock are subject to the risk that our offering, business and operating plans may change.

Although we intend to operate as a perpetual-life REIT with an ongoing offering and share redemption programs (or self-tender offers), this is not a requirement of our charter. Even if we are able to raise substantial funds in the Follow-On Offering, if circumstances change such that our board of directors believes it is in the best interest of our stockholders to terminate our Follow-On Offering or to terminate our share redemption programs (or stop conducting self-tender offers), we may do so without stockholder approval. Our board of directors may also change our investment objectives, borrowing policies, or other corporate policies without stockholder approval. In addition, we may change the way our fees and expenses are incurred and allocated to different classes of stockholders if the tax rules applicable to REITs change such that we could do so without adverse tax consequences. Our board of directors may decide that certain significant transactions that require stockholder approval such as dissolution, merger into another entity, consolidation or the sale or other disposition of all or substantially all of our assets, are in the best interests of our stockholders. Holders of all classes of our common stock have equal voting rights with respect to such matters and will vote as a single group rather than on a class-by-class basis. Accordingly, investors in our common stock are subject to the risk that our offering, business and operating plans may change.

Valuations and appraisals of our properties, real estate-related assets and real estate-related liabilities are estimates of value and may not necessarily correspond to realizable value.

The valuation methodologies used to value our properties and certain real estate-related assets involve subjective judgments regarding such factors as comparable sales, rental revenue and operating expense data, the capitalization or discount rate, and projections of future rent and expenses based on appropriate analysis. In addition, we generally do not undertake to mark-to-market our debt investments or real estate-related liabilities, but rather these assets and liabilities are usually included in our determination of NAV at an amount determined in accordance with GAAP. As a result, valuations and appraisals of our properties, real estate-related assets and real estate-related liabilities are only estimates of current market value. Ultimate realization of the value of an asset or liability depends to a great extent on economic and other conditions beyond our control and the control of the Independent Valuation Firm and other parties involved in the valuation of our assets and liabilities. Further, these valuations may not necessarily represent the price at which an asset or liability would sell, because market prices of assets and liabilities can only be determined by negotiation between a willing buyer and seller. Valuations used for determining our NAV also are generally made without consideration of the expenses that would be incurred in connection with disposing of assets and liabilities. Therefore, the valuations of our properties, our investments in real estate-related assets and our liabilities may not correspond to the timely realizable value upon a sale of those assets and liabilities. Our NAV does not currently represent enterprise value and may not accurately reflect the actual prices at which our assets could be liquidated on any given day, the value a third party would pay for all or substantially all of our shares, or the price that our shares would trade at on a national stock exchange. There will be no retroactive adjustment in the valuation of such assets or liabilities, the price of our shares of common stock, the price we paid to redeem shares of our common stock or NAV-based fees we paid to our Advisor and our Dealer Manager to the extent such valuations prove to not accurately reflect the true estimate of value and are not a precise measure of realizable value. Because the price you will pay for shares of our common stock in our offerings, and the price at which your shares may be redeemed or repurchased by us pursuant to our share redemption programs or self-tender offers, are based on our estimated NAV per share, you may pay more than realizable value or receive less than realizable value for your investment.

In order to disclose a daily NAV, we are reliant on the parties that we engage for that purpose, in particular the Independent Valuation Firm and the appraisers that we hire to value and appraise our real estate portfolio.

In order to disclose a daily NAV, our board of directors, including a majority of our independent directors, has adopted valuation procedures that contain a comprehensive set of methodologies to be used in connection with the calculation of our NAV and caused us to engage independent third parties such as the Independent Valuation Firm, to value our real estate portfolio on a daily basis, and independent appraisal firms, to provide periodic appraisals with respect to our properties. We have also engaged a firm to act as the NAV Accountant and may engage other independent third parties or our Advisor to value other assets or liabilities. Although our board of directors, with the assistance of our Advisor, oversees all of these parties and the reasonableness of their work product, we will not independently verify our NAV or the components thereof, such as the appraised values of our properties. Our management’s assessment of the market values of our properties may also differ from the appraised values of our properties as determined by the Independent Valuation Firm. If the parties engaged by us to determine our daily NAV are unable or unwilling to perform their obligations to us, our NAV could be inaccurate or unavailable, and we could decide to suspend our offerings and our share redemption programs.

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Our NAV is not subject to GAAP, will not be independently audited and will involve subjective judgments by the Independent Valuation Firm and other parties involved in valuing our assets and liabilities.

Our valuation procedures and our NAV are not subject to GAAP and will not be subject to independent audit. Our NAV may differ from equity (net assets) reflected on our audited financial statements, even if we are required to adopt a fair value basis of accounting for GAAP financial statement purposes. Additionally, we are dependent on our Advisor to be reasonably aware of material events specific to our properties (such as tenant disputes, damage, litigation and environmental issues) that may cause the value of a property to change materially and to promptly notify the Independent Valuation Firm so that the information may be reflected in our real estate portfolio valuation. In addition, the implementation and coordination of our valuation procedures include certain subjective judgments of our Advisor, such as whether the Independent Valuation Firm should be notified of events specific to our properties that could affect their valuations, as well as of the Independent Valuation Firm and other parties we engage, as to whether adjustments to asset and liability valuations are appropriate. Accordingly, you must rely entirely on our board of directors to adopt appropriate valuation procedures and on the Independent Valuation Firm and other parties we engage in order to arrive at our NAV, which may not correspond to realizable value upon a sale of our assets.

No rule or regulation requires that we calculate our NAV in a certain way, and our board of directors, including a majority of our independent directors, may adopt changes to the valuation procedures.

There are no existing rules or regulatory bodies that specifically govern the manner in which we calculate our NAV. As a result, it is important that you pay particular attention to the specific methodologies and assumptions we use to calculate our NAV. Other public REITs may use different methodologies or assumptions to determine their NAV. In addition, each year our board of directors, including a majority of our independent directors, will review the appropriateness of our valuation procedures and may, at any time, adopt changes to the valuation procedures. For example, we generally do not undertake to mark-to-market our debt investments or real estate-related liabilities, but rather these assets and liabilities are usually included in our determination of NAV at an amount determined in accordance with GAAP. As a result, the realizable value of specific debt investments and real property assets encumbered by debt that are used in the calculation of our NAV may be higher or lower than the value that would be derived if such debt investments or property-related liabilities were marked to market. In some cases such difference may be significant. We also do not currently include any enterprise value or real estate acquisition costs in our assets calculated for purposes of our NAV. If we acquire real property assets as a portfolio, we may pay a premium over the amount that we would pay for the assets individually. Our board of directors may change these or other aspects of our valuation procedures, which changes may have an adverse effect on our NAV and the price at which you may sell shares to us under our share redemption programs (or self-tender offers). See “Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities — Net Asset Value Calculation” and our valuation procedures attached as Exhibit 99.1 to this Annual Report on Form 10-K for more details regarding our valuation methodologies, assumptions and procedures.

Our NAV per share may suddenly change if the valuations of our properties materially change from prior valuations or the actual operating results materially differ from what we originally budgeted.

It is possible that the annual appraisals of our properties may not be spread evenly throughout the year and may differ from the most recent daily valuation. As such, when these appraisals are reflected in our Independent Valuation Firm’s valuation of our real estate portfolio, there may be a sudden change in our NAV per share for each class of our common stock. Property valuation changes can occur for a variety reasons, such as local real estate market conditions, the financial condition of our tenants, or lease expirations. For example, we regularly face lease expirations across our portfolio, and as we move further away from lease commencement toward the end of a lease term, the valuation of the underlying property will be expected to drop depending on the likelihood of a renewal or a new lease on similar terms. Such a valuation drop can be particularly significant when closer to a lease expiration, especially for single tenant buildings or where an individual tenant occupies a large portion of a building. We are at the greatest risk of these valuation changes during periods in which we have a large number of lease expirations as well as when the lease of a significant tenant is closer to expiration. Similarly, if a tenant will have an option in the future to purchase one of our properties from us at a price that is less than the current valuation of the property, then if the value of the property exceeds the option price, the valuation will be expected to decline and begin to approach the purchase price as the date of the option approaches. In addition, actual operating results may differ from what we originally budgeted, which may cause a sudden increase or decrease in the NAV per share amounts. We accrue estimated income and expenses on a daily basis based on annual budgets as adjusted from time to time to reflect changes in the business throughout the year. On a periodic basis, we adjust the income and expense accruals we estimated to reflect the income and expenses actually earned and incurred. We will not retroactively adjust the NAV per share of each class for any adjustments. Therefore, because actual results from operations may be better or worse than what we previously budgeted, the adjustment to reflect actual operating results may cause the NAV per share for each class of our common stock to increase or decrease.

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New acquisitions may be valued for purposes of our NAV at less than what we pay for them, which would dilute our NAV.

Pursuant to our valuation procedures, the acquisition price of newly acquired properties will serve as our appraised value for the year of acquisition, and thereafter will be part of the rotating appraisal cycle such that they are appraised at least every calendar year. This is true whether the acquisition is funded with cash, equity or a combination thereof. However, the Independent Valuation Firm always has the ability to adjust property valuations for purposes of our NAV from the most recent appraised value. Similarly, if the Independent Valuation Firm believes that the purchase price for a recent acquisition does not reflect the current value of the property, the Independent Valuation Firm has the ability to adjust the valuation for purposes of our NAV downwards immediately after acquisition. Even if the Independent Valuation Firm does not adjust the valuation downwards immediately following the acquisition, when we obtain an appraisal on the property, it may not appraise at a value equal to the purchase price. Accordingly, the value of a new acquisition as established under our NAV procedures could be less than what we pay for it, which could negatively affect our NAV. Large portfolio acquisitions, in particular, may require a “portfolio premium” to be paid by us in order to be a competitive bidder, and this “portfolio premium” may not be taken into consideration in calculating our NAV. In addition, acquisition expenses we incur in connection with new acquisitions will negatively impact our NAV. We may make acquisitions (with cash or equity) of any size without stockholder approval, and such acquisitions may be dilutive to our NAV.

The NAV per share that we publish may not necessarily reflect changes in our NAV that are not immediately quantifiable.

From time to time, we may experience events with respect to our investments that may have a material impact on our NAV. For example, and not by way of limitation, changes in governmental rules, regulations and fiscal policies, environmental legislation, acts of God, terrorism, social unrest, civil disturbances and major disturbances in financial markets may cause the value of a property to change materially. The NAV per share of each class of our common stock as published on any given day may not reflect such extraordinary events to the extent that their financial impact is not immediately quantifiable. As a result, the NAV per share that we publish may not necessarily reflect changes in our NAV that are not immediately quantifiable, and the NAV per share of each class published after the announcement of a material event may differ significantly from our actual NAV per share for such class until such time as the financial impact is quantified and our NAV is appropriately adjusted in accordance with our valuation procedures. The resulting potential disparity in our NAV may inure to the benefit of redeeming stockholders or non-redeeming stockholders and new purchasers of our common stock, depending on whether our published NAV per share for such class is overstated or understated.

The realizable value of specific properties may change before the value is adjusted by the Independent Valuation Firm and reflected in the calculation of our NAV.

Our valuation procedures generally provide that the Independent Valuation Firm will adjust a real property’s valuation, as necessary, based on known events that have a material impact on the most recent value (adjustments for non-material events may also be made). We are dependent on our Advisor to be reasonably aware of material events specific to our properties (such as tenant disputes, damage, litigation and environmental issues, as well as positive events such as new lease agreements) that may cause the value of a property to change materially and to promptly notify the Independent Valuation Firm so that the information may be reflected in our real estate portfolio valuation. Events may transpire that, for a period of time, are unknown to us or the Independent Valuation Firm that may affect the value of a property, and until such information becomes known and is processed, the value of such asset may differ from the value used to determine our NAV. In addition, although we may have information that suggests a change in value of a property may have occurred, there may be a delay in the resulting change in value being reflected in our NAV until such information is appropriately reviewed, verified and processed. For example, we may receive an unsolicited offer, from an unrelated third party, to sell one of our assets at a price that is materially different than the price included in our NAV. Or, we may be aware of a new lease, lease expiry, or entering into a contract for capital expenditure. Where possible, adjustments generally are made based on events evidenced by proper final documentation. It is possible that an adjustment to the valuation of a property may occur prior to final documentation if the Independent Valuation Firm determines that events warrant adjustments to certain assumptions that materially affect value. However, to the extent that an event has not yet become final based on proper documentation, its impact on the value of the applicable property may not be reflected (or may be only partially reflected) in the calculation of our NAV.

Because we generally do not mark our debt investments or real estate-related liabilities to market, the realizable value of specific debt investments and real property assets that are encumbered by debt may be higher or lower than the value used in the calculation of our NAV.

We generally do not undertake to mark-to-market our debt investments or real estate-related liabilities, but rather these assets and liabilities are usually included in our determination of NAV at an amount determined in accordance with GAAP. As a

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result, the realizable value of specific debt investments and real property assets that are encumbered by debt used in the calculation of our NAV may be higher or lower than the value that would be derived if such debt investments or liabilities were marked to market. In some cases such difference may be significant. For example, in Note 8 to our financial statements beginning on page F-1 of this Annual Report on Form 10-K for the year ended December 31, 2016, we disclosed that the estimated fair value of our debt liabilities, net of the fair value of our debt investments, was $5.2 million higher than the GAAP carrying balance, meaning that if we used the fair value of our debt rather than the carrying balance, our NAV would have been lower by approximately $5.2 million as of December 31, 2016. We record all derivative instruments at fair value, which we do not expect to be significantly different from the realizable value of our derivative instruments used in the calculation of our NAV.

Due to daily fluctuations in our NAV, the price at which your purchase is executed could be higher than our NAV per share at the time you submit your purchase order, and the price at which your redemption is executed could be lower than our NAV per share at the time you submit your redemption request.

The purchase and redemption price for shares of our common stock will be determined at the end of each business day based on our NAV and will not be based on any established trading price. In our Follow-On Offering, each accepted purchase order will be executed at a price equal to our NAV per share for the class of shares being purchased next determined after the purchase order is received in good order, plus, for Class A shares sold in the primary offering only, any applicable selling commissions. For example, if a purchase order is received in good order on a business day and before the close of business (4:00 p.m. Eastern time) on that day, the purchase order will be executed at a purchase price equal to our NAV per share for the class of shares being purchased determined after the close of business on that day, plus, for Class A shares sold in the primary offering only, any applicable selling commissions. If a purchase order is received in good order on a business day, but after the close of business on that day, the purchase order will be executed at a purchase price equal to our NAV per share for the class of shares being purchased determined after the close of business on the next business day, plus, for Class A shares sold in the primary offering only, any applicable selling commissions. Similarly, redemption requests received in good order will be effected at a redemption price equal to the next-determined NAV per share for the class of shares being redeemed (subject to a 2% short-term trading discount in certain circumstances). In addition, there may be a delay between your purchase or redemption decision and the execution date caused by time necessary for you and your participating broker-dealer to put a purchase order or redemption request in “good order,” which means, for these purposes, that all required information has been completed, all proper signatures have been provided, and, for purchase orders, funds for payment have been provided. As a result of this process, you will not know the purchase or redemption price at the time you submit your purchase order or redemption request. The purchase price per share at which your purchase order is executed could be higher than the NAV per share on the date you submitted your purchase order, and the redemption price per share at which your redemption request is executed could be lower than the NAV per share on the date you submitted your redemption request.

Our NAV and the NAV of your shares may be diluted in connection with our Follow-On Offering and future securities offerings.

In connection with the Follow-On Offering, we incur fees and expenses. Excluding selling commissions (which are effectively paid by purchasers of Class A shares in the primary offering at the time of purchase, because the purchase price of such shares is equal to the NAV per Class A share plus the selling commission, and therefore have no effect on our NAV), we expect to incur up to $7.5 million in primary dealer fees and approximately $12.8 million in organization and offering expenses, which will decrease the amount of cash we have available for operations and new investments. In addition, because the prices of shares sold in the Follow-On Offering are based on our NAV, the offering may be dilutive if our NAV procedures do not fully capture the value of our shares and/or we do not utilize the proceeds accretively.

In the future we may conduct other offerings of common stock (whether existing or new classes), preferred stock, debt securities or of interests in our Operating Partnership. We may also amend the terms of the Follow-On Offering. We may structure or amend such offerings to attract institutional investors or other sources of capital in connection with efforts to provide additional Class E liquidity or otherwise. The terms of the Follow-On Offering will reduce the NAV of your shares over time in accordance with our valuation procedures and the terms of the Follow-On Offering and future offerings (such as the offering price and the distribution fees and expenses) may negatively impact our ability to pay distributions and your overall return.

Investors do not have the benefit of an independent due diligence review in connection with our Follow-On Offering which increases the risk of your investment.

Because our Advisor and our Dealer Manager are related, investors do not have the benefit of an independent due diligence review and investigation in connection with the Follow-On Offering of the type normally performed by an unrelated,

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independent underwriter in connection with a securities offering. In addition, DLA Piper LLP (US) has acted as counsel to us, our Advisor and our Dealer Manager in connection with the Follow-On Offering and, therefore, investors do not have the benefit of a due diligence review that might otherwise be performed by independent counsel. Under applicable legal ethics rules, DLA Piper LLP (US) may be precluded from representing us due to a conflict of interest between us and our Dealer Manager. If any situation arises in which our interests are in conflict with those of our Dealer Manager or its related parties, we would be required to retain additional counsel and may incur additional fees and expenses. The lack of an independent due diligence review and investigation increases the risk of your investment.

Our investors may be at a greater risk of loss than our Advisor and members of our management team.

We have taken certain actions to increase the stock ownership in our Company by our management team, our Advisor and our directors over the past couple of years, including the implementation of certain stock-based awards. As of February 24, 2017, our Advisor and members of our management team own approximately $8.3 million of stock or in stock-based awards (excluding certain options granted to our independent directors but including unvested shares). While we have improved and expect to continue to grow stock ownership by management, our Advisor and our directors, the current level of ownership may be less than the management teams of other public real estate companies and as result, our investors may be at a greater risk of loss than our Advisor and other members of our management, especially as compared to these other companies in which stock ownership by management and directors may be significantly greater.

The availability and timing of cash distributions to you is uncertain.

We currently make and expect to continue to make quarterly distributions to our stockholders. However, the payment of class-specific expenses results in different amounts of distributions being paid with respect to each class of shares. In addition, we bear all expenses incurred in our operations, which reduce the amount of cash available for distribution to our stockholders. Distributions may also be negatively impacted by the failure to deploy our net proceeds on an expeditious basis, the inability to find suitable investments that are not dilutive to our distributions, the poor performance of our investments (including vacancy or decline in rental rates), an increase in expenses for any reason (including expending funds for redemptions) and due to numerous other factors. Any request by the holders of our OP Units to redeem some or all of their OP Units for cash may also impact the amount of cash available for distribution to our stockholders. In addition, our board of directors, in its discretion, may retain any portion of such funds for working capital. We cannot assure you that sufficient cash will be available to make distributions to our stockholders or that the amount of distributions will not either decrease or fail to increase over time. From time to time, we may adjust our distribution level and we may make such an adjustment at any time.

We may have difficulty funding our distributions with funds provided by our operations.

Although our distributions during the years ended December 31, 2016, 2015 and 2014 were fully funded from our operations, in the future we may fund distributions from other sources. Our long-term strategy is to fund the payment of quarterly distributions to our stockholders entirely from our operations. However, if we are unsuccessful in investing the capital we raise in our Follow-On Offering or which is generated from the sale of existing assets on an effective and efficient basis that is accretive to our distribution level, we may be required to fund our quarterly distributions to our stockholders from a combination of our operations and financing activities, which include net proceeds of our Follow-On Offering and borrowings (including borrowings secured by our assets), or to reduce the level of our quarterly distributions. Using certain of these sources may result in a liability to us, which would require a future repayment. The use of these sources for distributions and the ultimate repayment of any liabilities incurred could adversely impact our ability to pay distributions in future periods, decrease the amount of cash we have available for new investments, repayment of debt, share redemptions or repurchases and other corporate purposes, and potentially reduce your overall return and adversely impact and dilute the value of your investment in shares of our common stock. We may pay distributions from sources other than cash flow from operations, including, without limitation, the sale of assets, borrowings or offering proceeds. Our ability to pay distributions at the current level also likely will be impacted by the expiration of certain large leases in our portfolio, and, as a result, we may be required to reduce the level of our quarterly distributions. To the extent that we sell higher yielding assets in exchange for assets that may initially produce less income in exchange for the potential ability for longer term appreciation, this may also put pressure on our ability to sustain our current distribution level. If our quarterly distributions exceed cash flow generated from our operations, it may cause a decrease in our NAV if not offset by other effects.

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If we raise substantial offering proceeds in a short period of time, we may not be able to invest all of the net offering proceeds promptly, which may cause our distributions and the long-term returns to our investors to be lower than they otherwise would.

We could suffer from delays in locating suitable investments. The more money we raise in our Follow-On Offering, the more difficult it will be to invest the net offering proceeds promptly. Therefore, the large size of our Follow-On Offering increases the risk of delays in investing our net offering proceeds. Our reliance on our Advisor to locate suitable investments for us at times when the management of our Advisor is simultaneously seeking to locate suitable investments for other entities sponsored or advised by affiliates of the Sponsor could also delay the investment of the proceeds of our Follow-On Offering. Delays we encounter in the selection, acquisition and development of income-producing properties would likely negatively affect our NAV, limit our ability to pay distributions to you and reduce your overall returns.

The performance component of the advisory fee is calculated on the basis of the overall non-compounded investment return provided to holders of Fund Interests over a calendar year, so it may not be consistent with the return on your shares.

The performance component of the advisory fee is calculated on the basis of the overall non-compounded investment return provided to holders of Fund Interests (i.e., our Class E shares, Class A shares, Class W shares and Class I shares, along with the OP Units held by third parties) over a calendar year such that our Advisor will receive 25% of the overall return in excess of 6%; provided that in no event will the performance component exceed 10% of the overall return for such year. The overall non-compounded investment return provided to holders of Fund Interests over any applicable period is a dollar amount defined as the product of (i) the amount, if any, by which (A) the sum of (1) the weighted-average distributions per Fund Interest over the applicable period, and (2) the ending weighted-average NAV per Fund Interest, exceeds (B) the beginning weighted-average NAV per Fund Interest and (ii) the weighted-average number of Fund Interests outstanding during the applicable period. The weighted-average NAV per Fund Interest calculated on the last trading day of a calendar year shall be the amount against which changes in weighted-average NAV per Fund Interest are measured during the subsequent calendar year. However, the performance component will not be earned on any increase in the weighted-average NAV per Fund Interest except to the extent that it exceeds the historically highest year-end weighted-average NAV per Fund Interest since the commencement of our daily NAV calculations ($7.57 as of December 31, 2016). The foregoing NAV thresholds are subject to adjustment by our board of directors. Therefore, payment of the performance component of the advisory fee (1) is contingent upon the overall return to the holders of Fund Interests exceeding the 6% return, (2) will vary in amount based on our actual performance, (3) cannot cause the overall return to the holders of Fund Interests for the year to be reduced below 6%, and (4) is payable to our Advisor if the overall return to the holders of Fund Interests exceeds the 6% return in a particular calendar year, even if the overall return to the holders of Fund Interests on a cumulative basis over any longer or shorter period has been less than 6% per annum. Additionally, our Advisor has provided us with a waiver of a portion of its fees generally equal to the amount of the performance component that would have been payable with respect to the Class E shares and the Class E OP Units held by third parties until the NAV of such shares or units exceeds $10.00 per share or unit, the benefit of which will be shared among all holders of Fund Interests. However, our independent directors may decide to eliminate this waiver at any time if they conclude it is in the best interest of the Company to do so.

As a result, the performance component is not directly tied to the performance of the shares you purchase, the class of shares you purchase, or the time period during which you own your shares. The performance component may be payable to our Advisor even if the NAV of your shares at the end of the calendar year is below your purchase price, and the thresholds at which increases in NAV count towards the overall return to the holders of Fund Interests are not based on your purchase price. Because of the class-specific expenses consisting of the dealer manager fee and the distribution fee, which differ among classes, we do not expect the overall return of each class of Fund Interests to ever be the same. However, if and when the performance fee is payable, the expense will be allocated among all holders of Fund Interests ratably according to the NAV of their units or shares, regardless of the different returns achieved by different classes of Fund Interests during the year. Further, stockholders who redeem their shares during a given year may redeem their shares at a lower NAV per share as a result of an accrual for the estimated performance component of the advisory fee, even if no performance component is ultimately payable to our Advisor at the end of such calendar year. In addition, if the weighted-average NAV per Fund Interest remains above certain threshold levels, our Advisor’s ability to earn the performance fee in any year will not be affected by poor performance in prior years, and our Advisor will not be obligated to return any portion of advisory fees paid based on our subsequent performance.

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Payment of fees and expenses to our Advisor, the property manager and our Dealer Manager reduces the cash available for distribution and increases the risk that you will not be able to recover the amount of your investment in our shares.

The Advisor, the property manager (which is an affiliate of our Advisor) and our Dealer Manager perform or may perform services for us, including, among other things, the selection and acquisition of our investments, the management of our assets, the disposition of our assets, the financing of our assets and certain administrative services. We pay or may pay our Advisor, the property manager and our Dealer Manager fees and expense reimbursements for these services, which will reduce the amount of cash available for further investments or distribution to our stockholders.

We are required to pay substantial compensation to our Advisor and its affiliates, which may be increased or decreased during our Follow-On Offering or future offerings by a majority of our board of directors, including a majority of the independent directors.

Pursuant to our agreements with our Advisor and its affiliates, we are obligated to pay substantial compensation to our Advisor and its affiliates. Subject to limitations in our charter, the fees, compensation, income, expense reimbursements, interests and other payments that we are required to pay to our Advisor and its affiliates may increase or decrease during our Follow-On Offering or future offerings if such change is approved by a majority of our board of directors, including a majority of the independent directors. For example, we previously paid our Advisor a development management fee and we were previously subject to a property management agreement. We may reinstate the development management fee or reenter into a property management agreement at any time with the agreement of our Advisor, our former property manager and/or their affiliates. The compensation that we pay to our Advisor and its affiliates will decrease the amount of cash we have available for operations and new investments and could negatively impact our NAV, our ability to pay distributions and your overall return.

We are dependent upon our Advisor and its affiliates to conduct our operations and our Follow-On Offering; thus, adverse changes in their financial health or our relationship with them could cause our operations to suffer.

We are dependent upon our Advisor and its affiliates to conduct our operations and our Follow-On Offering. Thus, adverse changes to our relationship with, or the financial health of, our Advisor and its affiliates, including changes arising from litigation, could hinder their ability to successfully manage our operations and our portfolio of investments.

If we internalize our management functions, the percentage of our outstanding common stock owned by our other stockholders could be reduced, we could incur other significant costs associated with being self-managed, and any internalization could have other adverse effects on our business and financial condition.

At some point in the future, we may consider internalizing the functions performed for us by our Advisor, although we do not currently intend to do so. The method by which we could internalize these functions could take many forms. We may hire our own group of executives and other employees or we may acquire our Advisor or its respective assets, including its existing workforce. Any internalization transaction could result in significant payments to the owners of our Advisor, including in the form of our stock which could reduce the percentage ownership of our then existing stockholders and concentrate ownership in the owner of our Advisor. In addition, there is no assurance that internalizing our management functions will be beneficial to us and our stockholders. For example, we may not realize the perceived benefits because of the costs of being self-managed or we may not be able to properly integrate a new staff of managers and employees or we may not be able to effectively replicate the services provided previously by our Advisor or its affiliates. Internalization transactions have also, in some cases, been the subject of litigation. Even if these claims are without merit, we could be forced to spend significant amounts of money defending claims which would reduce our NAV and the amount of funds available for us to invest in real estate assets or to pay distributions.

If we were to internalize our management or if another investment program, whether sponsored or advised by affiliates of our Sponsor or otherwise, hires the employees of our Advisor or its affiliates in connection with its own internalization transaction or otherwise, our ability to conduct our business may be adversely affected.

We rely on persons employed by our Advisor or its affiliates to manage our day-to-day operating and acquisition activities. If we were to effectuate an internalization of our Advisor, we may not be able to retain all of the employees of our Advisor or its affiliates or to maintain relationships with other entities sponsored or advised by affiliates of our Sponsor. In addition, some of the employees of our Advisor or its affiliates may provide services to one or more other investment programs. These programs or third parties may decide to retain some or all of the key employees in the future. If this occurs, these programs could hire certain of the persons currently employed by our Advisor or its affiliates who are most familiar with our business and operations, thereby potentially adversely impacting our business.

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We have broad authority to incur debt, and high debt levels could hinder our ability to make distributions and could decrease the value of your investment in shares of our common stock.

Under our charter, we have a limitation on borrowing which precludes us from borrowing in excess of 300% of the value of our net assets, provided that we may exceed this limit if a higher level of borrowing is approved by a majority of our independent directors. High debt levels would cause us to incur higher interest charges, would result in higher debt service payments, could be accompanied by restrictive covenants, and would generally make us subject to the risks associated with leverage. These factors could limit the amount of cash we have available to distribute and could result in a decline in our NAV and in the value of your investment in shares of our common stock.

An investment in Class A, Class W or Class I shares will be impacted by class-specific expenses of other offerings.

The dealer manager fee and distribution fee are allocated on a class-specific basis, which means that the expenses are borne by all holders of the applicable class. For example, an investor who acquired Class A shares in a private offering will be allocated a proportional share of the dealer manager fee and distribution fee we pay with respect to Class A shares sold in our ongoing public offering of Class A, Class W and Class I shares. Such Class A expenses are allocated among all Class A shares ratably, regardless of how each Class A stockholder acquired his or her shares. As a result, purchasers of Class A, Class W or Class I shares in our ongoing public offering will be impacted by class-specific expenses that we pay with respect to any of our outstanding Class A, Class W and Class I shares, respectively, regardless of how or when those shares were issued. Specifically, we intend to operate as a perpetual-life REIT, which means that we intend to offer Class A, Class W and Class I shares continuously. In order to do so, from time to time we will be required to file a new registration statement to register additional Class A, Class W and Class I shares of common stock with the Commission. The dealer manager fee and distribution fee that are payable to our Dealer Manager on an ongoing basis with respect to any offering (i.e., pursuant to our current registration statement for such offering) will cease when total underwriting compensation in such offering equals the FINRA limitation of 10% of the gross proceeds from the primary portion of such offering. However, the dealer manager fee and distribution fee will be payable with respect to other public offerings, and investors in our Class A, Class W and Class I offering will be allocated a proportional share of such class-specific expenses. Accordingly, with respect to the shares that you own, you should expect to be allocated the maximum dealer manager fee and distribution fee for as long as you own your shares.

We are exposed to risks arising from a small number of tenants comprising a significant portion of our income.

As of December 31, 2016, a significant portion of our annualized base rent comes from two tenants, Sybase Inc. ("Sybase") which leases 100% of an office property located in East Bay, California ("Park Place", formerly known as Sybase Drive), and Schwab which leases 100% of a 594,000 square foot office property in Northern New Jersey (“3 Second Street", formerly known as Harborside). As a result, we are particularly exposed to their ability and willingness to perform according to the contractual terms of their existing leases and to renew when the leases expire. When the leases expire, we may be forced to lower the rental rates or offer other concessions in order to retain the tenants. Any reduction in the rental rates or other lease terms may have a meaningful impact to our operating results. Further, if our significant tenants choose not to renew at all, we will likely suffer from periods of receiving no rent while we seek replacement tenants, and incur costs related to finding replacement tenants. The Sybase and Schwab leases comprise $18.7 million and $23.5 million, or 11% and 13.8%, respectively, of our total annualized base rent as of December 31, 2016. The Sybase lease was terminated on January 31, 2017, and, as a result, we now expect that the effects described in this risk factor will be experienced. The Schwab lease will expire in September 2017, and we do not expect the Schwab lease to be renewed or extended. The Schwab lease includes nine subleases comprising approximately 7.4% of our annualized base rent as of December 31, 2016, which are scheduled to expire between September 2020 and September 2032. Based on market information as of December 31, 2016, we have obtained third-party estimates that current market rental rates, on a weighted-average basis utilizing annualized base rent as of December 31, 2016, are approximately 8.7% lower than the in-place rents for these two most significant leases. Accordingly, if market rents do not increase significantly, replicating the cash flows from these leases would be very difficult. Furthermore, we expect our rental income to be materially reduced during the periods we are seeking replacement tenants for these properties (or if we are unable to replace the existing tenants at existing rents). These factors could adversely affect our results of operations, financial condition, NAV and ability to pay distributions to our stockholders. For additional information regarding these lease expirations, see our discussion under Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations - Liquidity Outlook - Operating Activities - Lease Expirations included in this Annual Report on Form 10-K. These factors could adversely affect our results of operations, financial condition, NAV and ability to pay distributions to our stockholders.

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We are active portfolio managers and will incur transaction and transition costs each time that we acquire or dispose of an asset.

We believe that the real estate market is cyclical, with different demand for property types at different times. Although we do not invest for the short term, we are active portfolio managers and we will seek to take advantage of opportunities to acquire or dispose of assets presented to us by the real estate markets. Each time that we acquire or dispose of an asset, we incur associated transaction costs which may include, but are not limited to, broker fees, attorney fees, regulatory filings, taxes and disposition fees paid to our Advisor. In addition, each time that we sell an income-generating asset, our operating results will be negatively impacted unless and until we are able to reinvest the proceeds in an investment with an equal or greater yield, which we may be unable to do. Accordingly, in order for us to provide positive returns to our stockholders from active portfolio management, the benefits of active management must outweigh the associated transaction and transition costs. We may be unable to achieve this. These factors could adversely affect our results of operations, financial condition, NAV and ability to pay distributions to our stockholders.

The U.S. Department of Labor (“DOL”) has issued a final regulation revising the definition of “fiduciary” under ERISA and the Code, which may affect the marketing of investments in our shares in the future.

On April 8, 2016, the Department of Labor issued a final regulation relating to the definition of a fiduciary under ERISA and Section 4975 of the Code. The final regulation broadens the definition of fiduciary and is accompanied by new and revised prohibited transaction exemptions relating to investments by IRAs and Benefit Plans. The final regulation and the related exemptions were originally scheduled to apply for investment transactions on and after April 10, 2017, but the final regulation has been recommended for reconsideration pursuant to executive order. The final regulation and the accompanying exemptions are complex, implementation may be further delayed and the final regulation remains subject to potential further revision prior to implementation. Plan fiduciaries and the beneficial owners of IRAs are urged to consult with their own advisors regarding the final regulation. The final regulation could have a negative effect on the marketing of investments in our shares to such plans or accounts and our capital raising.

RISKS RELATED TO CONFLICTS OF INTEREST

Our Advisor faces a conflict of interest because the fees it receives for services performed are based on our NAV, the procedures for which our Advisor will assist our board of directors in developing, overseeing, implementing and coordinating.

The Advisor assists our board of directors in developing, overseeing, implementing and coordinating our NAV procedures. It assists our Independent Valuation Firm in valuing our real property portfolio by providing the firm with property-level information, including (i) historical and projected operating revenues and expenses of the property; (ii) lease agreements on the property; and (iii) the revenues and expenses of the property. Our Independent Valuation Firm assumes and relies upon the accuracy and completeness of all such information, does not undertake any duty or responsibility to verify independently any of such information and relies upon us and our Advisor to advise if any material information previously provided becomes inaccurate or was required to be updated during the period of its review. In addition, our Advisor may have some discretion with respect to valuations of certain assets and liabilities, which could affect our NAV. Because our Advisor is paid fees for its services based on our NAV, our Advisor could be motivated to influence our NAV and NAV procedures such that they result in an NAV exceeding realizable value, due to the impact of higher valuations on the compensation to be received by our Advisor. Our Advisor may also benefit by us retaining ownership of our assets at times when our stockholders may be better served by the sale or disposition of our assets in order to avoid a possible reduction in our NAV that could result from a distribution of the proceeds. If our NAV is calculated in a way that is not reflective of our actual NAV, then the purchase price of shares of our common stock on a given date may not accurately reflect the value of our portfolio, and your shares may be worth less than the purchase price.

Our Advisor’s product specialists may recommend that we enter into transactions with entities that have a relationship or affiliation with them, and our stockholders will not be able to assess our Advisor’s product specialists’ qualifications when deciding whether to make an investment in shares of our common stock.

Our Advisor utilizes third-party and affiliated product specialists to assist in fulfilling its responsibilities to us. The strategic alliances between our Advisor and the product specialists provide, in accordance with industry standards, that the product specialists must adhere to a standard of care of commercial reasonableness when performing services on our behalf. Our Advisor’s product specialists generally do not owe fiduciary duties to us and may have time constraints and other conflicts of interest due to relationships or affiliations they have with other entities. As a result, these product specialists may recommend that we enter into transactions with such entities, in which case we will not have the benefit of arm’s-length

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negotiations of the type normally conducted between unrelated parties. Our stockholders will not be able to assess the qualifications of our Advisor’s product specialists when deciding whether to make an investment in shares of our common stock. Therefore, our stockholders may not be able to determine whether our Advisor’s product specialists are sufficiently qualified or otherwise desirable to work with.

Our Advisor’s management personnel and product specialists face conflicts of interest relating to time management and there can be no assurance that our Advisor’s management personnel and product specialists will devote adequate time to our business activities or that our Advisor will be able to hire adequate additional employees.

All of our Advisor’s management personnel, other employees, affiliates and related parties may also provide services to other entities sponsored or advised by affiliates of our Sponsor, including, but not limited to, Industrial Property REIT Inc. (“IPT”) and Industrial Logistics Realty Trust Inc. (“ILT”). We are not able to estimate the amount of time that such management personnel and product specialists will devote to our business. As a result, certain of our Advisor’s management personnel and product specialists may have conflicts of interest in allocating their time between our business and their other activities which may include advising and managing various other real estate programs and ventures, which may be numerous and may change as programs are closed or new programs are formed. During times of significant activity in other programs and ventures, the time they devote to our business may decline and be less than we would require. There can be no assurance that our Advisor’s affiliates will devote adequate time to our business activities or that our Advisor will be able to hire adequate additional employees to perform the tasks currently being performed by our Advisor’s affiliates should the amount of time devoted to our business activities by such affiliates prove to be insufficient.

Our Advisor and its affiliates, including our officers and two of our directors, face conflicts of interest caused by compensation arrangements with us and other entities sponsored or advised by affiliates of our Sponsor, which could result in actions that are not in our stockholders’ best interests.

Some of our executive officers, two of our directors and other key personnel are also officers, directors, managers, key personnel and/or holders of an ownership interest in our Advisor, our Dealer Manager, our property manager and/or other entities related to our Sponsor. Our Advisor and its affiliates receive substantial fees from us in return for their services and these fees could influence their advice to us. Among other matters, the compensation arrangements could affect their judgment with respect to:

• the continuation, renewal or enforcement of our agreements with our Advisor and its affiliates, including the Advisory Agreement, the property management agreement and the agreement with our Dealer Manager;

• recommendations to our board of directors with respect to developing, overseeing, implementing and coordinating our NAV procedures, or the decision to adjust the value of certain of our assets or liabilities if our Advisor is responsible for valuing them;

• public offerings of equity by us, which may result in increased advisory fees for our Advisor;

• competition for tenants from entities sponsored or advised by affiliates of our Sponsor that own properties in the same geographic area as us;

• asset sales, which may allow our Advisor to earn disposition fees and commissions; and

• investments in assets subject to product specialist agreements with affiliates of our Advisor.

Further, certain advisory fees paid to our Advisor and management and leasing fees paid to the property manager are paid irrespective of the quality of the underlying real estate or property management services during the term of the related agreement. Our Advisor may also be entitled to a disposition fee and a commission upon a property sale, each equal to a percentage of the sales price. These fees and commissions may incentivize our Advisor to recommend the sale of an asset or assets that may not be in our best interests at the time. The premature sale of an asset may add concentration risk to the portfolio or may be at a price lower than if we held the asset. Moreover, our Advisor has considerable discretion with respect to the terms and timing of disposition and leasing transactions. In evaluating investments and other management strategies, the opportunity to earn these fees may lead our Advisor to place undue emphasis on criteria relating to its compensation at the expense of other criteria, such as preservation of capital, in order to achieve higher short-term compensation. Considerations relating to compensation to our Advisor and its affiliates from us and other entities sponsored or advised by affiliates of our Sponsor could result in decisions that are not in our stockholders’ best interests, which could hurt our ability to pay our stockholders distributions or result in a decline in the value of our stockholders’ investment. Conflicts of interest such as those

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described above have contributed to stockholder litigation against certain other externally managed REITs that are not affiliated with us or our Sponsor.

When considering whether to recommend investments through a joint venture or other co-ownership arrangement, the fee arrangements between our Advisor and the proposed joint venture partner may incentivize our Advisor to recommend investing a greater proportion of our resources in joint venture investments than may be in our stockholders’ best interests.

When we invest in assets through joint ventures or other co-ownership arrangements, our Advisor may, directly or indirectly (including, without limitation, through us or our subsidiaries), receive fees from our joint venture partners and co-owners of our properties for the services our Advisor provides to them with respect to their proportionate interests. Fees received from joint venture entities or partners and paid, directly or indirectly (including without limitation, through us or our subsidiaries), to our Advisor may be more or less than similar fees that we pay to our Advisor pursuant to the Advisory Agreement. Because our Advisor may receive fees from our joint venture partners and co-owners in connection with our joint venture or other co-ownership arrangements, our Advisor may be incentivized to recommend a higher level of investment through joint ventures than may otherwise be in the best interests of our stockholders.

The time and resources that entities sponsored or advised by affiliates of our Sponsor devote to us may be diverted and we may face additional competition due to the fact that these entities are not prohibited from raising money for another entity that makes the same types of investments that we target.

Entities sponsored or advised by affiliates of our Sponsor are not prohibited from raising money for another investment entity that makes the same types of investments as those we target. As a result, the time and resources they could devote to us may be diverted. For example, our Dealer Manager is currently involved in other public offerings for other entities sponsored or advised by affiliates of our Sponsor, including IPT and ILT. In addition, we may compete with any such investment entity for the same investors and investment opportunities. We may also co-invest with any such investment entity. Even though all such co-investments will be subject to approval by our independent directors, they could be on terms not as favorable to us as those we could achieve co-investing with an unrelated third party.

Our Advisor may have conflicting fiduciary obligations if we acquire properties with an entity sponsored or advised by one of its affiliates or other related entities; as a result, in any such transaction we may not have the benefit of arm’s-length negotiations of the type normally conducted between unrelated parties.

Our Advisor may cause us to acquire an interest in a property from, or through a joint venture with, an entity sponsored or advised by one of its affiliates or to dispose of an interest in a property to such an entity. In these circumstances, our Advisor will have a conflict of interest when fulfilling its fiduciary obligation to us. In any such transaction we may not have the benefit of arm’s-length negotiations of the type normally conducted between unrelated parties.

The fees we pay to entities sponsored or advised by affiliates of our Sponsor in connection with our offerings of securities and in connection with the management of our investments were not determined on an arm’s length basis, and therefore, we do not have the benefit of arm’s length negotiations of the type normally conducted between unrelated parties.

Our Advisor, our Dealer Manager and other of our Advisor’s affiliates have earned and will continue to earn fees, commissions and expense reimbursements from us. The fees, commissions and expense reimbursements paid and to be paid to our Advisor, our Dealer Manager and other of our Advisor’s affiliates for services they provided us in connection with past offerings and in connection with our Class A, Class W and Class I offering were not determined on an arm’s length basis. As a result, the fees have been determined without the benefit of arm’s length negotiations of the type normally conducted between unrelated parties.

We may compete with other entities or programs sponsored or advised by affiliates of our Sponsor, including IPT and ILT, for opportunities to acquire or sell investments, which may have an adverse impact on our operations.

We may compete with other entities or programs sponsored or advised by affiliates of our Sponsor, whether existing or created in the future, including IPT and ILT, for opportunities to acquire, finance or sell certain types of real properties. We may also buy, finance or sell real properties at the same time that other entities or programs sponsored or advised by affiliates of our Sponsor, including IPT and ILT, are buying, financing or selling properties. In this regard, there is a risk that our Advisor will advise us to purchase a real property that provides lower returns to us than a real property purchased by an entity or program sponsored or advised by an affiliate of our Sponsor, including IPT and ILT. Certain programs sponsored or advised by affiliates of our Sponsor own and/or manage real properties in geographic areas in which we expect to own real properties. Therefore, our real properties may compete for tenants with other real properties owned and/or managed by other programs sponsored or

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advised by affiliates of our Sponsor, including IPT and ILT. Our Advisor may face conflicts of interest when evaluating tenant leasing opportunities for our real properties and other real properties owned and/or managed by programs sponsored or advised by affiliates of our Sponsor, including IPT and ILT, and these conflicts of interest may have an adverse impact on our ability to attract and retain tenants.

Programs sponsored or advised by affiliates of our Sponsor may be given priority over us with respect to the acquisition of certain types of investments. As a result of our potential competition with these programs, certain investment opportunities that would otherwise be available to us may not in fact be available. For example, in recognition of the fact that we also desire to acquire industrial properties and have a separate day-to-day acquisition team, the Sponsor and our Advisor have agreed, subject to changes approved or required by our conflicts resolution committee, that (1) if an industrial property opportunity is a widely-marketed, brokered transaction, we, on the one hand, and ILT and/or IPT, on the other hand, may simultaneously and independently pursue such transaction, and (2) if an industrial property is not a widely-marketed, brokered transaction, then, as between us, on the one hand, and ILT and/or IPT, on the other hand, the management team and employees of each company generally are free to pursue any industrial opportunity at any time, subject to certain allocations if non-widely-marketed transactions are first sourced by certain shared employees, managers or directors. Although this is the current arrangement approved by the conflicts resolution committee, it is subject to change. One of our independent directors, Mr. Charles Duke, is also an independent director for IPT and ILT. If there are any transactions or policies affecting us and IPT or us and ILT, Mr. Duke will recuse himself from making any such decisions for as long as he holds both positions.

We may also compete with other entities or programs sponsored or advised by affiliates of our Sponsor for opportunities to acquire, finance or sell certain types of debt-related investments. As a result of our potential competition with other entities or programs sponsored or advised by affiliates of our Sponsor, certain investment opportunities that would otherwise be available to us may not in fact be available. This competition may also result in conflicts of interest that are not resolved in our favor.

We have purchased and may in the future purchase real estate assets from third parties who have existing or previous business relationships with affiliates or other related entities of our Sponsor; as a result, in any such transaction, we may not have the benefit of arm’s-length negotiations of the type normally conducted between unrelated parties.

We have purchased and may in the future purchase assets from third parties that have existing or previous business relationships with affiliates of our Sponsor. Affiliates of our Sponsor who also perform or have performed services for such third parties may have had or have a conflict in representing our interests in these transactions on the one hand and in preserving or furthering their respective relationships with such third parties on the other hand. In any such transaction, we will not have the benefit of arm’s-length negotiations of the type normally conducted between unrelated parties.

A conflict of interest may arise between our Class E investors and our Class A, Class W and Class I investors.

We do not intend to pursue a “Liquidity Event” with respect to our Class A, Class W and Class I shares within any period of time. A “Liquidity Event” includes, but is not limited to, (a) a listing of our common stock on a national securities exchange (or the receipt by our stockholders of securities that are listed on a national securities exchange in exchange for our common stock); (b) our sale, merger or other transaction in which our stockholders either receive, or have the option to receive, cash, securities redeemable for cash, and/or securities of a publicly traded company; or (c) the sale of all or substantially all of our assets where our stockholders either receive, or have the option to receive, cash or other consideration. Although we will not be precluded from pursuing a Liquidity Event (or series thereof) if our board of directors determines that is in the best interest of our stockholders, we intend to operate as a perpetual-life REIT. With respect to our Class E stockholders, our long-term goal is to raise sufficient proceeds in our ongoing primary offering so as to be able to accommodate those holders of Class E shares who would like us to purchase or redeem their shares.

Our board of directors currently intends to make liquidity available to Class E stockholders each quarter (other than liquidity made available in the event of the death or disability of a stockholder through the Class E share redemption program) in the Class E Liquidity Amount, regardless of whether such liquidity will be made available through the Class E share redemption program or a tender offer, and excluding liquidity made available in the event of the death or disability of a stockholder through the Class E share redemption program. Our current Class E share redemption program is only available in the event of the death or disability of a stockholder and requests for redemption under the Class E share redemption program may only be made during a limited window each quarter. The board of directors will evaluate each quarter whether to make liquidity available to Class E stockholders through the Class E share redemption program or through a tender offer process. However, if we are not successful over time in generating liquidity to holders of our Class E shares through our self-tender offers and the Class E share redemption program, we may explore additional liquidity strategies for our Class E stockholders. There can be no assurances that we will seek or be successful in achieving liquidity strategies for our Class E stockholders

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within any certain time frame or at all. In any event, our board of directors will seek to act in the best interest of the Company as a whole, taking into consideration all classes of stockholders.

Our different intentions with respect to liquidity strategies for our Class A, Class W and Class I stockholders and our Class E stockholders may, in certain situations, lead to conflicts of interests between the groups of stockholders. In such situations, this may not result in the best course of action for any particular stockholder.

RISKS RELATED TO ADVERSE CHANGES IN GENERAL ECONOMIC CONDITIONS

Changes in global economic and capital market conditions, including periods of generally deteriorating real estate industry fundamentals, may significantly affect our results of operations and returns to our stockholders.

We are subject to risks generally incident to the ownership of real property including changes in global, national, regional or local economic, demographic, political, real estate, or capital market conditions and other factors particular to the locations of our respective real property investments. We are unable to predict future changes in these market conditions. For example, an economic downturn or rise in interest rates could make it more difficult for us to lease properties or dispose of them. In addition, rising interest rates could make alternative interest bearing and other investments more attractive and, therefore, potentially lower the relative value of our existing real estate investments.

In addition, we believe the risks associated with our business are more severe during periods of economic slowdown or recession if these periods are accompanied by deteriorating fundamentals and declining values in the real estate industry. Because all of our debt-related investments outstanding as of December 31, 2016 and debt-related investments we may make in the future might consist of mortgages secured by real property, these same conditions could also adversely affect the underlying borrowers and collateral of assets that we own. Declining real estate values and deteriorating real estate fundamentals would also likely reduce the level of new mortgage loan originations, since borrowers often use increases in the value of their existing properties to support the purchase of, or investment in, additional properties. Furthermore, borrowers may not be able to pay principal and interest on such loans. Declining real estate values would also significantly increase the likelihood that we would incur losses on our debt investments in the event of a default because the value of our collateral may be insufficient to cover some or all of our basis in the investment.

For example, we recorded impairments of real properties, significant other-than-temporary impairment charges related to our real estate-related securities holdings, and provisions for losses on our debt-related investments, as a result of such conditions that occurred during the last recession in the United States. To the extent that there is a general economic slowdown or real estate fundamentals deteriorate, it may have a significant and adverse impact on our revenues, results from operations, financial condition, liquidity, overall business prospects and ultimately our ability to make distributions to our stockholders.

Uncertainty and volatility in the credit markets could affect our ability to obtain debt financing on reasonable terms, or at all, which could reduce the number of properties we may be able to acquire and the amount of cash distributions we can make to our stockholders.

The U.S. and global credit markets have in the past experienced severe dislocations and liquidity disruptions, which caused volatility in the credit spreads on prospective debt financings and constrained the availability of debt financing due to the reluctance of lenders to offer financing at high leverage ratios. Similar conditions in the future could adversely impact our ability to access additional debt financing on reasonable terms or at all, which may adversely affect investment returns on future acquisitions or our ability to make acquisitions.

If mortgage debt is unavailable on reasonable terms as a result of increased interest rates, increased credit spreads, decreased liquidity or other factors, we may not be able to finance the initial purchase of properties. In addition, when we incur mortgage debt on properties, we run the risk of being unable to refinance such debt upon maturity, or of being unable to refinance on favorable terms.

If interest rates are higher or other financing terms, such as principal amortization, the need for a corporate guaranty, or other terms are not as favorable when we refinance debt or issue new debt, our income could be reduced. To the extent we are unable to refinance debt on reasonable terms, at appropriate times or at all, we may be required to sell properties on terms that are not advantageous to us, or could result in the foreclosure of such properties. If any of these events occur, our cash flow would be reduced. This, in turn, would reduce cash available for distribution to our stockholders and may hinder our ability to raise more capital by issuing securities or borrowing more money.

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Economic events that may cause our stockholders to request that we redeem their shares may materially adversely affect our cash flow and our ability to achieve our investment objectives.

Future economic events affecting the U.S. economy generally, or the real estate sector specifically, could cause our stockholders to seek to sell their shares to us pursuant to our share redemption programs or self-tender offers. Generally, our Class A, Class W and Class I share redemption program imposes a quarterly cap on the aggregate net redemptions of our Class A, Class W and Class I share classes equal to the amount of shares of such classes with a value (based on the redemption price per share on the day the redemption is effected) of up to 5% of the aggregate NAV of the outstanding shares of such classes as of the last day of the previous calendar quarter. Our current Class E share redemption program is even more limited. On an ongoing basis, it is only available for redemptions in connection with the death or disability of a stockholder. With respect to all other Class E stockholders, although no assurances can be made, our board of directors currently intends to make liquidity available to Class E stockholders each quarter (other than liquidity made available in the event of the death or disability of a stockholder through the Class E share redemption program) in the Class E Liquidity Amount. Even if we are able to satisfy all resulting redemption or repurchase requests, our cash flow could be materially adversely affected. In addition, if we determine to sell valuable assets to satisfy redemption or repurchase requests, our ability to achieve our investment objectives, including, without limitation, diversification of our portfolio by property type and location, moderate financial leverage, conservative operating risk and an attractive level of current income, could be materially adversely affected.

Inflation or deflation may adversely affect our financial condition and results of operations.

Although neither inflation nor deflation has materially impacted our operations in the recent past, increased inflation could have an adverse impact on our floating rate mortgages, interest rates and general and administrative expenses, as these costs could increase at a rate higher than our rental and other revenue. Inflation could also have an adverse effect on consumer spending which could impact our tenants’ sales and, in turn, our percentage rents, where applicable. Conversely, deflation could lead to downward pressure on rents and other sources of income.

The failure of any banking institution in which we deposit our funds could have an adverse effect on our results of operations, financial condition and ability to pay distributions to our stockholders.

Currently, the Federal Deposit Insurance Corporation, or FDIC, generally, only insures amounts up to $250,000 per depositor per insured bank. A small proportion of our cash and cash equivalents, primarily those used to fund property-level working capital needs, are currently held in FDIC-insured bank accounts. The significant majority of our idle cash is currently invested in a combination of AAA-rated money market mutual funds, which in turn are primarily invested in short-term, high credit quality commercial paper, U.S. government funds and Treasury funds. To the extent that we have deposited funds with banking institutions, then if any of such institutions ultimately fail, we would lose the amount of our deposits over the then current FDIC insurance limit. The loss of our deposits could reduce the amount of cash we have available to distribute or invest and would likely result in a decline in the value of your investment.

We intend to disclose funds from operations (“FFO”) and Company-defined funds from operations (“Company-Defined FFO”), each a non-GAAP financial measure, in future communications with investors, including documents filed with the Commission. However, FFO and Company-Defined FFO are not equivalent to our net income or loss as determined under GAAP, and are not complete measures of our financial position and results of operations.

We use, and we disclose to investors, FFO and Company-Defined FFO, which are considered non-GAAP financial measures. For a discussion of FFO and Company-Defined FFO, including definitions, reconciliations to GAAP net income, and their inherent limitations, see “How We Measure Our Performance” in “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in this Annual Report on Form 10-K. FFO and Company-Defined FFO are not equivalent to our net income or loss as determined in accordance with GAAP. FFO and Company-Defined FFO and GAAP net income differ because FFO and Company-Defined FFO exclude gains or losses from sales of property and impairment of depreciable real estate, and add back real estate-related depreciation and amortization. Company-Defined FFO is also adjusted for gains and losses on real estate securities, gains and losses associated with provisions for loss on debt-related investments, acquisition-related expenses, gains and losses on derivatives and gains and losses associated with extinguishment of debt and financing commitments.

No single measure can provide investors with sufficient information and investors should consider all of our disclosures as a whole in order to adequately understand our financial position, liquidity and results of operations. Because of the differences between FFO and Company-Defined FFO and GAAP net income or loss, FFO and Company-Defined FFO may not be accurate indicators of our operating performance, especially during periods in which we are acquiring properties. In addition, FFO and Company-Defined FFO are not necessarily indicative of cash flow available to fund cash needs and

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investors should not consider FFO and Company-Defined FFO as alternatives to cash flows from operations or an indication of our liquidity, or indicative of funds available to fund our cash needs, including our ability to make distributions to our stockholders. Neither the Commission nor any other regulatory body has passed judgment on the acceptability of the adjustments that we use to calculate FFO and Company-Defined FFO. Also, because not all companies calculate these types of measures the same way, comparisons with other companies may not be meaningful.

RISKS RELATED TO OUR GENERAL BUSINESS OPERATIONS AND OUR CORPORATE STRUCTURE

We depend on our Advisor and its key personnel; if any of such key personnel were to cease employment with our Advisor, our business could suffer.

Our ability to make distributions and achieve our investment objectives is dependent upon the performance of our Advisor in the acquisition, disposition and management of real properties, and debt-related investments, the selection of tenants for our real properties, the determination of any financing arrangements and other factors. In addition, our success depends to a significant degree upon the continued contributions of certain of our Advisor’s key personnel, including John A. Blumberg, Eileen Hallquist, Jeffrey L. Johnson, Andrea L. Karp, Richard D. Kincaid, J. Michael Lynch, Lainie P. Minnick, Gregory M. Moran, James R. Mulvihill, Taylor M. Paul, Gary M. Reiff, M. Kirk Scott, Jeffrey W. Taylor, Joshua J. Widoff, and Evan H. Zucker, each of whom would be difficult to replace. We currently do not have, nor do we expect to obtain key man life insurance on any of our Advisor’s key personnel. If our Advisor were to lose the benefit of the experience, efforts and abilities of one or more of these individuals, our operating results and NAV could suffer.

Our board of directors determines our major policies and operations, which increases the uncertainties faced by our stockholders.

Our board of directors determines our major policies, including our policies regarding acquisitions, dispositions, financing, growth, debt capitalization, REIT qualification, redemptions and distributions. Our board of directors may amend or revise these and other policies without a vote of the stockholders. Under the Maryland General Corporation Law and our charter, our stockholders have a right to vote only on limited matters. Our board of directors’ broad discretion in setting policies and our stockholders’ inability to exert control over those policies increases the uncertainty and risks our stockholders face, especially if our board of directors and our stockholders disagree as to what course of action is in our stockholders’ best interests.

Our UPREIT structure may result in potential conflicts of interest with limited partners in the Operating Partnership whose interests may not be aligned with those of our stockholders.

Limited partners in the Operating Partnership have the right to vote on certain amendments to the agreement that governs the Operating Partnership, as well as on certain other matters. Persons holding such voting rights may exercise them in a manner that conflicts with our stockholders’ interests. As general partner of the Operating Partnership, we are obligated to act in a manner that is in the best interests of all partners of the Operating Partnership. Circumstances may arise in the future when the interests of limited partners in the Operating Partnership may conflict with the interests of our stockholders. These conflicts may be resolved in a manner stockholders believe is not in their best interests.

We may assume unknown liabilities in connection with acquisitions which could result in unexpected liabilities and expenses.

In connection with an acquisition, we may receive certain assets or interests in certain assets subject to existing liabilities, some of which may be unknown to us at the time of the acquisition. Unknown liabilities might include liabilities for cleanup or remediation of undisclosed environmental conditions, claims of tenants, vendors or other persons dealing with the entities prior to this offering (including those that had not been asserted or threatened prior to this offering), tax liabilities, and accrued but unpaid liabilities incurred in the ordinary course of business. If we acquire an entity, that entity may be subject to liabilities that become our responsibility upon acquisition of the entity. Our recourse with respect to such liabilities may be limited. Depending upon the amount or nature of such liabilities, our business, financial condition and results of operations, our ability to make distributions to our stockholders and the NAV of our shares may be adversely affected.

Tax protection agreements could limit our ability to sell or otherwise dispose of property contributed to the Operating Partnership.

In connection with contributions of property to the Operating Partnership, our Operating Partnership may enter into a tax protection agreement with the contributor of such property that provides that if we dispose of any interest in the contributed

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property in a taxable transaction within a certain time period, subject to certain exceptions, we may be required to indemnify the contributor for its tax liabilities attributable to the built-in gain that exists with respect to such property interests, and the tax liabilities incurred as a result of such tax protection payment. Therefore, although it may be in our stockholders’ best interests that we sell the contributed property, it may be economically prohibitive for us to do so because of these obligations.

Tax protection agreements may require our Operating Partnership to maintain certain debt levels that otherwise would not be required to operate our business.

Under a tax protection agreement, our Operating Partnership may provide the contributor of property the opportunity to guarantee debt or enter into a deficit restoration obligation. If we fail to make such opportunities available, we may be required to deliver to such contributor a cash payment intended to approximate the contributor’s tax liability resulting from our failure to make such opportunities available to that contributor and the tax liabilities incurred as a result of such tax protection payment. These obligations may require the Operating Partnership to maintain more or different indebtedness than we would otherwise require for our business.

Certain provisions in the partnership agreement of our Operating Partnership may delay or defer an unsolicited acquisition of us or a change of our control.

Provisions in the partnership agreement of our Operating Partnership may delay or defer an unsolicited acquisition of us or changes of our control. These provisions include, among others, redemption rights of qualifying parties and the rights of the limited partners to consent to transfers of the general partnership interest and mergers under specified circumstances. These provisions could discourage third parties from making proposals involving an unsolicited acquisition of us or a change of our control, although some stockholders might consider such proposals, if made, desirable.

The Operating Partnership’s private placements of Interests in specific Delaware statutory trusts under its DST Program could subject us to liabilities from litigation or otherwise.

On March 2, 2016, we, through the Operating Partnership, initiated a program to raise capital in private placements exempt from registration under the Securities Act through the sale of Interests in specific Delaware statutory trusts holding real properties, including properties currently indirectly owned by the Operating Partnership. These Interests may serve as replacement properties for investors seeking to complete like-kind exchange transactions under Section 1031 of the Code. All of the Interests sold to investors pursuant to such private placements will be leased-back by the Operating Partnership or a wholly owned subsidiary thereof, as applicable, and fully guaranteed by our Operating Partnership. Additionally, the Operating Partnership will be given a fair market value purchase option (“FMV Option”) giving it the right, but not the obligation, to acquire the Interests from the investors at a later time in exchange for OP Units. Investors who acquired Interests pursuant to such private placements may have done so seeking certain tax benefits that depend on the interpretation of, and compliance with, federal and state income tax laws and regulations. As the general partner of the Operating Partnership, we may become subject to liability, from litigation or otherwise, as a result of such transactions, including in the event an investor fails to qualify for any desired tax benefits.

The Operating Partnership’s private placements of Interests in specific Delaware statutory trusts under its DST Program will not shield us from risks related to the performance of the real properties held through such structures.

Pursuant to the DST Program, the Operating Partnership intends to place certain of its existing real properties and/or acquire new properties to place into Delaware statutory trusts and then sell interests, via its taxable REIT subsidiary (TRS), in such trusts to third-party investors. We will hold long-term leasehold interests in the property pursuant to master leases that are fully guaranteed by our Operating Partnership, while the third-party investors indirectly hold, in most cases, all of the interests in the real estate. Although we will hold a FMV Option to reacquire the real estate, the purchase price will be based on the then-current fair market value of the third-party investor’s interest in the real estate, which will be greatly impacted by the rental terms fixed by the long-term master lease. The lease effectively fixes our costs to sublease the property to occupying tenants until the earlier of the expiration of the master lease or our exercise of the FMV Option, while we bear the risk that the underlying cash flow from the property may be less than the master lease payments. Therefore, even though we will no longer own the underlying real estate, because of the fixed terms of the long-term master lease guaranteed by our Operating Partnership, negative performance by the underlying properties could affect cash available for distributions to our stockholders and will likely have an adverse effect on our results of operations and NAV.

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We may own beneficial interests in trusts owning real property that will be subject to the agreements under our DST Program, which may have an adverse effect on our results of operations, relative to if the DST Program agreements did not exist.

In connection with the launch of our DST Program, we may own beneficial interests in trusts owning real property that are subject to the terms of the agreements provided by our DST Program. The DST Program agreements may limit our ability to encumber, lease or dispose of our beneficial interests. Such agreements could affect our ability to turn our beneficial interests into cash and could affect cash available for distributions to our stockholders. The DST Program agreements, and in some cases the financing documents, used in connection with the DST Program could also impair our ability to take actions that would otherwise be in the best interests of our stockholders and, therefore, may have an adverse effect on our results of operations and NAV, relative to if the DST Program agreements did not exist.

Cash redemptions to holders of OP Units will reduce cash available for distribution to our stockholders or to honor their redemption or repurchase requests under our share redemption programs or self-tender offers.

The holders of OP Units (other than us) generally have the right to cause the Operating Partnership to redeem all or a portion of their OP Units for, at our sole discretion, shares of our common stock, cash, or a combination of both. Our election to redeem OP Units for cash may reduce funds available for distribution to our stockholders or to honor our stockholders’ redemption or repurchase requests under our share redemption programs or self-tender offers.

Maryland law and our organizational documents limit our stockholders’ right to bring claims against our officers and directors.

Maryland law provides that a director will not have any liability as a director so long as he or she performs his or her duties in good faith, in a manner he or she reasonably believes to be in our best interests, and with the care that an ordinarily prudent person in a like position would use under similar circumstances. In addition, our charter provides that, subject to the applicable limitations set forth therein or under Maryland law, no director or officer will be liable to us or our stockholders for monetary damages. Our charter also provides that we will generally indemnify our directors, our officers, our Advisor and its affiliates for losses they may incur by reason of their service in those capacities unless their act or omission was material to the matter giving rise to the proceeding and was committed in bad faith or was the result of active and deliberate dishonesty, they actually received an improper personal benefit in money, property or services or, in the case of any criminal proceeding, they had reasonable cause to believe the act or omission was unlawful. Moreover, we have entered into separate indemnification agreements with each of our independent directors and executive officers. As a result, we and our stockholders have more limited rights against these persons than might otherwise exist under common law. In addition, we are obligated to fund the defense costs incurred by these persons in some cases. However, our charter does provide that we may not indemnify our directors, our Advisor and its affiliates for any liability or loss suffered by them unless they have determined that the course of conduct that caused the loss or liability was in our best interests, they were acting on our behalf or performing services for us, the liability or loss was not the result of negligence or misconduct by our non-independent directors, our Advisor and its affiliates or gross negligence or willful misconduct by our independent directors, and the indemnification is recoverable only out of our net assets and not from the stockholders.

Your interest will be diluted if we or the Operating Partnership issue additional securities.

Existing stockholders and new investors purchasing shares of common stock do not have preemptive rights to any shares issued by us in the future. Under our charter, we have authority to issue a total of 1,200,000,000 shares of capital stock. Of the total number of shares of capital stock authorized (a) 1,000,000,000 shares are designated as common stock, 400,000,000 of which are unclassified (however, we refer to them herein as Class E shares to more easily distinguish them from the shares offered in our Class A, Class W and Class I offering), 200,000,000 of which are classified as Class A shares, 200,000,000 of which are classified as Class W shares, and 200,000,000 of which are classified as Class I shares and (b) 200,000,000 shares are designated as preferred stock. Our board of directors may amend our charter to increase the aggregate number of authorized shares of capital stock or the number of authorized shares of capital stock of any class or series without stockholder approval. We intend to operate as a perpetual-life REIT, and investors will likely experience dilution of their equity investment in us as a result of our ongoing Class A, Class W and Class I offering, including the distribution reinvestment plan, our ongoing Class E distribution reinvestment plan and future public offerings. Investors will also experience dilution if we issue securities in one or more private offerings, issue equity compensation pursuant to our equity incentive plans, issue shares to our Advisor in lieu of cash payments or reimbursements under the Advisory Agreement, or redeem OP Units for shares of common stock. In addition, we may in the future cause the Operating Partnership to issue a substantial number of additional OP Units in order to raise capital, acquire properties, or consummate a merger, business combination or another significant transaction. OP Units may generally be converted into shares of our common stock, thereby diluting the percentage ownership interest of other

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stockholders. Ultimately, any additional issuance by us of equity securities or by the Operating Partnership of OP Units will dilute your indirect interest in the Operating Partnership, through which we own all of our interests in our investments.

We may issue preferred stock or new classes of OP Units, which issuance could adversely affect those stockholders who purchased shares of our common stock in our public offerings.

If we ever created and issued preferred stock or one or more new classes of OP Units with a distribution preference over common stock, payment of any distribution preferences on outstanding preferred stock or OP Units would reduce the amount of funds available for the payment of distributions on our common stock. Further, holders of preferred stock are normally entitled and holders of new classes of OP Units could be entitled to receive a preference payment in the event we liquidate, dissolve or wind up before any payment is made to our common stockholders, likely reducing the amount common stockholders would otherwise receive upon such an occurrence. Holders of preferred stock or new classes of OP Units could be given other preferential rights, such as preferential redemption rights or preferential tax protection agreements, that could reduce the amount of funds available for the payment of distributions on our common stock or otherwise negatively affect our common stockholders. In addition, under certain circumstances, the issuance of preferred stock, a new class of OP Units, or a separate class or series of common stock may render more difficult or tend to discourage:

• a merger, offer or proxy contest;

• the assumption of control by a holder of a large block of our securities;

• the removal of incumbent management; and/or

• liquidity options that otherwise may be available.

We are not limited to making acquisitions with cash or borrowings.

We are not limited to making acquisitions with cash or borrowings. We may also make investments through either public or private offerings of equity securities from us or the Operating Partnership, and we intend to do so when attractive acquisition opportunities are available. We are not limited in the number or size of investments we may make with equity issuances, and we may effect a merger, business combination or another significant transaction through equity issuances. Such issuances may be comprised of existing classes of shares of our common stock or OP Units in the Operating Partnership, new classes of shares of our common stock or OP Units in the Operating Partnership with preferential terms compared to those of our existing investors (such as preferred stock, preferred OP Units, or contractual obligations to provide protection from adverse tax consequences), or tenancy-in-common interests. We and our Operating Partnership may, with the approval of a majority of our independent directors, agree to pay additional fees to our Advisor, the dealer manager and their affiliates in connection with any such transactions, which may negatively affect the NAV of your shares, our ability to pay distributions and your overall return.

The limit on the percentage of shares of our common stock that any person may own may discourage a takeover or business combination that may have benefited our stockholders.

Our charter restricts the direct or indirect ownership by one person or entity to no more than 9.8% of the value of our then outstanding capital stock (which includes common stock and any preferred stock we may issue) and no more than 9.8% of the value or number of shares, whichever is more restrictive, of our then outstanding common stock. This restriction may discourage a change of control of us and may deter individuals or entities from making tender offers for shares of our common stock on terms that might be financially attractive to stockholders or which may cause a change in our management. This ownership restriction may also prohibit business combinations that would have otherwise been approved by our board of directors and our stockholders. In addition to deterring potential transactions that may be favorable to our stockholders, these provisions may also decrease our stockholders’ ability to sell their shares of our common stock.

Although we are not currently afforded the full protection of the Maryland General Corporation Law relating to deterring or defending hostile takeovers, our board of directors could opt into these provisions of Maryland law in the future, which may discourage others from trying to acquire control of us and may prevent our stockholders from receiving a premium price for their stock in connection with a business combination.

Under Maryland law, “business combinations” between a Maryland corporation and certain interested stockholders or affiliates of interested stockholders are prohibited for five years after the most recent date on which the interested stockholder becomes an interested stockholder. These business combinations include a merger, consolidation, share exchange, or, in circumstances specified in the statute, an asset transfer or issuance or reclassification of equity securities. Also under Maryland

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law, control shares of a Maryland corporation acquired in a control share acquisition have no voting rights except to the extent approved by a vote of two-thirds of the votes entitled to be cast on the matter. Shares owned by the acquirer, an officer of the corporation or an employee of the corporation who is also a director of the corporation are excluded from the vote on whether to accord voting rights to the control shares. Should our board of directors opt into these provisions of Maryland law, it may discourage others from trying to acquire control of us and increase the difficulty of consummating any offer. Similarly, provisions of Title 3, Subtitle 8 of the Maryland General Corporation Law could provide similar anti-takeover protection.

Our charter includes a provision regarding tender offers that may discourage a stockholder from launching a tender offer for our shares.

Our charter provides that any person making a tender offer that is not otherwise subject to Regulation 14D of the Exchange Act, including any “mini-tender” offer, must comply with most of the provisions of Regulation 14D of the Exchange Act, including the notice and disclosure requirements. In addition, the offeror must provide us notice of such tender offer at least 10 business days before initiating the tender offer. If the offeror does not comply with the provisions set forth above, we will have the right to redeem that offeror’s shares, if any, and any shares acquired in such tender offer. In addition, the non-complying offeror will be responsible for all of our expenses in connection with that offeror’s noncompliance. This provision of our charter may discourage a stockholder from initiating a tender offer for our shares.

We depend on our relationships with lenders, joint venture partners, and property managers to conduct our business. If we fail to honor any of our contractual obligations, there could be a material and adverse impact on our ability to raise capital or manage our portfolio.

If we are viewed as developing underperforming properties, suffer sustained losses on our investments, default on a significant level of loans or experience significant foreclosure of our properties, our reputation could be damaged. Damage to our reputation could make it more difficult to successfully develop or acquire properties in the future and to continue to grow and expand our relationships with our lenders, joint venture partners, tenants and third-party management clients, which could adversely affect our business, financial condition, NAV, results of operations and ability to make distributions.

Our business could suffer in the event our Advisor, the Dealer Manager, our transfer agent or any other party that provides us with services essential to our operations experiences system failures or other cyber incidents or a deficiency in cybersecurity.

Our Advisor, the Dealer Manager, our transfer agent and other parties that provide us with services essential to our operations are vulnerable to service interruptions or damages from any number of sources, including computer viruses, malware, unauthorized access, energy blackouts, natural disasters, terrorism, war and telecommunication failures. Any system failure or accident that causes interruptions in our operations could result in a material disruption to our business. A cyber incident is considered to be any adverse event that threatens the confidentiality, integrity or availability of information resources. More specifically, a cyber incident is an intentional attack or an unintentional event that may include, but is not limited to, gaining unauthorized access to systems to disrupt operations, corrupt data, steal assets or misappropriate Company funds and/or confidential information, including, for example, confidential information regarding our stockholders. As reliance on technology in our industry has increased, so have the risks posed to our systems, both internal and those we have outsourced. In addition, the risk of cyber incidents has generally increased as the number, intensity and sophistication of attempted attacks and intrusions from around the world have increased. Cyber incidents may be carried out by third parties or insiders, including by computer hackers, foreign governments and cyber terrorists, using techniques that range from highly sophisticated efforts to more traditional intelligence gathering and social engineering aimed at obtaining information or funds. The remediation costs and lost revenues experienced by a victim of a cyber incident may be significant and significant resources may be required to repair system damage, protect against the threat of future security breaches or to alleviate problems, including reputational harm, loss of revenues and litigation, caused by any breaches. If personal information such as social security numbers of our stockholders is stolen, our stockholders may be more likely to be victims of identity theft and other crimes.There also may be liability for any stolen assets or misappropriated Company funds or confidential information. Any material adverse effect experienced by our Advisor, the Dealer Manager, our transfer agent and other parties that provide us with services essential to our operations could, in turn, have an adverse impact on us.

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RISKS RELATED TO INVESTMENTS IN REAL PROPERTY

Real properties are illiquid investments, and we may be unable to adjust our portfolio in response to changes in economic or other conditions or sell a property if or when we decide to do so.

Real properties are illiquid investments and we may be unable to adjust our portfolio in response to changes in economic or other conditions. In addition, the real estate market is affected by many factors, such as general economic conditions, availability of financing, interest rates and other factors, including supply and demand, that are beyond our control. We cannot predict whether we will be able to sell any real property for the price or on the terms set by us, or whether any price or other terms offered by a prospective purchaser would be acceptable to us. We cannot predict the length of time needed to find a willing purchaser and to close the sale of a real property. In addition, we may acquire real properties that are subject to contractual “lock-out” provisions that could restrict our ability to dispose of the real property for a period of time.

We may also be required to expend funds to correct defects or to make improvements before a property can be sold. We cannot assure you that we will have funds available to correct such defects or to make such improvements.

In acquiring a real property, we may agree to restrictions that prohibit the sale of that real property for a period of time or impose other restrictions, such as a limitation on the amount of debt that can be placed or repaid on that real property. Our real properties may also be subject to resale restrictions. All of these provisions would restrict our ability to sell a property.

We are dependent on tenants for revenue, and our inability to lease our real properties or to collect rent from our tenants may adversely affect our results of operations, NAV and returns to our stockholders.

Our revenues from our real property investments are dependent on our ability to lease our real properties and the creditworthiness of our tenants and would be adversely affected by the loss of or default by one or more significant lessees. Furthermore, certain of our assets may utilize leases with payments directly related to tenant sales, where the amount of rent that we charge a tenant is calculated as a percentage of such tenant’s revenues over a fixed period of time, and a reduction in sales can reduce the amount of the lease payments required to be made to us by tenants leasing space in such assets. The success of those real properties depends on the financial stability of the respective tenants. The financial results of our tenants can depend on several factors, including but not limited to the general business environment, interest rates, inflation, the availability of credit, taxation and overall consumer confidence. The recent economic downturn has, and may continue to, impact all of these factors, some to a greater degree than others.

In addition, our ability to increase our revenues and operating income partially depends on steady growth of demand for the products and services offered by the tenants located in the assets that we own and manage. A drop in demand, as a result of a slowdown in the U.S. and global economy or otherwise, could result in a reduction in tenant performance and consequently, adversely affect our results of operations, NAV and returns to our stockholders. Inflation could also have an adverse effect on consumer spending which could impact our tenants’ sales and, in turn, our percentage rents, where applicable. Conversely, deflation could lead to downward pressure on rents and other sources of income.

If indicators of impairment exist in any of our real properties, for example, we experience negative operating trends such as prolonged vacancies or operating losses, we may not recover some or all of our investment. Please refer to our financial statements beginning on page F-1 of this Annual Report on Form 10-K for historical information regarding our impairments.

Lease payment defaults by tenants could cause us to reduce the amount of distributions to our stockholders and could force us to find an alternative source of funds to make mortgage payments on any mortgage loans. In the event of a tenant default, we may also experience delays in enforcing our rights as landlord and may incur substantial costs in protecting our investment and re-leasing our real property. If a lease is terminated, we may be unable to lease the real property for the rent previously received or sell the real property without incurring a loss.

If the market for commercial real estate experiences increased vacancy rates, particularly in certain large metropolitan areas, it could result in lower revenues for us.

In the past decade, there have been global economic downturns that negatively impacted the commercial real estate market in the U.S., particularly in certain large metropolitan areas, and resulted in, among other things, increased tenant defaults under leases, generally lower demand for rentable space, and an oversupply of rentable space, all of which could lead to increased concessions, tenant improvement expenditures or reduced rental rates to maintain occupancies. We believe that the risks associated with our business could be more severe if the economy deteriorates again or if commercial real estate values

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decline. Our revenues will decline and our NAV and ability to pay distributions will be negatively impacted if our commercial properties experience higher vacancy rates or decline in value.

A real property that incurs a vacancy could be difficult to sell or re-lease.

A real property may incur a vacancy either by the continued default of a tenant under its lease or the expiration of the lease. In addition, certain of the real properties we acquire may have some vacancies at the time of closing. Certain other real properties may be specifically suited to the particular needs of a tenant and such real property may become vacant. Certain of our leases with retail tenants contain provisions giving the particular tenant the exclusive right to sell particular types of merchandise or provide specific types of services within the particular retail center. These provisions may limit the number and types of prospective tenants interested in leasing space in a particular retail property. Therefore, we may have difficulty obtaining a new tenant for any vacant space we have in our real properties. If the vacancy continues for a long period of time, we would suffer reduced revenues, which could materially and adversely affect our liquidity and NAV, and result in lower cash distributions to our stockholders. In addition, the resale value of the real property could be diminished because the market value may depend principally upon the value of the leases of such real property.

Adverse economic and other conditions in the regions where our assets are located may have a significant adverse impact on our financial results.

A deterioration of general economic or other relevant conditions, changes in governmental laws and regulations, acts of nature, demographics or other factors in any of the states or the geographic region in which our assets are located could result in the loss of a tenant, a decrease in the demand for our properties and a decrease in our revenues from those markets, which in turn may have a disproportionate and material adverse effect on our results of operations and financial condition. In addition, some of our investments are located in areas that are more susceptible to natural disasters, and therefore, our tenants and properties are particularly susceptible to revenue loss, cost increase or damage caused by earthquakes or other severe weather conditions or natural disasters. Any significant loss due to a natural disaster may not be covered by insurance and may lead to an increase in the cost of insurance and expenses for our tenants, or could limit the future availability of such insurance, which could limit our tenants’ ability to satisfy their obligations to us.

In addition, our results of operations depend substantially on our ability to lease the areas available in the assets that we own as well as the price at which we lease such space. Adverse conditions in the regions and specific markets where we operate may reduce our ability to lease our properties, reduce occupancy levels, restrict our ability to increase lease prices and force us to lower lease prices and/or offer tenant incentives. Should our assets fail to generate sufficient revenues for us to meet our obligations, our financial condition and results of operations, as well as our NAV and ability to make distributions, could be adversely affected.

Properties that have significant vacancies, especially value-add or other types of discounted real estate assets, may experience delays in leasing up or could be difficult to sell, which could diminish our return on these properties and the return on your investment.

Our investments in value-add properties or other types of discounted properties may have significant vacancies at the time of acquisition. If vacancies continue for a prolonged period of time beyond the expected lease-up stage that we anticipate will follow any redevelopment or repositioning efforts, we may suffer reduced revenues, resulting in less cash available for distributions to our stockholders. In addition, the resale value of the property could be diminished because the market value of a particular property depends principally upon the value of the cash flow generated by the leases associated with that property. Such a reduction on the resale value of a property could also reduce our NAV and the overall return on your investment.

Changes in supply of or demand for similar real properties in a particular area may increase the price of real property assets we seek to purchase or adversely affect the value of the real property assets that we own.

The real estate industry is subject to market forces and we are unable to predict certain market changes including changes in supply of or demand for similar real properties in a particular area. For example, if demand for the types of real property assets in which we seek to invest were to sharply increase or supply of those assets were to sharply decrease, the prices of those assets could rise significantly. Any potential purchase of an overpriced asset could decrease our rate of return on these investments and result in lower operating results and overall returns to our stockholders. Likewise, a sharp increase in supply could adversely affect leasing rates and occupancy, which could lower operating results, our NAV and overall returns to our stockholders.

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Actions of our joint venture partners could adversely impact our performance.

We have entered into and may continue to enter into joint ventures with third parties, including entities that are affiliated with our Advisor or entities sponsored or advised by affiliates of our Sponsor. We have purchased and developed and may also continue to purchase and develop properties in joint ventures or in partnerships, co-tenancies or other co-ownership arrangements with the sellers of the properties, affiliates of the sellers, developers or other persons. Such investments may involve risks not otherwise present with a direct investment in real estate, including, for example:

• the possibility that our venture partner, co-tenant or partner in an investment might become bankrupt or otherwise be unable to meet its capital contribution obligations;

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

• that such venture partner, 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;

• that actions by such venture partner, co-tenant or partner could adversely affect our reputation, negatively impacting our ability to conduct business; or

• that such venture partner, co-tenant or partner has legal or other effective control over the asset.

Actions by a joint venture partner or co-tenant might have the result of subjecting the property to liabilities in excess of those contemplated and may have the effect of reducing our stockholders’ returns.

Under certain joint venture arrangements, neither venture partner may have the power to control the venture, and an impasse could be reached, which might have a negative influence on the joint venture and decrease potential returns to our stockholders. In the event that a venture partner has a right of first refusal to buy out the other partner, it may be unable to finance such a buy-out at that time. It may also be difficult for us to sell our interest in any such joint venture or partnership or as a co-tenant in a particular property. In addition, to the extent that our venture partner or co-tenant is an affiliate of our Advisor or an entity sponsored or advised by affiliates of our Sponsor, certain conflicts of interest will exist.

We compete with numerous other parties or entities for real property investments and tenants, and we may not compete successfully.

We compete with numerous other persons or entities seeking to buy real property assets or to attract tenants to real properties we already own, which may have a negative impact on our ability to acquire real property assets or attract tenants on favorable terms, if at all, and the returns on our real property assets. These persons or entities may have greater experience and financial strength than us. For example, our competitors may be willing to offer space at rental rates below our rates, causing us to lose existing or potential tenants and pressuring us to reduce our rental rates to retain existing tenants or convince new tenants to lease space at our properties. Similarly, the opening of new competing assets near the assets that we own may hinder our ability to renew our existing leases or to lease to new tenants, because the proximity of new competitors may divert existing or new tenants to such competitors. In addition, if market rental rates decline during the term of an existing lease, we may be unable to renew or find a new tenant without lowering the rental rate. Each of these factors could adversely affect our results of operations, financial condition, NAV and ability to pay distributions to our stockholders.

Delays in the acquisition, development and construction of real properties or debt investments may have adverse effects on portfolio diversification, results of operations and returns to our stockholders.

Delays we encounter in selecting, acquiring and developing additional real properties or debt investments could adversely affect our stockholders’ returns. The uncertain state of the real estate markets in recent years and the resulting incentives of lenders and sellers to retain their investments had previously led to generally lower transaction volume in the broader real estate market and for us, in part due to pricing and valuation uncertainties. It is possible that such disruptions and uncertainties may reoccur. Alternatively, increased competition for high quality investments may also limit our ability to make incremental accretive investments in real properties and debt investments. These factors may continue to have a negative effect on our stockholders’ returns, and may also hinder our ability to reach our portfolio diversification objectives.

In addition, where properties are acquired prior to the start of construction or during the early stages of construction, it will typically take several months to complete construction and rent available space. Therefore, we may not receive any income

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from these properties for a significant period of time following acquisition, and distributions to our stockholders could suffer. Delays in the completion of construction could give tenants the right to terminate preconstruction leases for space at a newly developed project. We may incur additional risks when we make periodic progress payments or other advances to builders prior to completion of construction. Each of those factors could 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. Furthermore, the price we agree to for a real property will be based on our projections of rental income and expenses and estimates of the fair market value of the real property upon completion of construction. If our projections are inaccurate, we may pay too much for a property.

We may be unable to achieve our diversification goals or to realize benefits from diversification.

Our objective is to build a high-quality, diversified real estate portfolio. Although there can be no assurance that we will achieve this objective, we intend to diversify our portfolio by key portfolio attributes including, but not limited to, (1) property type, (2) target market, with consideration given to geographic concentrations, (3) average lease terms and portfolio occupancy expectations, (4) tenant concentrations, including credit and exposure to particular businesses or industries and (5) debt profile with the goal of maximizing flexibility while seeking to minimize cost and mitigate the risks associated with changes in interest rates and debt maturities. However, we may not successfully implement our diversification strategy. For example, although we may target investments in four primary property categories of office, industrial, retail and multifamily, we currently do not own any multifamily investments and have recently sold a large portion of our industrial holdings. Even if we do fully achieve our diversification goals, it is possible our diversified portfolio will not perform as well as a portfolio that is concentrated in a particular type of real estate.

We may alter our exposure to various property categories and we may not always own properties in each category.

We may target investments in four primary property categories of office, industrial, retail and multifamily. Although we aim to diversify our real estate portfolio by owning properties in each of these categories, we may not always have significant holdings, or any holdings at all, in each category. For example, we currently have no multifamily investments and have sold a large portion of our industrial holdings. We may elect to increase or decrease our holdings in each category at any time and we may change our target property categories at any time. If we decrease or eliminate our holdings in any property category or cease to target any of the four property categories our real estate portfolio will be less diversified and we may not realize the benefits of diversification.

We are subject to the risk that, with respect to assets that we have acquired and may acquire based on growth potential, such growth potential is not realized.

In 2016, we disposed of approximately $220.1 million of assets and we acquired approximately $66.5 million of assets. The assets that we sold were generally higher-yielding than the new assets we acquired, although we believe the acquired assets exhibit greater potential for revenue growth going forward. We believe that market conditions may cause us to continue to explore in certain markets the disposition of higher-yielding assets and in certain target markets the acquisition of assets that may generate lower yields but with greater growth potential. Although there can be no assurance that we will pursue this strategy or be successful in its execution, this may mean that, for some period of time, higher-yielding assets are sold from our portfolio in exchange for assets that initially may produce lower current income but which we believe will generate increased income over time through increased tenant demand and rental rate growth in order to generate long term growth in NAV. With respect to such assets, we are subject to the risk that the expected growth potential is not realized. This may result from a variety of factors, including but not limited to unanticipated changes in local market conditions or increased competition for similar properties in the same market. Acquiring properties that do not realize their expected growth potential, or properties that take longer than expected to realize their growth potential, would likely negatively affect our NAV, limit our ability to pay distributions to you and reduce your overall returns.

Our real properties are subject to property and other taxes that may increase in the future, which could adversely affect our cash flow.

Our real properties are subject to real and personal property and other taxes that may increase as tax rates change and as the properties are assessed or reassessed by taxing authorities. Certain of our leases provide that the property taxes, or increases therein, are charged to the lessees as an expense related to the real properties that they occupy while other leases will generally provide that we are responsible for such taxes. In any case, as the owner of the properties, we are ultimately responsible for payment of the taxes to the applicable governmental authorities. If property taxes increase, our tenants may be unable to make the required tax payments, ultimately requiring us to pay the taxes even if otherwise stated under the terms of the lease. If we fail to pay any such taxes, the applicable taxing authorities may place a lien on the property and the property may be subject to a tax sale. In addition, we will generally be responsible for property taxes related to any vacant space.

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Potential changes to the U.S. tax laws could have a significant negative impact on our business operations, financial condition and earnings.

U.S. federal income tax laws governing REITs and other corporations and the administrative interpretations of those laws may be amended at any time, potentially with retroactive effect. According to publicly released statements, a top legislative priority of the new administration may be to enact significant reform of the Code, including significant changes to taxation of business entities and the deductibility of interest expense and capital investment. There is a substantial lack of clarity around the likelihood, timing and details of any such tax reform and the impact of any potential tax reform on us or an investment in our securities. Future legislation, new regulations, administrative interpretations or court decisions could adversely affect our ability to qualify as a REIT or adversely affect our stockholders.

We are subject to litigation that could adversely affect our results of operations

We are a defendant from time to time in lawsuits and/or regulatory proceedings relating to our business. Unfavorable outcomes resulting from such lawsuits and/or regulatory proceedings could adversely impact our business, financial condition, NAV or results of operations.

Uninsured losses or premiums for insurance coverage relating to real property may adversely affect our returns.

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. Risks associated with potential acts of terrorism could sharply increase the premiums we pay for coverage against property and casualty claims. Additionally, mortgage lenders sometimes require commercial property owners to purchase specific coverage against terrorism as a condition for providing mortgage loans. These policies may not be available at a reasonable cost, if at all, which could inhibit our ability to finance or refinance our real properties. In such instances, we may be required to provide other financial support, either through financial assurances or self-insurance, to cover potential losses. Changes in the cost or availability of insurance could expose us to uninsured casualty losses. In the event that any of our real properties incurs a casualty loss that is not fully covered by insurance, the value of our assets will be reduced by any such uninsured loss. In addition, we could be held liable for indemnifying possible victims of an accident. We cannot assure our stockholders that funding will be available to us for the repair or reconstruction of damaged real property in the future or for liability payments to accident victims.

The real estate industry is subject to extensive regulation, which may result in higher expenses or other negative consequences that could adversely affect us.

Our activities are subject to federal, state and municipal laws, and to regulations, authorizations and license requirements with respect to, among other things, zoning, environmental protection and historical heritage, all of which may affect our business. We may be required to obtain licenses and permits with different governmental authorities in order to acquire and manage our assets.

In addition, the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”), which generally took effect in 2011, contains a sweeping overhaul of the regulation of financial institutions and the financial markets. Key provisions of the Dodd-Frank Act require extensive rulemaking by the Commission and the U.S. Commodity Futures Trading Commission, some of which remains ongoing. Thus, the full impact of the Dodd-Frank Act on our business cannot be fully assessed until all final implementing rules and regulations are promulgated.

Various aspects of the Dodd-Frank Act may have a significant impact on our business, including, without limitation, provisions of the legislation that increase regulation of and disclosure requirements related to investment advisors, certain hedging transactions, corporate governance and executive compensation, investor protection and enforcement provisions, and asset-backed securities.

For example, but not by way of limitation, the Dodd-Frank Act and the rulemaking thereunder provides for significantly increased regulation of the derivatives markets and the transactions used to affect our interest rate hedging activities, including: (i) regulatory reporting, (ii) subject to an exemption for "end-users" upon which we and our subsidiaries generally rely, mandated clearing through central counterparties and execution on regulated exchanges or execution facilities, and (iii) margin and collateral requirements. While the full impact of the Dodd-Frank Act on our interest rate hedging activities cannot be fully assessed until all final implementing rules and regulations are promulgated, the foregoing requirements may affect our ability to enter into hedging or other risk management transactions, may increase our costs in entering into such transactions, and/or may

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result in us entering into such transactions on less favorable terms than prior to effectiveness of the Dodd-Frank Act. The imposition of, or failure to comply with, any of the foregoing requirements may have an adverse effect on our business and our stockholders’ return.

In addition, public authorities may enact new and more stringent standards, or interpret existing laws and regulations in a more restrictive manner, which may force companies in the real estate industry, including us, to spend funds to comply with these new rules. Any such action on the part of public authorities may adversely affect our results from operations.

In the event of noncompliance with such laws, regulations, licenses and authorizations, we may face the payment of fines, project shutdowns, cancellation of licenses, and revocation of authorizations, in addition to other civil and criminal penalties.

Costs of complying with governmental laws and regulations related to environmental protection and human health and safety may be high.

All real property and the operations conducted on the real property are subject to federal, state and local laws and regulations relating to environmental protection and human health and safety. Some of these laws and regulations may impose joint and several liability on tenants, owners or operators for the costs to investigate or remediate contaminated properties, regardless of fault or whether the acts causing the contamination were legal.

Under various federal, state and local environmental laws, a current or previous owner or operator of real property may be liable for the cost of removing or remediating hazardous or toxic substances on such real property. 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. Third parties may also sue the owner or operator of a site for damages based on personal injury, natural resources or property damage or other costs, including investigation and clean-up costs resulting from the environmental contamination. In addition, the presence of hazardous substances, or the failure to properly remediate these substances, may adversely affect our ability to sell, rent or pledge such real property as collateral for future borrowings. Environmental laws also may impose restrictions on the manner in which real property may be used or businesses may be operated. A property owner who violates environmental laws may be subject to sanctions, which may be enforced by government agencies or, in certain circumstances, private parties. Some of these laws and regulations have been amended so as to require compliance with new or more stringent standards as of future dates. Compliance with new or more stringent laws or regulations or stricter interpretation of existing laws may require us to incur material expenditures. Future laws, ordinances or regulations may impose material environmental liability. Our tenants’ operations, the existing condition of land when we buy it, operations in the vicinity of our real properties, such as the presence of underground storage tanks, or activities of unrelated third parties may affect our real properties. In addition, there are various local, state and federal fire, health, life-safety and similar regulations with which we may be required to comply, and which may subject us to liability in the form of fines or damages for noncompliance. In connection with the acquisition and ownership of our real properties, we may be exposed to such costs in connection with such regulations. The cost of defending against environmental claims, of any damages or fines we must pay, of compliance with environmental regulatory requirements or of remediating any contaminated real property could materially and adversely affect our business, lower the value of our assets or results of operations and, consequently, lower our NAV and the amounts available for distribution to our stockholders.

Environmental laws in the U.S. also require that owners or operators of buildings containing asbestos properly manage and maintain the asbestos, adequately inform or train those who may come into contact with asbestos and undertake special precautions, including removal or other abatement, in the event that asbestos is disturbed during building renovation or demolition. These laws may impose fines and penalties on building owners or operators who fail to comply with these requirements and may allow third parties to seek recovery from owners or operators for personal injury associated with exposure to asbestos. Some of our properties may contain asbestos-containing building materials.

From time to time, we may acquire properties, or interests in properties, with known adverse environmental conditions where we believe that the environmental liabilities associated with these conditions are quantifiable and that the acquisition will yield a superior risk-adjusted return. In such an instance, we will underwrite the costs of environmental investigation, clean-up and monitoring into the cost. Further, in connection with property dispositions, we may agree to remain responsible for, and to bear the cost of, remediating or monitoring certain environmental conditions on the properties.

Generally, our properties are subject to a Phase I or similar environmental assessment by independent environmental consultants prior to or in connection with our acquisition of such properties. Phase I assessments are intended to discover and evaluate information regarding the environmental condition of the surveyed property and surrounding properties. Phase I assessments generally include a historical review, a public records review, an investigation of the surveyed site and surrounding

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properties, and preparation and issuance of a written report, but do not include soil sampling or subsurface investigations and typically do not include an asbestos survey. We cannot give any assurance that an environmental liability that we believe would have a material adverse effect on our business, financial condition or results of operations taken as a whole, will not currently exist at the time of acquisition or may not arise in the future, with respect to any of our properties. Material environmental conditions, liabilities or compliance concerns may arise after an environmental assessment has been completed. Moreover, there can be no assurance that future laws, ordinances or regulations will not impose any material environmental liability, or that the then current environmental condition of our properties will not be affected by tenants, by the condition of land or operations in the vicinity of such properties (such as releases from underground storage tanks), or by third parties unrelated to us.

The costs associated with complying with the Americans with Disabilities Act may reduce the amount of cash available for distribution to our stockholders.

Investment in real properties may also be subject to the Americans with Disabilities Act of 1990, as amended. Under this act, all places of public accommodation are required to comply with federal requirements related to access and use by disabled persons. The act 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 act’s requirements could require us to remove access barriers and our failure to comply with the act’s requirements could result in the imposition of injunctive relief, monetary penalties or, in some cases, an award of damages. We will attempt to acquire properties that comply with the act or place the burden on the seller or other third party, such as a tenant, to ensure compliance with the act. We cannot assure our stockholders that we will be able to acquire properties or allocate responsibilities in this manner. Any monies we use to comply with the act will reduce our NAV and the amount of cash available for distribution to our stockholders.

We may not have funding for future tenant improvements, which may adversely affect the value of our assets, our results of operations and returns to our stockholders.

When a tenant at one of our real properties does not renew its lease or otherwise vacates its space in one of our buildings, it is likely that, in order to attract one or more new tenants, we will be required to expend substantial funds to construct new tenant improvements in the vacated space. We expect to invest the net proceeds from our Class A, Class W and Class I offering in real estate-related investments, and we do not anticipate that we will maintain permanent working capital reserves. We do not currently have an identified funding source to provide funds that may be required in the future for tenant improvements and tenant refurbishments in order to attract new tenants. If we do not establish sufficient reserves for working capital or obtain adequate financing to supply necessary funds for capital improvements or similar expenses, we may be required to defer necessary or desirable improvements to our real properties. If we defer such improvements, the applicable real properties may decline in value, and it may be more difficult for us to attract or retain tenants to such real properties or the amount of rent we can charge at such real properties may decrease. We cannot assure our stockholders that we will have any sources of funding available to us for the repair or reconstruction of damaged real property in the future.

Lease agreements may have specific provisions that create risks to our business and may adversely affect us.

Our lease agreements are regulated by local, municipal, state and federal laws, which may grant certain rights to tenants, such as the compulsory renewal of their lease by filing lease renewal actions when certain legal conditions are met. A lease renewal action may represent two principal risks for us: (i) if we plan to vacate a given unit in order to change or adapt an asset’s mix of tenants, the tenant could remain in that unit by filing a lease renewal action and interfere with our strategy; and (ii) if we desire to increase the lease price for a specific unit, this increase may need to be approved in the course of a lease renewal action, and the final value could be decided at the discretion of a judge. We would then be subject to the court’s interpretation and decision, and could be forced to accept an even lower price for the lease of the unit. The compulsory renewal of our lease agreements and/or the judicial review of our lease prices may adversely affect our cash flow and our operating results.

Certain of our lease agreements may not be “triple net leases,” under which the lessee undertakes to pay all the expenses of maintaining the leased property, including insurance, taxes, utilities and repairs. We will be exposed to higher maintenance, tax, and property management expenses with respect to all of our leases that are not “triple net.”

Operating expenses, such as expenses for fuel, utilities, labor, building materials and insurance are not fixed and may increase in the future. There is no guarantee that we will be able to pass such increases on to our tenants. To the extent such increases cannot be passed on to our tenants, any such increases would cause our cash flow, NAV and operating results to decrease.

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A change in U.S. accounting standards regarding operating leases may make the leasing of our properties less attractive to our potential tenants, which could reduce overall demand for our leasing services.

Under current authoritative accounting guidance for leases, a lease is classified by a customer as a capital lease if the significant risks and rewards of ownership are considered to reside with the customer. Under capital lease accounting, both the leased asset and liability are reflected on the customer’s balance sheet. If the terms of the lease do not meet the criteria for a capital lease, the lease is considered an operating lease and no leased asset or contractual lease obligation is recorded on the customer’s balance sheet.  Accordingly, under the current accounting standards for leases, the entry into an operating lease with respect to real property can appear to enhance a customer’s reported financial condition or results of operations in comparison to the customer’s direct ownership of the property.

In order to address concerns raised by the Commission regarding the transparency of contractual lease obligations under the existing accounting standards for operating leases, the FASB issued ASU 2016-02 on February 25, 2016, which substantially changes the current lease accounting standards, primarily by eliminating the concept of operating lease accounting. As a result, a lease asset and obligation will be recorded on the customer’s balance sheet for all lease arrangements with terms greater than twelve months. In addition, ASU 2016-02 will impact the method in which contractual lease payments will be recorded. In order to mitigate the effect of the new lease accounting standards, customers may seek to negotiate certain terms within new lease arrangements or modify terms in existing lease arrangements, such as shorter lease terms, which would generally have less impact on their balance sheets. Also, customers may reassess their lease-versus-buy strategies. This could result in a greater renewal risk, a delay in investing our offering proceeds, or shorter lease terms, all of which may negatively impact our operations and our ability to pay distributions to our stockholders. The new leasing standard is effective on January 1, 2019, with early adoption permitted.

We depend on the availability of public utilities and services, especially for water and electric power. Any reduction, interruption or cancellation of these services may adversely affect us.

Public utilities, especially those that provide water and electric power, are fundamental for the sound operation of our assets. The delayed delivery or any material reduction or prolonged interruption of these services could allow certain tenants to terminate their leases or result in an increase in our costs, as we may be forced to use backup generators, which also could be insufficient to fully operate our facilities and could result in our inability to provide services. Accordingly, any interruption or limitation in the provision of these essential services may adversely affect us.

RISKS RELATED TO INVESTMENTS IN REAL ESTATE-RELATED DEBT AND SECURITIES

The mortgage loans in which we invest will be subject to the risk of delinquency, foreclosure and loss, which could result in losses to us.

Commercial mortgage loans are secured by commercial property and are subject to risks of delinquency and foreclosure and risks of loss. The ability of a borrower to repay a loan secured by a property typically is dependent primarily upon the successful operation of such property rather than upon the existence of independent income or assets of the borrower. If the net operating income of the property is reduced, the borrower’s ability to repay the loan may be impaired. Net operating income of an income-producing property can be affected by, among other things: tenant mix, success of tenant businesses, property management decisions, property location and condition, competition from comparable types of properties, changes in laws that increase operating expenses or limit rents that may be charged, any need to address environmental contamination at the property, the occurrence of any uninsured casualty at the property, changes in national, regional or local economic conditions and/or specific industry segments, current and potential future capital markets uncertainty, declines in regional or local real estate values, declines in regional or local rental or occupancy rates, increases in interest rates, real estate tax rates and other operating expenses, changes in governmental rules, regulations and fiscal policies, including environmental legislation, acts of God, terrorism, social unrest and civil disturbances.

In the event of any default under a mortgage loan held directly by us, we will bear a risk of loss of principal to the extent of any deficiency between the value of the collateral and the principal and accrued interest of the mortgage loan, which could have a material adverse effect on our cash flow from operations and results from operations and limit amounts available for distribution to our stockholders. In the event of the bankruptcy of a mortgage loan borrower, the mortgage loan to such borrower will be deemed to be secured only to the extent of the value of the underlying collateral at the time of bankruptcy (as determined by the bankruptcy court), and the lien securing the mortgage loan will be subject to the avoidance powers of the bankruptcy trustee or debtor-in-possession to the extent the lien is unenforceable under state law. Foreclosure of a mortgage loan can be an expensive and lengthy process, which could have a substantial adverse effect on our anticipated return on the

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foreclosed mortgage loan. In addition, if we foreclose on a particular property, we could become, as owner of the property, subject to liabilities associated with such property, including liabilities related to taxes and environmental matters.

The mezzanine loans and B-notes in which we invest involve greater risks of loss than senior loans secured by income-producing real properties.

We invest in mezzanine loans and B-notes that substantially take the form of subordinated loans secured by second mortgages on the underlying real property or loans secured by a pledge of the ownership interests of either the entity owning the real property or the entity that owns the interest in the entity owning the real property. These types of investments involve a higher degree of risk than long-term senior mortgage loans secured by income-producing real property because the investment may become unsecured as a result of foreclosure by the senior lender. In the event of a bankruptcy of the entity providing the pledge of its ownership interests as security, we may not have full recourse to the assets of such entity, or the assets of the entity may not be sufficient to satisfy our mezzanine loan in whole or in part. In addition, there may be significant delays and costs associated with the process of foreclosing on collateral securing or supporting these investments. If a borrower defaults on our mezzanine loan or debt senior to our loan, or in the event of a borrower bankruptcy, our mezzanine loan will be satisfied only after the senior debt. As a result, we may not recover some or all of our investment. In addition, mezzanine loans may have higher loan-to-value ratios than conventional mortgage loans, resulting in less equity in the real property and increasing the risk of loss of principal. Further, even if we are successful in foreclosing on the equity interests serving as collateral for our mezzanine loans, such foreclosure will result in us inheriting all of the liabilities of the underlying mortgage borrower, including the senior mortgage on the applicable property. This may result in both increased costs to us and a negative impact on our overall debt covenants and occupancy levels. In many cases a significant restructuring of the senior mortgage may be required in order for us to be willing to retain longer term ownership of the property. If we are unsuccessful in restructuring the underlying mortgage debt in these scenarios, the mortgage lender ultimately may foreclose on the property causing us to lose any remaining investment. Please refer to our financial statements beginning on page F-1 of this Annual Report on Form 10-K for historical information regarding our losses on debt-related investments.

A portion of our debt-related investments may be considered illiquid, and we may not be able to adjust our portfolio in response to changes in economic and other conditions.

Certain of the debt-related investments that we have purchased or may purchase in the future in connection with privately negotiated transactions are not or may not be registered under the relevant securities laws, resulting in a prohibition against their transfer, sale, pledge or other disposition except in a transaction that is exempt from the registration requirements of, or is otherwise effected in accordance with, those laws. As a result, our ability to vary our portfolio in response to changes in economic and other conditions may be limited. In addition, due to current credit market conditions, certain of our registered securities may not be as liquid as when originally purchased.

Bridge loans may involve a greater risk of loss than conventional mortgage loans.

We may provide bridge loans secured by first lien mortgages on properties to borrowers who are typically seeking short-term capital to be used in an acquisition, development or refinancing of real estate. The borrower may have identified an undervalued asset that has been undermanaged or is located in a recovering market. If the market in which the asset is located fails to recover according to the borrower’s projections, or if the borrower fails to improve the quality of the asset’s management or the value of the asset, the borrower may not receive a sufficient return on the asset to satisfy the bridge loan, and we may not recover some or all of our investment.

In addition, owners usually borrow funds under a conventional mortgage loan to repay a bridge loan. We may, therefore, be dependent on a borrower’s ability to obtain permanent financing to repay our bridge loan, which could depend on market conditions and other factors. Bridge loans, like other loans secured directly or indirectly by property, are subject to risks of borrower defaults, bankruptcies, fraud, losses and special hazard losses that are not covered by standard hazard insurance. In the event of any default under bridge loans held by us, we bear the risk of loss of principal and nonpayment of interest and fees to the extent of any deficiency between the value of the mortgage collateral and the principal amount of the bridge loan. Any such losses with respect to our investments in bridge loans could have an adverse effect on our NAV, results of operations, and financial condition.

Interest rate and related risks may cause the value of our real estate-related securities investments to be reduced.

Interest rate risk is the risk that fixed-income securities such as preferred and debt securities, and to a lesser extent dividend paying common stocks, will decline in value because of changes in market interest rates. Generally, when market interest rates rise, the market value of such securities will decline, and vice versa. In addition, during periods of rising interest

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rates, the average life of certain types of securities may be extended because of slower than expected principal payments. This may lock in a below-market interest rate, increase the security’s duration and reduce the value of the security. This is known as extension risk. During periods of declining interest rates, an issuer may be able to exercise an option to prepay principal earlier than scheduled, which is generally known as call or prepayment risk. If this occurs, we may be forced to reinvest in lower yielding securities. This is known as reinvestment risk. Preferred and debt securities frequently have call features that allow the issuer to repurchase the security prior to its stated maturity. An issuer may redeem an obligation if the issuer can refinance the debt at a lower cost due to declining interest rates or an improvement in the credit standing of the issuer. To the extent we invest in real estate-related securities going forward, these risks may reduce the value of such investments.

Investments in real estate-related securities are subject to specific risks relating to the particular issuer of the securities and may be subject to the general risks of investing in subordinated real estate-related securities.

We may invest in real estate-related common equity, preferred equity and debt securities of both publicly traded and private real estate companies. Investments in real estate-related securities will involve special risks relating to the particular issuer of the securities, including the financial condition and business outlook of the issuer. Issuers of real estate-related securities generally invest in real estate or real estate-related assets and are subject to the inherent risks associated with real estate-related debt investments discussed in this Annual Report on Form 10-K.

Real estate-related securities may be unsecured and subordinated to other obligations of the issuer. As a result, investments in real estate-related securities are subject to risks of (i) limited liquidity in the secondary trading market, (ii) substantial market price volatility, (iii) subordination to the prior claims of banks and other senior lenders to the issuer and preferred equity holders, (iv) the operation of mandatory sinking fund or call/redemption provisions during periods of declining interest rates that could cause the issuer to reinvest redemption proceeds in lower yielding assets, (v) the possibility that earnings of the issuer may be insufficient to meet its debt service and distribution obligations and (vi) the declining creditworthiness and potential for insolvency of the issuer during periods of rising interest rates and economic downturn. These risks may adversely affect the value of outstanding real estate-related securities and the ability of the issuers thereof to pay dividends.

We may make investments in non-U.S. dollar denominated securities, which will be subject to currency rate exposure and risks associated with the uncertainty of foreign laws and markets.

Some of our real estate-related securities investments may be denominated in foreign currencies, and therefore, we expect to have currency risk exposure to any such foreign currencies. A change in foreign currency exchange rates may have an adverse impact on returns on our non-U.S. dollar denominated investments.

Although we may hedge our foreign currency risk subject to the REIT income qualification tests, we may not be able to do so successfully and may incur losses on these investments as a result of exchange rate fluctuations. To the extent that we invest in non-U.S. dollar denominated securities, in addition to risks inherent in the investment in securities generally discussed in this Annual Report on Form 10-K, we will also be subject to risks associated with the uncertainty of foreign laws and markets including, but not limited to, unexpected changes in regulatory requirements, political and economic instability in certain geographic locations, difficulties in managing international operations, currency exchange controls, potentially adverse tax consequences, additional accounting and control expenses and the administrative burden of complying with a wide variety of foreign laws.

RISKS ASSOCIATED WITH DEBT FINANCING

We incur mortgage indebtedness and other borrowings, which may increase our business risks, and could hinder our ability to make distributions to our stockholders.

We have financed and may continue to finance a portion of the purchase price of certain of our investments by borrowing funds. As of December 31, 2016, our leverage ratio is approximately 45.9% of the fair value of our real property and debt-related investments (determined in accordance with our valuation procedures) inclusive of property and entity-level debt. Our current leverage target is between 40-60%. Although we will generally work to maintain the targeted leverage ratio over the near term, we may change our targeted leverage ratio from time to time. In addition, we may vary from our target leverage ratio from time to time, and there are no assurances that we will maintain the targeted range disclosed above or achieve any other leverage ratio that we may target in the future. Our board of directors may from time to time modify our borrowing policy in light of then-current economic conditions, the relative costs of debt and equity capital, the fair values of our properties, general conditions in the market for debt and equity securities, growth and acquisition opportunities or other factors.

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Under our charter, we have a limitation on borrowing that precludes us from borrowing in excess of 300% of the value of our net assets unless approved by a majority of the independent directors and disclosed to stockholders in our next quarterly report along with justification for the excess. Net assets for purposes of this calculation are defined to be our total assets (other than intangibles), valued at cost prior to deducting depreciation or other non-cash reserves, less total liabilities. Generally speaking, the preceding calculation is expected to approximate 75% of the aggregate cost of our real property assets and debt-related investments before non-cash reserves and depreciation. In addition, we have incurred and may continue to incur mortgage debt secured by some or all of our real properties to obtain funds to acquire additional real properties or for working capital. We may also borrow funds to satisfy the REIT tax qualification requirement that we distribute at least 90% of our annual REIT taxable income to our stockholders. Furthermore, we may borrow funds if we otherwise deem it necessary or advisable to ensure that we maintain our qualification as a REIT for federal income tax purposes.

High debt levels would generally cause us to incur higher interest charges, and could result in higher debt service payments and could be accompanied by restrictive covenants. If there is a shortfall between the cash flow from a property and the cash flow needed to service mortgage debt on that property, then the amount available for distributions to our stockholders may be reduced. In addition, incurring mortgage debt increases the risk of loss of a property since defaults on indebtedness secured by a property may result in lenders initiating foreclosure action. In that case, we could lose the property securing the loan that is in default or be forced to sell the property at an inopportune time, thus reducing the value of our investments. For tax purposes, a foreclosure on any of our properties will be treated as a sale of the property for a purchase price equal to the outstanding balance of the debt secured by the mortgage. If the outstanding balance of the debt secured by the mortgage exceeds our tax basis in the property, we will recognize taxable income on foreclosure, but we would not receive any cash proceeds. We and our Operating Partnership have historically given certain full, partial or limited guarantees, and may continue to give full, partial or limited guarantees in the future, to lenders of mortgage debt on behalf of the entities that own our properties. When we give a guarantee on behalf of an entity that owns one of our properties, we are responsible to the lender for satisfaction of the debt if it is not paid by such entity. If any mortgage contains cross-collateralization or cross-default provisions, a default on a single property could affect multiple properties. If any of our properties are foreclosed upon due to a default, our NAV, liquidity and ability to pay cash distributions to our stockholders will be adversely affected.

Increases in interest rates could increase the amount of our debt payments and therefore adversely impact our operating results.

We currently utilize a significant amount of variable rate debt financing. To the extent we do not have derivative instruments to hedge exposure to changes in interest rates, increases in interest rates would increase our interest costs, which would reduce our cash flows and our ability to make distributions to our stockholders. If we need to repay existing debt during periods of rising interest rates, we could be required to liquidate one or more of our real property or debt-related investments at times, which may not permit realization of the maximum return on such investments.

Our derivative instruments used to hedge against interest rate fluctuations may not be successful in mitigating our risks associated with interest rates and could reduce the overall returns on our investments.

We utilize derivative instruments to hedge exposure to changes in interest rates on certain of our loans secured by our real properties, but no hedging strategy can protect us completely. We may use derivative instruments, such as forward starting swaps, to hedge interest rate risks associated with debt incurrences that we anticipate may occur. However, if we fail to accurately forecast such debt incurrences we will be subject to interest rate risk without successfully hedging the underlying transaction. Furthermore, the use of derivative instruments may cause us to forgo the benefits of otherwise favorable fluctuations in interest rates, since derivative instruments may prevent us from realizing the full benefits of lower borrowing cost in an environment of declining interest rates.

In addition, derivative instruments may not mitigate all of the risk associated with fluctuations in borrowing costs. Derivative instruments are generally used to hedge fluctuations in benchmark interest rates, such as London Interbank Offered Rate (“LIBOR”) and U.S. treasury security-based interest rates. However, there are other components of borrowing costs that may comprise the “spread” that lenders apply to the benchmark interest rates. The “spread” that lenders apply to benchmark interest rates when making loans may fluctuate from time to time. Fluctuations in the “spread” may be attributable to volatility in the credit markets or borrower-specific credit risk. When we enter into derivative instruments in anticipation of certain debt incurrences, such derivative instruments do not mitigate the risks of fluctuations in “spread” which could exacerbate the risks described above.

We cannot assure our stockholders that our hedging strategy and the derivatives that we use will adequately offset all of our risk related to interest rate volatility or that our hedging of these risks will not result in losses. These derivative instruments may also generate income that may not be treated as qualifying REIT income for purposes of the 75% or 95% REIT income

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tests. For additional discussion of our hedging program and the related impact on our results of operations, see Note 6 to our financial statements beginning on page F-1 of this Annual Report on Form 10-K.

We assume the credit risk of our counterparties with respect to derivative transactions.

We may enter into derivative contracts for risk management purposes to hedge our exposure to cash flow variability caused by changing interest rates on our future variable rate real estate loans receivable and variable rate notes payable. These derivative contracts generally are entered into with bank counterparties and are not traded on an organized exchange or guaranteed by a central clearing organization. We would therefore assume the credit risk that our counterparties will fail to make periodic payments when due under these contracts or become insolvent. If a counterparty fails to make a required payment, becomes the subject of a bankruptcy case, or otherwise defaults under the applicable contract, we would have the right to terminate all outstanding derivative transactions with that counterparty and settle them based on their net market value or replacement cost. In such an event, we may be required to make a termination payment to the counterparty, or we may have the right to collect a termination payment from such counterparty. We assume the credit risk that the counterparty will not be able to make any termination payment owing to us. We may not receive any collateral from a counterparty, or we may receive collateral that is insufficient to satisfy the counterparty’s obligation to make a termination payment. Default by a counterparty may result in the loss of unrealized profits and may force us to enter into a replacement transaction at the then current market price.

We assume the risk that our derivative counterparty may terminate transactions early.

If we fail to make a required payment or otherwise default under the terms of a derivative contract, the counterparty would have the right to terminate all outstanding derivative transactions between us and that counterparty and settle them based on their net market value or replacement cost. In certain circumstances, the counterparty may have the right to terminate derivative transactions early even if we are not defaulting. If our derivative transactions are terminated early, it may not be possible for us to replace those transactions with another counterparty, on as favorable terms or at all.

We may be required to collateralize our derivative transactions.

We may be required to secure our obligations to our counterparties under our derivative contracts by pledging collateral to our counterparties. That collateral may be in the form of cash, securities or other assets. If we default under a derivative contract with a counterparty, or if a counterparty otherwise terminates one or more derivative contracts early, that counterparty may apply such collateral toward our obligation to make a termination payment to the counterparty. If we have pledged securities or other assets, the counterparty may liquidate those assets in order to satisfy our obligations. If we are required to post cash or securities as collateral, such cash or securities will not be available for use in our business. Cash or securities pledged to counterparties may be repledged by counterparties and may not be held in segregated accounts. Therefore, in the event of a counterparty insolvency, we may not be entitled to recover some or all collateral pledged to that counterparty, which could result in losses and have an adverse effect on our operations.

We may default on our derivative obligations if we default on the indebtedness underlying such obligations.

We have agreements with certain of our derivative counterparties that contain a provision where we could be declared in default on our derivative obligations if repayment of the underlying indebtedness is accelerated by the lender due to our default on the indebtedness. We also have agreements with certain other derivative counterparties that contain a provision whereby if we default on any of our indebtedness held by our Operating Partnership, including default where repayment of the indebtedness has not been accelerated by the lender, then we could also be declared in default on our derivative obligations. If we are declared in default under the terms of a derivative contract, the counterparty would have the right to terminate all outstanding derivative transactions between us and that counterparty and settle them based on their net market value or replacement cost. As of December 31, 2016, the fair value of derivatives in a net liability position, which included accrued interest but excluded any credit valuation adjustments related to these agreements, was approximately $2.9 million. If we had breached any of these provisions at December 31, 2016, we could have been required to settle our obligations under the agreements at their termination value of $2.9 million.

We have entered into loan agreements that contain restrictive covenants relating to our operations, which could limit our ability to make distributions to our stockholders.

When providing financing, a lender typically imposes restrictions on us that may affect our distribution and operating policies and our ability to incur additional debt. Our loan agreements include restrictions, covenants, customary market carve-outs and/or guarantees by us. Certain financial covenants include tests of our general liquidity and debt servicing capability as

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well as certain collateral specific performance and valuation ratios. In addition, our loan agreements may contain covenants that limit our ability to further mortgage the property, discontinue insurance coverage, or replace our Advisor as our advisor. Further, our loan agreements may limit our ability to replace the property manager or terminate certain operating or lease agreements related to the property. These or other limitations may adversely affect our flexibility and our ability to achieve our investment objectives and make distributions to our stockholders. There can be no assurance that we will be able to comply with these covenants in the future, or that if we violate a covenant the lender would be willing to provide a waiver of such covenant. Violation of these covenants could result in the acceleration of maturities under the default provisions of our loan agreements. As of December 31, 2016, we were in compliance with all financial covenants.

We have entered into, and may continue to enter into, financing arrangements involving balloon payment obligations, which may adversely affect our ability to refinance or sell properties on favorable terms, and to make distributions to our stockholders.

Most of our current mortgage financing arrangements require us to make a lump-sum or “balloon” payment at maturity. Our ability to make a balloon payment at maturity will be uncertain and may depend upon our ability to obtain additional financing or our ability to sell the particular property. At the time the balloon payment is due, we may or may not be able to refinance the balloon payment on terms as favorable as the original loan or to sell the particular property at a price sufficient to make the balloon payment. The effect of a refinancing or sale could affect the rate of return to our stockholders and the projected time of disposition of our assets. In an environment of increasing mortgage rates, if we place mortgage debt on properties, we run the risk of being unable to refinance such debt if mortgage rates are higher at the time a balloon payment is due. In addition, payments of principal and interest made to service our debts, including balloon payments, may leave us with insufficient cash to pay the distributions that we are required to pay to maintain our qualification as a REIT.

RISKS RELATED TO OUR TAXATION AS A REIT

Failure to qualify as a REIT could adversely affect our operations and our ability to make distributions.

If we were to fail to qualify as a REIT for any taxable year, we would be subject to U.S. federal income tax on our taxable income at corporate rates. In addition, we would generally be disqualified from treatment as a REIT for the four taxable years following the year in which we lose our REIT status. Losing our REIT status would reduce our net earnings available for investment or distribution to stockholders because of the additional tax liability. In addition, distributions to stockholders would no longer be deductible in computing our taxable income and we would no longer be required to make distributions. To the extent that distributions had been made in anticipation of our qualifying as a REIT, we might be required to borrow funds or liquidate some investments in order to pay the applicable corporate income tax. In addition, although we intend to operate in a manner as to qualify as a REIT, it is possible that future economic, market, legal, tax or other considerations may cause our board of directors to recommend that we revoke our REIT election.

Failure of our Operating Partnership to be taxable as a partnership could cause us to fail to qualify as a REIT and we could suffer other adverse tax consequences.

We believe that the Operating Partnership will continue to be treated for federal income tax purposes as a partnership and not as an association or as a publicly traded partnership taxable as a corporation. If the Internal Revenue Service were successfully to determine that the Operating Partnership was properly treated as a corporation, the Operating Partnership would be required to pay U.S. federal income tax at corporate rates on its net income, its partners would be treated as stockholders of the Operating Partnership and distributions to partners would constitute distributions that would not be deductible in computing the Operating Partnership’s taxable income. In addition, we could fail to qualify as a REIT, with the resulting consequences described above.

To continue to qualify as a REIT, we must meet annual distribution requirements, which may result in us distributing amounts that may otherwise be used for our operations.

To maintain the favorable tax treatment accorded to REITs, we normally will be required each year to distribute to our stockholders at least 90% of our real estate investment trust taxable income, determined without regard to the deduction for distributions paid and by excluding net capital gains. We are subject to U.S. federal income tax on our undistributed taxable income and net capital gain and to a 4% nondeductible excise tax on any amount by which distributions we pay with respect to any calendar year are less than the sum of (i) 85% of our ordinary income, (ii) 95% of our capital gain net income and (iii) 100% of our undistributed income from prior years. These requirements could cause us to distribute amounts that otherwise would be spent on acquisitions of properties and it is possible that we might be required to borrow funds or sell

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assets to fund these distributions. Additionally, it is possible that we might not always be able to make distributions sufficient to meet the annual distribution requirements and to avoid corporate income taxation on the earnings that we distribute.

From time to time, we may generate taxable income greater than our net income, as defined by GAAP, or differences in timing between the recognition of taxable income and the actual receipt of cash may occur. If we do not have other funds available in these situations, we could be required to borrow funds on unfavorable terms, sell investments at disadvantageous prices or distribute amounts that would otherwise be invested in future acquisitions to make distributions sufficient to enable us to pay out enough of our taxable income to satisfy the REIT distribution requirement and to avoid corporate income tax and the 4% excise tax in a particular year. These alternatives could increase our costs or reduce our equity. Thus, compliance with the REIT requirements may hinder our ability to grow, which could adversely affect the value of our common stock.

Recharacterization of sale-leaseback transactions may cause us to lose our REIT status.

We may purchase real properties and lease them back to the sellers of such properties. If we were to attempt to structure a sale-leaseback transaction such that the lease would be characterized as a “true lease” that would allow us to be treated as the owner of the property for federal income tax purposes, we cannot assure our stockholders that the IRS will not challenge such characterization. In the event that any such sale-leaseback transaction is challenged and recharacterized as a financing transaction or loan for U.S. federal income tax purposes, deductions for depreciation and cost recovery relating to such property would be disallowed. If a sale-leaseback transaction were so recharacterized, we might fail to satisfy the REIT qualification “asset tests” or the “income tests” and, consequently, lose our REIT status effective with the year of recharacterization. Alternatively, the amount of our REIT taxable income could be recalculated, which might also cause us to fail to meet the distribution requirement for a taxable year.

Our stockholders may have current tax liability on distributions if our stockholders elect to reinvest in shares of our common stock.

Even if our stockholders participate in our distribution reinvestment plan, our stockholders will be deemed to have received, and for U.S. federal income tax purposes will be taxed on, the amount reinvested in shares of our common stock to the extent the amount reinvested was not a tax-free return of capital. As a result, our stockholders that are not tax-exempt entities may have to use funds from other sources to pay their tax liability on the value of the common stock received.

Distributions payable by REITs do not qualify for the reduced tax rates that apply to other corporate distributions.

The current maximum U.S. federal income tax rate for distributions payable by corporations to domestic stockholders that are individuals, trusts or estates is 20% (plus a 3.8% "Medicare tax" surcharge). Distributions payable by REITs, however, generally are taxed at the ordinary income tax rate applicable to the individual recipient, rather than the maximum 20% income tax rate. The more favorable rates applicable to regular corporate distributions could cause investors who are individuals to perceive investments in REITs to be relatively less attractive than investments in the stocks of non-REIT corporations that pay distributions, which could adversely affect the value of the stock of REITs, including our common stock.

If we were considered to have actually or constructively paid a “preferential dividend” to certain of our stockholders, our status as a REIT could be adversely affected.

For taxable years ending on or before December 31, 2014, in order for distributions to be counted as satisfying the annual distribution requirement for REITs, and to provide us with a REIT-level tax deduction, the distributions must not have been “preferential dividends.” A dividend is not a preferential dividend if the distribution is (1) pro rata among all outstanding shares within a particular class, and (2) in accordance with the preferences among different classes of shares as set forth in our organizational documents. For the taxable year that began on January 1, 2015 and all future taxable years, so long as we continue to be a “publicly offered REIT” (i.e., a REIT which is required to file annual and periodic reports with the SEC under the Exchange Act), the preferential dividend rule will not apply to us.

In certain circumstances, we may be subject to federal and state income taxes as a REIT, which would reduce our cash available for distribution to our stockholders.

We may be subject to taxes on our income or property even if we qualify as a REIT for federal income tax purposes, including those described below.

• In order to qualify as a REIT, we are required to distribute annually at least 90% of our REIT taxable income (determined without regard to the dividends-paid deduction or net capital gain) to our stockholders. If we satisfy the

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distribution requirement but distribute less than 100% of our REIT taxable income, we will be subject to corporate income tax on the undistributed income.

• We will be required to pay a 4% nondeductible excise tax on the amount, if any, by which the distributions we make to our stockholders 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 previous years.

• If we have net income from the sale of foreclosure property that we hold primarily for sale to customers in the ordinary course of business or other non-qualifying income from foreclosure property, we will be required to pay a tax on that income at the highest corporate income tax rate.

• Any gain we recognize on the sale of a property, other than foreclosure property, that we hold primarily for sale to customers in the ordinary course of business, would be subject to the 100% “prohibited transaction” tax unless the sale qualified for a statutory safe harbor that requires, among other things, a two year holding period.

Our board of directors is authorized to revoke our REIT election without stockholder approval, which may cause adverse consequences to our stockholders.

Our charter authorizes our board of directors to revoke or otherwise terminate our REIT election, without the approval of our stockholders, if it determines that it is not in our best interest to qualify as a REIT. In this event, we would become subject to U.S. federal income tax on our taxable income and we would no longer be required to distribute most of our net income to our stockholders, which may cause a reduction in the total return to our stockholders.

Distributions to tax-exempt investors may be classified as unrelated business taxable income.

Neither ordinary nor capital gain distributions with respect to our common stock nor gain from the sale of common stock should generally constitute unrelated business taxable income to a tax-exempt investor. However, there are certain exceptions to this rule. In particular:

• part of the income and gain recognized by certain qualified employee pension trusts with respect to our common stock may be treated as unrelated business taxable income if shares of our common stock are predominately held by qualified employee pension trusts, we are required to rely on a special look-through rule for purposes of meeting one of the REIT share ownership tests, and we are not operated in a manner to avoid treatment of such income or gain as unrelated business taxable income;

• part of the income and gain recognized by a tax-exempt investor with respect to our common stock would constitute unrelated business taxable income if the investor incurs debt in order to acquire the common stock; and

• part or all of the income or gain recognized with respect to our common stock by social clubs, voluntary employee benefit associations, supplemental unemployment benefit trusts and qualified group legal services plans that are exempt from federal income taxation under Sections 501(c)(7), (9), (17), or (20) of the Code may be treated as unrelated business taxable income.

The stock ownership limit imposed by the Code for REITs and our charter may restrict our business combination opportunities and you may be restricted from acquiring or transferring certain amounts of our capital stock.

To maintain our status as a REIT under the Code, not more than 50% in value of our outstanding stock may be owned, directly or indirectly, by five or fewer individuals (as defined in the Code to include certain entities) at any time during the last half of each taxable year after our first year in which we qualify as a REIT. Our charter, with certain exceptions, authorizes our board of directors to take the actions that are necessary and desirable to preserve our qualification as a REIT. Unless an exemption is granted by our board of directors, no person (as defined to include entities) may own more than 9.8% in value of our capital stock or more than 9.8% in value or in number of shares, whichever is more restrictive, of our common stock following the completion of our public offerings. In addition, our charter will generally prohibit beneficial or constructive ownership of shares of our capital stock by any person who owns, actually or constructively, an interest in any of our tenants that would cause us to own, actually or constructively, more than a 9.9% interest in any of our tenants. Our board of directors may grant an exemption in its sole discretion, subject to such conditions, representations and undertakings as it may determine. These ownership limitations in our charter are common in REIT charters and are intended, among other purposes, to assist us in complying with the tax law requirements and to minimize administrative burdens. However, these ownership limits might also

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delay or prevent a transaction or a change in our control that might involve a premium price for our common stock or otherwise be in the best interests of our stockholders.

The tax on prohibited transactions will limit our ability to engage in transactions, including certain methods of syndicating and securitizing mortgage loans, that would be treated as sales for federal income tax purposes.

A REIT’s net income from prohibited transactions is subject to a 100% tax. In general, prohibited transactions are sales or other dispositions of property, other than foreclosure property, but including mortgage loans that are held primarily for sale to customers in the ordinary course of business. We might be subject to this tax if we were to syndicate, dispose of, or securitize loans in a manner that was treated as a sale of the loans for U.S. federal income tax purposes. Therefore, to avoid the prohibited transactions tax, we may choose not to engage in certain sales of loans at the REIT level and may limit the structures we utilize for our securitization transactions, even though the sales or structures otherwise might be beneficial to us.

In addition, the Code provides a safe harbor that, if met, allows us to avoid being treated as engaged in a prohibited transaction. In order to meet the safe harbor, (i) we must have held the property for at least 2 years (and, in the case of property which consists of land or improvements not acquired through foreclosure, we must have held the property for 2 years for the production of rental income), (ii) we must not have made aggregate expenditures includible in the basis of the property during the 2-year period preceding the date of sale that exceed 30% of the net selling price of the property, and (iii) during the taxable year the property is disposed of, we must not have made more than 7 property sales or, alternatively, the aggregate adjusted basis or fair market value of all the properties sold by us during the taxable year must not exceed 10% of the aggregate adjusted basis or 10% of the fair market value, respectively, of all our assets as of the beginning of the taxable year (with the 10% thresholds increased to 20% in certain circumstances). If the 7-sale limitation in (iii) above is not satisfied, substantially all of the marketing and development expenditures with respect to the property must be made through an independent contractor from whom we do not derive or receive any income. We will endeavor to avoid engaging in prohibited transactions or we will attempt to comply with the safe harbor provisions. There is no assurance, however, that we will not engage in prohibited transactions.

Legislative or regulatory action could adversely affect investors.

In recent years, numerous legislative, judicial and administrative changes have been made to the U.S. federal income tax laws applicable to investments in REITs and similar entities. Additional changes to tax laws are likely to continue to occur in the future, and we cannot assure our stockholders that any such changes will not adversely affect the taxation of a stockholder. Any such changes could have an adverse effect on an investment in shares of our common stock. We urge our stockholders to consult with their own tax advisor with respect to the status of legislative, regulatory or administrative developments and proposals and their potential effect on an investment in shares of our common stock.

Recharacterization of transactions under the Operating Partnership’s private placements could result in a 100% tax on income from prohibited transactions, which would diminish our cash distributions to our stockholders.

The Internal Revenue Service could recharacterize transactions under the Operating Partnership’s private placements such that the Operating Partnership could be treated as the bona fide owner, for tax purposes, of properties acquired and resold by the entity established to facilitate the transaction. Such recharacterization could result in the income realized on these transactions by the Operating Partnership being treated as gain on the sale of property that is held as inventory or otherwise held primarily for the sale to customers in the ordinary course of business. In such event, such gain could constitute income from a prohibited transaction and might be subject to a 100% tax. If this occurs, our ability to pay cash distributions to our stockholders will be adversely affected.

Qualifying as a REIT involves highly technical and complex provisions of the Code.

Qualification as a REIT involves the application of highly technical and complex Code provisions for which only limited judicial and administrative authorities exist. Even a technical or inadvertent violation could jeopardize our REIT qualification. Our continued qualification as a REIT will depend on our satisfaction of certain asset, income, organizational, distribution, stockholder ownership and other requirements on a continuing basis. In addition, our ability to satisfy the requirements to qualify as a REIT depends in part on the actions of third parties over which we have no control or only limited influence, including in cases where we own an equity interest in an entity that is classified as a partnership for U.S. federal income tax purposes.

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Foreign investors may be subject to FIRPTA on the sale of common shares if we are unable to qualify as a “domestically controlled qualified investment entity.”

A foreign person (subject to certain exceptions) disposing of a U.S. real property interest, including shares of a U.S. corporation whose assets consist principally of U.S. real property interests, is generally subject to a tax, known as FIRPTA, on the gain recognized on the disposition. FIRPTA does not apply, however, to the disposition of stock in a REIT if the REIT is a “domestically controlled qualified investment entity” (as defined in section 897(h)(4)(B) of the Code). A domestically controlled qualified investment entity includes a REIT in which, at all times during a specified testing period, less than 50% in value of its shares is held directly or indirectly by non-U.S. holders. We cannot assure our stockholders that we will qualify as a domestically controlled qualified investment entity. If we were to fail to so qualify, gain realized by a foreign investor on a sale of our common stock would be subject to FIRPTA unless our common stock was traded on an established securities market and the foreign investor did not at any time during a specified testing period directly or indirectly own more than 10% of the value of our outstanding common stock. Regardless of our status as a domestically controlled qualified investment entity, capital gain distributions attributable to a disposition of a U.S. real property interest will generally be subject to tax under FIRPTA in the hands of non-U.S. investors.

We may enter into certain hedging transactions which may have a potential impact on our REIT status.

From time to time, we may enter into hedging transactions with respect to one or more of our assets or liabilities. Our hedging activities may include entering into interest rate and/or foreign currency swaps, caps, and floors, options to purchase these items, and futures and forward contracts. Income and gain from “hedging transactions” that we enter into to hedge indebtedness incurred or to be incurred to acquire or carry real estate assets and that are clearly and timely identified as such will be excluded from both the numerator and the denominator for purposes of the gross income and asset tests that apply to REITs. Moreover, any income from a transaction entered into primarily to manage risk of currency fluctuations with respect to any item of income that would be qualifying REIT income under the REIT gross income tests, and any gain from the unwinding of any such transaction, does not constitute gross income for purposes of the REIT annual gross income tests. To the extent that we do not properly identify such transactions as hedges or we hedge with other types of financial instruments, or hedge other types of indebtedness, the income from those transactions may not be treated as qualifying income for purposes of the REIT gross income tests, and might also give rise to an asset that does not qualify for purposes of the REIT asset tests.

INVESTMENT COMPANY RISKS

Avoiding registration as an investment company imposes limits on our operations, and failure to avoid registration reduces the value of your investment.

We conduct our operations so as not to become regulated as an investment company under the Investment Company Act of 1940, as amended, which we refer to as the “Investment Company Act.” To do so, we will have to continue to monitor the value of our securities in comparison with the value of our other assets and make sure that the value of our securities does not exceed 40% of the value of all of our assets on an unconsolidated basis. As a result, we may be unable to sell assets we would otherwise want to sell and may be unable to purchase securities we would otherwise want to purchase.

If we were obligated to register as an investment company, we would have to comply with a variety of substantive requirements under the Investment Company Act that impose, among other things:

• limitations on capital structure;

• restrictions on specified investments;

• prohibitions on transactions with affiliates; and

• compliance with reporting, record keeping, voting, proxy disclosure and other rules and regulations that would significantly increase our operating expenses.

Registration with the Commission as an investment company would be costly, would subject our company to a host of complex regulations, and would divert the attention of management from the conduct of our business.

Further, if it were established that we were an unregistered investment company, there would be a risk that we would be subject to monetary penalties and injunctive relief in an action brought by the Commission, that we would be unable to enforce contracts with third parties, and that third parties could seek to obtain rescission of transactions undertaken during the period it

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was established that we were an unregistered investment company. Any such results would be likely to have a material adverse effect on us.

RETIREMENT PLAN RISKS

If you fail to meet the fiduciary and other standards under the Employee Retirement Income Security Act of 1974, as amended, or “ERISA,” or the Code as a result of an investment in our stock, you could be subject to criminal and civil penalties.

There are special considerations that apply to employee benefit plans subject to ERISA (such as profit-sharing, section 401(k) or pension plans) and other retirement plans or accounts subject to Section 4975 of the Code (such as an IRA) that are investing in our shares. If you are investing the assets of such a plan or account in our common stock, you should satisfy yourself that:

• your investment is consistent with your fiduciary and other obligations under ERISA and the Code;

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

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

• your investment in our shares, for which no trading market may exist, is consistent with the liquidity needs of the plan or IRA;

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

• you will be able to comply with the requirements under ERISA and the Code to value the assets of the plan or IRA annually; and

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

With respect to the annual valuation requirements described above, we expect to provide an estimated value of our net assets per share annually to those fiduciaries (including IRA trustees and custodians) who request it. Although this estimate will be based upon determinations of the NAV of our shares in accordance with our valuation procedures, no assurance can be given that such estimated value will satisfy the applicable annual valuation requirements under ERISA and the Code. The Department of Labor or the Internal Revenue Service may determine that a plan fiduciary or an IRA custodian is required to take further steps to determine the value of our common shares. In the absence of an appropriate determination of value, a plan fiduciary or an IRA custodian may be subject to damages, penalties or other sanctions.

Failure to satisfy the fiduciary standards of conduct and other applicable requirements of ERISA and the Code may result in the imposition of civil and criminal penalties, and can subject the fiduciary to claims for damages or for equitable remedies, including liability for investment losses. In addition, if an investment in our shares constitutes a prohibited transaction under ERISA or the Code, the fiduciary or IRA owner who authorized or directed the investment may be subject to the imposition of excise taxes with respect to the amount invested. Additionally, the investment transaction may have to be undone. In the case of a prohibited transaction involving an IRA owner, the IRA may be disqualified as a tax-exempt account and all of the assets of the IRA may be deemed distributed and subjected to tax. ERISA plan fiduciaries and IRA owners should consult with counsel before making an investment in our shares.

If our assets are deemed to be plan assets, our Advisor and we may be exposed to liabilities under Title I of ERISA and the Code.

In some circumstances where an ERISA plan holds an interest in an entity, the assets of the entity are deemed to be ERISA plan assets unless an exception applies. This is known as the “look-through rule.” Under those circumstances, the obligations and other responsibilities of plan sponsors, plan fiduciaries and plan administrators, and of parties in interest and disqualified persons, under Title I of ERISA and Section 4975 of the Code, as applicable, may be applicable, and there may be liability under these and other provisions of ERISA and the Code. We believe that our assets should not be treated as plan assets

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because the shares should qualify as “publicly-offered securities” that are exempt from the look-through rules under applicable Treasury Regulations. We note, however, that because certain limitations are imposed upon the transferability of shares so that we may qualify as a REIT, and perhaps for other reasons, it is possible that this exemption may not apply. If that is the case, and if our Advisor or we are exposed to liability under ERISA or the Code, our performance and results of operations could be adversely affected. Prior to making an investment in us, you should consult with your legal and other advisors concerning the impact of ERISA and the Code on your investment and our performance.

ITEM 1B.    UNRESOLVED STAFF COMMENTS

None.

ITEM 2.    PROPERTIES

As of December 31, 2016, we held the majority ownership in 55 real properties, all of which were operating properties. The properties are located in 20 distinct geographical markets throughout the United States and comprise approximately 9.0 million net rentable square feet. As of December 31, 2016, our operating properties were subject to mortgage notes with an aggregate principal amount outstanding of approximately $343.5 million. For additional discussion of our borrowings, see Note 5 to our financial statements beginning on page F-1 of this Annual Report on Form 10-K.

Geographic Distribution

The following map describes the geographic distribution and types of our 55 operating properties by market as of December 31, 2016.

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The following table describes our 55 operating properties, by market, which are presented on a consolidated basis for purposes of financial reporting as of December 31, 2016 (dollar amounts and square footage amounts in thousands).

Market	Number of Properties	Gross Investment Amount (1)		% of Gross Investment Amount		Net Rentable Square Feet		% of Total Net Rentable Square Feet		% Leased (2)		Secured Indebtedness (3)
Office Properties:
Northern New Jersey	1	$	231,029	10.6	%	$	594	6.6	%	100.0	%	$	—
Austin, TX	3	155,270		7.1	%	585		6.5	%	97.5	%	—
East Bay, CA	1	145,376		6.6	%	405		4.5	%	100.0	%	—
San Francisco, CA	1	121,827		5.5	%	263		2.9	%	93.5	%	—
Denver, CO	1	83,160		3.8	%	257		2.9	%	79.0	%	—
South Florida	2	82,141		3.7	%	363		4.0	%	83.9	%	—
Washington, DC	1	70,485		3.2	%	126		1.4	%	99.1	%	52,500
Princeton, NJ	1	51,324		2.3	%	167		1.9	%	100.0	%	—
Philadelphia, PA	1	46,908		2.1	%	174		1.9	%	93.2	%	—
Silicon Valley, CA	1	42,685		1.9	%	143		1.6	%	100.0	%	—
Dallas, TX	1	37,763		1.7	%	155		1.7	%	92.3	%	33,000
Minneapolis/St Paul, MN	1	29,515		1.3	%	107		1.2	%	100.0	%	—
Fayetteville, AR	1	11,695		0.5	%	61		0.7	%	100.0	%	—
Total/Weighted Average	16	1,109,178		50.3	%	3,400		37.8	%	95.0	%	85,500
Industrial Properties:
Dallas, TX	1	35,928		1.6	%	446		5.0	%	35.1	%	—
Central Kentucky	1	30,840		1.4	%	727		8.1	%	100.0	%	—
Louisville, KY	3	22,360		1.0	%	609		6.8	%	82.8	%	—
Total/Weighted Average	5	89,128		4.0	%	1,782		19.9	%	77.9	%	—
Retail Properties:
Greater Boston	25	540,872		24.5	%	2,223		24.8	%	95.2	%	83,447
South Florida	2	106,629		4.8	%	206		2.3	%	96.8	%	10,523
Philadelphia, PA	1	105,308		4.8	%	426		4.8	%	90.3	%	67,800
Washington, DC	1	62,867		2.9	%	233		2.6	%	100.0	%	70,000
Northern New Jersey	1	58,959		2.7	%	223		2.5	%	93.8	%	—
Raleigh, NC	1	45,714		2.1	%	143		1.6	%	97.8	%	26,200
Tulsa, OK	1	34,038		1.5	%	101		1.1	%	97.7	%	—
San Antonio, TX	1	32,072		1.5	%	161		1.8	%	89.6	%	—
Jacksonville, FL	1	19,557		0.9	%	73		0.8	%	48.0	%	—
Total/Weighted Average	34	1,006,016		45.7	%	3,789		42.3	%	94.0	%	257,970
Grand Total/Weighted Average	55	$	2,204,322	100.0	%	8,971		100.0	%	91.2	%	$	343,470

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(1) “Gross Investment Amount” as used here and throughout this document represents the allocated gross basis of real property, excluding the effect of gross intangible lease liabilities totaling approximately $91.0 million and before accumulated depreciation and amortization of approximately $492.9 million as of December 31, 2016.

(2) Percentage leased is based on executed leases as of December 31, 2016.

(3) Represents the principal balance outstanding and does not include our mark-to-market adjustment or net debt issuance costs.

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Lease Expirations

As of December 31, 2016, the weighted average remaining term of our leases was approximately 4.7 years, based on annualized base rent, and 4.5 years, based on leased square footage. See “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” of this Annual Report on Form 10-K for a schedule of expiring leases for our consolidated operating properties by annual minimum rents as of December 31, 2016.

Tenant Information

The following table describes our top ten tenants based on annualized base rent and their industry sectors as of December 31, 2016 (dollar and square footage amounts in thousands).  

	Tenant	Locations	Industry	Annualized Base Rent (1)		% of Total Annualized Base Rent		Square Feet	% of Total Portfolio Square Feet
1	Charles Schwab & Co, Inc. (2)	2	Securities, Commodities, Fin. Inv./Rel. Activities	$	23,645	13.9	%	602	7.4	%
2	Sybase (3)	1	Publishing Information (except Internet)	18,692		11.0	%	405	5.0	%
3	Stop & Shop	14	Food and Beverage Stores	14,125		8.3	%	853	10.4	%
4	Novo Nordisk	1	Chemical Manufacturing	4,627		2.7	%	167	2.0	%
5	Seton Health Care	1	Hospitals	4,339		2.6	%	156	1.9	%
6	Shaw's Supermarket	4	Food and Beverage Stores	3,944		2.3	%	240	2.9	%
7	I.A.M. National Pension Fund	1	Funds, Trusts and Other Financial Vehicles	3,114		1.8	%	63	0.8	%
8	TJX Companies	7	Clothing and Clothing Accessories Stores	2,998		1.8	%	299	3.7	%
9	Home Depot	1	Building Material and Garden Equipment and Supplies Dealers	2,469		1.5	%	102	1.3	%
10	Alliant Techsystems Inc.	1	Fabricated Metal Product Manufacturing	2,450		1.4	%	107	1.3	%
		33		$	80,403	47.3	%	2,994	36.7	%

_______________________________

(1) Annualized base rent represents the annualized monthly base rent of executed leases as of December 31, 2016.

(2) The amount presented for Schwab reflects the total annualized base rent for our two leases in place with Schwab as of December 31, 2016. One of these leases, which expires in September 2017, entails the lease of all 594,000 square feet of our 3 Second Street (formerly known as Harborside) office property and accounts for $23.5 million or 13.8% of our annualized base rent as of December 31, 2016. We do not expect Schwab to renew this lease. Schwab has subleased 100% of 3 Second Street to 27 sub-tenants through September 2017. We have executed leases directly with nine of these subtenants that comprise 352,000 square feet or 59% of 3 Second Street that effectively extend their leases beyond the Schwab lease expiration. These direct leases will expire between September 2020 and September 2032.

(3) The Sybase lease was terminated on January 31, 2017.

The top two tenants in the table above comprise 24.9% of annualized base rent as of December 31, 2016. However, due to the expiration of the Sybase lease and the near-term expiration of the Schwab lease at 3 Second Street, these two tenants are no longer in the top three tenants based on future minimum rental revenue, together comprising less than 3% of our total future minimum rental revenue as ofDecember 31, 2016. Alternatively, based on future minimum rental revenue as of December 31, 2016, our top five tenants rank as follows: 1) Stop & Shop, 2) Mizuho Bank Ltd., 3) Shaw's Supermarket, 4) Novo Nordisk, and 5) Schwab.

ITEM 3.    LEGAL PROCEEDINGS

None.

ITEM 4.    MINE SAFETY DISCLOSURES

Not applicable.

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PART II

ITEM 5.    MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

Market Information

There is no public market for shares of our common stock and we currently have no obligation or plans to apply for listing on any public trading market. The prices at which our shares of common stock are sold pursuant to our public offerings, or redeemed pursuant to our share redemption programs, are based on the daily NAV per share determined in accordance with our valuation procedures, as described further below. We may repurchase shares of our common stock pursuant to self-tender offers at a discount to NAV.

We commenced calculating a daily NAV on July 12, 2012. The following table presents the high and low NAV per share of each class of common stock for each quarter within the two most recent fiscal years (to date, our classes have had the same NAV on each day):

Quarter	Low		High
First Quarter 2015	$	7.13	$	7.31
Second Quarter 2015	$	7.28	$	7.38
Third Quarter 2015	$	7.36	$	7.44
Fourth Quarter 2015	$	7.40	$	7.47
First Quarter 2016	$	7.36	$	7.47
Second Quarter 2016	$	7.34	$	7.40
Third Quarter 2016	$	7.38	$	7.48
Fourth Quarter 2016	$	7.47	$	7.57

Performance Graph

The following graph is a comparison of the cumulative return of our shares of common stock calculated on a weighted average basis (after class-specific expenses), against the National Council of Real Estate Investment Fiduciaries Fund Index-Open-End Diversified Core Equity (“ODCE”) and Standard and Poor’s 500 Index (“S&P 500”), as peer group indices. The graph assumes that $100 was invested on September 30, 2012 in shares of our common stock and each index assuming that all dividends were reinvested. There can be no assurance that the performance of our shares will continue in line with the same or similar trends depicted in the following graph. Our total return since July 12, 2012, the date we initiated daily NAV pricing, was 41.73%, or 8.11% annualized. Our total return for the year ended December 31, 2016 was 6.31% on a weighted-average basis across our multiple share classes.

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This performance and the chart below do not reflect selling commissions of up to 3.0% of the public offering price per share applicable to Class A shares sold in our primary offering.

_______________________________ 

(1) The ODCE is an equal weighted, time weighted index of open-end core real estate funds reported net of fees. The term core typically reflects lower risk investment strategies, utilizing low leverage and generally represented by equity ownership positions in stable U.S. operating properties. Funds are weighted equally, regardless of size. While funds used in this benchmark have characteristics that differ from the Company (including differing management fees), our management feels that the ODCE is an appropriate and accepted index for the purpose of evaluating returns on investments in direct real estate funds. Investors cannot invest in this index. The Company has the ability to utilize higher leverage than is allowed for the funds in this index, which could increase the Company’s volatility relative to the index.

The following table shows the return, by share class, of each of our classes of common stock for the year ended December 31, 2016.

Share Class	Weighted average number of shares outstanding during period (in thousands)	Return
Class E	128,462	6.35	%
Class A (1)	1,888	5.21	%
Class W	2,140	5.73	%
Class I	27,158	6.25	%
Total / Weighted Average	159,648	6.31	%

_______________________________

(1) Does not reflect selling commission of up to 3.0% of the public offering price per share, applicable to Class A shares purchased in our primary offering.

Net Asset Value Calculation

Our board of directors, including a majority of our independent directors, has adopted valuation procedures that contain a comprehensive set of methodologies to be used in connection with the calculation of our NAV on a daily basis. One fundamental element of the valuation process, the valuation of our real property portfolio, is managed by Altus Group U.S., Inc., an independent valuation firm (“the Independent Valuation Firm”) approved by our board of directors, including a majority of our independent directors. All parties engaged by us in the calculation of our NAV, including the Advisor, are subject to the oversight of our board of directors. As part of this process, our Advisor reviews the estimates of the values of our real property portfolio and real estate-related assets for consistency with our valuation guidelines and the overall reasonableness of the valuation conclusions, and informs our board of directors of its conclusions (as needed, but at least once per year as part of their annual review, described below). Although our Independent Valuation Firm or other pricing sources

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may consider any comments received from us or our Advisor to their individual valuations, the final estimated values of our real properties or certain other assets and liabilities are determined by the Independent Valuation Firm or other pricing source. Our Independent Valuation Firm is available to meet with our board of directors to review valuation information, as well as our valuation guidelines and the operation and results of the valuation process generally. Our board of directors has the right to engage additional valuation firms and pricing sources to review the valuation process or valuations, if deemed appropriate. Every month our senior management team and Altus hold an NAV committee meeting to review the prior month’s adjustments to NAV and discuss any possible changes to the NAV policies and procedures which may be recommended to the board of directors.  The information reviewed by this committee is summarized for the audit committee.  At least once each calendar year our board of directors, including a majority of our independent directors, reviews the appropriateness of our valuation procedures. With respect to the valuation of our properties, the Independent Valuation Firm provides the board of directors with periodic valuation reports. From time to time our board of directors, including a majority of our independent directors, may adopt changes to the valuation procedures if it (1) determines that such changes are likely to result in a more accurate reflection of NAV or a more efficient or less costly procedure for the determination of NAV without having a material adverse effect on the accuracy of such determination or (2) otherwise reasonably believes a change is appropriate for the determination of NAV. We will publicly announce material changes to our valuation procedures or the identity or role of the Independent Valuation Firm. See Exhibit 99.1 of this Annual Report on Form 10-K for a more detailed description of our valuation procedures, including important disclosure regarding real property valuations provided by the Independent Valuation Firm.

The following table sets forth the components of NAV for the Company as of December 31, 2016 and September 30, 2016 (amounts in thousands except per share information). As used below, “Fund Interests” means our Class E shares, Class A shares, Class W shares, and Class I shares, along with the OP Units held by third parties, and “Aggregate Fund NAV” means the NAV of all of the Fund Interests.

	As of December 31, 2016			As of September 30, 2016
Office properties	$	1,187,600		$	1,185,850
Industrial properties	81,750			80,850
Retail properties	1,012,850			1,020,750
Real properties	$	2,282,200		$	2,287,450
Debt-related investments	15,209			15,340
Total Investments	$	2,297,409		$	2,302,790
Cash and other assets, net of other liabilities	(10,051		)	(10,109		)
Debt obligations	(1,054,470		)	(1,056,070		)
Outside investors’ interests	(3,588		)	(3,626		)
Aggregate Fund NAV	$	1,229,300		$	1,232,985
Total Fund Interests outstanding	162,396			164,930
NAV per Fund Interest	$	7.57		$	7.48

When the fair value of our real estate assets is calculated for the purposes of determining our NAV per share, the calculation is done using the fair value methodologies detailed within the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification under Topic 820, Fair Value Measurements and Disclosures (“ASC Topic 820”). However, our valuation procedures and our NAV are not subject to GAAP and will not be subject to independent audit. In the determination of our NAV, the value of certain of our assets and liabilities are generally determined based on their carrying amounts under GAAP; however, those principles are generally based upon historic cost and therefore may not be determined in accordance with ASC Topic 820. Readers should refer to our audited financial statements for our net book value determined in accordance with GAAP from which one can derive our net book value per share by dividing our stockholders’ equity by shares of our common stock outstanding as of the date of measurement.

Our valuation procedures, which address specifically each category of our assets and liabilities and are applied separately from the preparation of our financial statements in accordance with GAAP, involve adjustments from historical cost. There are certain factors which cause NAV to be different from net book value on a GAAP basis. Most significantly, the valuation of our real estate assets, which is the largest component of our NAV calculation, will be provided to us by the Independent Valuation Firm on a daily basis. For GAAP purposes, these assets are generally recorded at depreciated or amortized cost. We generally do not undertake to mark-to-market our debt investments or real estate-related liabilities, but rather these assets and liabilities are usually included in our determination of NAV at amounts determined in accordance with GAAP, which amounts have been

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and could in the future be materially different from the amount of these assets and liabilities if we were to undertake to mark-to-market our debt. Also for NAV purposes, we mark-to-market our hedging instruments on a frequency that management determines to be practicable under the circumstances and currently we seek to mark-to-market our hedging instruments on a weekly basis. However, our NAV policies and procedures allow for that frequency to change to be more or less frequent. Other examples that will cause our NAV to differ from our GAAP net book value include the straight-lining of rent, which results in a receivable for GAAP purposes that is not included in the determination of our NAV, and, for purposes of determining our NAV, the assumption of a value of zero in certain instances where the balance of a loan exceeds the value of the underlying real estate properties, where GAAP net book value would reflect a negative equity value for such real estate properties, even if such loans are non-recourse. Third party appraisers may value our individual real estate assets using appraisal standards that deviate from fair value standards under GAAP. The use of such appraisal standards may cause our NAV to deviate from GAAP fair value principles. We did not develop our valuation procedures with the intention of complying with fair value concepts under GAAP and, therefore, there could be differences between our fair values and the fair values derived from the principal market or most advantageous market concepts of establishing fair value under GAAP.

Under GAAP, we record liabilities for dealer manager and distribution fees that we (i) currently owe our dealer manager under the terms of our dealer manager agreement and (ii) for an estimate that we may pay to our Dealer Manager in future periods for shares of our common stock sold pursuant to the Prior Offering and the Follow-On Offering. As of December 31, 2016, we recorded a total liability for dealer manager and distribution fees of approximately $3.9 million, comprised of a $44,000 current payable to our dealer manager and a $3.9 million estimated liability for dealer manager and distributions fees that we may pay to our dealer manager in future periods. We do not deduct the $3.9 million liability for estimated future dealer manager and distribution fees in our calculation of NAV since we intend for our NAV to reflect our estimated value on the date that we determine our NAV. Accordingly, our estimated NAV at any given time should not include consideration of any estimated future dealer manager and distribution fees that may become payable after such date.

We include no discounts to our NAV for the illiquid nature of our shares, including the limitations on your ability to redeem shares under our share redemption programs or self-tender offers and our ability to suspend or terminate our share redemption programs or self-tender offers at any time. Our NAV generally does not consider exit costs (e.g. selling costs and commissions related to the sale of a property) that would likely be incurred if our assets and liabilities were liquidated or sold. While we may use market pricing concepts to value individual components of our NAV, our per share NAV is not derived from the market pricing information of open-end real estate funds listed on stock exchanges.

Please note that our NAV is not a representation, warranty or guarantee that: (1) we would fully realize our NAV upon a sale of our assets; (2) shares of our common stock would trade at our per share NAV on a national securities exchange; and (3) a stockholder would be able to realize the per share NAV if such stockholder attempted to sell his or her shares to a third party.

The December 31, 2016 valuation for our real properties was provided by the Independent Valuation Firm in accordance with our valuation procedures and determined starting with the appraised value. The aggregate real property valuation of $2.28 billion compares to a GAAP basis of real properties (before accumulated amortization and depreciation and the impact of intangible lease liabilities) of $2.11 billion, representing an increase of approximately $168.9 million or 8.0%. Certain key assumptions that were used by our Independent Valuation Firm in the discounted cash flow analysis are set forth in the following table based on weighted averages by property type.  

	Office		Industrial		Retail		Weighted Average Basis
Exit capitalization rate	6.65	%	7.68	%	6.44	%	6.59	%
Discount rate / internal rate of return (“IRR”)	7.29	%	8.26	%	6.96	%	7.18	%
Annual market rent growth rate	3.20	%	3.00	%	2.91	%	3.06	%
Average holding period (years)	10.3		10.9		10.1		10.2

A change in the rates used would impact the calculation of the value of our real properties. For example, assuming all other factors remain constant, an increase in the weighted-average annual discount rate/IRR and the exit capitalization rate of 0.25% would reduce the value of our real properties by approximately 1.94% and 2.26%, respectively.

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The following table sets forth the quarterly changes to the components of NAV for the Company and the reconciliation of NAV changes for each class of shares (amounts in thousands, except per share information):  

	Total			Class E Common Stock			Class A Common Stock			Class W Common Stock			Class I Common Stock			Class E OP Units
NAV as of September 30, 2016	$	1,232,985		$	896,349		$	14,145		$	16,802		$	214,866		$	90,823
Fund level changes to NAV
Realized/unrealized gains on net assets	12,163			8,564			143			161			2,421			874
Income accrual	22,407			15,953			259			302			4,266			1,627
Dividend accrual	(14,901		)	(10,692		)	(134		)	(177		)	(2,806		)	(1,092		)
Advisory fee	(3,624		)	(2,581		)	(42		)	(49		)	(689		)	(263		)
Performance based fee	(94		)	(66		)	(1		)	(1		)	(19		)	(7		)
Class specific changes to NAV
Dealer Manager fee	(107		)	—			(22		)	(25		)	(60		)	—
Distribution fee	(18		)	—			(18		)	—			—			—
NAV as of December 31, 2016 before share/unit sale/redemption activity	$	1,248,811		$	907,527		$	14,330		$	17,013		$	217,979		$	91,962
Share/unit sale/redemption activity
Shares/units sold	44,371			3,613			949			402			39,407			—
Shares/units redeemed	(63,882		)	(60,862		)	(137		)	(221		)	(1,897		)	(765		)
NAV as of December 31, 2016	$	1,229,300		$	850,278		$	15,142		$	17,194		$	255,489		$	91,197
Shares/units outstanding as of September 30, 2016 (1)	164,930			119,899			1,892			2,248			28,742			12,149
Shares/units sold	5,925			483			127			53			5,262			—
Shares/units redeemed	(8,459		)	(8,057		)	(18		)	(30		)	(253		)	(101		)
Shares/units outstanding as of December 31, 2016 (1)	162,396			112,325			2,001			2,271			33,751			12,048
NAV per share/unit as of September 30, 2016				$	7.48		$	7.48		$	7.48		$	7.48		$	7.48
Change in NAV per share				0.09			0.09			0.09			0.09			0.09
NAV per share/unit as of December 31, 2016				$	7.57		$	7.57		$	7.57		$	7.57		$	7.57

_______________________________

(1) Amounts reported do not include approximately 288,000 restricted stock units granted to our Advisor that remain unvested as of both September 30, 2016 and December 31, 2016.

Holders

As of February 24, 2017, we had (i) approximately 112.5 million shares of our Class E common stock outstanding held by a total of approximately 22,000 stockholders, (ii) approximately 2.0 million shares of our Class A common stock outstanding held by a total of approximately 300 stockholders, (iii) approximately 2.4 million shares of our Class W common stock outstanding held by a total of approximately 400 stockholders, and (iv) approximately 33.9 million shares of our Class I common stock outstanding held by a total of approximately 3,000 stockholders. As of February 24, 2017, we had approximately 12.0 million Class E OP Units outstanding issued to approximately 200 third parties in connection with our Operating Partnership’s private placement offerings.

Distributions

We intend to continue to accrue distributions daily and make distributions to our stockholders on a quarterly basis following the end of each calendar quarter. We began making such distributions following the first calendar quarter after the quarter in which the minimum offering requirements were met for our initial public offering. However, we reserve the right to adjust the periods during which distributions accrue and are paid.

Our ability to pay distributions at the current level also likely will be impacted by the expiration of certain large leases in our portfolio, and, as a result, we may be required to reduce the level of our quarterly distributions. To the extent that we sell higher yielding assets in exchange for assets that may initially produce less income in exchange for the potential ability for

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longer term appreciation, this may also put pressure on our ability to sustain our current distribution level. If our quarterly distributions exceed cash flow generated from our operations, it may cause a decrease in our NAV if not offset by other effects.

Our board of directors determines the level of our distributions each quarter. In determining the appropriate level of a distribution, our board of directors considers a number of factors, including the current and anticipated market conditions, current and anticipated future performance and make-up of our investments, our overall financial projections and expected future cash needs, and distributions required to satisfy requirements for qualification as a REIT. We can give no assurance that the board of directors will continue to set distributions at current levels and our distribution levels may change from time to time. Depending on the distribution level relative to cash flow generated from our portfolio, if our quarterly distributions exceed cash flow generated from our operations, it may cause a decrease in our NAV if not offset by other effects.

In connection with a distribution to our stockholders, our board has historically authorized, and intends to continue to authorize, a quarterly distribution of a certain dollar amount per share of our common stock before or on the first day of each quarter. We then calculate each stockholder’s specific distribution amount for the quarter using daily record and declaration dates and each stockholder’s distributions begin to accrue on the date and time that they become a record owner of our common stock, subject to our board of directors declaring a distribution for record owners as of such date and time. We accrue the amount of declared distributions as our liability on a daily basis, and such liability is accounted for in determining the NAV.

We are required to make distributions sufficient to satisfy the requirements for qualification as a REIT for federal income tax purposes. Generally, income distributed will not be taxable to us under the Code if we distribute at least 90% of our taxable income each year (computed without regard to the dividends paid deduction and our net capital gain). In addition, if we fail to distribute during each calendar year at least the sum of (a) 85% of our ordinary income for such year, (b) 95% of our capital gain net income for such year, and (c) any undistributed taxable income from prior periods, we will be subject to a 4% excise tax on the excess of the required distribution over the sum of (i) the amounts actually distributed by us, plus (ii) retained amounts on which we pay income tax at the corporate level. Distributions will be authorized at the discretion of the board of directors, in accordance with our earnings, cash flow and general financial condition. The board’s discretion will be directed, in substantial part, by its obligation to cause us to comply with the REIT requirements. Because we may receive income from interest or rents at various times during our fiscal year, distributions may not reflect our income earned in that particular distribution period and may be made in advance of actual receipt of funds in an attempt to make distributions relatively uniform. We are authorized to borrow money, issue new securities or sell assets in order to make distributions. There are no restrictions on the ability of the Operating Partnership to transfer funds to us.

For a summary of distributions that had been paid by us for the years ended December 31, 2016 and 2015 and declared for the first quarter of 2017, refer to Note 10 to our financial statements beginning on page F-1 of this Annual Report on Form 10-K.

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The following table sets forth the amounts and sources of distributions declared for the three and twelve months ended December 31, 2016 and 2015 (dollar amounts in thousands):

	For the Three Months Ended								For the Twelve Months Ended
Distributions:	December 31, 2016		% of Total Distributions		December 31, 2015		% of Total Distributions		December 31, 2016		% of Total Distributions		December 31, 2015		% of Total Distributions
Common stock distributions paid in cash	$	8,671	57.4	%	$	9,748	60.3	%	$	36,418	58.6	%	$	41,723	61.2	%
Other cash distributions (1)	1,297		8.6	%	1,313		8.1	%	5,135		8.3	%	5,241		7.7	%
Total cash distributions	$	9,968	66.0	%	$	11,061	68.4	%	$	41,553	66.9	%	$	46,964	68.9	%
Common stock distributions reinvested in common shares	5,139		34.0	%	5,093		31.6	%	20,622		33.1	%	21,177		31.1	%
Total distributions	$	15,107	100.0	%	$	16,154	100.0	%	$	62,175	100.0	%	$	68,141	100.0	%
Sources of distributions:
Cash flow from operations (2)	$	22,458	148.7	%	$	27,629	173.2	%	$	90,296	145.2	%	$	105,530	154.9	%
Financial performance metric:
NAREIT-defined FFO (3)	$	21,243	140.6	%	$	21,403	132.5	%	$	90,842	146.1	%	$	88,171	129.4	%

_______________________________

(1) Other cash distributions include (i) distributions declared for OP Units for the respective period, (ii) regular distributions made during the period to our joint venture partners that are noncontrolling interest holders, which exclude distributions of disposition proceeds related to properties sold by the joint ventures, and (iii) dealer manager and distribution fees we pay to our dealer manager with respect to the Class A, Class W and Class I shares.

(2) Expenses associated with the acquisition of real property are recorded to earnings and as a deduction to our cash from operations. We incurred acquisition-related expenses of approximately $6,000 and $667,000 for the three and twelve months ended December 31, 2016, respectively, and $1.4 million and $2.6 million for the three and twelve months ended December 31, 2015, respectively.

(3) FFO is an operating metric and should not be used as a liquidity measure. However, management believes the relationship between FFO and distributions may be meaningful for investors to better understand the sustainability of our operating performance compared to distributions made. For a discussion of FFO and Company-Defined FFO, including definitions, reconciliations to GAAP net income, and their inherent limitations, see “How We Measure Our Operating Performance” in “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in this Annual Report on Form 10-K.

Distribution Reinvestment Plan

Our distribution reinvestment plan allows stockholders to elect to have their cash distributions attributable to the class of shares owned automatically reinvested in additional shares of the same class. The per share purchase price for shares purchased pursuant to the distribution reinvestment plan is equal to our NAV per share applicable to the class of shares purchased, calculated as of the distribution date. A stockholder may terminate participation in our distribution reinvestment plan at any time, without penalty, by delivering to us a written notice. Such notice must be received by us at least one business day prior to a distribution date in order for a stockholder’s termination to be effective for such distribution date (i.e., a termination notice will be effective the day after it is received and will not affect participation in our distribution reinvestment plan for any prior date).

We reserve the right to amend any aspect of our distribution reinvestment plan without the consent of our stockholders, provided that notice of any material amendment is sent to participants at least 10 days prior to the effective date of that amendment. Our board of directors may amend, suspend or terminate the distribution reinvestment plan for any reason at any time upon 10 days’ prior notice to participants. We may provide notice by including such information (a) in a Current Report on Form 8-K or in our annual or quarterly reports, all publicly filed with the Commission or (b) in a separate mailing to the participants.

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Share Redemption Programs and Other Redemptions or Repurchases

We have adopted a Class E Share Redemption Program (the “Class E SRP”), whereby eligible Class E stockholders may request that we redeem all or any portion of their Class E shares in accordance with the procedures and subject to certain conditions and limitations described below. We also have a separate Class A, W and I Share Redemption Program (the “Class AWI SRP”) for holders of our Class A, Class W or Class I shares, described below. Our board of directors may modify, suspend or terminate our share redemption programs if it deems such action to be in the best interest of our stockholders. We also conduct self-tender offers from time to time. During 2016 and 2015, redemptions pursuant to our Class E SRP and Class AWI SRP and other repurchases were funded through borrowings from our revolving line of credit. We generally repay funds borrowed from our revolving line of credit from a variety of sources including (i) operating cash flows in excess of our distributions, (ii) proceeds from our equity offerings, (iii) proceeds from the disposition of real properties and (iv) other longer-term borrowings.

Class E Share Redemption Program

Under the Class E SRP, we redeem Class E shares on a quarterly basis. If a redemption request with respect to Class E shares is made and accepted, the redemption price per share is equal to the NAV per Class E share on the date of redemption. Redemptions are only available with respect to Class E shares of common stock in the event of the death or disability of a stockholder subject to the following limitation: unless approved by the board of directors, we will not make, during any consecutive twelve-month period, redemptions in the event of the death or disability of a stockholder that exceed five percent of the number of Class E shares of common stock outstanding at the beginning of such twelve-month period. With respect to Class E stockholders desiring liquidity other than in connection with an event of death or disability, our board of directors evaluates each quarter whether to make liquidity available through the Class E SRP or through a tender offer process. In order to make such liquidity available through the Class E SRP, our board of directors would need to amend the Class E SRP.

Self-Tender Offers

As set forth above, with respect to Class E stockholders desiring liquidity other than in connection with an event of death or disability, our board of directors evaluates each quarter whether to make liquidity available through the Class E SRP or through a tender offer process. In order to provide additional liquidity to Class E stockholders, from time to time we may conduct self-tender offers for Class E shares. Although there can be no assurance, our board of directors currently intends to make liquidity available to Class E stockholders each quarter (other than liquidity made available in the event of the death or disability of a stockholder through the Class E SRP) in the Class E Liquidity Amount. Our board of directors may at any time decide to reduce or eliminate the Class E Liquidity Amount or cease making Class E liquidity available through self-tender offers.

Class A, Class W and Class I Share Redemption Program

Under the Class AWI SRP, on each day the New York Stock Exchange is open for trading (a business day), stockholders may request that we redeem all or any portion of their Class A, Class W and Class I shares. Redemption requests received in good order by our transfer agent or a fund intermediary on a business day and before the close of business (4:00 p.m. Eastern time) on that day will be effected at a redemption price equal to our NAV per share for the class of shares being redeemed calculated after the close of business on that day. Subject to limited exceptions, shares redeemed within 365 days of the date of purchase will be redeemed at NAV per share for the class of shares being redeemed less a short-term trading discount equal to 2% of the gross proceeds otherwise payable with respect to the redemption.

A quarterly cap is imposed on the aggregate “net redemptions” of our Class A, Class W and Class I share classes equal to the amount of shares of such classes with a value (based on the redemption price per share on the day the redemption is effected) of up to 5% of the aggregate NAV of the outstanding shares of such classes as of the last day of the previous calendar quarter. Here, we use the term “net redemptions” to mean, for any quarter, the excess of our share redemptions (capital outflows) of our Class A, Class W and Class I share classes over the share purchases net of sales commissions (capital inflows) of such classes in any ongoing public offering of Class A, Class W or Class I shares, whether in a primary offering or pursuant to a distribution reinvestment plan.

For each future quarter, our board of directors reserves the right to choose whether the quarterly cap will be applied to “gross redemptions,” meaning, for any class and any quarter, amounts paid to redeem shares of such class since the beginning of such calendar quarter, or “net redemptions.” In order for the board of directors to change the application of the quarterly cap from net redemptions to gross redemptions or vice versa, we will notify stockholders through a prospectus supplement and/or a

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special or periodic report filed with the Commission, as well as in a press release or on our website, at least 10 days before the first business day of the quarter for which the new test will apply.

In addition, for each future quarter, our board of directors reserves the right to choose whether the quarterly cap and the “net redemptions” test will be applied to our Class A, Class W and Class I shares on a class-specific basis rather than on the aggregate basis described above. If our board of directors chooses to have the quarterly cap and the “net redemptions” test apply on a class-specific basis, then “net redemptions” of our Class A, Class W and Class I share classes will mean, for any class and any quarter, the excess of our share redemptions (capital outflows) of such class over the share purchases net of sales commissions (capital inflows) of such class in any ongoing public offering of Class A, Class W or Class I shares, whether in a primary offering or pursuant to a distribution reinvestment plan. Further, the quarterly cap will mean a quarterly cap on the “net redemptions” of each of our Class A, Class W and Class I share classes equal to the amount of shares of such class with an aggregate value (based on the redemption price per share on the day the redemption is effected) of up to 5% of the NAV of the outstanding shares of such class as of the last day of the previous calendar quarter. In order for the board of directors to change the application of the quarterly cap and the “net redemptions” test from being applied to our Class A, Class W and Class I shares on an aggregate basis among Class A, Class W and Class I shares, taken together, to a class-specific basis, or vice versa, we will notify stockholders through a prospectus supplement and/or a special or periodic report filed with the Commission, as well as in a press release or on our website, at least 10 days before the first business day of the quarter for which the new test will apply.

The AWI SRP clarifies that no assurance can be given that we will maintain the allocation to liquid assets intended to generally be maintained under normal circumstances, as described in the plan.

For the three months ended December 31, 2016, we redeemed (i) approximately 7.7 million Class E shares pursuant to a self-tender offer for approximately $57.3 million and (ii) approximately 661,000 shares of common stock pursuant to the Class E SRP and AWI SRP for approximately $4.9 million, as described further in the table below.

Period	Total Number of Shares Redeemed or Repurchased	Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs	Maximum Number of Shares that May Yet Be Purchased Pursuant to the Program (1)
October 1 - October 31, 2016	108,989	$	7.46	108,989	—
November 1 - November 30, 2016	473,452	7.48		473,452	—
December 1 - December 31, 2016 (2)	7,774,978	7.44		7,774,978	—
Total	8,357,419	$	7.44	8,357,419	—

_______________________________ 

(1) Redemptions and repurchases are limited under the Class E SRP and the Class AWI SRP as described above and pursuant to the terms of self-tender offers announced from time to time. We redeemed all Class A, W, and I shares that were requested to be redeemed during the three months ended December 31, 2016. As of December 31, 2016, we had capacity under the Class AWI SRP to redeem up to an aggregate of $50.9 million of Class A, W, and I shares. Pursuant to the Class AWI SRP, this capacity resets at the beginning of each quarter.

(2) Number of shares represents (i) approximately 7.7 million Class E shares repurchased at $7.44 per share for an aggregate cost of approximately $57.3 million pursuant to a self-tender offer and (ii) approximately 78,000 shares redeemed pursuant to the Class E SRP and the Class AWI SRP, as discussed above.

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Below is a summary of Class E common stock repurchases pursuant to our self-tender offers and repurchases pursuant to the Class E SRP for each quarter during 2016 and 2015 (number of shares in thousands).   

For the Quarter Ended:	Number of Class E Shares Requested for Redemption or Purchase	Number of Class E Shares Redeemed or Purchased	Percentage of Class E Shares Requested for Redemption Redeemed or for Purchase Purchased		Price Paid  per Share
March 31, 2015
Class E SRP – Ordinary Redemptions	18,570	1,104	5.9	%	$	7.30
Class E SRP – Death or Disability Redemptions	426	426	100.0	%	7.30
Total / Average	18,996	1,530	8.1	%	7.30
June 30, 2015
Class E SRP – Ordinary Redemptions	20,031	4,379	21.9	%	7.38
Class E SRP – Death or Disability Redemptions	626	626	100.0	%	7.38
Total / Average	20,657	5,005	24.2	%	7.38
September 30, 2015
Class E SRP – Ordinary Redemptions	12,456	1,393	11.2	%	7.42
Class E SRP – Death or Disability Redemptions	452	452	100.0	%	7.42
Self-Tender Offer Purchases (1)	17,153	17,153	100.0	%	7.25
Total / Average	30,061	18,998	63.2	%	7.27
December 31, 2015
Self-Tender Offer Purchases (2)	20,758	2,707	13.0	%	7.39
Total / Average	20,758	2,707	13.0	%	7.39
Average 2015	22,618	7,060	31.2	%	$	7.30
March 31, 2016
Class E SRP – Death or Disability Redemptions	460	460	100.0	%	$	7.43
Self-Tender Offer Purchases (2)	13,660	4,058	29.7	%	7.39
Total / Average	14,120	4,518	32.0	%	7.39
June 30, 2016
Class E SRP – Death or Disability Redemptions	537	537	100.0	%	7.37
Self-Tender Offer Purchases (2)	13,896	6,770	48.7	%	7.31
Total / Average	14,433	7,307	50.6	%	7.31
September 30, 2016
Class E SRP – Death or Disability Redemptions	466	466	100.0	%	7.40
Self-Tender Offer Purchases (2)	10,897	6,606	60.6	%	7.35
Total / Average	11,363	7,072	62.2	%	7.35
December 31, 2016
Class E SRP – Death or Disability Redemptions	360	360	100.0	%	7.48
Self-Tender Offer Purchases (2)	7,697	7,697	100.0	%	7.44
Total / Average	8,057	8,057	100.0	%	7.44
Average 2016	11,993	6,739	56.2	%	$	7.38

_______________________________ 

(1) Amounts represent Class E shares properly tendered and not properly withdrawn at or below the final purchase price of $7.25 per share of a modified “Dutch auction” tender offer, which we completed on August 12, 2015. An additional 6,863 Class E shares were submitted for redemption at prices higher than the final purchase price, and were therefore not properly tendered.

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(2) Amounts represent Class E shares purchased pursuant to a self-tender offer, which we completed on December 23, 2015, March 14, 2016, June 14, 2016, September 13, 2016 and December 9, 2016.

During 2016, we satisfied 100% of the redemption requests received pursuant to our Class AWI SRP; we redeemed approximately 180,000 Class A shares for an average price of approximately $7.36 per share, approximately 367,000 Class W shares for an average price of approximately $7.36 per share, and approximately 970,000 Class I shares for an average price of approximately $7.43 per share. During 2015, we satisfied 100% of the redemption requests received pursuant to our Class AWI SRP; we redeemed approximately 23,000 Class A shares for an average price of approximately $7.29 per share, approximately 20,000 Class W shares for an average price of approximately $7.32 per share and approximately 873,000 Class I shares for an average price of approximately $7.37 per share.

Securities Authorized for Issuance under Equity Compensation Plans

The following table gives information regarding our equity incentive plans as of December 31, 2016.   

	Equity Compensation Plans Information
Plan Category	Number of Securities To Be Issued Upon Exercise of Outstanding Options, Warrants, and Rights			Weighted-Average Exercise Price of Outstanding Options, Warrants, and Rights (1)		Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans (2)
Equity compensation plans approved by security holders	$	4,055	(3)	$	—	1,886,079
Equity compensation plans not approved by security holders	—			—		1,988,715
Total / Weighted Average	$	4,055		$	—	3,874,794

_______________________________ 

(1) Restricted stock units (“RSUs”) with respect to Class I shares of our common stock that were granted to our independent directors and had not been settled as of December 31, 2016, are included in the number of securities to be issued upon exercise of outstanding options, warrants, and rights but are not reflected in the weighted-average exercise price of outstanding options, warrants, and rights.

(2) We have two equity incentive plans. Under each plan, an aggregate maximum of 5.0 million shares may be issued upon grant, vesting or exercise of awards, although the board of directors, as of December 31, 2016, has only authorized and reserved for issuance a total of 2.0 million shares of our common stock under each plan.

(3) As of December 31, 2016, includes 4,055 RSUs with respect to Class I shares of our common stock that were granted to our independent directors and had not yet vested.

Unregistered Issuance of Securities

No equity securities were sold in unregistered transactions during the three months ended December 31, 2016.

ITEM 6.    SELECTED FINANCIAL DATA

The following table sets forth selected financial data relating to our historical financial condition and results of operations for each of the five years ended December 31, 2016. The financial data in the table is qualified in its entirety by, and should be read in conjunction with, “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our financial statements and related notes beginning on page F-1 of this Annual Report on Form 10-K. The amounts in the table are in thousands except per share and footnote information.  

	As of or For the Year Ended December 31,
	2016			2015			2014			2013			2012
Statement of Operations Data:
Total revenue	$	216,170		$	225,200		$	231,597		$	217,777		$	216,325
Total operating expenses, excluding acquisition-related expenses and impairment of real property	(169,999		)	(170,507		)	(167,018		)	(155,740		)	(156,550		)
Acquisition-related expenses net of other gains	(667		)	(2,644		)	(1,205		)	(536		)	(325		)
Impairment of real property (1)	(2,677		)	(8,124		)	(9,500		)	(2,600		)	—
Gain on sale of real property(2)	45,660			134,218			10,914			—			—
Interest expense	(40,782		)	(47,508		)	(61,903		)	(65,325		)	(69,844		)

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Income (loss) from continuing operations (3)	55,048			131,659			3,990			(9,084		)	(14,961		)
Discontinued operations (4)	—			—			30,004			65,554			(7,410		)
Net income (loss)	55,048			131,659			33,994			56,470			(22,371		)
Net (income) loss attributable to noncontrolling interests	(5,072		)	(7,404		)	(4,802		)	(4,002		)	110
Net income (loss) attributable to common stockholders	$	49,976		$	124,255		$	29,192		$	52,468		$	(22,261	)
Comprehensive Income (Loss) Data:
Net income (loss)	$	55,048		$	131,659		$	33,994		$	56,470		$	(22,371	)
Net unrealized change from available-for-sale securities	—			—			(211		)	—			(1,426		)
Net unrealized change from cash flow hedging derivatives	4,416			(977		)	721			4,975			3,963
Total other comprehensive (loss) income	4,416			(977		)	510			4,975			2,537
Comprehensive income (loss)	$	59,464		$	130,682		$	34,504		$	61,445		$	(19,834	)
Per Share Data:
Net income (loss) per basic and diluted common share:
Continuing operations	$	0.31		$	0.70		$	0.02		$	(0.05	)	$	(0.08	)
Discontinued operations	$	—		$	—		$	0.14		$	0.34		$	(0.04	)
Common Stock Distributions
Common stock distributions declared	$	57,040		$	62,900		$	62,236		$	62,330		$	84,259
Weighted average common stock distributions declared per share	$	0.3571		$	0.3582		$	0.3492		$	0.3499		$	0.4625
Other Information:
Weighted average number of common shares outstanding:
Basic	159,648			175,938			178,273			178,196			181,982
Diluted	172,046			188,789			190,991			191,932			197,244
Number of common shares outstanding at end of period	150,636			164,124			178,400			176,007			178,128
Number of diluted shares outstanding at end of period	162,684			176,932			190,547			189,278			192,303
Balance Sheet Data:
Real estate, before accumulated depreciation (5)	$	2,204,322		$	2,380,174		$	2,472,926		$	2,570,480		$	2,819,550
Total assets	$	1,783,728		$	1,960,891		$	2,140,628		$	2,294,724		$	2,646,162
Total debt obligations(6)	$	1,048,801		$	1,097,769		$	1,191,675		$	1,313,822		$	1,607,517
Total liabilities	$	1,175,637		$	1,234,940		$	1,376,648		$	1,489,713		$	1,804,635
Cash Flow Data:
Net cash provided by operating activities	$	90,296		$	105,530		$	87,229		$	86,589		$	94,487
Net cash (used in) provided by investing activities	$	122,530		$	74,421		$	(15,102	)	$	72,847		$	(39,465	)
Net cash used in financing activities	$	(214,731	)	$	(178,643	)	$	(82,444	)	$	(171,530	)	$	(146,597	)
Supplemental Information
FFO attributable to common stockholders(3)(7)	$	84,296		$	82,170		$	85,246		$	85,216		$	82,851
Company-defined FFO attributable to common stockholders (7)	$	81,108		$	85,722		$	86,430		$	88,044		$	88,383

_______________________________

(1) Real property impairment losses of $5.7 million recorded during the year ended December 31, 2012 relate to properties that we have disposed of and are included within discontinued operations.

(2) Beginning with the year ended December 31, 2014, as the result of adopting new accounting guidance, we present the aggregate net gains related to disposals of properties that are not classified as discontinued operations within continuing operations. See “Discontinued Operations” in Note 3 to our financial statements beginning on page F-1 of this Annual Report on Form 10-K for information regarding the adoption of new accounting guidance related to discontinued operations.

(3) Income (loss) from continuing operations and FFO attributable to common stockholders includes gains (losses) on extinguishment of debt of $5.1 million, $(1.2) million, $(2.5) million, and $(5.7) million in 2016, 2015, 2013, and 2012, respectively.

(4) After December 31, 2013, a discontinued operation is a component (or group of components) of the entity, the disposal of which would represent a strategic shift that has (or will have) a major effect on the entity’s operations and financial results, when such component (or group of components) have been disposed of or classified as held for sale. Through December 31, 2013, discontinued operations represent properties that we have either disposed of

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or have classified as held for sale if both the operations and cash flows of the property have been or will be eliminated from our ongoing operations as a result of the disposal transaction and if we will not have any significant continuing involvement in the operations of the property after the disposal transaction. Discontinued operations includes the results of (i) 12 properties classified as held for sale as of December 31, 2013, (ii) 13 properties disposed of during 2013 and (iii) three properties disposed of during 2012.

(5) Real estate, before accumulated depreciation includes approximately $30.4 million and $193.6 million that we classified within assets held for sale as of December 31, 2014 and 2013, respectively.

(6) Total debt obligations includes approximately $80.4 million that we classified within liabilities related to assets held for sale as of December 31, 2013. Net debt issuance costs, in accordance with ASU 2015-03, are included within this caption for all periods presented.

(7) FFO and Company-Defined FFO are defined, reconciled to GAAP net income, and discussed in “How We Measure Our Performance – Funds From Operations” in “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in this Annual Report on Form 10-K.

ITEM 7.    MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

This section of our Annual Report on Form 10-K provides an overview of what management believes to be the key elements for understanding (i) our company and how we manage our business, (ii) how we measure our performance and our operating results, (iii) our liquidity and capital resources, and (iv) the financial statements that follow beginning on page F-1 of this Annual Report on Form 10-K. The following discussion and analysis should be read together with our consolidated financial statements and notes thereto included in this Annual Report on Form 10-K. The following information contains forward-looking statements, which are subject to risks and uncertainties. Should one or more of these risks or uncertainties materialize, actual results may differ materially from those expressed or implied by the forward-looking statements. See “Cautionary Statement Regarding Forward-Looking Statements” above for a description of these risks and uncertainties.

Overview

Dividend Capital Diversified Property Fund Inc. is a Maryland corporation formed on April 11, 2005 to invest in a diverse portfolio of real property and real estate related investments. As used herein, “the Company,” “we,” “our” and “us” refer to Dividend Capital Diversified Property Fund Inc. and its consolidated subsidiaries and partnerships except where the context otherwise requires.

We believe we have operated in such a manner as to qualify as a real estate investment trust (“REIT”) for federal income tax purposes, commencing with the taxable year ended December 31, 2006, when we first elected REIT status. We utilize an Umbrella Partnership Real Estate Investment Trust (“UPREIT”) organizational structure to hold all or substantially all of our assets through our operating partnership, Dividend Capital Total Realty Operating Partnership LP (our “Operating Partnership”). Furthermore, our Operating Partnership wholly owns a taxable REIT subsidiary, DCTRT Leasing Corp. (the “TRS”), through which we execute certain business transactions that might otherwise have an adverse impact on our status as a REIT if such business transactions were to occur directly or indirectly through our Operating Partnership. We are an externally managed REIT and have no employees. Our day-to-day activities are managed by Dividend Capital Total Advisors LLC (our “Advisor”), a related party, under the terms and conditions of an advisory agreement (the “Advisory Agreement”).

On July 12, 2012, the Commission declared effective our Registration Statement on Form S-11 (the “Prior Registration Statement”). The Prior Registration Statement applied to the offer and sale (the “Prior Offering”) of up to $3,000,000,000 of our shares of common stock, of which $2,250,000,000 of shares were expected to be offered to the public in a primary offering and $750,000,000 of shares were expected to be offered to our stockholders pursuant to an amended and restated distribution reinvestment plan (subject to our right to reallocate such amounts). In the Prior Offering, we offered to the public three classes of shares: Class A shares, Class W shares and Class I shares with net asset value (“NAV”) based pricing. See “Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities” and Exhibit 99.1 of this Annual Report on Form 10-K, for a description of our valuation procedures and valuation components, including important disclosure regarding real property valuations provided by Altus Group U.S., Inc., an independent valuation firm (“the Independent Valuation Firm”). Our NAV is not audited by our independent registered public accounting firm. On September 15, 2015, we terminated the Prior Offering. Through September 15, 2015, the date our Prior Offering terminated, we had raised gross proceeds of approximately $183.0 million from the sale of approximately 25.8 million shares in the Prior Offering, including approximately $3.4 million through our distribution reinvestment plan.

On September 16, 2015, the Commission declared effective our Registration Statement on Form S-11 (the “Follow-On Registration Statement”). The Follow-On Registration Statement applies to the Company’s follow-on “best efforts” offering of up to $1,000,000,000 of the Company’s Class A, Class I and Class W shares of common stock, of which $750,000,000 of shares are expected to be offered to the public in a primary offering and $250,000,000 of shares are expected to be offered to stockholders of the Company pursuant to its distribution reinvestment plan (subject to the Company’s right to reallocate such

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amounts) (the “Follow-On Offering”). See Note 10 to our financial statements beginning on page F-1 of this Annual Report on Form 10-K for more information about changes in our common stock during the year ended December 31, 2016.

We will also continue to sell shares of our unclassified common stock, which we refer to as “Class E” shares, pursuant to our distribution reinvestment plan offering registered on our Registration Statement on Form S-3 (Registration Number 333-162636) (the “Class E DRIP Offering”).

In addition to our Follow-On Offering, in March 2016, we, through the Operating Partnership, initiated a program to raise capital in private placements exempt from registration under the Securities Act of 1933, as amended (“Private Placements”) through the sale of beneficial interests (“Interests”) in specific Delaware statutory trusts holding real properties, including properties currently indirectly owned by the Operating Partnership (the “DST Program”). We anticipate that these Interests may serve as replacement properties for investors seeking to complete like-kind exchange transactions under Section 1031 of the Internal Revenue Code of 1986, as amended. See "Private Placements of Delaware Statutory Trust Interests" in Note 11 to our financial statements beginning on page F-1 of this Annual Report on Form 10-K for more information about the DST Program.

The primary sources of our revenue and earnings include rent received from customers under longer-term operating leases at our properties, including reimbursements from customers for certain operating costs. Our primary expenses include rental expenses, depreciation and amortization expenses, general and administrative expenses, advisory fees and interest expenses.

We currently have three business segments, consisting of investments in (i) office property, (ii) industrial property, and (iii) retail property. We may have additional segments in the future to the extent we enter into additional real property sectors, such as multifamily, hospitality, and other real property types. For a discussion of our business segments and the associated revenue and net operating income by segment, see Note 13 to our financial statements beginning on page F-1 of this Annual Report on Form 10-K.

The following table summarizes our investments in real properties, by segment, using our estimated fair value of these investments as of December 31, 2016 (amounts in thousands):

	Geographic Markets	Number of Properties	Net Rentable Square Feet	% Leased (1)	Aggregate Fair Value
Office properties	13	16	3,400	95.0%	$	1,187,600
Industrial properties	3	5	1,782	77.9%	81,750
Retail properties	9	34	3,789	94.0%	1,012,850
Total real properties	20 (2)	55	8,971	91.2%	$	2,282,200

(1) Percentage leased is based on executed leases as of December 31, 2016.

(2) The total number of our geographic markets does not equal the sum of the number of geographic markets by segment, as we have more than one segment in certain geographic markets.

Any future and near-term obligations are expected to be funded primarily through the use of cash on hand, cash generated from operations, proceeds from our public offerings and other equity offerings, proceeds from the sale of existing investments, and the issuance and assumption of debt obligations.

• Cash on hand — As of December 31, 2016, we had approximately $13.9 million of cash and cash equivalents.

• Cash available under our credit facility — As of December 31, 2016, the unused portion of our line of credit was approximately $164.0 million, all of which was available to us.

• Cash generated from operations — During the year ended December 31, 2016, we generated approximately $90.3 million from operations of our real properties and income from debt-related investments.

• Proceeds from offerings of equity securities — We currently maintain a public offering of our shares of common stock. During the year ended December 31, 2016, we raised approximately $96.3 million in proceeds from the primary sale of Class A, W and I shares in our Follow-On Offering, including approximately $5.7 million under the distribution reinvestment plan. Approximately $69.3 million of the proceeds from the sale of Class A, W and I shares was raised pursuant to a selected dealer agreement, which we refer to as our “Managed Offering.”

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Additionally, during the year ended December 31, 2016, we received approximately $14.9 million in proceeds from the Class E DRIP Offering. Additionally, during the year ended December 31, 2016, we had sold approximately $2.5 million in Interests as part of our DST Program, which we include in "other liabilities" in our accompanying balance sheets.

• Proceeds from sales and repayments of existing investments — During the year ended December 31, 2016, we sold seven operating properties for approximately $220.1 million. After buyer credits, closing costs, the assumption of a related mortgage note, and the reclassification of certain proceeds to restricted cash, we received net proceeds of $208.6 million.

We believe that our existing cash balance, cash generated from operations, proceeds from our public offerings and our ability to sell investments and to issue debt obligations remains adequate to meet our expected capital obligations for the next twelve months.

Current Business Environment

The US economy continued to produce strong enough gains across several factors in 2016 to convince the Federal Reserve to raise interest rates in December 2016. During 2016, gross domestic product (“GDP”) grew at an estimated annualized rate of 1.6%, which is less than the 2.6% growth in 2015. The deceleration in GDP from 2015 to 2016 reflected a downturn in private inventory investment and nonresidential fixed investment and a deceleration in consumer spending, residential fixed investment and state and local government spending. In terms of inflation, the consumer price index increased 2.1% in 2016 which compares to an increase of 0.7% in 2015. Excluding food and energy items, the consumer price index increased 2.2% in 2016, compared to 2.1% in 2015. The unemployment rate decreased to 4.7% at the end of 2016 compared to 5.0% at the end of 2015 and the economy on average created over 180,000 new jobs per month in 2016, with real earnings increasing 0.8% in 2016 compared to 1.8% in 2015. Looking toward 2017, the Federal Reserve estimates GDP growth for 2017 between 1.9% and 2.3%, along with a positive outlook for other macroeconomic factors. Finally, the stock market responded favorably to the outcome of the presidential election and continues to set record highs in 2017 based on expectations that the new president’s policies will focus on significant fiscal stimulus, tax reform and deregulation. At the same time interest rates increased significantly from their historical lows seen during the middle of 2016.

Globally, growth in 2016 GDP declined to an estimated 2.3% from 2.7% in 2015. The World Bank expects global GDP to improve in 2017 to 2.7% amid heightened geopolitical uncertainty. Global trade growth slowed in 2016 due to structural factors and increased protectionism. Commodity prices stabilized during 2016 and may further recover, as planned production cuts from OPEC may lead oil prices higher. Financial market conditions for developing countries tightened significantly following the U.S. elections as concerns over protectionism sank currencies and increased bond yields globally. Heightened policy uncertainty in the United States and Europe will likely weigh on global trade and capital flows.

In 2016, even with modest GDP growth, US real estate fundamentals continued to perform well with rental rates and occupancy increasing resulting in 4.3% estimated growth in net operating income ("NOI") which is the highest post-crisis growth rate. Although development pipelines are returning to normalized levels, longer term growth is still expected to outpace inflation over the next several years. New development activity is most notable in the multifamily sector which is contributing to this property type having one of the lowest growth expectations over the next several years while the office sector is projected to be one of the highest growing sectors.

The capital market outlook for commercial real estate is less clear. The recent rise in interest rates and overall global uncertainty has resulted in flat to a slight increase in capitalization rates for real estate over the past several months and transaction volumes were about 10% lower than they were in 2015. Overall, while there seems to potentially be several years’ worth of runway for real estate fundamentals to continue improving, there are uncertainties as to how real estate investors will price real estate investments in a rising interest rate environment.

We have witnessed these trends in our daily activities. We are generally encountering more opportunities to increase rental rates across many of our markets and believe these opportunities should continue in 2017. In 2016, our same store average percentage leased improved to 92.1% from 90.9% in 2015 and our same store base rent increased 3% in 2016 when compared to 2015. Looking forward to 2017, we anticipate a reversal in this trend due to the near term lease expirations of our two largest leases with Schwab and Sybase. See our discussion of these lease expirations and their contribution to our annualized base rent and NOI in 2016 under “-Operating Activities-Lease Expirations.”

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In our transactions, we frequently find ourselves competing with many investors for properties that we find attractive and we believe the investor demand for high quality real estate currently exceeds the amount of supply. There remain opportunities to invest capital into commercial real estate but we believe being selective and disciplined is paramount to making successful investments. We have taken advantage of the capital competition by securing accretive financing in line with our leverage targets, which has significantly lowered our cost of capital. During 2016, we lowered our weighted average interest rate from 4.1% to 3.4% by continuing to repay higher interest senior mortgage borrowings with proceeds from lower interest senior mortgage and unsecured borrowings while maintaining a consistent leverage ratio.

Tenant Credit Quality

Our leasing strategy seeks to secure creditworthy tenants that meet our underwriting criteria for a respective property. The majority of our customers do not have a public corporate credit rating. Creditworthiness does not necessarily mean investment grade, and non-investment grade customers comprise the majority of our portfolio. We evaluate creditworthiness and financial strength of prospective tenants based on financial, operating and business plan information that such prospective tenants provide to us, as well as other market, industry, and economic information that is generally publicly available. As a result of this assessment, we may require that the tenant enhance their credit by providing us with security deposits, letters of credit from established financial institutions, or personal or corporate guarantees. Tenant creditworthiness often influences the amount of upfront tenant improvements, lease incentives, concessions or other leasing costs we may invest in a tenant lease.

Following the execution of a lease, we generally monitor tenant credit quality, particularly for our larger tenants, in several ways, including (i) ensuring the timeliness of payments from the tenant pursuant to the terms of the lease agreement, (ii) monitoring national and local media outlets for information regarding the tenant and their industry and (iii) obtaining, whenever reasonably possible, information from the tenant about the tenant’s financial condition (financial statements, tax returns, sales information or discussion with management).

Significant Transactions During the Year Ended December 31, 2016

Investment Activity

Dispositions of Real Properties

During the year ended December 31, 2016, we completed (i) the disposition of seven wholly owned properties aggregating approximately 1.2 million net rentable square feet for an aggregate sales price of approximately $220.1 million. Of these sales, the most significant is the sale of an office property in our Washington D.C. market comprising approximately 574,000 net rentable square feet to the property's tenant, pursuant to a purchase option acquired by the tenant for a contract sales price of approximately $158.4 million on February 18, 2016. For additional information on these dispositions, see Note 3 to our financial statements beginning on page F-1 of this Annual Report on Form 10-K.

Acquisition of Real Property

We acquired one property during the year ended December 31, 2016. The following table summarizes this acquisition. For additional information on this acquisition, see Note 3 to our financial statements beginning on page F-1 of this Annual Report on Form 10-K (dollar amounts and square footage in thousands): 

Real Property	Property Type	Market	Number of Properties	Date of Acquisition	Acquired Ownership		Contract Price		Net Rentable Square Feet	Percent Leased at Acquisition
Suniland Shopping Center	Retail	South Florida	1	May 27, 2016	100	%	$	66,500	82	93	%

Financing Activity

Share Redemption Programs and Other Redemptions and Repurchases

Self-Tender Offers — During the year ended December 31, 2016, we completed four self-tender offers pursuant to which we accepted for purchase approximately 25.1 million unclassified shares of common stock, which we refer to as “Class E” shares, at a weighted average purchase price of $7.37 per share for an aggregate cost of approximately $185.3 million. We funded the purchases with draws on our revolving credit facility.

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Amended Credit Facility

On December 22, 2016 we entered into a First Amendment to Amended and Restated Credit and Term Loan Agreement (the "BofA First Amendment") with a syndicate of lenders (the "BofA Lenders") led by Bank of America, N.A., as Administrative Agent ("BofA"). The BofA First Amendment amends that certain Amended and Restated Credit and Term Loan Agreement (the "BofA Credit Facility") dated as of January 13, 2015 among us, the BofA Lenders and BofA. The BofA Credit Facility consists of a $400 million revolving credit facility and a $150 million senior unsecured term loan. The BofA First Amendment among other things increased the maximum outstanding principal amount under the term loan from $150 million to $275 million pursuant to Section 2.15(a) of the BofA Credit Facility. As of December 31, 2016, we had outstanding borrowings of $275.0 million the term loan. For additional discussion of the Amended Credit Facility, see Note 5 to our financial statements beginning on page F-1 of this Annual Report on Form 10-K.

Notable Mortgage Note Borrowings and Other Secured Borrowings

Repayment of Mortgage Notes and Other Secured Borrowings — During the year ended December 31, 2016, we repaid nine mortgage note borrowings in full with an aggregate balance of approximately $326.2 million at the time of the payoffs and a weighted average interest rate of 5.82%. We funded the repayments with proceeds from our revolving credit facility and proceeds from real property dispositions. For additional information on these repayments, see Note 5 to our financial statements beginning on page F-1 of this Annual Report on Form 10-K.

Borrowing Under Mortgage Notes — During the year ended December 31, 2016, we received proceeds of $85.5 million from two mortgage note borrowings with a weighted average interest rate of 2.51%. For additional information on these borrowings, see Note 5 to our financial statements beginning on page F-1 of this Annual Report on Form 10-K.

Our Operating Results

Set forth below is a discussion of our operating results, followed by a discussion of FFO (as defined below) and Company-defined FFO (as defined below), which we consider to be meaningful supplemental measures of our operating performance. We also use NOI as a supplemental financial performance measure because NOI reflects the specific operating performance of our real properties and debt-related investments and excludes certain items that are not considered to be controllable in connection with the management of each property, such as other-than-temporary impairment, losses related to provisions for losses on debt-related investments, gains or losses on derivatives, acquisition-related expenses, losses on extinguishment of debt and financing commitments, interest income, depreciation and amortization, general and administrative expenses, advisory fees, interest expense and noncontrolling interests. However, NOI should not be viewed as an alternative measure of our operating financial performance as a whole, since it does exclude such items that could materially impact our results of operations. Further, our NOI may not be comparable to that of other real estate companies, as they may use different methodologies for calculating NOI. Therefore, we believe net income, as defined by GAAP, to be the most appropriate measure to evaluate our overall financial performance. We present NOI in the tables below, and include a reconciliation to net income, as defined by GAAP, in Note 13 to our financial statements beginning on page F-1 of this Annual Report on Form 10-K.

Net Income Attributable to Common Stockholders

Our net income attributable to common stockholders decreased to approximately $50.0 million for the year ended December 31, 2016 from approximately $124.3 million for the year ended December 31, 2015. The decrease was primarily a result of (i) a decrease in gain on sale of real property, largely driven by the disposition of a portfolio of 12 office and industrial properties during the year ended December 31, 2015, and (ii) a decrease in real property NOI from continuing operations as a result of the disposition activity, partially offset by (i) a decrease in interest expense, (ii) an increase in gain on extinguishment of debt and financing and (iii) lower impairments of real estate property.

Our net income attributable to common stockholders increased to approximately $124.3 million for the year ended December 31, 2015 from approximately $29.2 million for the year ended December 31, 2014. The increase was primarily a result of (i) an increase in gain on sale of real property, largely driven by the disposition of a portfolio of 12 office and industrial properties during the year ended December 31, 2015, and (ii) a decrease in interest expense, partially offset by a decrease in real property NOI from continuing operations as a result of the disposition activity.

The following series of tables and discussions describe in more detail our results of operations, including those items specifically mentioned above, for the year ended December 31, 2016 compared to the year ended December 31, 2015 and for the year ended December 31, 2015 compared to the year ended December 31, 2014.

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Three-Year Comparison

Our results of rental activities are presented in two groups: (i) all operating properties that we acquired prior to January 1, 2014 and owned through December 31, 2016 (the “Same Store Portfolio”), providing meaningful comparisons for 2016, 2015 and 2014, and (ii) all other operating properties, which were acquired or disposed during the same period, excluding dispositions classified as discontinued operations (the “Non-Same Store Portfolio”). The Same Store Portfolio includes 43 properties, comprising approximately 6.9 million square feet or 77.2% of our total portfolio when measured by square feet.

The following table illustrates the changes in rental revenues, rental expenses, and net operating income for the year ended December 31, 2016 compared to the year ended December 31, 2015 and for the year ended December 31, 2015 compared to the year ended December 31, 2014 (dollar amounts in thousands). 

	For the Year Ended December 31,						Amount Changed			% Change		For the Year Ended December 31,						Amount Changed			% Change
	2016			2015								2015			2014
Revenue
Base rental revenue - Same Store Portfolio (1)	$	131,591		$	127,656		$	3,935		3	%	$	127,656		$	123,371		$	4,285		3	%
Average % leased	92.1		%	90.9		%	N/A			1	%	90.9		%	86.8		%	N/A			5	%
Other rental revenue - Same Store Portfolio	21,947			26,284			(4,337		)	-17	%	26,284			26,783			(499		)	-2	%
Total rental revenue - Same Store Portfolio	153,538			153,940			(402		)	—	%	153,940			150,154			3,786			3	%
Rental revenue - Non-Same Store Portfolio (2)	61,689			64,338			(2,649		)	-4	%	64,338			74,047			(9,709		)	-13	%
Total continuing rental revenue	$	215,227		$	218,278		$	(3,051	)	-1	%	$	218,278		$	224,201		$	(5,923	)	-3	%
Rental Expenses
Same Store Portfolio	$	43,356		$	42,669		$	687		2	%	$	42,669		$	40,623		$	2,046		5	%
Non-Same Store Portfolio	22,231			16,921			5,310			31	%	16,921			10,374			6,547			63	%
Total rental expenses	$	65,587		$	59,590		$	5,997		10	%	$	59,590		$	50,997		$	8,593		17	%
Net Operating Income
Real property - Same Store Portfolio (3)	$	110,182		$	111,271		$	(1,089	)	-1	%	$	111,271		$	109,531		$	1,740		2	%
Real property - Non-Same Store Portfolio (2)	39,458			47,417			(7,959		)	-17	%	47,417			63,673			(16,256		)	-26	%
Total net operating income (4)	$	149,640		$	158,688		$	(9,048	)	-6	%	$	158,688		$	173,204		$	(14,516	)	-8	%

_______________________________ 

(1) Base rental revenue represents contractual base rental revenue earned by us from our tenants and does not include the impact of certain GAAP adjustments to rental revenue, such as straight-line rent adjustments, amortization of above-market intangible lease assets or the amortization of below-market lease intangible liabilities. Such GAAP adjustments and other rental revenue such as expense recovery revenue are included in the line item referred to as “other rental revenue.”

(2) Excludes results from properties classified as discontinued operations in our financial statements.

(3) Our same store NOI includes certain non-cash GAAP adjustments for rental revenue for straight line rent and amortization of above market lease assets and below market lease liabilities that caused an (decrease) increase to GAAP NOI of approximately $(5.6) million, $(3.9) million and $(173,000) for the years ended December 31, 2016, 2015 and 2014, respectively.

(4) For a discussion as to why we view net operating income to be an appropriate supplemental performance measure, refer to “Net Operating Income (“NOI”)” included above in this “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.” For a reconciliation to GAAP, refer to Note 13 to our financial statements beginning on page F-1 of this Annual Report on Form 10-K.

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Net Operating Income

Base Rental Revenue - Same Store

The table below presents the factors contributing to the increase in our same store base rental revenue for the year ended December 31, 2016 and 2015 (dollar amounts other than annualized base rent per square foot in thousands):

Same Store Portfolio	Base Rent for the  Year Ended  December 31,				$ Change		Average Percentage Leased for the Year Ended  December 31,				Annualized Base Rent per Square Foot for the Year Ended December 31(1),
	2016		2015				2016		2015		2016		2015
Office	$	80,938	$	78,329	$	2,609	97.4	%	96.4	%	$	35.36	$	34.58
Industrial	5,087		4,743		344		81.3	%	78.8	%	3.51		3.38
Retail	45,566		44,584		982		94.6	%	94.0	%	17.24		16.97
Total base rental revenue - same store	$	131,591	$	127,656	$	3,935	92.1	%	90.9	%	$	20.62	$	20.27

_______________________________ 

(1) Represents contractual base rent and does not include the impact of tenant concessions, such as free rent and tenant reimbursements.

Base rental revenue in our same store office and retail portfolios increased for the year ended December 31, 2016, compared to the year ended December 31, 2015, primarily due to (i) an increase in average base rent per square foot, resulting from scheduled rent escalations for existing leases and improving rental rates for new and renewal leases, partially offset by rent concessions that we granted since December 31, 2015, and (ii) an increase in average percentage leased across our same store portfolio for the year ended December 31, 2016, compared to the same period in 2015.

The table below presents the factors contributing to the increase in our same store base rental revenue for the year ended December 31, 2015 and 2014 (dollar amounts other than annualized base rent per square foot in thousands):

Same Store Portfolio	Base Rent for the  Year Ended  December 31,				$ Change		Average Percentage Leased for the Year Ended  December 31,				Annualized Base Rent per Square Foot for the Year Ended December 31(1),
	2015		2014				2015		2014		2015		2014
Office	$	78,329	$	75,160	$	3,169	96.4	%	94.8	%	$	34.58	$	33.74
Industrial	4,743		4,355		388		78.8	%	71.7	%	3.38		3.41
Retail	44,584		43,856		728		94.0	%	89.6	%	16.97		17.50
Total base rental revenue - same store	$	127,656	$	123,371	$	4,285	90.9	%	86.8	%	$	20.27	$	20.52

_______________________________ 

(1) Represents contractual base rent and does not include the impact of tenant concessions, such as free rent and tenant reimbursements.

Base rental revenue in our same store office portfolio increased for the year ended December 31, 2015, compared to the year ended December 31, 2014, primarily due to (i) an increase in average base rent per square foot for the year ended December 31, 2015, compared to the same period in 2014 and (ii) and increase in the average percentage leased for the same period.

Base rental revenue in our same store retail portfolio increased for the year ended December 31, 2015, compared to the year ended December 31, 2014, primarily due to an increase in the average percentage leased for the year ended December 31, 2015, compared to the same period in 2014, partially offset by a decrease in the average base rent per square feet.

Other Rental Revenue - Same Store

Same store other rental revenue decreased for the year ended December 31, 2016, compared to the same period in 2015, primarily due to (i) a increase in our straight line rent adjustment within our same store portfolio due to rent increases and the expiration of rental concessions, and (ii) lease termination payments of approximately $1.5 million related to tenants in our retail and office portfolios that we received during the year ended December 31, 2015 and (iii) a decrease in recoverable revenue due to a decrease in snow removal costs incurred by properties in our Greater Boston market due to the unusually harsh winter in 2015.

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Same store other rental revenue decreased for the year ended December 31, 2015, compared to the same period in 2014, primarily due to (i) a decrease in our straight line rent adjustment within our same store portfolio due to rent increases and the expiration of rental concessions, and (ii) a decrease in below market rent adjustment due to lease expirations during the year ended December 31, 2015, partially offset by (i) lease termination payments of approximately $1.5 million related to tenants in our retail and office portfolios that we received during the year ended December 31, 2015 and (ii) an increase in recoverable revenue due to an increase in snow removal costs incurred by properties in our Greater Boston market due to the unusually harsh winter in 2015.

Rental Expenses - Same Store

The table below presents the factors contributing to an increase in our Same Store rental expense for the years ended December 31, 2016 and 2015 and the factors contributing to an increase in our Same Store rental expense for the years ended December 31, 2015 and 2014 (dollar amounts in thousands): 

	For the Year Ended December 31,				$ Change			% Change		For the Year Ended December 31,			$ Change			% Change
	2016		2015							2015	2014
Real estate taxes	$	16,927	$	15,908	$	1,019		6.4	%	15,908	$	15,574	$	334		2.1	%
Repairs and maintenance	12,634		13,086		(452		)	(3.5	)%	13,086	11,213		1,873			16.7	%
Utilities	5,522		5,571		(49		)	(0.9	)%	5,571	6,096		(525		)	(8.6	)%
Property management fees	3,284		3,168		116			3.7	%	3,168	3,005		163			5.4	%
Insurance	983		1,021		(38		)	(3.7	)%	1,021	1,081		(60		)	(5.6	)%
Other	4,006		3,915		91			2.3	%	3,915	3,654		261			7.1	%
Total same store rental expense	$	43,356	$	42,669	$	687		1.6	%	42,669	$	40,623	$	2,046		5.0	%

Real estate taxes increased for the year ended December 31, 2016 from the year ended December 31, 2015, primarily driven by an increase in property values and scheduled increases in tax payments at certain properties within our same store office portfolio.

Repairs and maintenance expenses decreased for the year ended December 31, 2016, compared to the year ended December 31, 2015, primarily attributable to a decrease in snow removal costs incurred by properties in our Greater Boston market due to the unusually harsh winter in 2015 partially offset by an increase in seasonal parking lot maintenance expenses during the year ended December 31, 2016.

The majority of the increase in repairs and maintenance expenses of the Same Store Portfolio for the year ended December 31, 2015, compared to the year ended December 31, 2014, is attributable to snow removal costs incurred by properties in our Greater Boston market due to the unusually harsh winter in 2015.

Utilities decreased for the year ended December 31, 2015 from the year ended December 31, 2014, primarily driven by high electricity rates and usage during January 2014 as a result of unusually cold temperatures in our Northern New Jersey market.

Real Property – Non-Same Store Portfolio

The decrease in rental revenue and NOI in our Non-Same Store Portfolio for the year ended December 31, 2016, compared to the year ended December 31, 2015 primarily resulted from dispositions in our office portfolio during 2016 partially offset by acquisitions in our retail portfolio during 2015. We disposed of seven real properties in 2016 and 17 real properties in 2015 that we included in continuing operations. We acquired one and eight real properties in 2016 and 2015, respectively. See our discussion under “—Significant Transactions During the Year Ended December 31, 2016—Investment Activity” for further discussion of acquisition and disposition activity.

The decrease in rental revenue and NOI in our Non-Same Store Portfolio for the year ended December 31, 2015, compared to the year ended December 31, 2014, resulted from disposition of 17 real properties in 2015 and five real properties in 2014 that we included in continuing operations. Our acquisition of eight and three real properties in 2015 and 2014, respectively, partially offset the impact of these dispositions to our Non-Same Store Portfolio rental revenue and NOI. Furthermore, we reported the 2014 operating results of 12 industrial properties that we classified as held for sale as of

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December 31, 2013 as discontinued operations in 2014. Other than this industrial portfolio, we included the operating results of all dispositions in 2014 and 2015 in our continuing operations. Had we included the 12 industrial properties in continuing operations, we would have included total additional rental revenue of $969,000 for 2014.

Debt-Related Income

Debt-related income decreased for the year ended December 31, 2016 compared to the same period in 2015 and decreased for the year ended December 31, 2015 compared to the same period in 2014. The decrease is primarily attributable to the repayments of debt-related investments during 2015 and 2014. We received approximately $81.5 million and $29.7 million in cash proceeds from principal repayments in 2015 and 2014, respectively, and approximately $2.6 million and $244,000 of early repayment fees in 2015 and 2014, respectively.

Other Operating Expenses

Real Estate Depreciation and Amortization Expense

Depreciation and amortization expense decreased for the year ended December 31, 2016 compared to the same period in 2015 and decreased for the year ended December 31, 2015 compared to the same period in 2014 primarily due to our disposition of real properties during 2016, 2015 and 2014.

General and Administrative Expenses

General and administrative expenses decreased for the year ended December 31, 2016 compared to the same period in 2015 by approximately $1.3 million, or 12%, primarily due to a decrease in reimbursements paid by us to our Advisor for salaries and overhead related to fewer acquisition activities in the year ended December 31, 2016.

General and administrative expenses stayed relatively stable for the year ended December 31, 2015, compared to the same period in 2014.

Advisory Fees

In connection with the commencement of the Prior Offering in 2012, we amended our Advisory Agreement with our Advisor to eliminate acquisition fees and tie the advisory fee earned by our Advisor to our NAV. In addition, our current advisory fees paid to our Advisor include a performance-based component for which our Advisor receives an additional fee equal to 25% of the total investment return to our Class A, W and I stockholders in a given year in excess of 6% as an incentive to reward sustainable total investment return performance to our stockholders. However, our Advisor does not currently receive a performance fee based on Class E shares until their NAV exceeds $10 per share.

Advisory fees decreased $2.2 million, or 13%, during the year ended December 31, 2016 compared to the same period in 2015, primarily due to (i) a $1.2 million decrease in the performance-based fee component of advisory fees as a result of a lower total weighted average return in 2016 of 6.3% compared to 9.4% in 2015 and (ii) a net decrease in our outstanding common stock as a result of four tender offers in 2016, which reduced our total NAV.

Advisory fees increased $1.2 million during the year ended December 31, 2015 compared to the same period in 2014, primarily due to an increase in performance-based component of advisory fees of approximately $855,000 as a result of our total weighted average return of 9.4% in 2015 compared to 8.6% in 2014. In addition, an increase in our overall NAV resulting from our NAV per share increasing from $7.16 to $7.47 from December 31, 2014 through December 31, 2015, partially offset by net redemptions of our common stock reducing our total NAV, also contributed to the increase in our advisory fees.

See Note 11 to our financial statements beginning on page F-1 of this Annual Report on Form 10-K for further discussion of all fees and reimbursements that we pay to our Advisor.

Acquisition-Related Expenses

Acquisition-related expenses decreased for the year ended December 31, 2016 compared to the same period in 2015 by approximately $2.0 million, or 75%, primarily due to a decrease in acquisition activity in 2016. We acquired one property in 2016 and eight properties in 2015. See Note 3 to our financial statements beginning on page F-1 of this Annual Report on Form 10-K for further discussion of our 2016 acquisition activity.

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Acquisition-related expenses increased for the year ended December 31, 2015 compared to the same period in 2014 by approximately $1.4 million, or 119%, primarily due to an increase in acquisition activity in 2015. We acquired eight properties in 2015 and three properties in 2014.

Impairment of Real Estate Property

We recorded $2.7 million in impairment charges during the year ended December 31, 2016 primarily due to the net book value of certain properties exceeding the contract sales price less cost prior to disposition. During the years ended December 31, 2015 and 2014, we recorded real property impairment charges of $8.1 million and $9.5 million, respectively. These impairment charges resulted from our decision to consider various disposition strategies for two properties that we no longer considered strategic to our overall investment objectives. We later sold these properties. The shortened hold period for future cash flows from these properties triggered the impairment losses. See Note 3 to our financial statements beginning on page F-1 of this Annual Report on Form 10-K for further discussion of these impairment charges.

In the calculation of our NAV, our real estate assets are carried at fair value using valuation methodologies consistent with ASC Topic 820, Fair Value Measurements and Disclosures. As a result, the timing of valuation changes recorded in our NAV will not necessarily be the same as for impairment charges recorded to our financial statements prepared pursuant to GAAP.

Other Income (Expenses)

Interest and Other Income

Interest and other income remained relatively stable for the year ended December 31, 2016 compared to the same period in 2015 and increased $1.0 million for the year ended December 31, 2015, compared to the same period in 2014 primarily due to an increase in interest income received from our CDO securities portfolio.

Interest Expense

Interest expense decreased for the year ended December 31, 2016, compared to the same period in 2015, and decreased for the year ended December 31, 2015, compared to the same period in 2014, due to lower average interest rates and lower average borrowings.

The following table further describes our interest expense by debt obligation, and includes amortization of deferred financing costs, amortization related to our derivatives, and amortization of discounts and premiums (amounts in thousands):

	For the Year Ended December 31,
	2016		2015		2014
Debt Obligation
Mortgage notes (1)	$	23,292	$	35,529	$	50,772
Line of credit and other unsecured borrowings	17,448		11,258		8,843
Other secured borrowings	—		477		1,375
Financing obligations	42		244		1,210
Total interest expense	$	40,782	$	47,508	$	62,200

_______________________________ 

(1) Includes interest expense attributable to discontinued operations of $296,000 for the year ended December 31, 2014.

Gain (Loss)on Extinguishment of Debt and Financing Commitments

During the year ended December 31, 2016, we had a gain of approximately $5.1 million on extinguishment of debt and financing commitments, resulting from the extinguishment of a $5.1 million contingently payable mortgage note that was not ultimately required to be repaid upon the disposition of the related property.

During the year ended December 31, 2015, we recorded approximately $1.2 million of loss on extinguishment of debt and financing commitments, primarily resulting from (i) deferred financing costs written off due to the amendment and restatement of our senior secured term loan and revolving line of credit on January 13, 2015, and (ii) accelerated amortization

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of deferred financing costs upon the repayment of borrowings under our repurchase facilities earlier than we had originally expected.

Gain on Sale of Real Property

During the years ended December 31, 2016, 2015 and 2014, we recorded gain on sale of real property of approximately $45.7 million, $134.2 million and $40.5 million, respectively. For a detailed discussion of the real properties we disposed of during the three years, see Note 3 to our financial statements beginning on page F-1 of this Annual Report on Form 10-K.

How We Measure Our Operating Performance

Funds From Operations

FFO Definition (“FFO”)

We believe that FFO, as defined by the National Association of Real Estate Investment Trusts (“NAREIT”), is a meaningful supplemental measure of our operating performance because historical cost accounting for real estate assets in accordance with GAAP implicitly assumes that the value of real estate assets diminishes predictably over time, as reflected through depreciation and amortization expense. However, since real estate values have historically risen or fallen with market and other conditions, many industry investors and analysts have considered presentation of operating results for real estate companies that use historical cost accounting to be insufficient. Thus, NAREIT created FFO as a supplemental measure of operating performance for real estate investment trusts that consists of net income (loss), calculated in accordance with GAAP, plus real estate-related depreciation and amortization and impairment of depreciable real estate, less gains (or losses) from dispositions of real estate held for investment purposes.

The following unaudited table presents a reconciliation of FFO to net income (loss) for the three months and the years ended December 31, 2016, 2015 and 2014 (amounts in thousands, except per share information).

	For the Three Months Ended December 31,									For the Year Ended December 31,
	2016			2015			2014			2016			2015			2014
Reconciliation of net earnings to FFO:
Net income attributable to common stockholders	$	3,112		$	730		$	5,303		$	49,976		$	124,255		$	29,192
Add (deduct) NAREIT-defined adjustments:
Depreciation and amortization expense	20,083			21,710			22,514			80,105			83,114			88,994
Gain on disposition of real property (1)	(2,165		)	(984		)	(4,452		)	(45,660		)	(134,218		)	(40,592		)
Impairment of real estate property	—			—			—			2,677			8,124			9,500
Noncontrolling interests’ share of net income	245			47			397			5,072			7,404			4,802
Noncontrolling interests’ share of FFO	(1,576		)	(1,635		)	(1,648		)	(7,874		)	(6,509		)	(6,650		)
FFO attributable to common shares-basic	19,699			19,868			22,114			84,296			82,170			85,246
FFO attributable to dilutive OP Units	1,544			1,535			1,501			6,546			6,001			6,077
FFO attributable to common shares-diluted	$	21,243		$	21,403		$	23,615		$	90,842		$	88,171		$	91,323
FFO per share-basic and diluted	$	0.13		$	0.12		$	0.12		$	0.53		$	0.47		$	0.48
Weighted average number of shares outstanding
Basic	154,807			166,352			179,926			159,648			175,938			178,273
Diluted	166,942			179,203			192,137			172,046			188,789			190,991

_______________________________ 

(1) Include amounts attributable to discontinued operations for periods presented of 2014.

Company-Defined FFO

As part of its guidance concerning FFO, NAREIT has stated that the “management of each of its member companies has the responsibility and authority to publish financial information that it regards as useful to the financial community.” As a result, modifications to FFO are common among REITs as companies seek to provide financial measures that meaningfully

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reflect the specific characteristics of their businesses. In addition to the NAREIT definition of FFO and other GAAP measures, we provide a Company-Defined FFO measure that we believe is helpful in assisting management and investors assess the sustainability of our operating performance. As described further below, our Company-Defined FFO presents a performance metric that adjusts for items that we do not believe to be related to our ongoing operations. In addition, these adjustments are made in connection with calculating certain of the Company’s financial covenants including its interest coverage ratio and fixed charge coverage ratio and therefore we believe this metric will help our investors better understand how certain of our lenders view and measure the financial performance of the Company and ultimately its compliance with these financial covenants. However, no single measure can provide users of financial information with sufficient information and only our disclosures read as a whole can be relied upon to adequately portray our financial position, liquidity and results of operations.

Our Company-Defined FFO is derived by adjusting FFO for the following items: acquisition-related expenses, gains and losses associated with extinguishment of debt and financing commitments, and gains and losses on derivatives. Management’s evaluation of our future operating performance excludes these items based on the following economic considerations:

Acquisition-related expenses — For GAAP purposes, expenses associated with efforts to acquire real properties, including efforts related to acquisition opportunities that are not ultimately completed, are recorded to earnings. We believe by excluding acquisition-related expenses, Company-Defined FFO provides useful supplemental information for management and investors when evaluating the sustainability of our operating performance, because these types of expenses are directly correlated to our investment activity rather than our ongoing operating activity.

Losses on extinguishment of debt and financing commitments — Losses on extinguishment of debt and financing commitments represent losses incurred as a result of the early retirement of debt obligations and breakage costs and fees incurred related to rate lock agreements with prospective lenders. Such losses may be due to dispositions of assets, the repayment of debt prior to its contractual maturity or the nonoccurrence of forecasted financings. Our management believes that any such losses are not related to our ongoing operations. Accordingly, we believe by excluding losses on extinguishment of debt and financing commitments, Company-Defined FFO provides useful supplemental information for management and investors when evaluating the sustainability of our operating performance.

We also believe that Company-Defined FFO allows investors and analysts to compare the performance of our portfolio with other REITs that are not currently affected by the adjusted items. In addition, as many other REITs adjust FFO to exclude the items described above, we believe that our calculation and reporting of Company-Defined FFO may assist investors and analysts in comparing our performance with that of other REITs. However, because Company-Defined FFO excludes items that are an important component in an analysis of our historical performance, such supplemental measure should not be construed as a complete historical performance measure and may exclude items that have a material effect on the value of our common stock.

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The following unaudited tables present a reconciliation of Company-Defined FFO to FFO for the three months and the years ended December 31, 2016, 2015 and 2014 (amounts in thousands, except per share information).

	For the Three Months Ended December 31,									For the Year Ended December 31,
	2016			2015			2014			2016			2015			2014
Reconciliation of FFO to Company-Defined FFO:
FFO attributable to common shares-basic	$	19,699		$	19,868		$	22,114		$	84,296		$	82,170		$	85,246
Add (deduct) our adjustments:
Acquisition-related expenses	6			1,385			243			667			2,644			1,205
(Gain) loss on extinguishment of debt and financing commitments	—			—			—			(5,136		)	1,168			63
Noncontrolling interests’ share of NAREIT-defined FFO	1,576			1,635			1,648			7,874			6,509			6,650
Noncontrolling interests’ share of Company-Defined FFO	(1,577		)	(1,734		)	(1,664		)	(6,593		)	(6,769		)	(6,734		)
Company-Defined FFO attributable to common shares-basic	19,704			21,154			22,341			81,108			85,722			86,430
Company-Defined FFO attributable to dilutive OP Units	1,545			1,634			1,516			6,299			6,261			6,161
Company-Defined FFO attributable to common shares-diluted	$	21,249		$	22,788		$	23,857		$	87,407		$	91,983		$	92,591
Company-Defined FFO per share-basic and diluted	$	0.13		$	0.13		$	0.12		$	0.51		$	0.49		$	0.48
Weighted average number of shares outstanding
Basic	154,807			166,352			179,926			159,648			175,938			178,273
Diluted	166,942			179,203			192,137			172,046			188,789			190,991

Limitations of FFO and Company-Defined FFO

FFO (both NAREIT-defined and Company-Defined) is presented herein as a supplemental financial measure and has inherent limitations. We do not use FFO or Company-Defined FFO as, nor should they be considered to be, an alternative to net income (loss) computed under GAAP as an indicator of our operating performance, or as an alternative to cash from operating activities computed under GAAP, or as an indicator of liquidity or our ability to fund our short or long-term cash requirements, including distributions to stockholders. Management uses FFO and Company-Defined FFO as indications of our future operating performance and as a guide to making decisions about future investments. Our FFO and Company-Defined FFO calculations do not present, nor do we intend them to present, a complete picture of our financial condition and operating performance. In addition, other REITs may define FFO and an adjusted FFO metric differently and choose to treat acquisition-related expenses and potentially other accounting line items in a manner different from us due to specific differences in investment strategy or for other reasons; therefore, comparisons with other REITs may not be meaningful.

Our Company-Defined FFO calculation is limited by its exclusion of certain items previously discussed, but we continuously evaluate our investment portfolio and the usefulness of our Company-Defined FFO measure in relation thereto. We believe that net income (loss) computed under GAAP remains the primary measure of performance and that FFO or Company-Defined FFO are only meaningful when they are used in conjunction with net income (loss) computed under GAAP. Further, we believe that our consolidated financial statements, prepared in accordance with GAAP, provide the most meaningful picture of our financial condition and operating performance.

Specifically with respect to fees and expenses associated with the acquisition of real property, which are excluded from Company-Defined FFO, such fees and expenses are characterized as operational expenses under GAAP and included in the determination of net income (loss) and income (loss) from operations, both of which are performance measures under GAAP. The purchase of operating properties is a key strategic objective of our business plan focused on generating operating income and cash flow in order to fund our obligations and to make distributions to investors. However, as the corresponding acquisition-related costs are paid in cash, these acquisition-related costs negatively impact our GAAP operating performance and our GAAP cash flows from operating activities during the period in which efforts are undertaken to acquire properties. In

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addition, if we acquire a property after all offering proceeds from our public offerings have been invested, there will not be any offering proceeds to pay the corresponding acquisition-related costs. Accordingly, such costs will then be paid from other sources of cash such as additional debt proceeds, operational earnings or cash flow, net proceeds from the sale of properties, or other ancillary cash flows. Among other reasons as previously discussed, the treatment of acquisition-related costs is a reason why Company-Defined FFO is not a complete indicator of our overall financial performance, especially during periods in which efforts are undertaken to acquire properties. Note that, pursuant to our valuation procedures, acquisition-related expenses result in an immediate decrease to our NAV.

FFO and Company-Defined FFO may not be useful performance measures as a result of the various adjustments made to net income for the charges described above to derive such performance measures. Specifically, we intend to operate as a perpetual-life vehicle and, as such, it is likely for our operating results to be negatively affected by certain of these charges in the future, specifically acquisition-related expenses, as it is currently contemplated as part of our business plan to acquire additional investment properties which would result in additional-acquisition related expenses. Any change in our operational structure would cause the non-GAAP measure to be re-evaluated as to the relevance of any adjustments included in the non-GAAP measure. As a result, we caution investors against using FFO or Company-Defined FFO to determine a price to earnings ratio or yield relative to our NAV.

Further, FFO or Company-Defined FFO is not comparable to the performance measure established by the Investment Program Association (the “IPA”), referred to as “modified funds from operations,” or “MFFO,” as MFFO makes further adjustments including certain mark-to-market items and adjustments for the effects of straight-line rent. As such, FFO and Company-Defined FFO may not be comparable to the MFFO of non-listed REITs that disclose MFFO in accordance with the IPA standard. More specifically, Company-Defined FFO has limited comparability to the MFFO and other adjusted FFO metrics of those REITs that do not intend to operate as perpetual-life vehicles as such REITs have a defined acquisition stage. Because we do not have a defined acquisition stage, we may continue to acquire real estate and real estate-related investments for an indefinite period of time. Therefore, Company-Defined FFO may not reflect our future operating performance in the same manner that the MFFO or other adjusted FFO metrics of a REIT with a defined acquisition stage may reflect its operating performance after the REIT had completed its acquisition stage.

Neither the Commission nor any other regulatory body, nor NAREIT, has adopted a set of standardized adjustments that includes the adjustments that we use to calculate Company-Defined FFO. In the future, the Commission or another regulatory body, or NAREIT, may decide to standardize the allowable adjustments across the non-listed REIT industry at which point we may adjust our calculation and characterization of Company-Defined FFO. 

Liquidity Outlook

We believe our existing cash balance, our available credit under the Amended Facility, cash from operations, additional proceeds from our public offerings, proceeds from the sale of existing investments, and prospective debt or equity issuances will be sufficient to meet our liquidity and capital needs for the foreseeable future, including the next 12 months. Our capital requirements over the next 12 months are anticipated to include, but are not limited to, operating expenses, distribution payments, debt service payments, including debt maturities of approximately $162.5 million, redemption payments, potential issuer tender offers and acquisitions of real properties. Subsequent to December 31, 2016, we repaid approximately $110.0 million of debt that was scheduled to mature over the next 12 months.

In order to maintain a reasonable level of liquidity for redemptions of Class A, Class W and Class I shares pursuant to our Second Amended and Restated Class A, W and I Share Redemption Program (the “Class AWI SRP”), we intend to generally maintain under normal circumstances the following aggregate allocation to sources of liquidity, which include liquid assets and capacity under our borrowing facilities: (1) 10% of the aggregate NAV of our outstanding Class A, Class W and Class I shares up to $1 billion of collective Class A, Class W and Class I share NAV, and (2) 5% of the aggregate NAV of our outstanding Class A, Class W and Class I shares in excess of $1 billion of collective Class A, Class W and Class I share NAV. However, as set forth in the Class AWI SRP, no assurance can be given that we will maintain this allocation to liquid assets. Our board of directors has the right to modify, suspend or terminate our Class AWI SRP if it deems such action to be in the best interest of our stockholders. As of December 31, 2016, the aggregate NAV of our outstanding Class A, Class W and Class I shares was approximately $287.8 million.

As of December 31, 2016, we had approximately $13.9 million of cash compared to $15.8 million as of December 31, 2015. The following discussion summarizes the sources and uses of our cash during the year ended December 31, 2016, which resulted in the net cash decrease of approximately $1.9 million.

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Operating Activities

Net cash provided by operating activities decreased by approximately $15.2 million to $90.3 million for the year ended December 31, 2016, compared to net cash provided by operating activities of approximately $105.5 million for the same period in 2015. The decrease is primarily due to (i) a decrease in NOI as discussed previously under “Our Operating Results”, (ii) unfavorable changes in other assets and liabilities due to annual property tax payments and (iii) a decrease in interest payments received from our debt-related investments, partially offset by (i) a decrease in asset management fees primarily resulting from the common stock redemptions pursuant to our self-tender offers during 2015 and 2016 and (ii) a decrease in interest payments on borrowings.

Lease Expirations

Our primary source of funding for our property-level operating expenses and debt service payments is rent collected pursuant to our tenant leases. Our properties are generally leased to tenants for the longer term and as of December 31, 2016, the weighted average remaining term of our leases was approximately 4.7 years, based on annualized base rent, and 4.5 years, based on leased square footage. The following is a schedule of expiring leases for our consolidated operating properties by annualized base rent and square footage as of December 31, 2016 and assuming no exercise of lease renewal options (dollar and square footage amounts in thousands).

	Lease Expirations
Year (1)	Number of Leases Expiring	Annualized Base Rent (2)		%		Square Feet	%
2017 (3)	92	$	37,199	21.9	%	1,112	13.6	%
2018	117	13,288		7.8	%	591	7.2	%
2019	105	24,625		14.5	%	1,168	14.3	%
2020	114	24,155		14.2	%	1,120	13.7	%
2021	64	17,214		10.2	%	1,552	19.0	%
2022	46	10,400		6.1	%	612	7.5	%
2023	36	16,194		9.5	%	647	7.9	%
2024	25	5,249		3.1	%	336	4.1	%
2025	19	4,230		2.5	%	210	2.6	%
2026	17	3,217		1.9	%	182	2.2	%
Thereafter	32	14,111		8.3	%	643	7.9	%
Total	667	$	169,882	100.0	%	8,173	100.0	%

_______________________________

(1) The lease expiration year does not include the consideration of any renewal or extension options. Also, the lease expiration year is based on noncancellable lease terms and does not extend beyond any early termination rights that the tenant may have under the lease.

(2) Annualized base rent represents the annualized monthly base rent of leases executed as of December 31, 2016.

(3) Includes 10 leases with annualized base rent of approximately $330,000 that are on a month-to-month basis.

Our two most significant leases, Sybase which leases 100% of a 405,000 square foot office property located in East Bay, California ("Park Place", formerly known as Sybase Drive), and Schwab which leases 100% of a 594,000 square foot office property in Northern New Jersey (“3 Second Street", formerly known as Harborside), will expire January 2017 and September 2017, respectively. The Sybase lease was terminated on January 31, 2017 and we do not expect the Schwab lease to be renewed or extended. The Sybase and Schwab leases comprise $18.7 million and $23.5 million, or 11% and 13.8%, respectively, of our total annualized base rent as of December 31, 2016 and $13.6 million and $15.8 million, or 9.1% and 10.5%, respectively, of our total NOI for the year ended December 31, 2016. As of December 31, 2016, the Sybase and Schwab leases comprise 4.5% and 6.6%, respectively, of our total portfolio when measured in square feet.

However, 3 Second Street is 100% subleased to 27 tenants through September 2017 and furthermore nine of these subleases comprising 352,000 square feet or 59% of 3 Second Street, have executed leases directly with us that effectively extend their leases beyond the Schwab lease expiration. These direct leases will expire between September 2020 and September 2032. As a result, the above lease expiration table includes these direct leases in the years in which the leases will expire, as opposed to reflecting the full impact of the lease expiration of the current in-place lease with Schwab in 2017.

Based on market information as of September 30, 2016, we have obtained third-party estimates that current market rental rates, on a weighted-average basis utilizing annualized base rent as of December 31, 2016, are

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approximately 8.7% lower than our two leases with Sybase and Schwab. Accordingly, if market rents do not increase significantly, replicating the cash flows from these leases would be very difficult. When the leases expire we may be forced to lower the rental rates or offer other concessions in order to attract new tenants. In addition, we will be required to expend substantial funds to construct new tenant improvements in the vacated space. As a result, and until these properties are released, we would expect the expiration of these two leases to significantly and negatively impact our operating results and cash flows.

During the year ended December 31, 2016, we signed new leases for approximately 425,000 square feet and renewal leases for approximately 520,000 square feet. Tenant improvements and leasing commissions related to these leases were approximately $10.6 million and $7.4 million, respectively, or $11.20 and $7.80 per square foot, respectively. Of these leases, approximately 538,000 square feet were considered comparable leases, with average straight line rent growth of 21.5%, and tenant improvements and incentives of approximately $7.91 per square foot. Comparable leases comprise leases for which prior leases were in place for the same suite within twelve months of executing a new lease. Comparable leases must have terms of at least six months and the square footage of the suite occupied by the prior tenant cannot be more or less than 50% different from the size of the new lease’s suite.

Investing Activities

Net cash provided by investing activities increased approximately $48.1 million to approximately $122.5 million for the year ended December 31, 2016 from approximately $74.4 million for the year ended December 31, 2015. The increase is primarily due to a decrease in cash paid to acquire operating properties partially offset by (i) decrease in proceeds from disposition of real properties, and (ii) a decrease in principal collections on debt-related investments.

Financing Activities

Net cash used in financing activities increased approximately $36.1 million to approximately $214.7 million for the year ended December 31, 2016 from $178.6 million for the year ended December 31, 2015. The increase is primarily due to an increase in cash paid for net borrowing activities as discussed previously in "- Significant Transactions During the Year Ended December 31, 2016" partially offset by (i) a decrease in cash paid for redemption of common shares, (ii) an increase in cash received from the sale of our common shares and (ii) a decrease in distributions paid.

During the year ended December 31, 2016 and 2015, we raised approximately $96.3 million and $86.5 million in proceeds from the sale of Class A, W, and I shares, respectively, including approximately $5.7 million and $3.5 million under the distribution reinvestment plan, respectively. We have offered and will continue to offer Class E shares of common stock through the Class E DRIP Offering. The amount raised under the Class E DRIP Offering decreased by approximately $3.0 million to approximately $14.9 million for the year ended December 31, 2016, from approximately $17.9 million for the year ended December 31, 2015.

Distributions

To obtain the favorable tax treatment accorded to REITs, we normally will be required each year to distribute to our stockholders at least 90% of our real estate investment trust taxable income, determined without regard to the deduction for distributions paid and by excluding net capital gains. The payment of distributions is determined by our board of directors and may be adjusted at its discretion at any time. Distribution levels are set by our board of directors at a level it believes to be appropriate and sustainable based upon a review of a variety of factors including the current and anticipated market conditions, current and anticipated future performance and make-up of our investments, our overall financial projections and expected future cash needs.

Distributions declared payable to common stockholders decreased approximately $5.9 million to approximately $57.0 million for the year ended December 31, 2016 from approximately $62.9 million for the same period in 2015. Such distributions were paid following the respective quarters for which they were declared. Approximately $36.4 million and $41.7 million, respectively, were paid in cash and approximately $20.6 million and $21.3 million, respectively, were reinvested in shares of our common stock pursuant to our distribution reinvestment plan during the years ended December 31, 2016 and 2015.

On December 14, 2016, our board of directors authorized for each class of common stock a dividend of $0.09 per share, subject to adjustment for class-specific expenses, for the quarter ending March 31, 2017. The dividend will be payable to stockholders of record as of the close of business on each day during the period from January 1, 2017 to March 31, 2017, pro-rated for the period of ownership. The dividend will accrue daily and be paid no later than April 30, 2017.

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Redemptions and Repurchases

During the years ended December 31, 2016 and 2015, we redeemed or repurchased approximately 28.5 million and 29.2 million shares of common stock for approximately $210.0 million and approximately $212.9 million, respectively. The decrease in cash used for redemptions is primarily due to a decrease in the cash used for redemptions pursuant to our Class E SRP partially offset by cash used for self-tenders. See Note 10 to our financial statements beginning on page F-1 of this Annual Report on Form 10-K for further discussion of redemptions and repurchases during the years ended December 31, 2016 and 2015. See “Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities — Share Redemption Programs and Other Redemptions or Repurchases” of this Annual Report on Form 10-K for a description of our share redemption programs.

In addition to the above-mentioned redemptions, during the years ended December 31, 2016 and 2015, we redeemed approximately 760,000 and 360,000 OP Units, respectively, from our OP Unit holders for approximately $5.6 million and $2.7 million, respectively.

Off-Balance Sheet Arrangements

As of December 31, 2016, we had no material off-balance sheet arrangements that had or are reasonably likely to have a current or future effect on our financial condition, revenues, or expenses, results of operations, liquidity, capital expenditures or capital resources. There are no lines of credit, side agreements, or any other derivative financial instruments related to or between our unconsolidated joint venture and us, and we believe we have no material exposure to financial guarantees.

Contractual Obligations

The following table reflects our contractual obligations as of December 31, 2016 (amounts in thousands).

	Payments due by period
Contractual Obligations	Total		Less than 1 year		1-3 years		3-5 years		More than 5 years
Borrowings (1)	$	1,165,931	$	191,904	$	554,601	$	44,287	$	375,139
Other obligations (2)	15,349		446		932		941		13,030
Total Contractual Obligations	$	1,181,280	$	192,350	$	555,533	$	45,228	$	388,169

_______________________________

(1) Includes principal and interest payments due for our mortgage notes and other unsecured borrowing obligations as well as payments due for our interest rate swaps. We estimated the interest payments on our floating-rate borrowings using interest rates derived from the benchmark LIBOR curve.

(2) Includes a ground lease at an office property in our San Fransisco market and lease payments pursuant to the DST Program.

Subsequent Events

The following dispositions and financing transactions occurred subsequent to December 31, 2016.

Self-Tender Offer

On February 10, 2017, we commenced a self-tender offer to purchase for cash up to $40 million of our Class E shares, subject to our ability to increase the number of shares accepted for payment in the offer by up to but not more than 2% of our outstanding Class E shares (resulting in a commensurate increase in the dollar volume by up to approximately $16.9 million, without amending or extending the offer in accordance with rules promulgated by the Commission, at a purchase price of $7.51 per share, net to the seller in cash, less any applicable withholding taxes and without interest. The offer was made upon the terms and subject to the conditions set forth in the Offer to Purchase, dated February 10, 2017, and in the related Letter of Transmittal, filed with the Commission on Schedule TO on February 10, 2017. The offer will expire at 5:00 p.m. Central Time, on Friday, March 10, 2017.

For information regarding other financing transactions that occurred subsequent to December 31, 2016, see Note 17 to our financial statements beginning on page F-1 of this Annual Report on Form 10-K.

Inflation

Substantially all of our leases provide for separate real estate tax and operating expense escalations over a base amount. In addition, many of our leases provide for fixed base rent increases or indexed rent increases. We believe that inflationary

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increases in costs may be at least partially offset by the contractual rent increases and operating expense escalations in our leases. To date, we believe that inflation has not had a material impact to our operations or overall liquidity.

Critical Accounting Policies and Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the financial statements and disclosures. Some of these estimates and assumptions require application of difficult, subjective, and/or complex judgment, often about the effect of matters that are inherently uncertain and that may change in subsequent periods. We are required to make such estimates and assumptions when applying the following accounting policies.

Investments in Real Property

Costs associated with the acquisition of real property, including acquisition fees paid to our Advisor, are expensed as incurred. In addition, we estimate the fair value of contingent consideration and contingencies related to acquisitions of real property in determining the total cost of the property acquired. Subsequent changes in the fair value of such contingent consideration are recorded either as a gain or loss in our consolidated statements of income. Contingencies are subsequently adjusted through the consolidated statements of income when new information becomes available indicating that settlement of a contingent liability is probable and can be estimated at an amount greater than the acquisition date fair value, or the contingency is resolved, in which case the contingent asset or liability is derecognized.

Costs associated with the development and improvement of our real property assets are capitalized as incurred. Costs incurred in making repairs and maintaining real estate assets are expensed as incurred. During the land development and construction periods, we capitalize interest costs, insurance, real estate taxes and certain general and administrative costs if such costs are incremental and identifiable to a specific activity to get the asset ready for its intended use. The results of operations for acquired real property are included in our accompanying statements of income from their respective acquisition dates.

Upon acquisition, the total cost of a property is allocated to land, building, building and land improvements, tenant improvements and intangible lease assets and liabilities. The purchase price allocation of the total cost to land, building, building improvements, tenant improvements, intangible lease assets and intangible lease liabilities is based on our estimate of the property’s as-if vacant fair value. The as-if vacant fair value is calculated by using all available information such as the replacement cost of such asset, appraisals, property condition reports, market data and other related information. The difference between the fair value and the face value of debt assumed in an acquisition is recorded as an adjustment to the purchase price allocation. The allocation of the total cost of a property to an intangible lease asset includes the value associated with the in-place leases, which may include lost rent, leasing commissions, tenant improvements, legal and other costs.

We record acquired “above-market” and “below-market” leases at their fair value equal to the difference between the contractual amounts to be paid pursuant to each in-place lease and our estimate of fair market lease rates for each corresponding in-place lease, measured over a period equal to the remaining term of the lease for above-market leases and the remaining term of the lease plus the term of any below-market fixed-rate renewal option periods for below-market leases. In addition, we allocate a portion of the purchase price of an acquired property to the estimated value of customer relationships, if any. As of December 31, 2016, we had not recognized any estimated value to customer relationships.

The following table summarizes the amounts that we have incurred in amortization expense for intangible lease assets and adjustments to rental revenue for above-market lease assets and below-market lease liabilities for the years ended December 31, 2016, 2015 and 2014 (amounts in thousands).  

	For the Year Ended December 31,
	2016			2015			2014
Above-market lease assets	$	(5,515	)	$	(5,216	)	$	(6,708	)
Below-market lease liabilities	6,050			6,029			7,324
Net increase to rental revenue	$	535		$	813		$	616
Intangible lease asset amortization	$	(40,797	)	$	(44,260	)	$	(48,937	)

We expense any unamortized intangible lease asset or record an adjustment to rental revenue for any unamortized above-market lease asset or below-market lease liability when a tenant terminates a lease before the stated lease expiration date. We

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recorded an insignificant amount of adjustments related to write-offs of unamortized intangible lease assets and liabilities due to early lease terminations during the years ended December 31, 2016, 2015 and 2014.

Real property assets, including land, building, building and land improvements, tenant improvements, lease commissions, and intangible lease assets and liabilities are stated at historical cost less accumulated depreciation and amortization. Depreciation and amortization are computed on a straight-line basis over their estimated useful lives as described in the following table.  

Description	Depreciable Life
Land	Not depreciated
Building	40 years
Building and land improvements	10-40 years
Tenant improvements	Lesser of useful life or lease term
Lease commissions	Over lease term
Intangible in-place lease assets	Over lease term
Above-market lease assets	Over lease term
Below-market lease liabilities	Over lease term, including below-market fixed-rate renewal options

The following table presents expected amortization during the next five years and thereafter related to the acquired above-market lease assets, below-market lease liabilities and acquired in-place lease intangibles, for properties owned as of December 31, 2016 (amounts in thousands).

	For the Year Ended December 31,
	2017			2018			2019			2020			2021			Thereafter			Total
Acquired above-market lease assets	$	(2,379	)	$	(727	)	$	(633	)	$	(213	)	$	(201	)	$	(456	)	$	(4,609	)
Acquired below-market lease liabilities	5,307			4,695			3,977			3,272			2,847			39,447			59,545
Net rental revenue increase	$	2,928		$	3,968		$	3,344		$	3,059		$	2,646		$	38,991		$	54,936
Acquired in-place lease intangibles	$	27,158		$	16,909		$	11,863		$	6,898		$	5,412		$	15,572		$	83,812

Impairment — Real Property

We review our investments in real property that are classified as held and used individually on a quarterly basis, and more frequently when such an evaluation is warranted, to determine their appropriate classification, as well as whether there are indicators of impairment.

As of December 31, 2016, all of our properties were classified as held and used. These held and used assets are reviewed for indicators of impairment, which may include, among others, vacancy, each tenant’s inability to make rent payments, operating losses or negative operating trends at the property level, notification by a tenant that it will not renew its lease, a decision to dispose of a property, including a change in estimated holding periods, or adverse changes in the fair value of any of our properties. If indicators of impairment exist on a held and used asset, we compare the future estimated undiscounted cash flows from the expected use of the property to its net book value to determine if impairment exists. If the sum of the future estimated undiscounted cash flows is greater than the current net book value, we conclude no impairment exists. If the sum of the future estimated undiscounted cash flows is less than its current net book value, we recognize an impairment loss for the difference between the net book value of the property and its estimated fair value. If our assumptions, projections or estimates regarding a property change in the future, we may have to record an impairment charge to reduce or further reduce the net book value of the property.

During the year ended December 31, 2016, we recorded a $2.1 million impairment charge related to a consolidated office property located in the Washington, DC market, which we acquired in June 2010. Additionally, we recorded a $587,000 impairment charge related to a consolidated office property located in the Chicago, IL market ("40 Boulevard"), which we acquired in January 2007 and we held through a joint venture in which we were not the managing partner. We held an 80% ownership interest in 40 Boulevard.

During the year ended December 31, 2015, we recorded approximately $1.6 million of impairment charges related to a wholly owned retail property (“Mt. Nebo”), which we later sold during 2015, and a $6.5 million impairment charge related to a

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consolidated office property located in the Chicago, IL market, which we acquired in February 2007 and we hold through a joint venture in which we are not the managing partner. We have an 80% ownership interest in the office property. During the year ended December 31, 2014, we recorded a $9.5 million impairment related to Mt. Nebo.

New Accounting Pronouncements

For our consideration of new accounting pronouncements, see Note 2 to our financial statements beginning on page F-1 of this Annual Report on Form 10-K.

ITEM 7A.    QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Market risk is the adverse effect on the value of assets and liabilities that results from a change in the applicable market resulting from a variety of factors such as perceived risk, interest rate changes, inflation and overall general economic changes. Accordingly, we manage our market risk by matching projected cash inflows from operating, investing and financing activities with projected cash outflows for debt service, acquisitions, capital expenditures, distributions to stockholders and unit holders, and other cash requirements. Our outstanding borrowings are directly impacted by changes in market conditions. This impact is largely mitigated by the fact that the majority of our outstanding borrowings have fixed interest rates, which minimize our exposure to the risk that fluctuating interest rates may pose to our operating results and liquidity.

As of December 31, 2016, the fair value of our fixed rate mortgage debt was $291.6 million and the carrying value of our fixed rate mortgage debt was $290.3 million. The fair value estimate of our fixed rate mortgage debt was estimated using a discounted cash flow analysis utilizing rates we would expect to pay for debt of a similar type and remaining maturity if the loans were originated as of December 31, 2016. As we expect to hold our fixed rate instruments to maturity and the amounts due under such instruments would be limited to the outstanding principal balance and any accrued and unpaid interest, we do not expect that fluctuations in interest rates, and the resulting change in fair value of our fixed rate instruments, would have a significant impact on our operations.

As of December 31, 2016, we had approximately $401.4 million of unhedged variable rate borrowings outstanding indexed to LIBOR rates. If the LIBOR rates relevant to our remaining variable rate borrowings were to increase 10%, we estimate that our annual interest expense would increase by approximately $310,000 based on our outstanding floating-rate debt as of December 31, 2016.

We may seek to limit the impact of interest rate changes on earnings and cash flows and to lower our overall borrowing costs by selectively utilizing derivative instruments to hedge exposures to changes in interest rates on loans secured by our assets. We maintain risk management control systems to monitor interest rate cash flow risk attributable to both our outstanding and forecasted debt obligations as well as our potential offsetting hedge positions. While this hedging strategy is designed to minimize the impact on our net income (loss) and funds from operations from changes in interest rates, the overall returns on our investments may be reduced. Our board of directors has established policies and procedures regarding our use of derivative instruments for hedging or other purposes. During the year ended December 31, 2016, we recorded an increase in our net liability value of approximately $204,000 as a result of changes in the value of our derivatives. Changes in the interest rate yield curve directly impact the value of our derivatives and, as capital market expectations of future interest rates have declined, so have the value of our derivatives.

ITEM 8.    FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

The report of the independent registered public accounting firm and the financial statements listed in the accompanying index are included in “Item 15. Exhibits and Financial Statement Schedules” of this Annual Report on Form 10-K. See “Index to Consolidated Financial Statements” on page F-1 of this Annual Report on Form 10-K. 

ITEM 9.    CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

None.

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ITEM 9A.    CONTROLS AND PROCEDURES

Disclosure Controls and Procedures

As of December 31, 2016, the end of the period covered by this Annual Report on Form 10-K, we conducted an evaluation of the effectiveness of our disclosure controls and procedures, under the supervision and with the participation of our Chief Executive Officer (principal executive officer) and our Chief Financial Officer (principal financial officer). Based upon this evaluation, our Chief Executive Officer and our Chief Financial Officer have concluded that our disclosure controls and procedures were effective as of December 31, 2016, to provide reasonable assurance that information required to be disclosed by us in the reports filed or submitted by us under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Commission’s rules and forms and that information is accumulated and communicated to management, including our Chief Executive Officer and our Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosures.

Management’s Annual Report on Internal Control over Financial Reporting

Management is responsible for establishing and maintaining adequate internal control over financial reporting, as defined in Exchange Act Rules 13a-15(f) and 15d-15(f).

Our internal control over financial reporting is a process designed under the supervision and with the participation of our Chief Executive Officer and our Chief Financial Officer.

During 2016, management conducted an evaluation of the effectiveness of our internal control over financial reporting, based upon criteria established in Internal Control — Integrated Framework, issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework). This evaluation included a review of the documentation of controls, evaluation of the design effectiveness of controls, testing of the operating effectiveness of controls, and a conclusion on this evaluation. Based upon this evaluation, management determined that our internal control over financial reporting is effective as of December 31, 2016.

Changes in Internal Control over Financial Reporting

There have been no changes in our internal control over financial reporting processes that occurred during the quarter ended December 31, 2016, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

ITEM 9B.    OTHER INFORMATION

Distribution Reinvestment Plan Suitability Requirement

Pursuant to the terms of our distribution reinvestment plan (“DRP”), participants in the DRP must promptly notify us if at any time they fail to meet the current suitability requirements for making an investment in us.

The current suitability standards require that Class E stockholders participating in the DRP other than investors in Arizona, California, Ohio and Oregon have either:

• a net worth (exclusive of home, home furnishings and automobiles) of $150,000 or more; or

• a net worth (exclusive of home, home furnishings and automobiles) of at least $45,000 and had during the last tax year, or estimate that such investor will have during the current tax year, a minimum of $45,000 annual gross income.

The current suitability standards require that Class E stockholders participating in the DRP in Arizona, California, Ohio and Oregon must have either:

• a net worth (exclusive of home, home furnishings and automobiles) of $250,000 or more; or  

• a net worth (exclusive of home, home furnishings and automobiles) of at least $70,000 and had during the last tax year, or estimate that such investor will have during the current tax year, a minimum of $70,000 annual gross income.

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In addition, Class E stockholders participating in the DRP in Ohio and Oregon must have a net worth of at least 10 times their investment in us and any of our affiliates (namely, Logistics Property Trust Inc. and Industrial Property Trust Inc.).

The current suitability standards for Class A, Class W and Class I stockholders participating in the DRP are listed in the section entitled “Suitability Standards” in our current Class A, Class W and Class I public offering prospectus on file at www.sec.gov and on our website at www.dividendcapitaldiversified.com.

Stockholders can notify us of any changes to their ability to meet the suitability requirements or change their DRP election by contacting us at Dividend Capital Diversified Property Fund Inc., Investor Relations, 518 17th Street, Suite 1700, Denver, Colorado 80202, Telephone: (303) 228-2200.

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PART III

ITEM10.    DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

Board of Directors

Our board of directors consists of five directors, three of whom are independent directors, as determined by our board of directors. Our charter and bylaws provide that a majority of the entire board of directors may establish, increase, or decrease the number of directors, provided that the number of directors shall never be less than three nor more than 15. The foregoing is the exclusive means of fixing the number of directors.

Set forth below is certain information about our directors, including their respective position, age, biographical information, directorships held in the previous five years, and the experience, qualifications, attributes, and/or skills that led the board of directors to determine that the person should serve as our director. All of our directors have terms expiring on the date of the 2017 annual meeting of stockholders or until his or her successor is elected and qualified. For information regarding each director’s beneficial ownership of shares of our common stock, see “Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters” in this Annual Report on Form 10-K.

Richard D. Kincaid Chairman of the board of directors Age: 55 Director since 2012 Member of audit committee Member of investment committee Richard D. Kincaid has served as Chairman of the Board of Directors since September 2012. Prior to joining DPF’s Board of Directors, Mr. Kincaid was a Trustee and the President of Equity Office Properties Trust from November 2002, and the Chief Executive Officer from April 2003, until Equity Office Properties Trust was acquired by the Blackstone Group in February 2007. From March 1997 until November 2002, Mr. Kincaid was Executive Vice President of Equity Office Properties Trust and was Chief Operating Officer from September 2001 until November 2002. He also was Chief Financial Officer of Equity Office Properties Trust from March 1997 until August 2002, and Senior Vice President from October 1996 until March 1997. Prior to joining Equity Office Properties Trust in 1995, Mr. Kincaid was Senior Vice President of Finance for Equity Group Investments, Inc., where he oversaw debt financing activities for the public and private owners of real estate controlled by Mr. Samuel Zell. During his tenure at Equity Group Investments and Equity Office Properties Trust, Mr. Kincaid supervised more than $11 billion in financing transactions, including property level loans encumbering office buildings, apartments, and retail properties, as well as unsecured debt, convertible debt securities, and preferred stock. Prior to joining Equity Group Investments in 1990, Mr. Kincaid held positions with Barclays Bank PLC and The First National Bank of Chicago. Richard Kincaid is currently the President and Founder of the BeCause Foundation. The BeCause Foundation is a nonprofit corporation that heightens awareness about a number of complex social problems and promotes change through the power of film. Mr. Kincaid is also an active private investor in early stage companies. Mr. Kincaid is Chairman of the Board of Rayonier Inc. (NYSE: RYN), an international real estate investment trust (“REIT”) that specializes in timber and specialty fibers. He also served on the board of directors of Vail Resorts (NYSE: MTN), a mountain resort operator, from July 2006 until April 2015, and Strategic Hotels and Resorts (NYSE: BEE), an owner of upscale and luxury hotels in North America and Europe, from January 2009 until December 2015. Mr. Kincaid received his Master’s Degree in Business Administration from the University of Texas, and his Bachelor’s Degree from Wichita State University. We believe that Mr. Kincaid’s qualifications to serve on our board of directors include his significant leadership experience as a Trustee, the President and the Chief Executive Officer of Equity Office Properties Trust and his director positions with other public companies. He also has demonstrated strategic insight with respect to large, growing real estate companies, as he developed the financial, technology and integration strategies for Equity Office Properties Trust during its tremendous growth, which included nearly $17 billion in acquisitions. We believe that his leadership and experience are valuable additions to our board in connection with our new offering and our transition to a perpetual-life REIT.

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John A. Blumberg Director Age: 57 Director since 2006 Chairman of investment committee

John A. Blumberg has served as a director of the Board of Directors since January 2006 and also as Chairman of the Board of Directors from January 2006 to September 2012. Mr. Blumberg has also been a manager of DPF’s Advisor since April 2005. From October 2009 to March 2010, Mr. Blumberg served as the Chairman of the Board of Directors of Industrial Income Trust Inc. (IIT), a REIT focusing on industrial real estate which was sold in November 2015. Mr. Blumberg is a manager of Industrial Income Advisors LLC, the former advisor to IIT. Mr. Blumberg is also a manager of Industrial Property Advisors LLC, the advisor to Industrial Property Trust Inc. (IPT), a Denver, Colorado-based REIT and ILT Advisors LLC, the advisor to Industrial Logistics Realty Trust Inc. (ILT), a Denver, Colorado-based REIT. Mr. Blumberg is a principal of both Dividend Capital Group LLC and Black Creek Group LLC, a Denver-based real estate investment firm, which he co- founded in 1993. In 2014, Mr. Blumberg joined the Board of Directors for Rayonier Inc. Since 2006, Mr. Blumberg has also been chairman of Mexico Retail Properties, a fully integrated retail real estate company that acquires, develops and manages retail properties throughout Mexico. Mr. Blumberg has been active in real estate acquisition, development, and redevelopment activities since 1993 and, as of December 31, 2016, with affiliates, has overseen directly, or indirectly through affiliated entities, the acquisition, development, redevelopment, financing and sale of real properties having combined value of approximately $16.7 billion. Prior to co-founding Black Creek Group LLC, Mr. Blumberg was President of JJM Investments, which owned over 100 shopping center properties in Texas. During the 12 years prior to joining JJM Investments, Mr. Blumberg served in various positions with Manufacturer’s Hanover Real Estate, Inc., Chemical Bank and Chemical Real Estate, Inc., most recently as President of Chemical Real Estate, Inc. Mr. Blumberg holds a Bachelor’s Degree from the University of North Carolina at Chapel Hill. We believe that Mr. Blumberg’s qualifications to serve on our board of directors are demonstrated by his extensive experience in real estate investments, including his over 20 years of experience with Black Creek Group LLC as a co-founder of the company, his position as a principal of Dividend Capital Group LLC, his leadership experience as an executive officer of, and an advisor to, non-traded REITs and other real estate investment companies, and his experience in real estate investment banking.

Charles B. Duke Director Age: 59 Director since 2006 Chairman of audit committee Member of investment committee

Charles B. Duke has served as an independent director of the Board of Directors since January 2006. Mr. Duke has also served as an independent director on the board of Industrial Property Trust Inc. (IPT), a Denver, Colorado based REIT since March 2013 and on the board of Industrial Logistics Realty Trust Inc. (ILT), a Denver, Colorado based REIT since February 2016. Mr. Duke also served as an independent director on the board of directors of Industrial Income Trust Inc. (IIT) from December 2009 until November 2015. Mr. Duke is currently founder and Chief Executive Officer of To-Table Inc. (“To- Table”), a retailer of specialty gourmet foods. Prior to founding To-Table in November 2014, Mr. Duke was involved in the management of two ink jet cartridge remanufacturers and aftermarket suppliers. Mr. Duke served as Executive Vice President of IJR, Inc. in Phoenix, Arizona, from October 2012 to July 2014, and as the founder, President and Chief Executive Officer of Legacy Imaging, Inc. from 1996 through 2012. Mr. Duke has been active in entrepreneurial and general business activities since 1980 and has held several executive and management roles throughout his career, including founder, president, and owner of Careyes Corporation, a private bank, registered investment advisor and a member of FINRA based in Denver, Colorado, Chief Financial Officer at Particle Measuring Systems, a global technology leader in the environmental monitoring industry based in Boulder, Colorado, and Vice President of Commercial Loans at Colorado National Bank. Mr. Duke also spent four years with Kirkpatrick Pettis, the investment-banking subsidiary of Mutual of Omaha, as Vice President of Corporate Finance, involved in primarily mergers and acquisitions, financing, and valuation activities. Mr. Duke graduated from Hamilton College in 1980 with a Bachelor’s Degree in Economics and English. We believe that Mr. Duke’s qualifications to serve on our board of directors include his considerable experience in financial matters, including specifically his experience as founder and president of a private bank and as Chief Financial Officer of a significant organization, and we believe his business management experience is valuable in terms of providing director leadership.

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Daniel J. Sullivan Director Age: 51 Director since 2006 Member of audit committee Member of investment committee Member of conflicts resolution committee

Daniel J. Sullivan has served as an independent director of the Board of Directors since January 2006. Since 2003, he has been a private consultant and author. From 2003 to 2013, Mr. Sullivan was also the assistant editor of Humanitas, an academic journal published by the National Humanities Institute. Prior to that, from 1998 to 2002, he was Director of Business Development at Jordan Industries Inc. Mr. Sullivan has nineteen years of international business, consulting, and private equity investment experience, including over four years, from 1987 through 1991, in the real estate industry as an appraiser, property analyst, and investment banker with Manufacturers Hanover Real Estate Investment Banking Group in New York. During that time, Mr. Sullivan participated in the structuring and private placement of over $1 billion in long term, fixed-rate, and multi- property mortgage financings for the bank’s corporate clients. Mr. Sullivan holds a Master of Arts Degree in Political Theory from The Catholic University of America in Washington, DC and a Bachelor of Arts Degree in History from Boston College in Chestnut Hill, Massachusetts. We believe that Mr. Sullivan’s diverse background in education, journalism, international business, consulting, and private equity investment adds a unique perspective to our board of directors in fulfilling its duties. His qualifications to serve on our board are also demonstrated by his experience in international business, finance, and real estate investments.

John P. Woodberry Director Age: 54 Director since 2006 Member of conflicts resolution committee Member of investment committee

John P. Woodberry has served as an independent director of the Board of Directors since January 2006.  Mr. Woodberry has been active in finance and investing since 1991. From 2012 to present, Mr. Woodberry has served as Portfolio Manager for Woodberry Holdings, LLC, a family office with investments in venture capital, hedge funds, private companies, and public equities. From 2016 to present, Mr. Woodberry has served as the Chairman of the Board and Chief Financial Officer of American Marksman, LLC, an early stage recycling and munitions company. From 2014 to present, Mr. Woodberry has served as the Chairman of the Board for AgPixel, LLC, an agriculture services company. From 2007 to 2012, Mr. Woodberry worked at Passport Capital, LLC where he served as a Senior Managing Director and Portfolio Manager for Capital Markets and India. From 2004 to 2007, Mr. Woodberry was the President and Portfolio Manager of Independence Capital Asset Partners, LLC. Previously, from 2001 to 2004, Mr. Woodberry was a Senior Research Analyst at Cobalt Capital, LLC, a New York City-based hedge fund. From 1998 to 2001, Mr. Woodberry worked for Minute Man Capital Management, LLC and Trident Investment Management, LLC, each a New York City-based hedge fund. From 1995 to 1998, Mr. Woodberry worked at Templeton Investment Council Ltd. Mr. Woodberry has a Master’s Degree in Business Administration from Harvard Business School and a Bachelor of Arts Degree from Stanford University. We believe that Mr. Woodberry’s qualifications to serve on our board of directors include his depth of experience in finance, capital markets, and investment management. His managerial roles at various hedge funds, including his experience as President and Portfolio Manager of Independence Capital Asset Partners, LLC, provide him with leadership experience that we believe is valuable to our board of directors in fulfilling its duties.

Executive Officers

The following table shows the names and ages of our current executive officers and the positions held by each individual. A description of the business experience of each individual for at least the past five years follows the table. All officers serve at the discretion of our board of directors.

Name	Age	Position
Jeffrey L. Johnson	57	Chief Executive Officer
J. Michael Lynch	64	President
M. Kirk Scott	38	Chief Financial Officer and Treasurer
Joshua J. Widoff	46	Executive Vice President, General Counsel and Secretary
Gregory M. Moran	44	Executive Vice President

Jeffrey L. Johnson has served as the Chief Executive Officer since January 2013. Mr. Johnson served as Managing Principal of Lakeshore Holdings, LLC, a private equity real estate firm that he founded, from 2007 through December 2012. Mr. Johnson has also served as the Chief Executive Officer of DPF’s Advisor since January 2013. From December 2009 to June 2011, he also served as founder and Managing Principal of Reunion Office Holdings, LLC, a private equity real estate firm, and

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from January 2009 to November 2009, he served as Chief Investment Officer and Managing Director of Transwestern Investment Company, a private equity real estate firm now known as Pearlmark Real Estate Partners. From 2003 until Equity Office Properties Trust was acquired by the Blackstone Group in February 2007, Mr. Johnson served as Chief Investment Officer, Executive Vice President and Chairman of the Investment Committee of Equity Office Properties Trust. Equity Office Properties Trust was a publicly traded REIT and at that time was the largest publicly traded owner and manager of office properties in the United States. While at Equity Office Properties Trust, Mr. Johnson restructured the investment group and implemented an investment strategy that resulted in over $12.5 billion in transaction volume, providing capital for a $2.6 billion stock repurchase. From 1990 to 1999, Mr. Johnson was a senior executive at Equity Office Properties Trust and its predecessor entities, most recently serving as Chief Investment Officer. Mr. Johnson was instrumental in completing Equity Office Property Trust’s initial public offering in July 1997, setting investment strategies and completing over $9 billion of real estate operating company transactions and property acquisitions. From 1990 to 1996, he was a senior acquisitions officer where he was responsible for acquiring over $1.2 billion of office properties. From 2000 through 2003, Mr. Johnson served as a Managing Director, founding Partner and Co-Head of U.S. Investments for Lehman Brothers Holdings, Inc.’s real estate private equity group, where he was one of six founding members that raised a $1.6 billion first-time fund, built an international investment group and executed a process that resulted in $580 million of equity investments, in over $6.9 billion of real estate, during the fund’s first 30 months.

During his career, Mr. Johnson has overseen acquisition and disposition activity in various real estate and real estate-related investments, including core office properties, development projects, joint ventures, international investments, mezzanine loans and multi-asset class portfolio transactions. He has also been instrumental in numerous significant public and private capital markets and mergers and acquisitions transactions. Mr. Johnson serves on the Northwestern University Kellogg Real Estate Advisory Board. Mr. Johnson is also a member of each of the Urban Land Institute and the Chicago Commonwealth Club. Mr. Johnson received his Master’s Degree in Business Administration from Northwestern University’s Kellogg Graduate School of Management and his Bachelor’s Degree from Denison University.

J. Michael Lynch has served as our President since July 2013. Mr. Lynch has over 30 years of real estate development and investment experience. Prior to joining us, Mr. Lynch served as Chief Investment Officer of Arden Realty, Inc., a GE Capital Real Estate Company, from May 2007 to June 2013. While with Arden Realty, Mr. Lynch oversaw capital market activities for a $4.5 billion office and industrial portfolio and led a team responsible for approximately $2 billion in acquisition and disposition activity. From May 2004 to March 2007, he served as Senior Vice President of Investments for Equity Office Properties Trust. While at Equity Office Properties Trust, Mr. Lynch managed office investment activity in major cities in the Western U.S. and development activity throughout the U.S. and completed transactions valued at over $1.5 billion of core and core-plus properties.

Mr. Lynch serves as an Advisory Board member for American Homes 4 Rent. Mr. Lynch received his Bachelor of Science Degree in Economics, cum laude, from Mount Saint Mary’s College and his Master’s Degree in Architecture from Virginia Polytechnic Institute.

M. Kirk Scott has served as the Chief Financial Officer and Treasurer since April 2009 and currently serves as the Chairman of the NAV Committee. Previously Mr. Scott served as a Vice President and Controller from April 2008 to September 2011. Since joining DPF in April 2008, Mr. Scott has overseen and developed investor and lender relations, NAV policies and procedures, finance, financial reporting, accounting, budgeting, forecasting, internal audit, securities and tax compliance and other related areas of responsibilities. Prior to joining DPF in 2008, Mr. Scott was Controller of Denver-based NexCore Group, a fully-integrated real estate development and operating company primarily focused within the medical office sector that at the time had developed or acquired over 4.7 million square feet of facilities. Within his capacity as Controller, Mr. Scott directed and oversaw the accounting, financial reporting and compliance, budgeting, forecasting and investor relation functions for the NexCore Group. From 2002 until 2006, Mr. Scott was Assistant Controller at Dividend Capital Group LLC and DCT Industrial Trust Inc. (NYSE: DCT) during that company’s growth from inception to more than $2 billion in assets under management where he was responsible for establishing the organization’s accounting and financial reporting function including compliance with the rules and regulations of the Commission, FINRA, the Internal Revenue Service and various state blue sky laws. Prior thereto, Mr. Scott was an auditor with KPMG focused on various real estate assignments. Mr. Scott holds a Bachelor’s Degree in Accounting, cum laude, from the University of Wyoming.

Joshua J. Widoff has served as Executive Vice President, General Counsel and Secretary since October 2010, and served as Senior Vice President, Secretary and General Counsel from September 2007 to October 2010. Mr. Widoff has served as the Executive Vice President, General Counsel and Secretary of Industrial Property Trust Inc. since September 2012, and of Industrial Logistics Realty Trust Inc. since November 2014. Mr. Widoff also has served as the Executive Vice President, Secretary and General Counsel of DC Liquidating Trust since November 2015. Mr. Widoff also served as the Senior Vice President, General Counsel and Secretary from May 2009 until December 2013, and as the Executive Vice President, General

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Counsel and Secretary of Industrial Income Trust Inc. (IIT) from December 2013 until the sale of IIT in November 2015. He has also served as a Managing Director of Black Creek Group LLC, a Denver-based private equity real estate firm, since September 2007, and as Executive Vice President of Dividend Capital Group LLC since October 2010. Prior to joining DPF in September 2007, Mr. Widoff was a partner from October 2002 to July 2007 at the law firm of Brownstein Hyatt Farber Schreck, P.C., where he was active in the management of the firm, serving as chairman of both the firm’s Associate and Recruiting Committees and overseeing an integrated team of attorneys and paralegals servicing clients primarily in the commercial real estate business. During more than a dozen years of private practice, he managed transactions involving the acquisition, development, leasing, financing and disposition of various real estate assets, including vacant land, apartment and office buildings, hotels, casinos, industrial/warehouse facilities and shopping centers. He also participated in asset and stock acquisition transactions, convertible debt financings, private offerings and complex joint venture negotiations. Mr. Widoff served as general business counsel on a variety of contract and operational issues to a wide range of clients in diverse businesses. Mr. Widoff currently serves as a Vice-Chair and Commissioner for the Denver Urban Renewal Authority. Mr. Widoff received his Bachelor’s Degree from Trinity University in Texas and his Juris Doctor Degree from the University of Colorado School of Law.

Gregory M. Moran has served as Executive Vice President since July 2013. Mr. Moran also has served as a Vice President of Investments of Dividend Capital Group LLC and Dividend Capital Total Advisors Group LLC since August 2005. Mr. Moran has been an active participant in the institutional real estate community since 1998. From December 2001 through July 2005, Mr. Moran was a Portfolio Manager in the Real Estate Investment Group for the Public Employees’ Retirement Association of Colorado where he was directly involved in the ongoing management of a global real estate investment portfolio with over $2 billion of invested equity. Mr. Moran was responsible for sourcing and underwriting new investment opportunities, ongoing asset management of existing portfolio investments and relationship management for over a dozen joint venture partners and advisors of the fund. From September 1998 through December 2001, Mr. Moran worked in the Capital Markets Group at Sonnenblick Goldman Company, most recently as a Vice President. During this time, Mr. Moran was responsible for raising and structuring debt and equity investments in commercial real estate projects on behalf of public and private real estate investment companies. Mr. Moran received his Bachelor’s Degree in Business Administration and Master’s Degree in Professional Accounting from the University of Texas at Austin-McCombs School of Business. He is also a CFA Charterholder, and a member of the CFA Institute, Urban Land Institute and Pension Real Estate Association.

Section 16(a) Beneficial Ownership Reporting Compliance

Section 16(a) of the Exchange Act requires our directors, our officers, and certain beneficial owners, or, collectively, reporting persons, to file reports of holdings and transactions in our shares of common stock with the Commission. To our knowledge, based solely on review of copies of such reports, during the year ended December 31, 2016, all of such reporting persons complied with all Section 16(a) filing requirements applicable to them.

CORPORATE GOVERNANCE

Board Leadership Structure

We separate the roles of Chief Executive Officer and Chairman of our board of directors because we currently believe that the different roles can best be filled by different people who have different experiences and perspectives. Mr. Jeffrey L. Johnson, as our Chief Executive Officer, is responsible for the execution of our business strategy and day-to-day operations. One of our interested directors, Mr. Kincaid, serves as Chairman of our board of directors, and, in such capacity, is responsible for presiding over our board of directors in its identification and execution of our operational and investment objectives, and oversight of our management team. We believe that Mr. Kincaid’s experience and background make him highly qualified to lead our board of directors in the fulfillment of its duties.

As an interested director, Mr. Kincaid may not participate as a director in determining the compensation of our Advisor, the renewal of the Advisory Agreement, or any other transactions or arrangements that we may enter into with regard to our Advisor or its affiliates. Our independent directors maintain authority with regard to any and all transactions and arrangements made with our Advisor. For additional discussion regarding the role that our independent directors play with regard to transactions and arrangements made with our Advisor see “Certain Relationships and Related Party Transactions” in “Item 13. Certain Relationships and Related Transactions, and Director Independence” in this Annual Report on Form 10-K.

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Code of Business Conduct and Ethics

Our board of directors has adopted a Code of Business Conduct and Ethics, which applies to all employees of our Advisor, and our officers and directors, including our Chief Executive Officer and our Chief Financial Officer. Additionally, our board of directors has adopted a code of ethics specifically for the unique and critical roles of our Chief Executive Officer and our Senior Financial Officers, including our Chief Financial Officer. Copies of the Code of Business Conduct and Ethics and the Code of Ethics for our Chief Executive Officer and our Senior Financial Officers may be found on our website at www.dividendcapitaldiversified.com. Our board of directors must approve any amendment to or waiver of the Code of Business Conduct and Ethics as well as the Code of Ethics for our Chief Executive Officer and our Senior Financial Officers. We presently intend to disclose amendments and waivers, if any, of the Code of Business Conduct and Ethics on our website.

Our Internet address is www.dividendcapitaldiversified.com. We make available, free of charge through a link on our website, our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and amendments to such reports, if any, as filed with the Commission as soon as reasonably practicable after such filing. You may also obtain these documents in print by writing us at 518 Seventeenth Street, 17th Floor, Denver, Colorado 80202, Attention: Investor Relations.

Audit Committee

The members of our audit committee are Messrs. Duke, Kincaid and Sullivan. Messrs. Duke and Sullivan are each an independent director and Mr. Kincaid is an interested director. The board of directors has determined that each member of our audit committee is financially literate as such qualification is interpreted by our board of directors. Our board of directors has determined that Mr. Duke qualifies as an “Audit Committee Financial Expert” as defined by the rules of the Commission.  

ITEM 11.    EXECUTIVE COMPENSATION

Compensation of Directors

We pay each of our independent directors $8,750 per quarter plus $2,000 for each regular board of directors meeting attended in person, $1,000 for each regular board of directors meeting attended by telephone, and $2,000 for each committee meeting and each special board of directors meeting attended in person or by telephone. We also pay the chairman of the audit committee an annual retainer of $7,500 (prorated for a partial term). All directors receive reimbursement of reasonable out-of-pocket expenses incurred in connection with attending board meetings. If a director is also one of our officers, we will not pay additional compensation for services rendered as a director. The amount and form of compensation payable to our independent directors for their service to us is determined by our independent directors, based upon recommendations from our Advisor. Certain of our executive officers may, in their capacities as officers and/or employees our Advisor, participate in recommending compensation for our directors.

RSU Awards

In addition, at each annual meeting of stockholders the independent directors will automatically, upon election, receive an award (“Annual Award”), pursuant to either the Equity Incentive Plan or the Secondary Plan (as defined in “Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters – Equity Incentive Plans” of this Annual Report on Form 10-K), of $10,000 in restricted stock units (“RSUs”) with respect to Class I shares of our common stock, with the number of RSUs based on the NAV per Class I share as of the end of the day of the annual meeting. Independent directors appointed after an annual meeting will, upon appointment, receive a pro rata Annual Award, with the number of RSUs based on the Class I NAV as of the end of the day of appointment and reflecting the number of days remaining until the one-year anniversary of the prior annual meeting of stockholders (or, if earlier and if scheduled as of the day of appointment, the date of the next scheduled annual meeting of stockholders).

RSUs will vest if and when the director completes the term for which he or she was elected/appointed. Unvested awards will also vest in the event of death or disability of the director or upon a change of control of our company. Unvested awards will be forfeited if the director’s term in office terminates prematurely for any other reason. The directors may elect to defer settlement of vested awards in shares pursuant to Section 409A of the Code.

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The following table sets forth information concerning the compensation of our independent directors for the year ended December 31, 2016:

Name	Fees Earned or Paid in Cash		Stock Awards (1)		Total
Charles B. Duke	$	94,125	$	10,496	$	104,621
Daniel J. Sullivan	85,750		10,496		96,246
John P. Woodberry	76,750		10,496		87,246
Total	$	256,625	$	31,488	$	288,113

_______________________________

(1) Includes (i) the amortized portion of an Annual Award which was made on June 25, 2015 to each independent director then in office and fully vested on June 23, 2016, with the number of RSUs based on the Class I NAV as of the end of the day on June 25, 2015 (“2015 Director RSU Grant”), (ii) the amortized portion of an Annual Award which was made on June 23, 2016 to each independent director then in office and will fully vest on June 23, 2017, with the number of RSUs based on the Class I NAV as of the end of the day on June 23, 2016, and (iii) the dividend equivalents related to the 2015 Director RSU Grant, which was accrued over the one-year period between June 25, 2015 and June 23, 2016 and fully vested on June 23, 2016, the date the 2015 Director RSU Grant fully vested.

Executive Compensation

Compensation Discussion and Analysis

Because our Advisory Agreement provides that our Advisor assumes principal responsibility for managing our affairs, we have no employees, and our executive officers, in their capacities as such, do not receive compensation from us, nor do they work exclusively on our affairs. In their capacities as officers or employees of our Advisor or its affiliates, they devote such portion of their time to our affairs as is required for the performance of the duties of our Advisor under the Advisory Agreement. The compensation received by our executive officers is not paid or determined by us, but rather by an affiliate of our Advisor based on all of the services provided by these individuals. See “Certain Relationships and Related Party Transactions” in “Item 13. Certain Relationships and Related Transactions, and Directors Independence” of this Annual Report on Form 10-K for a summary of the fees and expenses payable to our Advisor and its affiliates.

Compensation Committee Report

We do not currently have a compensation committee, however, our compensation committee, if formed, would be comprised entirely of independent directors. In lieu of a formal compensation committee, our independent directors perform an equivalent function. Our independent directors have reviewed and discussed the Compensation Discussion and Analysis contained in “Item 11. Executive Compensation” of this Annual Report on Form 10-K (the “CD&A”) with management. Based on the independent directors’ review of the CD&A and their discussions of the CD&A with management, the independent directors recommended to the board of directors, and the board of directors has approved, that the CD&A be included in this Annual Report on Form 10-K.

INDEPENDENT DIRECTORS:

Charles B. Duke

Daniel J. Sullivan

John P. Woodberry

The foregoing report shall not be deemed to be “soliciting material” or incorporated by reference by any general statement incorporating by reference this Annual Report on Form 10-K into any filing under the Securities Act of 1933, as amended (the “Securities Act”), or under the Exchange Act, except to the extent that we specifically incorporate this information by reference, and shall not otherwise be deemed filed under such Acts.

Compensation Committee Interlocks and Insider Participation

We do not currently have a compensation committee, however, we intend that our compensation committee, if formed, would be comprised entirely of independent directors. In lieu of a formal compensation committee, our independent directors perform an equivalent function. None of our independent directors served as one of our officers or employees or as an officer or employee of any of our subsidiaries during the fiscal year ended December 31, 2016, or formerly served as one of our officers or as an officer of any of our subsidiaries. In addition, during the fiscal year ended December 31, 2016, none of our executive officers served as a director or member of a compensation committee (or other board committee performing equivalent

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functions or, in the absence of any such committee, the entire board of directors) of any entity that has one or more executive officers or directors serving as a member of our board of directors. 

We do not expect that any of our executive officers will serve as a director or member of the compensation committee of any entity whose executive officers include a member of our compensation committee, if formed.

ITEM 12.    SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

Security Ownership of Certain Beneficial Owners and Management

The following table shows, as of January 31, 2017, the amount of each class of our common stock beneficially owned (unless otherwise indicated) by (i) any person who is known by us to be the beneficial owner of more than five percent of the outstanding shares of such class, (ii) our directors, (iii) our executive officers, and (iv) all of our directors and executive officers as a group.

Unless otherwise indicated below, each person or entity has an address in care of our principal executive offices at 518 Seventeenth Street, 17th Floor, Denver, Colorado 80202.

Name and Address of Beneficial Owner (1)	Amount and Nature of Beneficial Ownership		Percent of Common Stock of Applicable Class
Dividend Capital Total Advisors LLC (2)	20,000	Class E shares	*
	37,954	Class I shares	*
John A. Blumberg (Director) (2)	36,822	Class I shares	*
Charles B. Duke (Independent Director)	3,640	Class I shares	*
Richard D. Kincaid (Chairman and Director)	60,759	Class I shares	*
Daniel J. Sullivan (Independent Director)	3,866	Class I shares	*
John P. Woodberry (Independent Director)	8,640	Class I shares	*
Jeffrey L. Johnson (Chief Executive Officer)	115,033	Class I shares	*
J. Michael Lynch (President and Chief Operating Officer)	73,805	Class I shares	*
M. Kirk Scott (Chief Financial Officer and Treasurer)	37,353	Class I shares	*
Joshua J. Widoff (Executive Vice President, General Counsel      and Secretary)	17,143	Class I shares	*
Gregory M. Moran (Executive Vice President)	3,707	Class I shares	*
Beneficial ownership of Common Stock by all directors and      executive officers as a group (10 persons) (2)	20,000	Class E shares (3)	*
	398,722	Class I shares	1.2%

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* Less than 1%. 

(1) Except as otherwise indicated below, each beneficial owner has the sole power to vote and dispose of all common stock held by that beneficial owner. Beneficial ownership is determined in accordance with Rule 13d-3 under the Exchange Act. Common stock issuable pursuant to options, to the extent such options are exercisable within 60 days, is treated as beneficially owned and outstanding for the purpose of computing the percentage ownership of the person holding the option, but is not treated as outstanding for the purpose of computing the percentage ownership of any other person.

(2) Our Advisor and the parent of our Advisor are presently each directly or indirectly controlled by one or more of the following and/or their affiliates: John A. Blumberg, James R. Mulvihill, and Evan H. Zucker.

(3) Comprised of 20,000 Class E shares held by our Advisor.

Equity Incentive Plans

Second Amended and Restated Equity Incentive Plan

On March 12, 2015, our board of directors adopted the Second Amended and Restated Equity Incentive Plan (the “Equity Incentive Plan”). The Equity Incentive Plan was approved by our stockholders on June 23, 2015. The Equity Incentive Plan provides for the granting of cash-based awards and stock-based awards, including stock options, stock appreciation rights, restricted stock, and stock units to our employees (if we have any in the future), our independent directors, employees of the Advisor or its affiliates, other advisors and consultants of ours and of the Advisor selected by the plan administrator for participation in the Equity Incentive Plan, and any prospective director, officer, employee, consultant, or advisor of the

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Company and the Advisor. Any such stock-based awards, including stock options, stock appreciation rights, restricted stock, and stock units will provide for exercise prices, where applicable, that are not less than the fair market value of shares of our common stock on the date of the grant.

Our board of directors administers the Equity Incentive Plan as the plan administrator, with sole authority to select participants, determine the types of awards to be granted and determine all the terms and conditions of the awards, including whether the grant, vesting or settlement of awards may be subject to the attainment of one or more performance goals. No awards will be granted under the Equity Incentive Plan if the grant, vesting and/or exercise of the awards would jeopardize our status as a REIT for tax purposes or otherwise violate the ownership and transfer restrictions imposed under our charter. Unless determined by the plan administrator, no award granted under the Equity Incentive Plan will be transferable except through the laws of descent and distribution.

An aggregate maximum of 5.0 million shares of our common stock may be issued upon grant, vesting or exercise of awards under the Equity Incentive Plan, although the board of directors, to date, has only authorized and reserved for issuance a total of 2.0 million shares of our common stock under the Equity Incentive Plan. In addition, to any individual in any single calendar year no more than 200,000 shares may be made subject to stock options or stock appreciation rights under the Equity Incentive Plan and no more than 200,000 shares may be made subject to other stock-based awards under the Equity Incentive Plan. Further, no more than $1.0 million may be paid under a cash-based award to any individual in a single calendar year.

If any shares subject to an award are forfeited or cancelled, or if an award is settled in cash, terminates unearned or expires, in each case, without a distribution of shares, the shares with respect to such award shall, to the extent of any such forfeiture, cancellation, cash settlement, termination or expiration, again be available for awards under the Equity Incentive Plan. By contrast, if shares are surrendered or withheld as payment of the exercise price of an award or withholding taxes in respect of an award, the shares with respect to such award shall, to the extent of any such surrender or withholding, no longer be available for awards under the Equity Incentive Plan. In the event of certain corporate transactions affecting our common stock, such as, for example, a reorganization, recapitalization, merger, spin-off, split-off, stock dividend or extraordinary dividend, our board of directors will have the sole authority to determine whether and in what manner to equitably adjust the number and type of shares and the exercise prices applicable to outstanding awards under the plan, the number and type of shares reserved for future issuance under the plan, and, if applicable, performance goals applicable to outstanding awards under the plan. Fractional shares that result from any adjustment will be disregarded.

Under the Equity Incentive Plan, the plan administrator will determine the treatment of awards in the event of a change in our control. The Equity Incentive Plan will automatically expire on March 12, 2025, unless earlier terminated by our board of directors. Our board of directors may terminate the Equity Incentive Plan at any time. The expiration or other termination of the Equity Incentive Plan will have no adverse impact on any award that is outstanding at the time the Equity Incentive Plan expires or is terminated without the consent of the holder of the outstanding award. Our board of directors may amend the Equity Incentive Plan at any time, but no amendment will adversely affect any award on a retroactive basis without the consent of the holder of the outstanding award, and no amendment to Equity Incentive Plan will be effective without the approval of our stockholders if such approval is required by any law, regulation or rule applicable to the Equity Incentive Plan. The same is true for any amendment to remove the prohibition on repricing. No amendment will be made that could jeopardize the status of the Company as a REIT under the Code.

Secondary Equity Incentive Plan

On March 12, 2015, the board of directors also adopted the Amended and Restated Secondary Equity Incentive Plan (the “Secondary Plan”). The Secondary Plan was approved by our stockholders on June 23, 2015. The Secondary Plan is substantially similar to the Equity Incentive Plan, except that under the Secondary Plan, an eligible participant is any person, trust, association or entity to which the plan administrator desires to grant an award. An aggregate maximum of 5.0 million shares may be issued upon grant, vesting or exercise of awards under the Secondary Plan, although the board of directors, to date, has only authorized and reserved for issuance a total of 2.0 million shares of our common stock under the Secondary Plan.

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The following table gives information regarding our equity incentive plans as of December 31, 2016.

	Equity Compensation Plans Information
Plan Category	Number of Securities To Be Issued Upon Exercise of Outstanding Options, Warrants, and Rights			Weighted-Average Exercise Price of Outstanding Options, Warrants, and Rights (1)		Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans (2)
Equity compensation plans approved by security holders	$	4,055	(3)	$	—	1,886,079
Equity compensation plans not approved by security holders	—			—		1,988,715
Total / Weighted Average	$	4,055		$	—	3,874,794

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(1) Restricted stock units (“RSUs”) with respect to Class I shares of our common stock that were granted to our independent directors and had not been settled as of December 31, 2016, are included in the number of securities to be issued upon exercise of outstanding options, warrants, and rights but are not reflected in the weighted-average exercise price of outstanding options, warrants, and rights.

(2) We have two equity incentive plans. Under each plan, an aggregate maximum of 5.0 million shares may be issued upon grant, vesting or exercise of awards, although the board of directors, as of December 31, 2016, has only authorized and reserved for issuance a total of 2.0 million shares of our common stock under each plan.

(3) As of December 31, 2016, includes 4,055 RSUs with respect to Class I shares of our common stock that were granted to our independent directors and had not yet vested.

ITEM13.    CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

Advisory Agreement

We rely on our Advisor to manage our day-to-day activities and to implement our investment strategy. We, the Operating Partnership, and our Advisor are party to a Tenth Amended and Restated Advisory Agreement, dated as of June 23, 2016 and effective as of June 30, 2016, which we refer to herein as the “Advisory Agreement”. On June 23, 2016, we, the Operating Partnership and our Advisor agreed to renew the Advisory Agreement for an additional one-year term expiring June 30, 2017. The current term of the Advisory Agreement is one year and expires on June 30 of each calendar year, subject to renewals by our board of directors for an unlimited number of successive one-year periods. Our officers and our interested directors are all employees or principals of our Advisor. Our Advisor is presently directly or indirectly majority owned, controlled, and/or managed by John A. Blumberg, James R. Mulvihill, Evan H. Zucker, and/or their affiliates.

Under the terms of the Advisory Agreement, our Advisor uses its best efforts, subject to the oversight, review, and approval of the board of directors, to perform the following:

• Participate in formulating an investment strategy and asset allocation framework consistent with achieving our investment objectives;

• Assist our board of directors in developing, overseeing, implementing, and coordinating our daily NAV procedures;

• Provide information about our properties and other assets and liabilities to the independent valuation firm and other parties involved in determining our daily NAV;

• Research, identify, review, and recommend to our board of directors for approval real property and real estate-related acquisitions and dispositions consistent with our investment policies and objectives;

• Structure the terms and conditions of transactions pursuant to which acquisitions and dispositions of real properties and real estate-related investments will be made;

• Actively oversee and manage our real property and real estate-related investment portfolios for purposes of meeting our investment objectives;

• Manage our day-to-day affairs, including financial accounting and reporting, investor relations, marketing, informational systems, and other administrative services on our behalf;

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• Select joint venture partners and product specialists, structure corresponding agreements, and oversee and monitor these relationships; and

• Arrange for financing and refinancing of our assets.

The independent directors will evaluate the performance of our Advisor before renewing the Advisory Agreement. The Advisory Agreement may be terminated:

• Immediately by us for “cause” (as defined in the Advisory Agreement) or upon the bankruptcy of our Advisor;

• Without cause or penalty by a majority of our independent directors upon 60 days’ written notice; or

• With “good reason” (as defined in the Advisory Agreement) by our Advisor upon 60 days’ written notice.

In the event of the termination of the Advisory Agreement, our Advisor will cooperate with us and take all reasonable steps requested to assist our board of directors in making an orderly transition of the advisory function. Before selecting a successor advisor, our board of directors must determine that any successor advisor possesses sufficient qualifications to perform the advisory function and to justify the compensation it would receive from us.

Compensation to our Advisor

Our Advisor and its affiliates are paid fees and reimbursed certain expenses in connection with services they provide to us. In the event the Advisory Agreement is terminated, our Advisor will be paid all accrued and unpaid fees and expense reimbursements earned prior to the date of termination. We will not reimburse our Advisor or its affiliates for services for which our Advisor or its affiliates are entitled to compensation in the form of a separate fee. Our Advisor may also, directly or indirectly (including, without limitation, through us or our subsidiaries), receive fees from our joint venture partners or co-owners of our properties for services provided to them with respect to their proportionate interests. Fees received from joint venture partners or co-owners of our properties and paid, directly or indirectly (including without limitation, through us or our subsidiaries), to our Advisor may be more or less than similar fees that we pay to our Advisor pursuant to the Advisory Agreement.

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The following table summarizes all of the compensation and fees, including reimbursement of expenses, that are payable by us to our Advisor.

·	Advisory Fees — Advisor	In consideration for the asset management services it provides on our behalf, we pay our Advisor an advisory fee equal to: (1) a fixed component that accrues daily in an amount equal to 1/365th of 1.15% of the “Aggregate Fund NAV” (defined as the aggregate NAV of our Class E shares, Class A shares, Class W shares, and Class I shares, along with the OP Units in our Operating Partnership held by third parties) for such day, which is payable monthly in arrears, and (2) a performance component calculated on the basis of the overall non-compounded investment return provided to holders of “Fund Interests” (defined as our Class E shares, Class A shares, Class W shares, and Class I shares, along with the OP Units in our Operating Partnership held by third parties) such that our Advisor receives 25% of the overall return in excess of 6%; provided that in no event may the performance component exceed 10% of the overall return for such year, and subject to certain other limitations. In addition, we pay our Advisor a fee of 1.0% of the total consideration we receive upon the sale of real property assets. Further, for providing a substantial amount of services in connection with the sale of a property, as determined by a majority of our independent directors, we pay our Advisor up to 50.0% of the reasonable, customary, and competitive commission paid for the sale of a comparable real property, provided that such amount shall not exceed 1.0% of the contract price of the property sold and, when added to all other real estate commissions paid to unaffiliated parties in connection with the sale, may not exceed the lesser of a competitive real estate commission or 6.0% of the sales price of the property.
·	Expense Reimbursement — Advisor	Subject to certain limitations, we reimburse our Advisor for all of the costs it incurs in connection with the services it provides to us, including, without limitation, our allocable share of our Advisor’s overhead, which includes but is not limited to our Advisor’s rent, utilities, and personnel costs, as well as a portion of the compensation payable to our principal executive officer and our principal financial officer. We do not reimburse our Advisor or its affiliates for services for which our Advisor or its affiliates are entitled to compensation in the form of a separate fee.
·	Issuer Organization and Offering Expense Reimbursement — Advisor or its affiliates, including our Dealer Manager	We pay directly, or reimburse our Advisor and our Dealer Manager if they pay on our behalf, any organization and offering expenses (other than selling commissions, the dealer manager fee, distribution fees, the primary dealer fee, supplemental fees and commissions, and certain other amounts) as and when incurred. After the termination of the current primary offering and again after termination of the offering under our distribution reinvestment plan, our Advisor has agreed to reimburse us to the extent that total cumulative organization and offering expenses (including selling commissions, the primary dealer fee, the dealer manager fee, and distribution fees) that we incur exceed 15% of our gross proceeds from the applicable offering.
·	Additional Underwriting Compensation – our Dealer Manager or our Advisor	We pay directly, or reimburse our Advisor and our Dealer Manager if they pay on our behalf, certain additional items of underwriting compensation including legal fees of our Dealer Manager, reimbursements for customary travel, lodging, meals and reasonable entertainment expenses of registered persons associated with our Dealer Manager, the cost of educational conferences held by us, including costs reimbursement for registered persons associated with our Dealer Manager and registered representatives of participating broker-dealers to attend educational conferences sponsored by us, attendance fees and costs reimbursement for registered persons associated with our Dealer Manager to attend seminars conducted by participating broker-dealers, and promotional items. In addition to this additional underwriting compensation, our Advisor may also pay our Dealer Manager additional amounts to fund certain of our Dealer Manager’s costs and expenses related to the distribution of this offering, which will not be reimbursed by us. Also, our Dealer Manager may pay supplemental fees or commissions to participating broker-dealers and servicing broker-dealers with respect to Class I shares sold in the primary offering, which will not be reimbursed by us.

Dealer Manager Agreement

We entered into a dealer manager agreement dated July 12, 2012, or the “Prior Dealer Manager Agreement,” with our Dealer Manager in connection with the Prior Offering. Pursuant to the Prior Dealer Manager Agreement, our Dealer Manager served as the dealer manager for the Prior Offering. Our Dealer Manager is an entity related to our Advisor and a member firm of FINRA.

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Under the Prior Dealer Manager Agreement, our Dealer Manager provided certain sales, promotional, and marketing services to us in connection with the distribution of the shares of common stock offered pursuant to our Prior Offering prospectus. Pursuant to the Prior Dealer Manager Agreement, we paid our Dealer Manager a sales commission of up to 3.0% of the NAV per Class A share sold in the primary offering, subject to the reduction of the sales commission in certain circumstances, and a distribution fee which accrued daily in an amount equal to 1/365th of 0.50% of the amount of our NAV per share for our Class A shares for such day. We also paid our Dealer Manager a dealer manager fee which accrued daily in an amount equal to 1/365th of 0.60% of our NAV per share for each of our Class A and Class W shares and in an amount equal to 1/365th of 0.10% of our NAV per share for our Class I shares for such day. We will continue paying such dealer manager fees and distribution fee with respect to shares sold in the Prior Offering until the earlier to occur of the following: (i) a listing of the class of such shares on a national securities exchange, (ii) following the completion of the Prior Offering, total underwriting compensation in the Prior Offering equaling 10% of the gross proceeds from the primary portion of the Prior Offering, or (iii) such shares no longer being outstanding. The sales commissions, distribution fees, and dealer manager fees may all be reallowed to participating broker dealers who are members of FINRA. Our Dealer Manager may also receive a portion of the organization and offering expense reimbursement amounts described above under “— Compensation to our Advisor”. Our Dealer Manager is presently directly or indirectly majority owned by John A. Blumberg, James R. Mulvihill, Evan H. Zucker, and/or their affiliates.

Pursuant to an amendment to our Prior Dealer Manager Agreement entered into on May 31, 2013, from time to time we could agree to pay our Dealer Manager a primary dealer fee in the amount of up to 5.0% of the gross proceeds raised from the sale of Class I shares in the primary portion of the Prior Offering, provided that the total gross proceeds raised with respect to which the primary dealer fee could apply could not exceed $300,000,000. Pursuant to this amendment, our Dealer Manager retained 0.5% of such gross proceeds and reallowed the remainder of the primary dealer fee to the participating broker-dealers involved in selling such Class I shares based on the portion of the gross proceeds raised from their customers. The primary dealer fee is considered underwriting compensation (as defined in accordance with, and subject to the underwriting compensation limits of, applicable FINRA rules).

On September 16, 2015, the Company entered into a Second Amended and Restated Dealer Manager Agreement (the “Second Amended Dealer Manager Agreement”) with our Dealer Manager in connection with the Follow-On Offering. Pursuant to the Second Amended Dealer Manager Agreement, our Dealer Manager serves as the dealer manager for the Follow-On Offering.

The Second Amended Dealer Manager Agreement is an amendment and restatement of the Prior Dealer Manager Agreement. The purpose of the Second Amended Dealer Manager Agreement is to engage our Dealer Manager with respect to the Follow-On Offering while still paying dealer manager fees and distribution fees with respect to the Prior Offering. As amended, the Second Amended Dealer Manager Agreement may be made to apply to future offerings by naming them in a schedule to the agreement, with the consent of the Company and our Dealer Manager. Pursuant to the Second Amended Dealer Manager Agreement, we pay (i) selling commissions on Class A shares sold in the primary offering of up to 3.0% of the public offering price per share, (ii) a dealer manager fee which accrues daily in an amount equal to 1/365th of 0.6% of our NAV per share of Class A and Class W shares outstanding and an amount equal to 1/365th of 0.1% of our NAV per share of Class I shares outstanding on such day on a continuous basis, and (iii) a distribution fee which accrues daily in an amount equal to 1/365th of 0.5% of our NAV per Class A share outstanding on such day on a continuous basis. Subject to FINRA limitations on underwriting compensation, we will continue to pay the dealer manager fee and distribution fee until the earlier to occur of the following: (i) a listing of the class of such shares on a national securities exchange or (ii) such shares no longer being outstanding.

Pursuant to the Second Amended Dealer Manager Agreement, from time to time we may agree to pay our Dealer Manager a primary dealer fee in the amount of up to 5.0% of the gross proceeds raised from the sale of Class I shares in the primary portion of the Follow-On Offering, provided that the total gross proceeds raised with respect to which the primary dealer fee will apply may not exceed $100,000,000. Pursuant to this agreement, our Dealer Manager retains 0.5% of such gross proceeds and reallows the remainder of the primary dealer fee to the participating broker-dealers involved in selling such Class I shares based on the portion of the gross proceeds raised from their customers. The primary dealer fee is considered underwriting compensation (as defined in accordance with, and subject to the underwriting compensation limits of, applicable FINRA rules).

On June 23, 2016, our board of directors increased the maximum amount of total gross proceeds raised with respect to which the primary dealer fee will apply to $150 million. Such amount is subject to further increase by our board of directors, in its discretion.

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For the year ended December 31, 2016, we paid a primary dealer fee of $3.5 million with respect to $69.3 million of the total gross proceeds raised in our public offering. The maximum primary dealer fee we will pay our Dealer Manager pursuant to the Second Amended Dealer Manager Agreement is $7.5 million, although in the future we may enter into subsequent amendments to the Second Amended Dealer Manager Agreement to provide for additional primary dealer fee payments.

Property Management Agreement

On June 23, 2016, we and Dividend Capital Property Management LLC (the “Property Manager”) agreed to terminate the property management agreement dated January 9, 2006, with the Property Manager (the “Property Management Agreement”) as no services were being provided by the Property Manager under the Property Management Agreement. The Property Manager waived the notice period for termination so that the Property Management Agreement terminated immediately.

Compensation to our Advisor and its Affiliates

In connection with the commencement of the Prior Offering in 2012, we amended our Advisory Agreement with our Advisor to eliminate acquisition fees and tie the advisory fee earned by our Advisor to our NAV. In addition, our current advisory fees paid to our Advisor include a performance-based component for which our Advisor receives an additional fee equal to 25% of the total investment return to our Class A, W and I stockholders in a given year in excess of 6% as an incentive to reward sustainable total investment return performance to our stockholders. However, our Advisor will not receive a performance fee based on Class E shares until their NAV exceeds $10 per share. We designed the amended advisory fee structure to benefit stockholders by reducing day-to-day management fees paid to our Advisor, while incentivizing the Advisor to maximize stockholder value, whether or not new capital is raised.

See Note 11 to our financial statements beginning on page F-1 of this Annual Report on Form 10-K for further discussion of all fees and reimbursements that we pay to our Advisor.

The table below provides information regarding fees and expenses paid or payable to our Advisor, our Dealer Manager, and their affiliates in connection with their services provided to us. The table includes amounts incurred and payable for the years ended December 31, 2016 and 2015 (amounts in thousands). 

	For the Year Ended December 31,
	2016		2015
Advisory fees (1)	$	14,857	$	17,083
Other reimbursements paid to our Advisor (2)	8,368		9,008
Other reimbursements paid to our Dealer Manager	396		441
Advisory fees related to the disposition of real properties	2,140		4,962
Development management fee (3)	31		88
Primary dealer fee (4)	3,465		2,540
Selling commissions	100		114
Dealer manager fees	381		258
Distribution fees	70		50
Total	$	29,808	$	34,544

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(1) Amounts reported for the years ended December 31, 2016 and 2015 include approximately $1.1 million, respectively, that we were not obligated to pay in consideration of the issuance of Company RSUs (as defined below) to our Advisor. The Restricted Stock Unit Agreements with our Advisor are discussed further in Note 11 to our financial statements beginning on page F-1 of this Annual Report on Form 10-K.

(2) Other reimbursements paid to our Advisor for the years ended December 31, 2016 and 2015 include approximately $312,000 and $320,000, respectively, to reimburse a portion of the salary, bonus and benefits for our principal executive officer, Jeffrey L. Johnson and approximately $424,000 and $555,000, respectively, to reimburse a portion of the salary, bonus and benefits for our principal financial officer, M. Kirk Scott, for services provided to us for which our Advisor does not otherwise receive a separate fee. The balance of such reimbursements are made up primarily of other general overhead and administrative expenses, including, but not limited to, allocated rent paid to both third parties and affiliates of our Advisor, equipment, utilities, insurance, travel and entertainment, and other costs.

(3) Pursuant to our amended Advisory Agreement effective as of June 30, 2016, our Advisor will no longer receive a development management fee in exchange for providing development management services.

(4) Amounts reported include primary dealer fees we paid to our Dealer Manager based on the gross proceeds raised by participating broker-dealers pursuant to certain selected dealer agreements. Of the primary dealer fee earned during the years ended December 31, 2016and 2015, our Dealer Manager

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reallowed approximately $3.1 million and $2.3 million, respectively, to participating third-party broker-dealers and retained approximately $347,000 and $254,000, respectively.

Our independent directors evaluate at least annually whether the compensation that we contract to pay to our Advisor and its affiliates is reasonable in relation to the nature and quality of services performed and that such compensation is within the limits prescribed by our charter. The amount of granted restricted stock units ("Company RSUs") is considered in the evaluation of the total compensation paid to the Advisor for services provided. Our independent directors also supervise the performance of our Advisor and its affiliates and the compensation we pay to them to determine that the provisions of our compensation arrangements are carried out. Our board of directors also reviews all of our general and administrative expenses on at least an annual basis, which includes certain amounts reimbursed by us to our Advisor.

Please also see Note 11 to our financial statements beginning on page F-1 of this Annual Report on Form 10-K for information regarding restricted stock grants to certain employees of our Advisor and its affiliates, none of which are our named executive officers.

Product Specialists

During the year ended December 31, 2012, our Advisor entered into a product specialist agreement with BCG TRT Advisors LLC (“BCG”), in connection with advisory services related to our investments in real estate securities assets. Pursuant to this agreement, a portion of the asset management fee that our Advisor receives from us related to real estate securities investments is reallowed to BCG in exchange for services provided. Approximately $37,000 was incurred related to services provided by BCG during the year ended December 31, 2016.

Policies and Procedures for Conflict Resolution and Review of Related Party Transactions

We are subject to potential conflicts of interest arising out of our relationship with our Advisor and its affiliates. These conflicts may relate to compensation arrangements, the allocation of investment and leasing opportunities, the terms and conditions on which various transactions might be entered into by us and our Advisor or its affiliates, and other situations in which our interests may differ from those of our Advisor or its affiliates. Our board of directors has adopted conflicts of interest resolutions procedures. Our charter also contains certain requirements relating to board and independent director approval of transactions between us, on the one hand, and our Advisor or any of its affiliates, on the other hand.  

Independent Directors

Our independent directors evaluate at least annually whether the compensation that we contract to pay to our Advisor and its affiliates is reasonable in relation to the nature and quality of services performed and to our investment performance and that such compensation is within the limits prescribed by our charter. In addition, our independent directors, acting as a group, will resolve potential conflicts of interest whenever they determine that the exercise of independent judgment by the board of directors or our Advisor or its affiliates could reasonably be compromised. However, the independent directors may not take any action which, under Maryland law, must be taken by the entire board of directors or which is otherwise not within their authority. The independent directors, as a group, are authorized to retain their own legal and financial advisors. Those conflict of interest matters that cannot be delegated to our independent directors, as a group, under Maryland law must be acted upon by both the board of directors and the independent directors.

Acquisitions Involving Affiliates and Other Related Entities

We will not purchase or lease real properties in which our Sponsor, our Advisor, any of our directors, or any of their affiliates has an interest without a determination by a majority of our directors (including a majority of our independent directors) not otherwise interested in the transaction that such transaction is fair and reasonable to us and at a price to us no greater than the cost of the property to our Sponsor, our Advisor, such director or such affiliate unless there is substantial justification for any amount that exceeds such cost and such excess amount is determined to be reasonable. In no event will we acquire any such property at an amount in excess of its appraised value. We will not sell or lease real properties to our Sponsor, our Advisor, our directors or any of their affiliates unless a majority of the directors not otherwise interested in the transaction (including a majority of the independent directors not otherwise interested in the transaction) determine that the transaction is fair and reasonable to us.

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Mortgage Loans Involving Affiliates

Our charter prohibits us from investing in or making mortgage loans in which the transaction is with our Sponsor, our Advisor, our directors, or any of their affiliates unless an independent expert appraises the underlying property. We must keep the appraisal for at least five years and make it available for inspection and duplication by any of our stockholders. In addition, we must obtain a mortgagee’s or owner’s title insurance policy or commitment as to the priority of the mortgage or the condition of the title. Our charter prohibits us from making or investing in any mortgage loans that are subordinate to any lien or other indebtedness of our Sponsor, our Advisor, our directors, or any of their affiliates.

Issuance of Options and Warrants to Certain Affiliates

Our charter prohibits the issuance of options or warrants to purchase our common stock to our Sponsor, our Advisor, our directors, or any of their affiliates (i) on terms more favorable than we would offer such options or warrants to unaffiliated third parties or (ii) in excess of an amount equal to 10% of our outstanding common stock on the date of grant.

Repurchase of Shares of Common Stock

Our charter prohibits us from paying a fee to our Sponsor, our Advisor, our directors, or any of their affiliates in connection with our repurchase of our common stock.

Loans and Expense Reimbursements Involving Affiliates

Except with respect to certain mortgage loans as described above or loans to wholly owned subsidiaries, we will not make any loans to our Sponsor, our Advisor, our directors, or any of their affiliates. In addition, we will not borrow from these parties unless a majority of the directors not otherwise interested in the transaction (including a majority of the independent directors not otherwise interested in the transaction) approve the transaction as being fair, competitive, and commercially reasonable, and no less favorable to us than comparable loans between unaffiliated parties. These restrictions on loans will only apply to advances of cash that are commonly viewed as loans, as determined by our board of directors. By way of example only, the prohibition on loans would not restrict advances of cash for legal expenses or other costs incurred as a result of any legal action for which indemnification is being sought, nor would the prohibition limit our ability to advance reimbursable expenses incurred by directors or our Advisor or its affiliates.

DIRECTOR INDEPENDENCE

Our charter defines an “independent director” as a person who has not been, directly or indirectly, associated with our Sponsor (as defined in our charter) or our Advisor, within the previous two years by virtue of:

• ownership interests in our Sponsor, our Advisor, or any of their affiliates;

• employment by our Sponsor, our Advisor, or any of their affiliates;

• service as an officer or director of our Sponsor, our Advisor, or any of their affiliates;

• performance of services, other than as a director for us;

• service as a director or trustee of more than three real estate investment trusts organized by our Sponsor or advised by our Advisor; or

• maintenance of a material business or professional relationship with our Sponsor, our Advisor, or any of their affiliates.

We refer to our directors who are not independent as our “interested directors.” Our charter sets forth the material business or professional relationships that cause a person to be associated with us and therefore not eligible to serve as an independent director. A business or professional relationship is per se material if the prospective independent director received more than five percent of his annual gross income in the last two years from our Sponsor, our Advisor, or any affiliate of our Sponsor or Advisor, or if more than five percent of his net worth, on a fair market value basis, has come from our Sponsor, our Advisor, or any affiliate of our Sponsor or Advisor.

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Our board of directors has determined that Messrs. Charles B. Duke, Daniel J. Sullivan, and John P. Woodberry are independent within the meaning of the applicable (i) provisions set forth in our charter, (ii) requirements set forth in the Exchange Act and the applicable Commission rules, and (iii) although our shares are not listed on the New York Stock Exchange (“NYSE”), independence rules set forth in the NYSE Listed Company Manual. To be considered independent under the NYSE rules, our board of directors must determine that a director does not have a material relationship with us and/or our consolidated subsidiaries (either directly or as a partner, stockholder, or officer of an organization that has a relationship with any of those entities).

Committee Independence

Audit Committee. The members of our audit committee are Messrs. Duke, Kincaid and Sullivan. Messrs. Duke and Sullivan are each an independent director and Mr. Kincaid is an interested director.

Investment Committee. The members of our investment committee are Messrs. Blumberg, Kincaid, Duke, Sullivan, and Woodberry. Messrs. Duke, Sullivan, and Woodberry are each an independent director, and Messrs. Kincaid and Blumberg are each an interested director.

Conflicts Resolution Committee. The members of our conflicts resolution committee are Messrs. Sullivan and Woodberry, each of whom is an independent director.

Compensation Committee. We do not have a standing compensation committee. Our board of directors may establish a compensation committee in the future to administer our equity incentive plans. A compensation committee, if formed, will consist entirely of our independent directors.

Nominating Committee. We do not have a standing nominating committee. Our board of directors has determined that it is appropriate for us not to have a nominating committee because all of the matters for which a nominating committee would be responsible are presently considered by our entire board of directors.

ITEM 14.    PRINCIPAL ACCOUNTANT FEES AND SERVICES

During the year ended December 31, 2016, we engaged KPMG LLP to provide us with audit services. Services provided included the audit of annual financial statements, review of unaudited quarterly financial information, review and consultation regarding filings with the Commission, and consultation on financial accounting and reporting matters.

Total fees billed to us by KPMG LLP for the years ended December 31, 2016 and 2015 were $818,610 and $844,415, respectively, and consisted of the following: 

	For the Year Ended December 31,
	2016		2015
Audit Fees	$	818,610	$	844,415
Audit-Related Fees	—		—
Tax Fees	—		—
All Other Fees	—		—
Total	$	818,610	$	844,415

All fees were determined to be “Audit Fees”. Audit Fees are fees incurred for the audits of the consolidated financial statements, consultation on audit-related matters, and required review of Commission filings. This category also includes review of, and consents for, filings with the Commission related to our public offerings.

The audit committee of our board of directors has considered all services provided by KPMG LLP to us and concluded that this involvement is compatible with maintaining the independent registered public accounting firm’s independence.

The audit committee of our board of directors is responsible for appointing our independent registered public accounting firm and approving the terms of the independent registered public accounting firm’s services. The audit committee charter imposes a duty on the audit committee to pre-approve all auditing services performed for us by our independent registered public accounting firm, as well as all permitted non-audit services. The audit committee may, in its discretion, delegate to one or more of its members the authority to pre-approve any audit or non-audit services to be performed by the independent

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registered public accounting firm, provided any such approval is presented to and approved by the full audit committee at its next scheduled meeting. All fees for services provided by KPMG LLP in 2016 and 2015 were pre-approved by the audit committee of our board of directors.

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PART IV

ITEM15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

(a) Financial Statements and Schedules.

Reference is made to the “Index to Consolidated Financial Statements” on page F-1 of this Annual Report on Form 10-K and the consolidated financial statements included therein, beginning on page F-2.

All other financial statement schedules are not required under the related instructions, or they have been omitted either because they are not significant or the required information has been disclosed in the consolidated financial statements and the notes related thereto.

(b) Exhibits

The following exhibits are filed as part of this Annual Report on Form 10-K: 

Exhibit Number	Description
3.1	Articles of Restatement, incorporated by reference to Exhibit 3.1 to the Company’s Annual Report on Form 10-K, filed March 21, 2012
3.2	Articles of Amendment, incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K, filed July 12, 2012
3.3	Articles Supplementary (Class A shares), incorporated by reference to Exhibit 3.2 to the Company’s Current Report on Form 8-K, filed July 12, 2012
3.4	Articles Supplementary (Class W shares), incorporated by reference to Exhibit 3.3 to the Company’s Current Report on Form 8-K, filed July 12, 2012
3.5	Articles Supplementary (Class I shares), incorporated by reference to Exhibit 3.4 to the Company’s Current Report on Form 8-K, filed July 12, 2012
3.6	Certificate of Correction to Articles of Restatement, incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K, filed on March 26, 2014
3.7	Certificate of Correction to Articles of Restatement, incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K, filed on August 30, 2016
3.8	Sixth Amended and Restated Bylaws, incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K, filed December 8, 2014
4.1	Fourth Amended and Restated Distribution Reinvestment Plan, incorporated by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K, filed July 12, 2012
4.2	Second Amended and Restated Class E Share Redemption Program, incorporated by reference to Exhibit 99.1 to the Company’s Current Report on Form 8-K, filed December 16, 2015
4.3	Statement regarding transfer restrictions, preferences, limitations, and rights of holders of shares of common stock (to appear on stock certificate or to be sent upon request and without charge to stockholders issued shares without certificates), incorporated by reference to Exhibit 4.5 to Post-Effective Amendment No. 3 to the Company’s Registration Statement on Form S-11 (No. 333-175989), filed April 15, 2013
4.4	Second Amended and Restated Class A, W and I Share Redemption Program, incorporated by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K, filed December 17, 2014
10.1	Second Amended and Restated Dealer Manager Agreement, incorporated by reference to Exhibit 1.1 to the Company's Current Report on Form 8-K, filed September 16, 2015.
10.2	Tenth Amended and Restated Advisory Agreement, dated as of June 23, 2016, incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K, filed June 27, 2016
10.3	Fifth Amended and Restated Operating Partnership Agreement of Dividend Capital Total Realty Operating Partnership LP, dated as of March 2, 2016, incorporated by reference to Exhibit 10.2 to Amendment No. 3 to the Company’s Registration Statement on Form S-11, Commission File No. 333-197767, filed April 7, 2016
10.4	Amendment No. 1 to Fifth Amended and Restated Operating Partnership Agreement of Dividend Capital Total Realty Operating Partnership LP*
10.5	Form of Trust Agreement, incorporated by reference to Exhibit 10.22 to Amendment No. 3 to the Company’s Registration Statement on Form S-11, Commission File No. 333-197767, filed April 7, 2016
10.6	Form of Master Lease, incorporated by reference to Exhibit 10.23 to Amendment No. 3 to the Company’s Registration Statement on Form S-11, Commission File No. 333-197767, filed April 7, 2016

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10.7	Form of Guaranty, incorporated by reference to Exhibit 10.24 to Amendment No. 3 to the Company’s Registration Statement on Form S-11, Commission File No. 333-197767, filed April 7, 2016
10.8	Dealer Manager Agreement between Dividend Capital Exchange LLC and Dividend Capital Securities LLC dated March 2, 2016, and Form of Selected Dealer Agreement, incorporated by reference to Exhibit 10.25 to Amendment No. 3 to the Company’s Registration Statement on Form S-11,Commission File No. 333-197767, filed April 7, 2016
10.9	Form of Management Agreement between various affiliates of the Company (a/k/a Dividend Capital Total Realty Trust Inc.) and KeyPoint Partners LLC, as property manager (New England Retail Portfolio), incorporated by reference to Exhibit 10.27 to the Company’s Quarterly Report on Form 10-Q, filed August 14, 2007
10.10	Dividend Capital Fixed Rate Office Portfolio Loan Agreement between TRT Lending Subsidiary I, LLC and Wells Fargo Bank, National Association, dated June 25, 2010, incorporated by reference to Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q, filed August 13, 2010
10.11	Side Letter Agreement Related to Mortgage, Assignment of Leases and Rents, Security Agreement and Fixture Filing by and among the Company (a/k/a Dividend Capital Total Realty Trust Inc.) and New York Life Insurance Company, dated June 25, 2010, incorporated by reference to Exhibit 10.5.1 to the Company’s Quarterly Report on Form 10-Q, filed August 13, 2010
10.12	Amended and Restated Credit and Term Loan Agreement, incorporated by reference to Exhibit 1.1 to the Company’s Current Report on Form 8-K, filed January 13, 2015
10.13	Credit Agreement, incorporated by reference to Exhibit 1.1 to the Company’s Current Report on Form 8-K, filed March 2, 2015
10.14	Form of Indemnification Agreement for officers and directors, incorporated by reference to Exhibit 10.4 to Amendment No. 5 to the Company's Registration Statement on Form S-11, Commission File No. 333-125338, filed January 13, 2006
10.15	Second Amended and Restated Equity Incentive Plan, incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K, filed June 24, 2015
10.16	Amended and Restated Secondary Equity Incentive Plan, incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K, filed June 24, 2015
10.17	Form of Director Option Agreement, incorporated by reference to Exhibit 99.1 to the Company’s Current Report on Form 8-K, filed April 7, 2006
10.18	Form of Independent Director Restricted Stock Unit Agreement, incorporated by reference to Exhibit 10.17 to the Company’s Annual Report on Form 10-K, filed March 10, 2014
10.19	Purchase and Sale Contract by and between TRT NOIP Doolittle – Redondo Beach LP, TRT NOIP Sheila - Commerce LP, TRT NOIP Corporate Center Drive – Newbury Park LP, TRT NOIP Sylvan Way – Parsippany LLC, TRT NOIP Sw 80 - Plantation LLC, TRT NOIP Connection – Irving LP, TRT NOIP Maple – El Segundo LP, TRT NOIP Glenville - Richardson LP, TRT NOIP Columbia - Richfield LLC, TRT NOIP Corporate Drive – Dixon LLC, TRT NOIP Eagle LP, TRT NOIP East 28 – Aurora LLC, GPT Doolittle Drive Owner LP, GPT Sheila Street Owner LP, GPT Corporate Center-Thousand Oaks Owner LP, GPT Sylvan Way Owner LLC, GPT SW 80th Street Owner LLC, GPT Maple Avenue Owner LP, GPT Connection Drive Owner LLC, GPT Glenville Drive Owner LLC, GPT Columbia Road Owner LLC, GPT Corporate Drive-Dixon Owner LLC, GPT Vickery Drive Owner LLC, and GPT 28th Avenue Aurora Owner LLC, dated December 9, 2014, incorporated by reference to Exhibit 10.15 to Pre-Effective Amendment No. 1 to the Company’s Registration Statement on Form S-11 (File No. 333-197767), filed January 29, 2015
10.20	Amended and Restated Purchase and Sale Contract between TRT NOIP Sheila – Commerce LP, TRT NOIP Corporate Center Drive – Newbury Park LP, TRT NOIP Connection – Irving LP, TRT NOIP Glenville – Richardson LP, TRT NOIP Columbia – Richfield LLC, TRT NOIP Eagle LP, TRT NOIP East 28 – Aurora LLC, GPT Sheila Street Owner LP, GPT Corporate Center-Thousand Oaks Owner LP, GPT Connection Drive Owner LLC, GPT Columbia Road Owner LLC, GPT Vickery Drive Owner LLC, and GPT 28th Avenue Aurora Owner LLC, dated January 15, 2015, incorporated by reference to Exhibit 10.16 to Pre-Effective Amendment No. 1 to the Company’s Registration Statement on Form S-11 (File No. 333-197767), filed January 29, 2015
10.21	Amended and Restated Purchase and Sale Contract between TRT NOIP Doolittle – Redondo Beach LP, TRT NOIP Sw 80 – Plantation LLC, TRT NOIP Corporate Drive – Dixon LLC, GPT Doolittle Drive Owner LP, GPT SW 80th Street Owner LLC, and GPT Corporate Drive-Dixon Owner LLC, dated January 15, 2015, incorporated by reference to Exhibit 10.17 to Pre-Effective Amendment No. 1 to the Company’s Registration Statement on Form S-11 (File No. 333-197767), filed January 29, 2015
10.22	Amended and Restated Purchase and Sale Contract by and between TRT NOIP Sylvan Way – Parsippany LLC, TRT NOIP Maple – El Segundo LP, GPT Sylvan Way Owner LLC, and GPT Maple Avenue Owner LP, dated January 15, 2015, incorporated by reference to Exhibit 10.18 to Pre-Effective Amendment No. 1 to the Company’s Registration Statement on Form S-11 (File No. 333-197767), filed January 29, 2015

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10.23	Restricted Stock Unit Agreement between the Company and Dividend Capital Total Advisors LLC, dated April 7, 2014, incorporated by reference to Exhibit 10.14 to Post-Effective Amendment No. 8 to the Company’s Registration Statement on Form S-11 (File No. 333-175989), filed April 11, 2014
10.24	Restricted Stock Unit Agreement between the Company and Dividend Capital Total Advisors LLC, dated February 25, 2015 (relating to 135,359 restricted stock units), incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K, filed March 3, 2015
10.25	Restricted Stock Unit Agreement between the Company and Dividend Capital Total Advisors LLC, dated February 25, 2015 (relating to 88,788 restricted stock units), incorporated by reference to Exhibit 10.3 to the Company’s Current Report on Form 8-K, filed March 3, 2015
10.26	Restricted Stock Unit Agreement between the Company and Dividend Capital Total Advisors LLC, dated February 4, 2016 (relating to 124,451 restricted stock units), incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K, filed February 5, 2016.
10.27	Mortgage, Assignment of Leases and Rents, Security Agreement and Fixture Filing, dated January 10, 2017*
10.28	Promissory Note, dated January 10, 2017*
10.29	First Amendment to Amended and Restated Credit and Term Loan Agreement, dated December 22, 2016*
21	Subsidiaries of the registrant*
23.1	Consent of KPMG LLP*
31.1	Rule 13a-14(a) Certification of Principal Executive Officer*
31.2	Rule 13a-14(a) Certification of Principal Financial Officer*
32.1	Certification of Principal Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002*
32.2	Certification of Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002*
99.1	Valuation Procedures, incorporated by reference to Exhibit 99.1 to the Company’s Annual Report on Form 10-K, filed March 3, 2015
99.2	Consent of Altus Group U.S., Inc.*
101.1	The following information from this Annual Report on Form 10-K for the year ended December 31, 2016, formatted in XBRL (eXtensible Business Reporting Language): (i) Consolidated Balance Sheets; (ii) Consolidated Statements of Income; (iii) Consolidated Statements of Stockholders’ Equity; and (iv) Consolidated Statements of Cash Flows*

*    Filed or furnished herewith.

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INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

Report of Independent Registered Public Accounting Firm	F-2
Consolidated Balance Sheets	F-3
Consolidated Statements of Income	F-4
Consolidated Statements of Comprehensive Income	F-5
Consolidated Statements of Equity	F-6
Consolidated Statements of Cash Flows	F-7
Notes to Consolidated Financial Statements	F-8
Report of Independent Registered Public Accounting Firm	F-47
Schedule III — Real Estate and Accumulated Depreciation	F-48

F-1

Report of Independent Registered Public Accounting Firm

The Board of Directors and Stockholders

Dividend Capital Diversified Property Fund Inc.:

We have audited the accompanying consolidated balance sheets of Dividend Capital Diversified Property Fund Inc. and subsidiaries (the Company) as of December 31, 2016 and 2015, and the related consolidated statements of income, comprehensive income, equity, and cash flows for each of the years in the three‑year period ended December 31, 2016. These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Dividend Capital Diversified Property Fund Inc. and subsidiaries as of December 31, 2016 and 2015, and the results of their operations and their cash flows for each of the years in the three‑year period ended December 31, 2016, in conformity with U.S. generally accepted accounting principles.

/s/KPMG LLP

Denver, Colorado

March 3, 2017

F-2

PART I. FINANCIAL INFORMATION

ITEM 1.    FINANCIAL STATEMENTS

DIVIDEND CAPITAL DIVERSIFIED PROPERTY FUND INC.

CONSOLIDATED BALANCE SHEETS 

(In thousands, except share and footnoted information)

	As of December 31,
	2016			2015
ASSETS
Investments in real property	$	2,204,322		$	2,380,174
Accumulated depreciation and amortization	(492,911		)	(505,957		)
Total net investments in real property	1,711,411			1,874,217
Debt-related investments, net	15,209			15,722
Total net investments	1,726,620			1,889,939
Cash and cash equivalents	13,864			15,769
Restricted cash	7,282			18,394
Other assets, net	35,962			36,789
Total Assets	$	1,783,728		$	1,960,891
LIABILITIES AND EQUITY
Liabilities:
Accounts payable and accrued expenses (1)	$	34,085		$	39,645
Mortgage notes	342,247			585,864
Unsecured borrowings	706,554			511,905
Intangible lease liabilities, net	59,545			63,874
Other liabilities	33,206			33,652
Total Liabilities	1,175,637			1,234,940
Equity:
Stockholders’ equity:
Common stock, $0.01 par value; 1,000,000,000 shares authorized; 150,636,393 and 164,124,057 shares issued and outstanding, as of December 31, 2016 and December 31, 2015, respectively (2)	1,506			1,641
Additional paid-in capital	1,361,638			1,470,859
Distributions in excess of earnings	(839,896		)	(832,681		)
Accumulated other comprehensive loss	(6,905		)	(11,014		)
Total stockholders’ equity	516,343			628,805
Noncontrolling interests	91,748			97,146
Total Equity	608,091			725,951
Total Liabilities and Equity	$	1,783,728		$	1,960,891

_______________________________

(1) Includes approximately $3.6 million and $5.1 million that we owed to our Advisor and affiliates of our Advisor for services and reimbursement of certain expenses as of December 31, 2016 and December 31, 2015, respectively.

(2) Includes 112,325,127 shares of Class E common stock, 2,001,359 shares of Class A common stock, 2,271,361 shares of Class W common stock, and 34,038,546 shares of Class I common stock issued and outstanding as of December 31, 2016, and 137,275,396 shares of Class E common stock, 1,703,109 shares of Class A common stock, 1,812,277 shares of Class W common stock, and 23,334,275 shares of Class I common stock issued and outstanding as of December 31, 2015.

The accompanying notes are an integral part of these consolidated financial statements.  

F-3

DIVIDEND CAPITAL DIVERSIFIED PROPERTY FUND INC.

CONSOLIDATED STATEMENTS OF INCOME 

(In thousands, except per share and footnoted information)

	For the Year Ended December 31,
	2016			2015			2014
REVENUE:
Rental revenue	$	215,227		$	218,278		$	224,201
Debt-related income	943			6,922			7,396
Total Revenue	216,170			225,200			231,597
EXPENSES:
Rental expense	65,587			59,590			50,997
Real estate depreciation and amortization expense	80,105			83,114			88,994
General and administrative expenses (1)	9,450			10,720			11,108
Advisory fees, related party	14,857			17,083			15,919
Acquisition-related expenses	667			2,644			1,205
Impairment of real estate property (2)	2,677			8,124			9,500
Total Operating Expenses	173,343			181,275			177,723
Other Income (Expenses):
Interest and other income	2,207			2,192			1,168
Interest expense	(40,782		)	(47,508		)	(61,903		)
Gain (loss) on extinguishment of debt and financing commitments	5,136			(1,168		)	(63		)
Gain on sale of real property (3)	45,660			134,218			10,914
Income from continuing operations	55,048			131,659			3,990
Discontinued operations (4)	—			—			30,004
Net income	55,048			131,659			33,994
Net income attributable to noncontrolling interests	(5,072		)	(7,404		)	(4,802		)
NET INCOME ATTRIBUTABLE TO COMMON STOCKHOLDERS	$	49,976		$	124,255		$	29,192
Net income per basic and diluted common share:
Continuing operations	$	0.31		$	0.70		$	0.02
Discontinued operations	$	—		$	—		$	0.14
NET INCOME PER BASIC AND DILUTED COMMON SHARE	$	0.31		$	0.70		$	0.16
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING
Basic	159,648			175,938			178,273
Diluted	172,046			188,789			190,991

_______________________________ 

(1) Includes approximately $6.4 million, $7.1 million and $6.8 million incurred by our Advisor and its affiliates for reimbursable expenses during the years ended December 31, 2016, 2015, and 2014, respectively.

(2) Includes approximately $265,000 and $125,000 paid to our Advisor for advisory fees associated with the disposition of real properties during the years ended December 31, 2016 and 2015, respectively.

(3) Includes approximately $1.9 million, $4.8 million, and $419,000 paid to our Advisor for advisory fees associated with the disposition of real properties during the years ended December 31, 2016, 2015 and 2014, respectively.

(4) Includes approximately $1.6 million paid to our Advisor for fees associated with the disposition of real properties during the year ended December 31, 2014.

The accompanying notes are an integral part of these consolidated financial statements.

F-4

DIVIDEND CAPITAL DIVERSIFIED PROPERTY FUND INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(In thousands) 

	For the Year Ended December 31,
	2016			2015			2014
Net Income	$	55,048		$	131,659		$	33,994
Other Comprehensive (Loss) Income:
Net unrealized change from available-for-sale securities	—			—			(211		)
Change from cash flow hedging derivatives	4,416			(977		)	721
Total Other Comprehensive (Loss) Income	4,416			(977		)	510
Comprehensive income	59,464			130,682			34,504
Comprehensive income attributable to noncontrolling interests	(5,379		)	(7,321		)	(4,637		)
COMPREHENSIVE INCOME ATTRIBUTABLE TO COMMON STOCKHOLDERS	$	54,085		$	123,361		$	29,867

The accompanying notes are an integral part of these consolidated financial statements.

F-5

DIVIDEND CAPITAL DIVERSIFIED PROPERTY FUND INC.

CONSOLIDATED STATEMENTS OF EQUITY

(In thousands)

	Stockholders’ Equity
	Common Stock					Additional Paid-in Capital			Distributions in Excess of Earnings			Accumulated Other Comprehensive Loss			Noncontrolling Interests			Total Equity
	Shares		Amount
Balances, December 31, 2013	176,007		$	1,760		$	1,582,886		$	(860,747	)	$	(10,794	)	$	91,906		$	805,011
Comprehensive income (loss):
Net income	—		—			—			29,192			—			4,802			33,994
Net unrealized change in available-for-sale securities	—		—			—			—			(196		)	(15		)	(211		)
Unrealized change from cash flow hedging derivatives	—		—			—			—			671			50			721
Common stock:
Issuance of common stock, net of offering costs	13,923		140			86,961			—			—			—			87,101
Issuance of common stock, stock-based compensation plans	136		1			776			—			—			—			777
Redemptions of common stock	(11,666	)	(117		)	(82,119		)	—			—			—			(82,236		)
Amortization of stock-based compensation	—		—			30			—			—			—			30
Distributions declared on common stock	—		—			—			(62,236		)	—			—			(62,236		)
Noncontrolling interests:
Contributions of noncontrolling interests	—		—			—			—			—			104			104
Distributions declared to noncontrolling interests	—		—			—			—			—			(9,390		)	(9,390		)
Redemptions of noncontrolling interests	—		—			(1,121		)	—			199			(6,978		)	(7,900		)
Buyout of noncontrolling interest	—		—			(969		)	—			—			(816		)	(1,785		)
Balances, December 31, 2014	178,400		$	1,784		$	1,586,444		$	(893,791	)	$	(10,120	)	$	79,663		$	763,980
Comprehensive income (loss):
Net income	—		—			—			124,255			—			7,404			131,659
Unrealized change from cash flow hedging derivatives	—		—			—			—			(922		)	(55		)	(977		)
Common stock:
Issuance of common stock, net of offering costs	14,262		142			96,807			—			—			—			96,949
Issuance of common stock, stock-based compensation plans	618		6			1,257			—			—			—			1,263
Redemptions of common stock	(29,156	)	(291		)	(213,505		)	—			—			—			(213,796		)
Amortization of stock-based compensation	—		—			32			—			—			—			32
Distributions declared on common stock	—		—			—			(62,900		)	—			—			(62,900		)
Distributions on Unvested Advisor RSUs	—		—			—			(245		)	—			—			(245		)
Noncontrolling interests:
Contributions of noncontrolling interests	—		—			—			—			—			17,337			17,337
Distributions declared to noncontrolling interests	—		—			—			—			—			(4,689		)	(4,689		)
Redemptions of noncontrolling interests	—		—			(176		)	—			28			(2,514		)	(2,662		)
Balances, December 31, 2015	164,124		$	1,641		$	1,470,859		$	(832,681	)	$	(11,014	)	$	97,146		$	725,951
Comprehensive income (loss):
Net income	—		—			—			49,976			—			5,072			55,048
Unrealized change from cash flow hedging derivatives	—		—			—			—			4,109			307			4,416
Common stock:
Issuance of common stock, net of offering costs	14,952		150			100,297			—			—			—			100,447
Issuance of common stock, stock-based compensation plans	32		—			306			—			—			—			306
Redemptions of common stock	(28,472	)	(285		)	(210,287		)	—			—			—			(210,572		)
Amortization of stock-based compensation	—		—			1,109			—			—			—			1,109
Distributions declared on common stock	—		—			—			(57,040		)	—			—			(57,040		)
Distributions on Unvested Advisor RSUs	—		—			—			(151		)	—			—			(151		)
Noncontrolling interests:
Contributions of noncontrolling interests	—		—			—			—			—			3,225			3,225
Distributions declared to noncontrolling interests	—		—			—			—			—			(9,006		)	(9,006		)
Redemptions of noncontrolling interests	—		—			(646		)	—			—			(4,996		)	(5,642		)
Balances, December 31, 2016	150,636		$	1,506		$	1,361,638		$	(839,896	)	$	(6,905	)	$	91,748		$	608,091

The accompanying notes are an integral part of these consolidated financial statements.

F-6

DIVIDEND CAPITAL DIVERSIFIED PROPERTY FUND INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

	For the Year Ended December 31,
	2016			2015			2014
OPERATING ACTIVITIES:
Net income	$	55,048		$	131,659		$	33,994
Adjustments to reconcile net income to net cash provided by operating activities:
Real estate depreciation and amortization expense	80,105			83,114			88,994
Gain on disposition of real property	(45,660		)	(134,218		)	(40,592		)
Impairment loss on real estate property	2,677			8,124			9,500
Collection of accrued interest from debt investment	—			6,421			—
(Gain) loss on extinguishment of debt and financing commitments	(5,136		)	1,168			63
Other adjustments to reconcile net income to net cash provided by operating activities	8,120			4,660			8,565
Changes in operating assets and liabilities	(4,858		)	4,602			(13,295		)
Net cash provided by operating activities	90,296			105,530			87,229
INVESTING ACTIVITIES:
Acquisition of real property	(65,861		)	(319,577		)	(125,509		)
Capital expenditures in real property	(28,951		)	(26,204		)	(14,944		)
Proceeds from disposition of real properties	208,604			359,817			105,322
Principal collections on debt-related investments	469			64,769			24,052
Other investing activities	8,269			(4,384		)	(4,023		)
Net cash provided by (used in) investing activities	122,530			74,421			(15,102		)
FINANCING ACTIVITIES:
Mortgage note proceeds	84,045			70,626			—
Mortgage note principal repayments	(314,816		)	(136,658		)	(52,977		)
Defeasance of mortgage note borrowings	—			(53,267		)	—
Net proceeds from revolving line of credit borrowings	69,000			92,000			45,000
Net proceeds from term loan borrowings	124,411			80,000			—
Other secured borrowings repayments	—			(25,796		)	(1,122		)
Redemption of common shares	(212,878		)	(225,720		)	(81,990		)
Distributions on common stock	(37,647		)	(42,439		)	(41,239		)
Proceeds from sale of common stock	88,206			80,609			74,916
Offering costs for issuance of common stock	(5,417		)	(4,602		)	(4,568		)
Distributions to noncontrolling interest holders	(6,641		)	(4,591		)	(9,501		)
Redemption of OP Unit holder interests	(5,309		)	(2,750		)	(8,219		)
Other financing activities	2,315			(6,055		)	(2,744		)
Net cash used in financing activities	(214,731		)	(178,643		)	(82,444		)
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS	(1,905		)	1,308			(10,317		)
CASH AND CASH EQUIVALENTS, beginning of period	15,769			14,461			24,778
CASH AND CASH EQUIVALENTS, end of period	$	13,864		$	15,769		$	14,461
Supplemental Disclosure of Cash Flow Information:
Cash paid for interest	$	38,161		$	45,321		$	58,330
Supplemental Disclosure of Noncash Investing and Financing Activities:
Assumed mortgage	$	—		$	11,869		$	—
Common stock issued pursuant to the distribution reinvestment plan	$	20,576		$	21,347		$	20,831
Issuances of OP Units for beneficial interests	$	—		$	7,324		$	—
Non-cash repayment of mortgage note and other secured borrowings*	$	—		$	139,236		$	115,387
Non-cash disposition of real property*	$	7,830		$	128,008		$	107,075
Non-cash principal collection on debt-related investments*	$	—		$	11,228		$	7,125
Non-cash investment in real property	$	—		$	11,869		$	12,232

_______________________________

* Represents the amount of sales proceeds and debt repayments from the disposition of real property or the repayment of borrowings that we did not receive or pay in cash, primarily due to the repayment or assumption of related borrowings by the purchaser or borrower at closing.

The accompanying notes are an integral part of these consolidated financial statements.

F-7

DIVIDEND CAPITAL DIVERSIFIED PROPERTY FUND INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2016

1.     ORGANIZATION

Dividend Capital Diversified Property Fund Inc. is a Maryland corporation formed on April 11, 2005 to invest in a diverse portfolio of real property and real estate related investments. As used herein, “the Company,” “we,” “our” and “us” refer to Dividend Capital Diversified Property Fund Inc. and its consolidated subsidiaries and partnerships except where the context otherwise requires.

We believe we have operated in such a manner as to qualify as a real estate investment trust (“REIT”) for federal income tax purposes, and we utilize an Umbrella Partnership Real Estate Investment Trust (“UPREIT”) organizational structure to hold all or substantially all of our assets through our operating partnership, Dividend Capital Total Realty Operating Partnership, L.P. (our “Operating Partnership”). Furthermore, our Operating Partnership wholly owns a taxable REIT subsidiary, DCTRT Leasing Corp. (the “TRS”), through which we have executed certain business transactions that might otherwise have an adverse impact on our status as a REIT if such business transactions were to occur directly or indirectly through our Operating Partnership.

We are the sole general partner of our Operating Partnership. In addition, we have contributed 100% of the proceeds received from our offerings of common stock to our Operating Partnership in exchange for partnership units (“OP Units”) representing our interest as a limited partner of the Operating Partnership.

Dividend Capital Total Advisors LLC (our “Advisor”), a related party, manages our day-to-day activities under the terms and conditions of an advisory agreement (as amended from time to time, the “Advisory Agreement”). Our Advisor and its affiliates receive various forms of compensation, reimbursements and fees for services relating to the investment and management of our real estate assets.

On July 12, 2012, the Securities and Exchange Commission (the “Commission”) declared effective our Registration Statement on Form S-11 (Registration Number 333-175989) (as amended, the “Prior Registration Statement”). The Prior Registration Statement applied to the offer and sale (the “Prior Offering”) of up to $3,000,000,000 of our shares of common stock, of which $2,250,000,000 of shares were expected to be offered to the public in a primary offering and $750,000,000 of shares were expected to be offered to our stockholders pursuant to an amended and restated distribution reinvestment plan (subject to our right to reallocate such amounts). In the Prior Offering, we offered to the public three classes of shares: Class A shares, Class W shares and Class I shares with net asset value (“NAV”) based pricing. See “Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities” and Exhibit 99.1 of this Annual Report on Form 10-K for a description of our valuation procedures and valuation components, including important disclosure regarding real property valuations provided by Altus Group U.S., Inc., an independent valuation firm. Our independent registered public accounting firm does not audit our NAV. Selling commissions, dealer manager fees, and distribution fees are allocated to Class A shares, Class W shares, and Class I shares on a class-specific basis and differ for each class, even when the NAV of each class is the same. On September 15, 2015, we terminated the Prior Offering. Through September 15, 2015, the date our Prior Offering terminated, we had raised gross proceeds of approximately $183.0 million from the sale of approximately 25.8 million shares in the Prior Offering, including approximately $3.4 million through our distribution reinvestment plan.

On September 16, 2015, the Commission declared effective our Registration Statement on Form S-11 (Registration Number 333-197767) (the “Follow-On Registration Statement”). The Follow-On Registration Statement applies to the Company’s follow-on “best efforts” offering of up to $1,000,000,000 of the Company’s Class A, Class I and Class W shares of common stock, of which $750,000,000 of shares are expected to be offered to the public in a primary offering and $250,000,000 of shares are expected to be offered to stockholders of the Company pursuant to its distribution reinvestment plan (subject to the Company’s right to reallocate such amounts) (the “Follow-On Offering”). As of December 31, 2016, we had raised gross proceeds of approximately $110.0 million from the sale of approximately 14.8 million shares in the Follow-On Offering.

As of December 31, 2016, we had raised aggregate gross proceeds of approximately $293.0 million from the sale of approximately 40.6 million shares, including approximately $10.4 million raised through our distribution reinvestment plan. As of December 31, 2016, approximately $890.0 million in shares remained available for sale pursuant to the Follow-on Offering, including approximately $243.1 million in shares available for sale through our distribution reinvestment plan.

F-8

We are offering to sell any combination of Class A shares, Class W shares and Class I shares with a dollar value up to the maximum offering amount pursuant to the Follow-On Offering. We also sell shares of our unclassified common stock, which we refer to as “Class E” shares, pursuant to our distribution reinvestment plan offering registered on our Registration Statement on Form S-3 (Registration Number 333-162636). In the event of a liquidation event, such assets, or the proceeds therefrom, will be distributed ratably in proportion to the respective NAV for each class until the NAV for each class has been paid. Other than differing allocable fees and liquidation rights, Class E shares, Class A shares, Class W shares, and Class I shares have identical rights and privileges.

2.    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Principles of Consolidation

Due to our control of our Operating Partnership through our sole general partnership interest and the limited rights of the limited partners, we consolidate our Operating Partnership, and limited partner interests not held by us are reflected as noncontrolling interests in the accompanying consolidated financial statements (herein referred to as “financial statements”). All significant intercompany accounts and transactions have been eliminated in consolidation.

Our financial statements also include the accounts of our consolidated subsidiaries and joint ventures through which we are the primary beneficiary, when such subsidiaries and joint ventures are variable interest entities, or through which we have a controlling interest. In determining whether we have a controlling interest in a joint venture and the requirement to consolidate the accounts of that entity, we consider factors such as ownership interest, board representation, management representation, authority to make decisions, and contractual and substantive participating rights of the partners/members as well as whether the entity is a variable interest entity in which we have the power to direct the activities that most significantly impact the entity’s economic performance and the obligation to absorb losses that could potentially be significant to the entity or the right to receive benefits that could potentially be significant to the entity.

Our Operating Partnership qualifies as a variable interest entity for accounting purposes and substantially all of the assets of the Company are held by our Operating Partnership, which, subject to certain Operating Partnership and subsidiary level financing restrictions, can be used to settle its obligations. Creditors of certain liabilities of our Operating Partnership have recourse to the Company. All joint ventures in which we have investments are variable interest entities. All of our investments in joint ventures represent our interests in real estate partnerships, formed for the purpose of acquiring, leasing, managing, holding for investment, selling and otherwise dealing with real property investments. Our involvement with our joint ventures affects our financial position, financial performance and cash flows in ways similar to direct ownership of real property investment. We own a significantly disproportionate majority of the ownership interests of our joint ventures. In each of our joint ventures, our joint venture partner performs the day-to-day management of the real properties owned by the respective joint ventures. However, in each of our joint ventures, we approve the activities that most significantly impact the joint venture’s economic performance. Due to our substantive approval rights and our exposure to the economic returns and losses of each of the joint ventures, we are the primary beneficiary of each of our joint ventures. Based on these considerations, we consolidate all of our investments in joint ventures. The accompanying consolidated balance sheets include approximately $48.2 million and $76.9 million, after accumulated depreciation and amortization, in consolidated real property variable interest entity investments as of December 31, 2016 and 2015, respectively. The accompanying consolidated balance sheets include approximately $50.1 million in consolidated mortgage notes in variable interest entity investments as of December 31, 2015. There were no mortgage notes related to variable interest entities as of December 31, 2016.

Judgments made by us with respect to our level of influence or control of an entity and whether we are the primary beneficiary of a variable interest entity involve consideration of various factors, including the form of our ownership interest, the size of our investment (including loans), our ability to direct the activities of the entity, and our obligation to absorb the losses of, or, our right to receive benefits from the entity. Our ability to correctly assess our influence or control over an entity affects the presentation of these investments in our financial statements and, consequently, our financial position and specific items in our results of operations that are used by our stockholders, lenders and others in their evaluation of us. The maximum risk of loss related to our investment in these consolidated variable interest entities is limited to our recorded investments in such entities. The creditors of the consolidated variable interest entities do not have recourse to our general credit.

Generally, we consolidate real estate partnerships and other entities that are not variable interest entities when we own, directly or indirectly, a majority voting interest in the entity.

F-9

Reclassifications

Certain previously reported amounts have been reclassified to conform to the current period financial statement presentation. In April 2015, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update 2015-03 (“ASU 2015-03”), which requires that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability. The guidance is effective for all reporting periods beginning after December 15, 2015 and requires retrospective application. As a result of adopting this guidance, we reclassified approximately $5.1 million and $1.2 million of net debt issuance costs to “unsecured borrowings” and “mortgage notes”, respectively, in the accompanying consolidated balance sheet as of December 31, 2015. We recorded approximately $4.4 million and $1.8 million of net debt issuance costs into “unsecured borrowings” and “mortgage notes”, respectively, in the accompanying consolidated balance sheet as of December 31, 2016.

Investments

Real Property

Costs associated with the acquisition of real property, including acquisition fees paid to our Advisor, are expensed as incurred. In addition, we estimate the fair value of contingent consideration and contingencies related to acquisitions of real property in determining the total cost of the property acquired. Subsequent changes in the fair value of such contingent consideration are recorded either as a gain or loss in our consolidated statements of income. Contingencies are subsequently adjusted through the consolidated statements of income when new information becomes available indicating that settlement of a contingent liability is probable and can be estimated at an amount greater than the acquisition date fair value, or the contingency is resolved, in which case the contingent asset or liability is derecognized.

Costs associated with the development and improvement of our real property assets are capitalized as incurred. Costs incurred in making repairs and maintaining real estate assets are expensed as incurred. During the land development and construction periods, we capitalize interest costs, insurance, real estate taxes and certain general and administrative costs if such costs are incremental and identifiable to a specific activity to get the asset ready for its intended use. The results of operations for acquired real property are included in our accompanying statements of income from their respective acquisition dates.

Upon acquisition, the total cost of a property is allocated to land, building, building and land improvements, tenant improvements and intangible lease assets and liabilities. The purchase price allocation of the total cost to land, building, building improvements, tenant improvements, intangible lease assets and intangible lease liabilities is based on our estimate of the property’s as-if vacant fair value. The as-if vacant fair value is calculated by using all available information such as the replacement cost of such asset, appraisals, property condition reports, market data and other related information. The difference between the fair value and the face value of debt assumed in an acquisition is recorded as an adjustment to the purchase price allocation. The allocation of the total cost of a property to an intangible lease asset includes the value associated with the in-place leases, which may include lost rent, leasing commissions, tenant improvements, legal and other costs.

We record acquired “above-market” and “below-market” leases at their fair value equal to the difference between the contractual amounts to be paid pursuant to each in-place lease and our estimate of fair market lease rates for each corresponding in-place lease, measured over a period equal to the remaining term of the lease for above-market leases and the remaining term of the lease plus the term of any below-market fixed-rate renewal option periods for below-market leases. In addition, we allocate a portion of the purchase price of an acquired property to the estimated value of customer relationships, if any. As of December 31, 2016, we had not recognized any estimated value to customer relationships.

The following table summarizes the amounts that we have incurred in amortization expense for intangible lease assets and adjustments to rental revenue for above-market lease assets and below-market lease liabilities for the years ended December 31, 2016, 2015 and 2014 (amounts in thousands). 

	For the Year Ended December 31,
	2016			2015			2014
Above-market lease assets	$	(5,515	)	$	(5,216	)	$	(6,708	)
Below-market lease liabilities	6,050			6,029			7,324
Net increase to rental revenue	$	535		$	813		$	616
Intangible lease asset amortization	$	(40,797	)	$	(44,260	)	$	(48,937	)

F-10

We expense any unamortized intangible lease asset or record an adjustment to rental revenue for any unamortized above-market lease asset or below-market lease liability when a tenant terminates a lease before the stated lease expiration date. During the year ended December 31, 2016, we recorded $1.7 million related to write-offs of unamortized intangible lease assets and liabilities due to early lease terminations. We recorded an insignificant amount of adjustments related to write-offs of unamortized intangible lease assets and liabilities due to early lease terminations during the years ended December 31, 2015 and 2014.

Real property assets, including land, building, building and land improvements, tenant improvements, lease commissions, and intangible lease assets and liabilities are stated at historical cost less accumulated depreciation and amortization. Depreciation and amortization are computed on a straight-line basis over their estimated useful lives as described in the following table.   

Description	Depreciable Life
Land	Not depreciated
Building	40 years
Building and land improvements	10-40 years
Tenant improvements	Lesser of useful life or lease term
Lease commissions	Over lease term
Intangible in-place lease assets	Over lease term
Above-market lease assets	Over lease term
Below-market lease liabilities	Over lease term, including below-market fixed-rate renewal options

The following table presents expected amortization during the next five years and thereafter related to the acquired above-market lease assets, below-market lease liabilities and acquired in-place lease intangibles, for properties owned as of December 31, 2016 (amounts in thousands).

	For the Year Ended December 31,
	2017			2018			2019			2020			2021			Thereafter			Total
Acquired above-market lease assets	$	(2,379	)	$	(727	)	$	(633	)	$	(213	)	$	(201	)	$	(456	)	$	(4,609	)
Acquired below-market lease liabilities	5,307			4,695			3,977			3,272			2,847			39,447			59,545
Net rental revenue increase	$	2,928		$	3,968		$	3,344		$	3,059		$	2,646		$	38,991		$	54,936
Acquired in-place lease intangibles	$	27,158		$	16,909		$	11,863		$	6,898		$	5,412		$	15,572		$	83,812

Discontinued Operations and Held for Sale

Beginning with the year ended December 31, 2014, a discontinued operation is defined as a component (or group of components) of the entity, the disposal of which would represent a strategic shift that has (or will have) a major effect on the entity’s operations and financial results, when such a component (or group of components) has been disposed of or classified as held for sale. Interest expense is included in discontinued operations only if it is directly attributable to these operations or properties. The results of operations of properties that have been classified as discontinued operations are reported as discontinued operations for all periods presented. We classify real property as held for sale when our management commits to a plan to sell the property, the plan has appropriate approvals, the sale of the property is probable, and certain other criteria are met. At such time, the respective assets and liabilities are presented separately on our balance sheets and depreciation is no longer recognized. Assets held for sale are reported at the lower of their carrying amount or their estimated fair value less the costs to sell the assets. We recognize an impairment loss for assets held for sale if the current net book value of the property exceeds its fair value less selling costs. As of December 31, 2014, one of our properties was classified as held for sale.

F-11

Debt-Related Investments

Debt-related investments are considered to be held for investment, as we have both the intent and ability to hold these investments until maturity. Accordingly, these assets are carried at cost, net of unamortized loan origination costs and fees, discounts, repayments and unfunded commitments unless such loans or investments are deemed to be impaired.

Revenue Recognition

Revenue Recognition — Real Property

We record rental revenue for the full term of each lease on a straight-line basis. Certain properties have leases that offer the tenant a period of time where no rent is due or where rent payments increase during the term of the lease. Accordingly, we record a receivable from tenants for rent that we expect to collect over the remaining lease term rather than currently, which is recorded as straight-line rents receivable. When we acquire a property, the term of existing leases is considered to commence as of the acquisition date for purposes of this calculation. Tenant recovery income includes payments from tenants for real estate taxes, insurance and other property operating expenses and is recognized as rental revenue.

The following table summarizes straight-line rental adjustments and tenant recovery income received from tenants for real estate taxes, insurance and other property operating expenses and recognized as rental revenue for the years ended December 31, 2016, 2015, and 2014 (amounts in thousands): 

	For the Year Ended December 31,
	2016			2015			2014
Straight-line rent adjustments	$	(1,263	)	$	(976	)	$	3,037
Tenant recovery income (1)	$	41,707		$	37,526		$	31,092

_______________________________

(1) Tenant recovery income excludes real estate taxes that were paid directly by our tenants that are subject to triple net lease contracts. Such payments totaled approximately $4.3 million, $7.0 million and $12.4 million during the years ended December 31, 2016, 2015, and 2014, respectively.

Impairment

Impairment — Real Property

We review our investments in real property individually on a quarterly basis, and more frequently when such an evaluation is warranted, to determine their appropriate classification, as well as whether there are indicators of impairment. The investments in real property are either classified as held and used or held for sale.

As of December 31, 2016, all of our properties were classified as held and used. The held and used assets are reviewed for indicators of impairment, which may include, among others, vacancy, each tenant’s inability to make rent payments, operating losses or negative operating trends at the property level, notification by a tenant that it will not renew its lease, a decision to dispose of a property, including a change in estimated holding periods, or adverse changes in the fair value of any of our properties. If indicators of impairment exist on a held and used asset, we compare the future estimated undiscounted cash flows from the expected use of the property to its net book value to determine if impairment exists. If the sum of the future estimated undiscounted cash flows is greater than the current net book value, we conclude no impairment exists. If the sum of the future estimated undiscounted cash flows is less than its current net book value, we recognize an impairment loss for the difference between the net book value of the property and its estimated fair value. If a property is classified as held for sale, we recognize an impairment loss if the current net book value of the property exceeds its fair value less selling costs. If our assumptions, projections or estimates regarding a property change in the future, we may have to record an impairment charge to reduce or further reduce the net book value of the property. See Note 3 for a discussion of impairment charges relating to our real properties recorded during the years ended December 31, 2016, 2015, and 2014.

Impairment — Debt-Related Investments

We review our debt-related investments on a quarterly basis, and more frequently when such an evaluation is warranted, to determine if impairment exists. Accordingly, we do not group our debt-related investments into classes by credit quality indicator. A debt-related investment is impaired when, based on current information and events (including economic, industry and geographical factors), it is probable that we will be unable to collect all amounts due, both principal and interest, according to the contractual terms of the agreement. When an investment is deemed impaired, the impairment is measured based on the

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expected future cash flows discounted at the investment’s effective interest rate. As a practical expedient, the FASB issued ASC Topic 310, Receivables, which permits a creditor to measure impairment based on the fair value of the collateral of an impaired collateral-dependent debt-related investment or to measure impairment based on an observable market price for the impaired debt-related investment as an alternative to discounting expected future cash flows. Regardless of the measurement method, a creditor should measure impairment based on the fair value of the collateral when the creditor determines that foreclosure is probable. A debt-related investment is also considered impaired if its terms are modified in a troubled debt restructuring (“TDR”). A TDR occurs when we grant a concession to a borrower in financial difficulty by modifying the original terms of the loan. Impairments on TDR loans are generally measured based on the present value of expected future cash flows discounted at the effective interest rate of the original loan. See Note 4 for a discussion of impairment charges relating to our debt-related investments recorded during the years ended December 31, 2016, 2015, and 2014.

Derivative Instruments and Hedging Activities

We record all derivative instruments in the accompanying balance sheets at fair value. Accounting for changes in the fair value of a derivative instrument depends on the intended use of the derivative instrument and the designation of the derivative instrument. Derivative instruments used to hedge exposure to changes in the fair value of an asset, liability, or firm commitments attributable to a particular risk, such as interest rate risk, are considered “fair value” hedges. Derivative instruments used to hedge exposure to variability in expected future cash flows, such as future interest payments, or other types of forecasted transactions, are considered “cash flow” hedges. We do not have any fair value hedges.

For derivative instruments designated as cash flow hedges, the changes in the fair value of the derivative instrument that represent changes in expected future cash flows, which are effectively hedged by the derivative instrument, are initially reported as other comprehensive income (loss) in the statement of equity until the derivative instrument is settled. Upon settlement, the effective portion of the hedge is recognized as other comprehensive income (loss) and amortized over the term of the designated cash flow or transaction the derivative instrument was intended to hedge. The change in value of any derivative instrument that is deemed to be ineffective is charged directly to earnings when the determination of hedge ineffectiveness is made. We assess the effectiveness of each hedging relationship by comparing the changes in fair value or cash flows of the derivative instrument with the changes in fair value or cash flows of the designated hedged item or transaction. For purposes of determining hedge ineffectiveness, management estimates the timing and potential amount of future fixed-rate debt issuances each quarter in order to estimate the cash flows of the designated hedged item or transaction. Management considers the likelihood of the timing and amount of entering into such forecasted transactions when determining the expected future fixed-rate debt issuances. We do not use derivative instruments for trading or speculative purposes. We classify cash paid to settle our forward starting swaps as financing activities in our statements of cash flows.

Cash and Cash Equivalents

Cash and cash equivalents consist of cash on hand and highly liquid investments with original maturities of three months or less such as money market mutual funds or certificates of deposits. As of both December 31, 2016 and 2015, we have not realized any losses in such cash accounts or investments and believe that we are not exposed to any significant credit risk.

Restricted Cash

Restricted cash consists primarily of lender and property-related escrow accounts. As of both December 31, 2016 and 2015, we had not realized any losses in such restricted cash accounts or investments related to, and believe that we are not exposed to, any significant credit risk.

Collectability of Receivables

We evaluate the collectability of our rent and other receivables on a regular basis based on factors including, among others, the age of the receivable, payment history, the financial strength of the tenant or borrower and any guarantors. Specifically with regards to our debt-related investments, we evaluate the collectability of our receivables based on factors including, among others, the value of the underlying collateral, the operations and operating trends of the underlying collateral, if any, the asset type and current economic conditions. If our evaluation of these factors indicates we may not recover the full amount of the receivable, we provide a reserve against the portion of the receivable that we estimate may not be recovered. This analysis requires us to determine whether there are factors indicating a receivable may not be fully collectible and to estimate the amount of the receivable that may not be collected. As of December 31, 2016 and 2015, we had rent and other receivables of approximately $29.9 million and $34.1 million included in the caption other assets in our accompanying balance sheets, respectively, related to which we recorded allowances of approximately $1.0 million and $628,000 included in the

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caption "other assets, net" respectively. If our assumptions or estimates regarding the collectability of a receivable change in the future, we may have to record allowances to reduce or further reduce the carrying value of the receivable.

Accumulated Other Comprehensive Loss

Accumulated other comprehensive loss as reported in the accompanying consolidated statements of equity as of December 31, 2016 primarily consists of the cumulative loss related to our derivatives of $5.9 million, before attribution to noncontrolling interests of $1.2 million, and cumulative gain related to our real estate securities of approximately $1.1 million, before attribution of a cumulative loss to noncontrolling interests of $1.3 million.

Basic and Diluted Net Income (Loss) per Common Share

Basic net income (loss) per common share is determined by dividing net income (loss) attributable to common stockholders by the weighted average number of common shares outstanding during the period. Diluted net income (loss) per common share includes the effects of potentially issuable common stock, but only if dilutive, including the presumed exchange of OP Units.

Stock-Based Compensation

Independent Director RSU Awards

On December 5, 2013, our board of directors approved revised compensation for our independent directors. In connection with the revised compensation plan, at each annual meeting of stockholders the independent directors will automatically, upon election, receive an award of restricted stock units (“RSUs”) with respect to Class I shares of our common stock, with the number of RSUs based on the NAV per Class I share as of the end of the day of the annual meeting. RSUs granted under this plan are measured at fair value on the grant date and amortized to compensation expense on a straight-line basis over the service period after which the awards fully vest. Such expense is included in “general and administrative expenses” in the accompanying consolidated statements of income. The fair value of these awards is measured at our NAV per share. RSUs awarded to our independent directors vest no later than one year from the date of grant.

Advisor RSU Agreements

We have entered into Restricted Stock Unit Agreements (the “Advisor RSU Agreements”) with our Advisor. The purposes of the Advisor RSU Agreements are to promote an alignment of interests among our stockholders, our Advisor and the personnel of our Advisor and its affiliates, and to promote retention of the personnel of our Advisor and its affiliates. Each restricted stock unit granted pursuant to the Advisor RSU Agreements (the “Company RSU”) will, upon vesting, entitle our Advisor to one Class I share of our common stock. The Advisor is expected to redistribute a significant portion of the Company RSUs and/or shares to senior level employees of our Advisor and its affiliates that provide services to us, although the terms of such redistributions (including the timing, amount and recipients) remain solely in the discretion of our Advisor. The Company RSUs are subject to specified vesting and settlement provisions and, upon settlement in Class I shares of Company common stock, require offsets of advisory fees and expenses otherwise payable from the Company to our Advisor. Each offset amount equals the number of Company RSUs vesting on such date multiplied by the NAV per Class I share publicly disclosed by us as of the end of the grant date. Each offset amount is always calculated based on the grant date NAV per Class I share, even beyond the initial vesting date. At the end of each 12-month period following each vesting date, if the offset amount has not been fully realized by offsets from the cash payments otherwise due and payable to our Advisor under the Advisory Agreement, our Advisor shall promptly pay any shortfall to us.

If our board of directors declares and we pay a cash dividend on Class I shares for any period in which the Company RSUs are outstanding (regardless of whether such Company RSUs are then vested), our Advisor will be entitled to dividend equivalents (“Dividend Equivalents”) with respect to that cash dividend equal to the cash dividends that would have been payable on the same number of Class I shares as the number of Company RSUs subject to the Advisor RSU Agreements had such Class I shares been outstanding during the same portion of such period as the Company RSUs were outstanding. Any such Dividend Equivalents may be paid in cash or Class I shares, at our Advisor’s election. Accordingly, we classify Company RSUs as participating securities because participants receive dividends on unvested shares.

F-14

Restricted Stock Grants

We granted restricted shares of Class I common stock, respectively, to certain employees of our Advisor and its affiliates, none of which are our named executive officers. Restricted stock grants are measured at fair value during the service period and recorded to compensation expense over the service period after which the grants fully vest. Such expense is included in “general and administrative expenses” in the accompanying consolidated statements of income. The fair value of these awards is measured at our NAV per share as of the date the shares vest.

Dealer Manager and Distribution Fees

Dividend Capital Securities LLC, which we refer to as our “Dealer Manager,” distributes the shares of our common stock in our public offering on a “best efforts” basis. Our Dealer Manager coordinates our distribution effort and manages our relationships with participating broker-dealers and financial advisors and provides assistance in connection with compliance matters relating to marketing our public offering. Among other fees, we pay our Dealer Manager (i) a dealer manager fee which accrues daily in an amount equal to 1/365th of 0.6% of our NAV per share of Class A and Class W shares outstanding and an amount equal to 1/365th of 0.1% of our NAV per share of Class I shares outstanding on such day on a continuous basis, and (ii) a distribution fee which accrues daily in an amount equal to 1/365th of 0.5% of our NAV per share of Class A shares outstanding on such day on a continuous basis. We cease paying the dealer manager fee and distribution fee with respect to shares sold in the offering on the earlier to occur of the following: (i) a listing of the class of such shares on a national securities exchange, (ii) following the completion of an offering, total underwriting compensation in the offering equaling 10% of the gross proceeds from the primary portion of the respective offering, or (iii) such shares no longer being outstanding.

We account for these dealer manager and distribution fees as a reduction in proceeds received from the sale of common stock. We record a liability for dealer manager and distribution fees that we estimate that we may pay our Dealer Manager in future periods for shares of our common stock sold pursuant to the Prior Offering and Follow-On Offering with a corresponding reduction in proceeds received from the sale of common stock. The payment of dealer manager and distribution fees may extend several years after the sale of the related shares of common stock. Accordingly, as of December 31, 2016, we recorded a liability for estimated future dealer manager and distribution fees of approximately $3.9 million. This liability included an immaterial amount related to shares issued prior to December 31, 2015. See Note 11 for further discussion of dealer manager and distribution fees.

Use of Estimates

The preparation of the financial statements in conformity with accounting principles generally accepted in the United States (“GAAP”) requires management to make estimates and assumptions relating to the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ materially from those estimates. Estimates and assumptions are reviewed periodically and the effects of revisions are reflected in the periods they are determined to be necessary.

New Accounting Pronouncements

In January 2017, the FASB issued Accounting Standards Update 2017-01 ("ASU 2017-01"), which clarifies the definition of a business in order to provide additional guidance to assist entities with evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. This guidance will be effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. Earlier adoption is permitted. The guidance in ASU 2017-01 should be adopted on a prospective basis. We adopted ASU 2017-01 as of January 1, 2017 and anticipate that future acquisitions of real property will likely be accounted for as asset acquisitions rather than business combinations. Among other things, accounting for an asset acquisition requires capitalization of acquisition costs as a component of the acquired assets whereas accounting for business combinations requires acquisition costs to be expensed. For the years ended December 31, 2016, 2015 and 2014, we expensed $667,000, $2.6 million and $1.2 million of acquisition costs, respectively, under accounting for business combinations. Additionally, goodwill is not recognized and contingent consideration is recorded when probable and reasonably estimable under accounting for asset acquisitions.

In November 2016, the FASB issued Accounting Standards Update 2016-18 ("ASU 2016-18"), which requires that a statement of cash flows explain the change during the period in the total of cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents. Therefore, amounts generally described as restricted cash and restricted cash equivalents should be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the statement of cash flows. The total amount of restricted cash and restricted cash

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equivalents and cash and cash equivalents will be reconciled to amounts on the balance sheet and the nature of the restrictions disclosed. This guidance will be effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. Earlier adoption is permitted. The guidance in ASU 2016-18 should be adopted on a retrospective basis. We do not anticipate the adoption will have a significant impact on our financial statements.

In June 2016, the FASB issued Accounting Standards Update 2016-13, which introduces a new model for recognizing credit losses for certain financial instruments, including loans, accounts receivable and debt securities. The new model requires an estimate of expected credit losses over the life of exposure to be recorded through the establishment of an allowance account, which is presented as an offset to the related financial asset. The expected credit loss is recorded upon the initial recognition of the financial asset. The guidance will be effective for annual reporting periods (including interim reporting periods within those periods) beginning after December 15, 2019. Earlier application is permitted. The guidance will generally be adopted on a modified retrospective basis, with exceptions for certain types of financial assets. We do not anticipate the adoption will have a significant impact on our financial statements.

In March 2016, the FASB issued Accounting Standards Update 2016-05, which clarifies the effect of derivative contract novations on existing hedge accounting relationships. The guidance states that a change in the counterparty to a derivative instrument that has been designated as the hedging instrument under ASC Topic 815, Derivatives and Hedging (“ASC Topic 815”) does not, in and of itself, require dedesignation of that hedging relationship provided that all other hedge accounting criteria continue to be met. The guidance will be effective for annual reporting periods (including interim reporting periods within those periods) beginning after December 15, 2016. The guidance can be adopted on either a prospective basis or a modified retrospective basis. Earlier application is permitted. We do not anticipate the adoption will have a significant impact on our financial statements.

In February 2016, the FASB issued Accounting Standards Update 2016-02, Leases (Topic 842) (“ASU 2016-02”), which amends the accounting guidance regarding lessees accounting, leveraged leases, and sale and leaseback transactions. The accounting applied by a lessor is largely unchanged under ASU 2016-02, however, the standard requires that lessors expense certain initial direct costs that are not incremental in negotiating a lease. Under existing standards, certain of these costs are capitalizable and therefore this new standard may result in certain of these costs being expensed as incurred after adoption. Such costs are not material to the Company. This standard may also impact the timing, recognition and disclosures related to our rental recoveries from tenants earned from leasing our operating properties. The guidance will be effective for annual reporting periods (including interim reporting periods within those periods) beginning after December 15, 2018. Earlier application is permitted. We plan to early adopt ASU 2016-02 beginning January 1, 2018. The guidance should be adopted using a modified retrospective transition, which will require application of ASU 2016-02 at the beginning of the earliest comparative period presented. Our initial analysis of our lease contracts indicates that the adoption of ASU 2016-02 will not have a material impact on our consolidated financial statements; however, we are still in the process of evaluating the impact of ASU 2016-02.

In May 2014, the FASB issued Accounting Standards Update 2014-09, Revenue from Contracts with Customers (Topic 606) (“ASU 2014-09”), which provides new guidance outlining a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers that supersedes most current revenue recognition guidance. This guidance requires an entity to recognize revenue when it transfers 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. The new guidance specifically excludes revenue associated with lease contracts. Additionally, this guidance expands related disclosure requirements regarding the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers. In June 2015, the FASB agreed to defer the effective date of this guidance for a year from the original effective date outlined in ASU 2014-09, and as a result, the guidance will be effective for annual reporting periods (including interim reporting periods within those periods) beginning after December 15, 2017 and will require full or modified retrospective application. Early adoption is permitted for annual reporting periods (including interim reporting periods within those periods) beginning after December 15, 2016. We plan to adopt the standard when it becomes effective for us beginning January 1, 2018 and have not determined whether the full or modified retrospective application will be applied. Rental revenues and certain recoveries earned from leasing our operating properties will be evaluated with the adoption of the lease accounting standard (discussed above). Additionally, we do not expect the standard to significantly impact the accounting for sales of our properties. Our initial analysis of our non-lease related revenue contracts indicates that the adoption of ASU 2014-09 will not have a material effect on our consolidated financial statements; however, we are still in the process of evaluating the impact of ASU 2014-09.

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3.INVESTMENTS IN REAL PROPERTY

Currently, our consolidated investments in real property consist of investments in office, industrial and retail properties. The following tables summarize our consolidated investments in real property as of December 31, 2016 and 2015 (amounts in thousands):

Real Property	Land		Building and Improvements			Intangible Lease Assets			Total Investment Amount			Intangible Lease Liabilities			Net Investment Amount
As of December 31, 2016:
Office	$	171,176	$	701,859		$	236,143		$	1,109,178		$	(15,121	)	$	1,094,057
Industrial	8,821		63,999			16,308			89,128			(344		)	88,784
Retail	293,973		599,020			113,023			1,006,016			(75,515		)	930,501
Total gross book value	473,970		1,364,878			365,474			2,204,322			(90,980		)	2,113,342
Accumulated depreciation/amortization	—		(215,858		)	(277,053		)	(492,911		)	31,435			(461,476		)
Total net book value	$	473,970	$	1,149,020		$	88,421		$	1,711,411		$	(59,545	)	$	1,651,866
As of December 31, 2015:
Office	$	203,889	$	833,655		$	310,629		$	1,348,173		$	(18,923	)	$	1,329,250
Industrial	9,572		65,307			16,436			91,315			(344		)	90,971
Retail	260,761		570,700			109,225			940,686			(74,282		)	866,404
Total gross book value	474,222		1,469,662			436,290			2,380,174			(93,549		)	2,286,625
Accumulated depreciation/amortization	—		(208,281		)	(297,676		)	(505,957		)	29,675			(476,282		)
Total net book value	$	474,222	$	1,261,381		$	138,614		$	1,874,217		$	(63,874	)	$	1,810,343

Acquisitions

The following table summarizes our acquisition of real property during the year ended December 31, 2016 (dollar amounts and square footage in thousands): 

Real Property	Property Type	Market	Date of Acquisition	Acquired Ownership	Contract Price		Net Rentable Square Feet	Percent Leased at Acquisition
Suniland Shopping Center	Retail	South Florida	5/27/2016	100%	$	66,500	82	93.2	%

The following table summarizes the allocations of the fair value of the real property we acquired during the year ended December 31, 2016 to land, building and improvements, intangible lease assets, intangible lease liabilities, and mark-to-market adjustment on assumed debt (dollar amounts in thousands). We have not made any material adjustments related to these allocations. 

																	Weighted-Average Amortization Period (Years)
Real Property	Land		Building and Improvements		Intangible Lease Assets		Intangible Lease Liabilities			Total Fair Value		Prorations and Credits			Contract Price		Intangible Lease Assets	Intangible Lease Liabilities
Suniland Shopping Center	$	34,804	$	28,022	$	5,880	$	(2,113	)	$	66,593	$	(93	)	$	66,500	5.8	10.4

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Dispositions

During 2016, 2015 and 2014 we disposed of the following properties (dollar amounts and square footage in thousands): 

Property Type	Market	Ownership		Net Rentable Square Feet	Percentage Leased		Disposition Date	Contract Sales Price		Gain (loss) on Sale
2016 Dispositions:
Office	Washington, DC	100	%	574	100	%	2/18/2016	$	158,400	$	41,241
Office	Chicago, IL	80	%	107	66	%	3/1/2016	9,850		—
Office	Chicago, IL	80	%	199	81	%	3/1/2016	18,000		159
Retail	Greater Boston	100	%	39	100	%	8/5/2016	3,625		975
Industrial	Louisville, KY	90	%	126	33	%	9/2/2016	5,400		1,120
Office	Washington, DC	100	%	178	—	%	9/30/2016	18,600		—
Retail (1)	Greater Boston	100	%	13	100	%	11/18/2016	6,200		2,165
Total 2016 real property dispositions				1,236	73	%		$	220,075	$	45,660
2015 Dispositions:
Retail	Greater Boston	100	%	11	100	%	12/18/2015	$	1,625	$	14
Office	Silicon Valley, CA	100	%	53	100	%	12/14/2015	16,750		970
Land Parcel	Denver, CO	100	%	N/A	N/A		8/12/2015	7,577		1,701
Office	Los Angeles, CA	100	%	111	—	%	7/20/2015	12,549		2,866
Retail	Pittsburgh, PA	100	%	103	93	%	5/5/2015	12,500		—
Office and Industrial     Portfolio (2)	Various (2)	100	%	2,669	100	%	3/11/2015	398,635		105,542
Office	Dallas, TX	100	%	177	88	%	1/16/2015	46,600		23,125
Total 2015 real property dispositions				3,124	95	%		$	496,236	$	134,218
2014 Dispositions:
Office	Denver, CO	100	%	138	100	%	11/7/2014	$	9,100	$	4,032
Industrial (3)	Silicon Valley, CA	100	%	177	41	%	10/15/2014	13,579		—
Office	East Bay, CA	100	%	60	0	%	6/13/2014	5,700		2,755
Land Parcel	Denver, CO	100	%	N/A	N/A		4/14/2014	780		93
Office	Little Rock, AR	100	%	102	100	%	2/25/2014	19,550		1,350
Retail	Greater Boston	100	%	110	0	%	2/18/2014	6,750		2,276
Industrial Portfolio	Various (4)	93	%	3,387	99	%	1/22/2014	175,000		29,545
Total 2014 real property dispositions				3,974	93	%		$	230,459	$	40,051

_______________________________

(1) Disposed property was a single building from a multi-building grocery-anchored retail property. We continue to operate the remaining portion of the property.

(2) The Portfolio includes (i) six office properties comprising 1.1 million net rentable square feet located in the following markets: Los Angeles, CA (three properties, of which one disposed property was a single building from a two-building office property), Northern New Jersey, Miami, FL, and Dallas, TX, and (ii) six industrial properties comprising 1.6 million net rentable square feet located in the following markets: Los Angeles, CA, Dallas, TX, Cleveland, OH, Chicago, IL, Houston, TX, and Denver, CO. We incurred closing costs and fees of approximately $7.8 million upon the closing of this transaction, including approximately $4.0 million in advisory fees related to the disposition of real property paid to our Advisor. For the years ended December 31, 2015 and 2014, our consolidated statements of income include approximately $6.2 million and $33.7 million of aggregate revenue attributable to the Portfolio, respectively.

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(3) On October 15, 2014, we disposed of a wholly owned industrial property comprising approximately 177,000 net rentable square feet in three buildings located in the Silicon Valley, CA market (“Lundy”). At the time of the disposition, the property had a net investment amount of approximately $13.1 million. The property was transferred to the lender through a foreclosure sale which extinguished amounts due, including related principal of $13.6 million.

(4) Industrial portfolio included 12 properties located in the following markets: Atlanta, GA, Central Pennsylvania, Cincinnati, OH, Columbus, OH, Dallas, TX, Indianapolis, IN, and Minneapolis/St. Paul, MN.

Discontinued Operations

We present the results of operations and the respective aggregate net gains (losses) of any property or group of properties, the disposal of which would represent a strategic shift that has (or will have) a major effect on our operations and financial results, when such property (or group of properties) have been disposed of or classified as held for sale, as discontinued operations in our accompanying statements of income.

We did not have any discontinued operations for the years ended December 31, 2016 and 2015. Discontinued operations for the year ended December 31, 2014 include the results of operations and net gain on the disposition of 12 industrial properties classified as held for sale as of December 31, 2013. The following table summarizes amounts recorded as discontinued operations for the years ended December 31, 2014 (amounts in thousands): 

	For the Year Ended December 31, 2014
Revenues	$	969
Rental expense	(340		)
Real estate depreciation and amortization expense	—
Interest expense	(296		)
Other expenses	(8		)
Income from discontinued operations	325
Gain on disposition	29,679
Discontinued operations	30,004
Discontinued operations attributable to noncontrolling interests	(4,462		)
Discontinued operations attributable to common stockholders	$	25,542

Real Property Impairment

During the year ended December 31, 2016, we recorded a $2.1 million impairment charge related to a consolidated office property located in the Washington, DC market, which we acquired in June 2010 ("Sunset Hills"). We sold Sunset Hills in September 2016. Prior to the disposition, the net book value of Sunset Hills exceeded the contract sales price less the cost to sell by $2.1 million. Accordingly, we recorded an impairment charge to reduce the net book value of Sunset Hills to our estimate of its fair value less the cost to sell.

Additionally, we recorded a $587,000 impairment charge related to a consolidated office property located in the Chicago, IL market ("40 Boulevard"), which we acquired in January 2007 and we held through a joint venture in which we were not the managing partner. We held an 80% ownership interest in 40 Boulevard. We sold 40 Boulevard in March 2016. Prior to the disposition, the net book value of 40 Boulevard exceeded the contract sales price less the cost to sell by approximately $587,000. Accordingly, we recorded an impairment charge to reduce the net book value of 40 Boulevard to our estimate of its fair value less the cost to sell.

The fair value measurements for the impairment charges related to Sunset Hills and 40 Boulevard were based on the contract sales price less selling costs. The fair value used in determining impairment for Sunset Hills and 40 Boulevard was $18.6 million and $9.9 million, respectively as of December 31, 2016.We considered the Level 3 inputs used in determining the fair value of these real property investments to be significant. As such, these investments fall under the Level 3 category of the fair value hierarchy as defined in ASC Topic 820, Fair Value Measurements and Disclosures ("ASC Topic 820"). The key assumption used in determining the fair value of these properties was our expectation of the sales price of the properties. Our expectation of the sales price was developed based on the valuations provided by a third-party broker quote.

During the year ended December 31, 2015, we recorded a $6.5 million impairment charge related to a consolidated office property located in the Chicago, IL market ("Washington Commons"), which we acquired in February 2007 and we held through a joint venture in which we are not the managing partner. We held an 80% ownership interest in Washington Commons. We recorded an impairment charge to reduce the net book value of Washington Commons to our estimate of its fair

F-19

value less the cost to sell. The impairment charge was based on a reduction of our estimated holding period for Washington Commons, triggering impairment recognition with the related fair value measurement based on our estimate of future cash flows from the operation and disposition of Washington Commons. The fair value used in determining impairment for Washington Commons was $17.0 million as of December 31, 2015. We considered the Level 3 inputs used in determining the fair value of this real property investment to be significant. As such, this investment falls under the Level 3 category of the fair value hierarchy. The key assumption used in determining the fair value of Washington Commons was our expectation of the sales price of the property. Our expectation of the sales price was developed based on the valuation provided by a third-party broker quote. 

In addition, during the year ended December 31, 2015, we recorded approximately $1.6 million of impairment charges related to a wholly owned retail property that we acquired in May 2007 in the Pittsburgh, PA market, which was disposed of in May 2015 (“Mt. Nebo”). Accordingly, we recorded an impairment charge to reduce the net book value of Mt. Nebo to our estimate of its fair value less the cost to sell. The fair value measurement was based on the contract sales price less selling costs. The fair value used in determining impairment for Mt. Nebo was $12.5 million as of December 31, 2015. We considered the Level 3 inputs used in determining the fair value of this real property investment to be significant. As such, this investment falls under the Level 3 category of the fair value hierarchy. The key assumption used in determining the fair value of Mt. Nebo was our expectation of the sales price of the property. Our expectation of the sales price was developed based on the valuation provided by a third-party broker quote. 

During the year ended December 31, 2014, we recorded a $9.5 million impairment related to Mt. Nebo. During the year ended December 31, 2014, we began to consider possible disposition opportunities for this property. Such disposition opportunities caused us to significantly reduce our estimated holding period for this property. As a result of our review and based on our estimate of future cash flow and fair value of the retail property, we recognized the impairment charge to adjust the carrying value to our estimate of fair value as of December 31, 2014.

In the calculation of our daily NAV, our real estate assets are carried at fair value using valuation methodologies consistent with ASC Topic 820. As a result, the timing of valuation changes recorded in our NAV will not necessarily be the same as for impairment charges recorded to our consolidated financial statements prepared pursuant to GAAP. Since we determine our NAV daily, impairment charges pursuant to GAAP will likely always be delayed and potentially significantly delayed compared to the change in fair value of our properties included in the calculation of our daily NAV.

Future Minimum Rentals

Future minimum rentals to be received under non-cancelable operating and ground leases in effect as of December 31, 2016, are as follows (amounts in thousands): 

For the Year Ended December 31,	Future Minimum Rentals
2017	$	144,932
2018	128,008
2019	116,595
2020	85,928
2021	68,617
Thereafter	214,531
Total	$	758,611

The table above does not reflect future rental revenues from the potential renewal or replacement of existing and future leases and excludes property operating expense reimbursements and rental revenue beyond a penalty free termination option.

F-20

Concentration of Credit Risk

Concentration of credit risk with respect to our sources of revenue exists due to a number of tenants whose rental payments to us make up a relatively high percentage of our rental revenue. Rental revenue from our lease with Charles Schwab & Co., Inc., as master tenant of one of our office properties, represented approximately $25.4 million, or 11.8%, of our total revenue from continuing operations for the year ended December 31, 2016. The following is a summary of amounts related to the top five tenants based on annualized base rent, as of December 31, 2016 (dollar amounts and square feet in thousands): 

Tenant	Locations	Industry	Annualized Base Rent (1)		% of Total Annualized Base Rent		Square Feet	% of Total Portfolio Square Feet
Charles Schwab & Co., Inc. (2)	2	Securities, Commodities, Fin. Inv./Rel. Activities	$	23,645	13.9	%	602	7.4	%
Sybase (3)	1	Publishing Information (except Internet)	18,692		11.0	%	405	5.0	%
Stop & Shop	14	Food and Beverage Stores	14,125		8.3	%	853	10.4	%
Novo Nordisk	1	Chemical Manufacturing	4,627		2.7	%	167	2.0	%
Seton Health Care	1	Hospitals	4,339		2.6	%	156	1.9	%
	19		$	65,428	38.5	%	2,183	26.7	%

_______________________________

(1) Annualized base rent represents the annualized monthly base rent of executed leases as of December 31, 2016.

(2) The amount presented for Schwab reflects the total annualized base rent for our two leases in place with Schwab as of December 31, 2016. One of these leases, which expires in September 2017, entails the lease of all 594,000 square feet of our 3 Second Street (formerly known as Harborside) office property and accounts for $23.5 million or 13.8% of our annualized base rent as of December 31, 2016. We do not expect Schwab to renew this lease. Schwab has subleased 100% of 3 Second Street to 27 sub-tenants through September 2017. We have executed leases directly with nine of these subtenants that comprise 352,000 square feet or 59% of 3 Second Street that effectively extend their leases beyond the Schwab lease expiration. These direct leases will expire between September 2020 and September 2032.

(3) The Sybase lease was terminated on January 31, 2017.

The top two tenants in the table above comprise 24.9% of annualized base rent as of December 31, 2016. However, due to the expiration of the Sybase lease and the near-term expiration of the Schwab lease at 3 Second Street, these two tenants are no longer in the top three tenants based on future minimum rental revenue, together comprising less than 3% of our total future minimum rental revenue as ofDecember 31, 2016. Alternatively, based on future minimum rental revenue as of December 31, 2016, our top five tenants rank as follows: 1) Stop & Shop, 2) Mizuho Bank Ltd., 3) Shaw's Supermarket, 4) Novo Nordisk, and 5) Schwab.

Our properties in New Jersey, Massachusetts, California, and Texas accounted for approximately 20%, 20%, 14%, and 12%, respectively, of our total gross investment in real property portfolio as of December 31, 2016. A deterioration of general economic or other relevant conditions, changes in governmental laws and regulations, acts of nature, demographics or other factors in any of those states or the geographical region in which they are located could result in the loss of a tenant, a decrease in the demand for our properties and a decrease in our revenues from those markets, which in turn may have a disproportionate and material adverse effect on our results of operations and financial condition.

Third Party Purchase Options

"3 Second Street, formerly known as Harborside,” an office property located in Northern New Jersey, was subject to a purchase option held by a third party with an exercise price that we estimated to be approximately $239.4 million and an exercise date in May 2016. On August 5, 2015, we paid the option holder approximately $12.0 million to terminate the option. Such payment is included within capital expenditures in real property in the accompanying consolidated statements of cash flows. As a result, the option is no longer outstanding.

“Colshire,” an office property located in the Washington, DC area, was subject to a purchase option held by the tenant, Northrop Grumman, with an exercise price that we estimated to be approximately $158.4 million and an expiration date in March 2016. The tenant exercised the purchase option during January 2016, triggering a sale of the property to Northrop Grumman in February 2016. See our discussion under "—Dispositions"for information regarding the disposition of this office property during the year ended December 31, 2016.

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4.    DEBT-RELATED INVESTMENTS

As of December 31, 2016 and 2015, we had invested in three debt-related investments. The weighted average maturity of our debt-related investments structured as mortgage notes as of December 31, 2016 was 2.2 years, based on our recorded net investments. The following table describes our debt-related income for the years ended December 31, 2016, 2015, and 2014 (dollar amounts in thousands):   

	For the Year Ended December 31,						Weighted Average Yield as of December 31, 2016 (1)
Investment Type	2016		2015		2014
Mortgage notes (2)	$	943	$	5,136	$	4,521	6.1	%
Mezzanine debt (3)	—		1,786		2,875		N/A
Total	$	943	$	6,922	$	7,396	6.1	%

_______________________________

(1) Weighted average yield is calculated on an unlevered basis using the amount invested, current interest rates and accretion of premiums or discounts realized upon the initial investment for each investment type as of December 31, 2016. As of December 31, 2016, all of our debt-related investments bear interest at fixed rates.

(2) None of our debt-related investments structured as mortgage notes were repaid in full during the year ended December 31, 2016. Six and three of our debt-related investments structured as mortgage notes were repaid in full during the years ended December 31, 2015 and 2014, respectively. Amounts recorded include early repayment fees received and accelerated amortization of origination fees offset by accelerated amortization of deferred due diligence costs related to certain of these repayments.

(3) Our debt-related investment structured as a mezzanine loan was repaid in full during the year ended December 31, 2015. During the year ended December 31, 2015, amounts recorded were offset by accelerated amortization of deferred due diligence costs.

The following table describes our debt-related investment activity for the years ended December 31, 2016 and 2015 (amounts in thousands). 

	Year Ended December 31,
	2016			2015
Investment in Debt-Related Investments:
Balance at January 1,	$	15,722		$	94,951
Investments (1)	—			3,465
Principal repayments	(469		)	(82,417		)
Amortization of deferred fees, costs, and discounts/premiums	(44		)	(277		)
Balance at December 31,	$	15,209		$	15,722

_______________________________

(1) Investment includes approximately $2 million of accrued interest that was capitalized into the principal balance of our mezzanine debt investment during the year ended December 31, 2015.

Debt-Related Investment and Repayment Activity

As of December 31, 2016, all of our debt-related investments required both interest and principal payments on a monthly basis. We did not have any debt-related investment that was subject to delinquent principal or interest payments. We are the senior lender in all of our debt-related investments with respect to the underlying collateral. The following table summarizes our debt-related investments as of December 31, 2016 (dollar amounts in thousands).

Description	Region	Interest Rate Fixed or Variable	Interest Rate as of December 31, 2016		Maturity Date	Face Amount of Debt (1)		Amount of Debt Related Investments
Mortgage note	Northeast	Fixed	6.2	%	11/1/2017	$	3,609	$	3,622
Mortgage note	Southeast	Fixed	7.0	%	3/1/2019	8,483		8,551
Mortgage note	Mountain	Fixed	5.2	%	3/1/2021	3,048		3,036
Total/weighted average			6.4	%		$	15,140	$	15,209

_______________________________

(1) Reflects the principal amount of the debt investment outstanding, which is net of principal repayments.

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Impairment

As of December 31, 2016 and December 31, 2015, we did not have any allowance for loan loss. During the year ended December 31, 2016, we did not record any current period provision for loan loss or recoveries of amounts previously charged off. During the year ended December 31, 2015, we determined that an impaired debt-related investment did not have any value and therefore we recorded a direct write-off of the allowance for loan loss of $3 million. We did not have any debt-related investments on non-accrual status as of December 31, 2016 or December 31, 2015. We did not record any interest income related to our impaired debt-related investment during the years ended December 31, 2016, 2015, or 2014.

5.    DEBT OBLIGATIONS

The following table describes our borrowings as of December 31, 2016 and 2015 (dollar amounts in thousands):

	Principal Balance as of December 31,						Weighted Average Interest Rate as of December 31,				Gross Investment Amount Securing Borrowings  as of December 31,(1)
	2016			2015			2016		2015		2016		2015
Fixed-rate mortgages (2)	$	290,970		$	580,959		4.9	%	5.6	%	$	462,954	$	1,016,560
Floating-rate mortgages (3)	52,500			7,890			2.3	%	3.4	%	70,485		16,618
Total mortgage notes	343,470			588,849			4.5	%	5.5	%	533,439		1,033,178
Line of credit (4)	236,000			167,000			2.3	%	1.9	%	N/A		N/A
Term loans (5)	475,000			350,000			3.2	%	2.6	%	N/A		N/A
Total unsecured borrowings	711,000			517,000			2.9	%	2.4	%	N/A		N/A
Total borrowings	$	1,054,470		$	1,105,849		3.4	%	4.1	%	N/A		N/A
Less: net debt issuance costs (6)	(6,295		)	(6,317		)
Add: mark-to-market adjustment on assumed debt	626			1,304
Less: GAAP principal amortization on restructed debt	—			(3,067		)
Total borrowings (net basis)	$	1,048,801		$	1,097,769

_______________________________

(1) “Gross Investment Amount” as used here and throughout this document represents the allocated gross basis of real property and debt-related investments, after certain adjustments. Gross Investment Amount for real property (i) excludes the effect of intangible lease liabilities, (ii) excludes accumulated depreciation and amortization, and (iii) includes the impact of impairments. 

(2) Amount as of December 31, 2016 includes a floating-rate mortgage note that was subject to an interest rate spread of 1.60% over one-month LIBOR, which we have effectively fixed using an interest rate swap at 3.051% for the term of the borrowing.

(3) As of December 31, 2016, our floating-rate mortgage note was subject to an interest rate spread of 1.65% over one-month LIBOR. As of December 31, 2015 our floating-rate mortgage note was subject to an interest rate spread of 3.00% over one-month LIBOR.

(4) As of December 31, 2016 and 2015, borrowings under our line of credit were subject to interest at a floating rate of 1.55% and 1.40% over one-month LIBOR, respectively. However, as of December 31, 2016, we had effectively fixed the interest rate of approximately $12.1 million of the total of $236.0 million in borrowings using interest rate swaps, resulting in a weighted average interest rate on the total line of credit of 2.28%. As of December 31, 2015, we had effectively fixed the interest rate of approximately $25.4 million of the total of $167.0 million in borrowings using interest rate swaps, resulting in a weighted average interest rate on the total line of credit of 1.88%.

(5) As of December 31, 2016 and 2015, borrowings under our term loans were subject to interest at weighted average floating rates of 1.60% and 1.52%, respectively, over one-month LIBOR. However, we had effectively fixed the interest rates of the borrowings using interest rate swaps at 3.17% and 2.59% as of December 31, 2016 and 2015, respectively.

(6) See Note 2 for additional information related to the reclassification of net debt issuance costs in accordance with ASU 2015-03.

As of December 31, 2016, seven mortgage notes were interest-only and four mortgage notes were fully amortizing with outstanding principal balances of approximately $316.3 million and $27.2 million, respectively. None of our mortgage notes are recourse to us.

Revolving Credit Facility and Five-Year Term Loan

Through a syndicate of 14 lenders (the "BofA Lenders") led by Bank of America, N.A., as Administrative Agent ("BofA"), we have a $675 million senior unsecured term loan and revolving line of credit (the “Facility”). The Facility provides us with the ability from time to time to increase the size of the Facility up to a total of $900 million less the amount of any prepayments under the term loan component of the Facility, subject to receipt of lender commitments and other conditions.

The Facility consists of a $400 million revolving credit facility (the “Revolving Credit Facility”) and a $275 millionfive-year term loan (the “Term Loan”). The Revolving Credit Facility contains a sublimit of $50 million for letters of credit and a

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sublimit of $50 million for swing line loans. The primary interest rate for the Revolving Credit Facility is based on LIBOR, plus a margin ranging from 1.40% to 2.30%, depending on our consolidated leverage ratio. The maturity date of the Revolving Credit Facility is January 31, 2019 and contains one one-year extension option that we may exercise upon (i) payment of an extension fee equal to 0.15% of the sum of the amount outstanding under the Revolving Credit Facility and the unused portion of the Revolving Credit Facility at the time of the extension, and (ii) compliance with the other conditions set forth in the credit agreement. The primary interest rate within the Term Loan is based on LIBOR, plus a margin ranging from 1.35% to 2.20%, depending on our consolidated leverage ratio. The maturity date of the Term Loan is January 31, 2018 and contains twoone-year extension options that we may exercise upon (i) payment of an extension fee equal to 0.125% of the sum of the amount outstanding under the Term Loan at the time of each extension, and (ii) compliance with the other conditions set forth in the credit agreement.

Borrowings under the Facility are available for general business purposes including, but not limited to, refinancing of existing indebtedness and financing the acquisition of permitted investments, including commercial properties. As of December 31, 2016 and 2015, the unused portion of the Facility was approximately $164.0 million and $230.8 million, respectively, and we had full access to the unused portion of the Facility.

Seven-Year Term Loan

Through a syndicate of six lenders led by Wells Fargo Bank, National Association as Administrative Agent and Regions Bank as Syndication Agent, we have a $200 millionseven-year term loan credit agreement (the “$200 million Term Loan”) . The primary interest rate within the $200 million Term Loan is based on LIBOR, plus a margin ranging from 1.65% to 2.55%, depending on our consolidated leverage ratio. The maturity date of the $200 million Term Loan is February 27, 2022 with no extension options.

Borrowings under the $200 million Term Loan are available for general business purposes including, but not limited to financing the acquisition of permitted investments, including commercial properties.

As of December 31, 2016, we were in compliance with all our debt covenants.

Mortgage Note Borrowings

During the year ended December 31, 2016, we entered into two mortgage note borrowings. The following table describes the new borrowings in more detail (dollar amounts in thousands):

Borrowings	Date Borrowed	Principal Balance		Fixed or Floating Interest Rate	Stated Interest Rate		Contractual Maturity Date	Extension Options	Collateral Type	Collateral Market
Preston Sherry Plaza (1)	4/13/2016	$	33,000	Fixed	3.05	%	3/1/2023	None	Office Property	Dallas, TX
1300 Connecticut (2)	8/5/2016	52,500		Floating	2.17	%	8/5/2023	None	Office Property	Washington, DC
Total borrowings		$	85,500		2.51	%

(1) As of December 31, 2016, the Preston Sherry Plaza term loan was subject to an interest rate spread of 1.60% over one-month LIBOR, which we have effectively fixed using an interest rate swap at 3.051% for the term of the borrowing.

(2) As of December 31, 2016, the 1300 Connecticut term loan was subject to an interest rate spread of 1.65% over one-month LIBOR. However, we entered into interest rate swaps which will effectively fix the interest rate of the borrowing at 2.852% from July 1, 2018 to July 1, 2021.

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Repayment of Mortgage Notes

During the year ended December 31, 2016, we repaid nine mortgage note borrowings in full during the respective free-prepayment periods prior to their scheduled maturities using proceeds from the Facility and the disposition of real properties. The following table describes these repayments in more detail (dollar amounts in thousands):

Debt Obligation	Repayment Date	Balance Repaid/Extinguished		Interest Rate Fixed or Floating	Stated Interest Rate		Contractual Maturity Date	Collateral Type	Collateral Market
1300 Connecticut	1/12/2016	$	44,979	Fixed	6.81	%	4/10/2016	Office Property	Washington, DC
Washington Commons (1)	2/1/2016	21,300		Fixed	5.94	%	2/1/2016	Office Property	Chicago, IL
40 Boulevard (2)	3/1/2016	7,830		Floating	3.44	%	3/11/2016	Office Property	Chicago, IL
Jay Street	4/11/2016	23,500		Fixed	6.05	%	7/11/2016	Office Property	Silicon Valley, CA
655 Montgomery	4/11/2016	55,683		Fixed	6.01	%	6/11/2016	Office Property	San Francisco, CA
Bala Pointe	7/1/2016	24,000		Fixed	5.89	%	9/1/2016	Office Property	Philadelphia, PA
Harborside	9/9/2016	104,675		Fixed	5.50	%	12/10/2016	Office Property	Northern New Jersey
Bandera Road	12/8/2016	21,500		Fixed	5.46	%	2/8/2017	Retail Property	San Antonio, TX
Shiloh	12/8/2016	22,700		Fixed	5.57	%	1/8/2017	Industrial Property	Dallas, TX
Total/weighted average borrowings		$	326,167		5.82	%

(1) Amount presented includes a $5.1 million contingently payable mortgage note that was not ultimately required to be repaid. As a result of the transaction, we recognized a gain on extinguishment of debt and financing commitments of approximately $5.1 million during the year ended December 31, 2016.

(2) The mortgage note was subject to an interest rate of 3.0% over one-month LIBOR.

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Debt Maturities

The following table reflects our contractual debt maturities as of December 31, 2016, specifically our obligations under our mortgage notes and unsecured borrowings (dollar amounts in thousands):   

	As of December 31, 2016
	Mortgage Notes				Unsecured Borrowings				Total
Year Ending December 31,	Number of Borrowings Maturing	OutstandingPrincipalBalance			Number of BorrowingsMaturing	Outstanding PrincipalBalance (1)			Outstanding Principal Balance
2017	4	$	162,460		—	$	—		$	162,460
2018	—	2,698			1	275,000			277,698
2019	—	3,698			1	236,000			239,698
2020	—	3,860			—	—			3,860
2021	1	12,764			—	—			12,764
2022	1	3,660			1	200,000			203,660
2023	2	77,899			—	—			77,899
2024	—	1,034			—	—			1,034
2025	1	71,094			—	—			71,094
2026	—	1,157			—	—			1,157
Thereafter	2	3,146			—	—			3,146
Total	11	$	343,470		3	$	711,000		$	1,054,470
Less: net debt issuance costs		(1,849		)		(4,446		)
Add: mark-to-market adjustment on assumed debt		626				—
Total borrowings (net basis)		$	342,247			$	706,554

_______________________________

(1) Unsecured borrowings presented include (i) borrowings under the Term Loan of $275.0 million, which were scheduled to mature in 2018, subject to twoone-year extension options, (ii) borrowings under the Revolving Credit Facility of $236.0 million, which were scheduled to mature in 2019, subject to a one-year extension option, and (iii) borrowings under the $200 million Term Loan of $200.0 million which are scheduled to mature in 2022 with no extension options.

6.    DERIVATIVES AND HEDGING ACTIVITIES

Risk Management Objective of Using Derivatives

We maintain risk management control systems to monitor interest rate risk attributable to both our outstanding and forecasted debt obligations. We generally seek to limit the impact of interest rate changes on earnings and cash flows by selectively utilizing derivative instruments to hedge exposures to changes in interest rates on our unsecured floating rate borrowings. While this hedging strategy is designed to minimize the impact on our net income (loss) and cash provided by operating activities from changes in interest rates, the overall returns on our investments may be reduced. Our board of directors has established policies and procedures regarding our use of derivative instruments for hedging or other purposes to achieve these risk management objectives.

Cash Flow Hedges of Interest Rate Risk

Our objectives in using interest rate derivatives are to add stability to interest expense and to manage our exposure to interest rate movements. To accomplish this objective, we primarily use interest rate swaps as part of our interest rate risk management strategy. Interest rate swaps designated as cash flow hedges involve the receipt of variable-rate amounts from counterparties in exchange for us making fixed-rate payments over the life of the agreements without exchange of the underlying notional amounts. We have entered into and plan to enter into certain interest rate derivatives with the goal of mitigating our exposure to adverse fluctuations in the interest payments on our one-month LIBOR-indexed debt. Certain of our floating rate borrowings are not hedged and therefore, to an extent, we have ongoing exposure to interest rate movements.

The effective portion of changes in the fair value of derivatives designated and that qualify as cash flow hedges under ASC Topic 815 is recorded in accumulated other comprehensive income (loss) and is subsequently reclassified into earnings in the period that the hedged forecasted transaction affects earnings. During the next 12 months, we estimate that approximately

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$3.3 million will be reclassified as an increase to interest expense related to active effective hedges of existing floating-rate debt, and we estimate that approximately $2.0 million will be reclassified as an increase to interest expense related to effective forward started interest rate swaps where the hedging instrument has been terminated. The ineffective portion of the change in fair value of the derivatives is recognized directly in earnings. The table below presents a reconciliation of the beginning and ending balances, between December 31, 2015 and December 31, 2016, of our accumulated other comprehensive loss (“OCI”), net of amounts attributable to noncontrolling interests, related to the effective portion of our cash flow hedges as presented on our financial statements, as well as amounts related to our available-for-sale securities (amounts in thousands):  

	(Losses) and Gains on Cash Flow Hedges			Unrealized (Losses) and Gains on Available-For-Sale Securities			Accumulated Other Comprehensive Loss
Beginning balance as of December 31, 2015:	$	(9,967	)	$	(1,047	)	$	(11,014	)
Other comprehensive income:
Amount of loss reclassified from OCI into interest expense (effective portion) (net of tax benefit of $0)	4,620			—			4,620
Change in fair value recognized in OCI (effective portion) (net of tax benefit of $0)	(204		)	—			(204		)
Net current-period other comprehensive income	4,416			—			4,416
Attribution of and other adjustments to OCI attributable to noncontrolling interests	(298		)	(9		)	(307		)
Ending balance as of December 31, 2016:	$	(5,849	)	$	(1,056	)	$	(6,905	)

Fair Values of Derivative Instruments

The valuation of interest rate derivatives is determined using widely accepted valuation techniques, including discounted cash flow analysis on the expected cash flows of each derivative. This analysis reflects the contractual terms of the derivatives, including the period to maturity, and uses observable market-based inputs, including interest rate curves and implied volatilities. The fair values of interest rate swaps are determined using the market standard methodology of netting the discounted future fixed cash receipts (or payments) and the discounted expected variable cash payments (or receipts). The variable cash payments (or receipts) are based on an expectation of future interest rates (forward curves) derived from observable market interest rate curves.

To comply with the provisions of ASC Topic 820, we incorporate credit valuation adjustments to appropriately reflect both our own nonperformance risk and the respective counterparty’s nonperformance risk in the fair value measurements. In adjusting the fair value of our derivative for the effect of nonperformance risk, we have considered the impact of netting and any applicable credit enhancements, such as collateral postings, thresholds, mutual puts and guarantees.

The majority of the inputs used to value our derivative instruments fall within Level 2 of the fair value hierarchy. However, the credit valuation adjustments associated with our derivative instruments utilize Level 3 inputs, such as estimates of current credit spreads, to evaluate the likelihood of potential default by us and our counterparties. As of December 31, 2016, we had assessed the significance of the impact of the credit valuation adjustments and had determined that it was not significant to the overall valuation of our derivative instruments. As a result, we have determined that our derivative valuations are classified in Level 2 of the fair value hierarchy.

Designated Derivatives

As of December 31, 2016 and 2015, we had 11 and 12 outstanding interest rate swaps that were designated as cash flow hedges of interest rate risk, with a total notional amount of $395.1 million and $375.4 million, respectively. In addition, as of December 31, 2016, we had one interest rate swap with a total notional amount of $52.5 million that will become effective in July 2018 and mature in July 2021, which is designated as a cash flow hedge of interest rate risk. The table below presents the gross fair value of our designated derivative financial instruments as well as their classification on our accompanying consolidated balance sheets as of December 31, 2016 and 2015 (amounts in thousands): 

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		Fair Value of Asset Derivatives as of					Fair Value of Liability Derivatives as of
	Balance Sheet Location	December 31, 2016		December 31, 2015		Balance Sheet Location	December 31, 2016			December 31, 2015
Interest rate contracts	Other assets, net(1)	$	2,135	$	197	Other liabilities (1)	$	(2,777	)	$	(3,303	)

_______________________________ 

(1) Although our derivative contracts are subject to master netting arrangements which serve as credit mitigants to both us and our counterparties under certain situations, we do not net our derivative fair values or any existing rights or obligations to cash collateral on the accompanying consolidated balance sheets. If we did net our derivative fair values on the accompanying consolidated balance sheets, the derivative fair values would be lowered by approximately $157,000 as of December 31, 2015. This would result in net fair values of our asset derivatives of approximately $41,000 and and net fair values of our liability derivatives of approximately $3.1 million as of December 31, 2015. As of December 31, 2016, there would not be an impact if we net our derivative fair values.

Non-Designated Derivatives

Derivatives not designated as hedges are not speculative and are used to hedge our exposure to interest rate movements and other identified risks but do not meet hedge accounting requirements. As of December 31, 2016, 2015, and 2014, we did not have any outstanding derivatives that were not designated as hedges.

Effect of Derivative Instruments on the Statements of Comprehensive Income

The table below presents the effect of our derivative financial instruments on our financial statements for the years ended December 31, 2016, 2015, and 2014 (amounts in thousands):

	For the Year Ended December 31,
	2016			2015			2014
Derivatives Designated as Hedging Instruments
Derivative type	Interest rate contracts			Interest rate contracts			Interest rate contracts
Amount of (loss) recognized in OCI (effective portion)	$	(204	)	$	(5,797	)	$	(2,370	)
Location of loss reclassified from accumulated OCI into income (effective portion)	Interest expense			Interest expense			Interest expense
Amount of loss reclassified from accumulated OCI into income (effective portion)	$	4,620		$	4,820		$	3,091
Location of gain (loss) recognized in income (ineffective portion and amount excluded from effectiveness testing)	Interest and other income			Interest and other income			Interest and other income
Amount of gain (loss) recognized in income (ineffective portion and amount excluded from effectiveness testing)	$	—		$	3		$	(1	)

Credit-Risk-Related Contingent Features

We have agreements with certain of our derivative counterparties that contain a provision where we could be declared in default on our derivative obligations if repayment of the underlying indebtedness is accelerated by the lender due to our default on the indebtedness. We have agreements with certain other derivative counterparties that contain a provision whereby if we default on any of our indebtedness held by our Operating Partnership, including default where repayment of the indebtedness has not been accelerated by the lender, then we could also be declared in default on our derivative obligations.

As of December 31, 2016, the fair value of derivatives in a net liability position, which included accrued interest but excluded any credit valuation adjustments related to these agreements, was approximately $2.9 million. As of December 31, 2016, we have not posted any collateral related to these agreements. If we had breached any of these provisions at December 31, 2016, we could have been required to settle our obligations under the agreements at their termination value of $2.9 million. 

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7.    FAIR VALUE DISCLOSURES

ASC Topic 820, defines fair value, establishes a framework for measuring fair value, and expands disclosures about fair value measurements. ASC Topic 820 applies to reported balances that are required or permitted to be measured at fair value under existing accounting pronouncements; accordingly, the standard does not require any new fair value measurements of reported balances.

ASC Topic 820 emphasizes that fair value is a market-based measurement, not an entity-specific measurement. Therefore, a fair value measurement should be determined based on the assumptions that market participants would use in pricing the asset or liability. As a basis for considering market participant assumptions in fair value measurements, ASC Topic 820 establishes a fair value hierarchy that distinguishes between market participant assumptions based on market data obtained from sources independent of the reporting entity (observable inputs that are classified within Levels 1 and 2 of the hierarchy) and the reporting entity’s own assumptions about market participant assumptions (unobservable inputs classified within Level 3 of the hierarchy).

Level 1 inputs utilize quoted prices (unadjusted) in active markets for identical assets or liabilities that we have the ability to access. Level 2 inputs are inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly. Level 2 inputs may include quoted prices for similar assets and liabilities in active markets, as well as inputs that are observable for the asset or liability (other than quoted prices), such as interest rates, foreign exchange rates, and yield curves that are observable at commonly quoted intervals. Level 3 inputs are unobservable inputs for the asset or liabilities, which are typically based on an entity’s own assumptions, as there is little, if any, related market activity. In instances where the determination of the fair value measurement is based on inputs from different levels of the fair value hierarchy, the level in the fair value hierarchy within which the entire fair value measurement falls is based on the lowest level input that is significant to the fair value measurement in its entirety. Our assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment, and considers factors specific to the asset or liability.

The table below presents certain of our assets and liabilities measured at fair value on a recurring basis as of December 31, 2016 and 2015, aggregated by the level in the fair value hierarchy within which those measurements fall as defined above (amounts in thousands). The fair value estimates presented herein are based on information available to management as of December 31, 2016 and December 31, 2015. Please see Note 6 for a discussion of our methodology for estimating the fair value of our derivative instruments. These estimates are not necessarily indicative of the amounts we could ultimately realize. There were no changes between fair value hierarchy levels during the years ended December 31, 2016 and 2015.

	Level 1		Level 2			Level 3		Total
As of December 31, 2016:
Assets
Real estate securities	$	—	$	—		$	200	$	200
Derivative instruments	—		2,135			—		2,135
Total assets	$	—	$	2,135		$	200	$	2,335
Liabilities
Derivative instruments	$	—	$	(2,777	)	$	—	$	(2,777	)
Total liabilities	$	—	$	(2,777	)	$	—	$	(2,777	)
As of December 31, 2015:
Assets
Real estate securities	$	—	$	—		$	200	$	200
Derivative instruments	—		197			—		197
Total assets	$	—	$	197		$	200	$	397
Liabilities
Derivative instruments	$	—	$	(3,303	)	$	—	$	(3,303	)
Total liabilities	$	—	$	(3,303	)	$	—	$	(3,303	)

We review our fair value hierarchy classifications on a quarterly basis. Transfers into or out of Level 3 are made if the significant inputs used in measuring the fair values of the assets and liabilities became unobservable or observable, respectively, in the current market environment. When assets and liabilities are transferred between levels, we recognize the transfer at the beginning of the period. There were no transfers into or out of assets having fair value measurements based on

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significant unobservable inputs (Level 3) between December 31, 2015 and December 31, 2016. Additionally, there was no change in fair value or carrying value for our assets having fair value measurements based on significant unobservable inputs (Level 3) between December 31, 2015 and December 31, 2016.

Nonrecurring Fair Value Measurements

See Note 3 for a discussion of the nonrecurring fair value measurements used in recording impairment charges related to our real estate properties during the years ended December 31, 2016 and 2015.

8.    FAIR VALUE OF FINANCIAL INSTRUMENTS

We are required to disclose an estimate of fair value of our financial instruments for which it is practicable to estimate the value. The fair value of a financial instrument is the amount at which such financial instrument could be exchanged in a current transaction between willing parties, other than in a forced sale or liquidation. For certain of our financial instruments, fair values are not readily available since there are no active trading markets as characterized by current exchanges between willing parties. Accordingly, we derive our estimated fair value using various valuation techniques, such as computing the present value of estimated future cash flows using discount rates commensurate with the risks involved. However, the determination of estimated cash flows may be subjective and imprecise and changes in assumptions or estimation methodologies can have a material effect on these estimated fair values. In that regard, the fair value estimates may not be substantiated by comparison to independent markets, and in many cases, may not be realized in immediate settlement of the instrument.

We use the framework established in ASC Topic 820 to measure the fair value of our financial instruments as disclosed in the table below. The fair values estimated below are indicative of certain interest rate and other assumptions as of December 31, 2016 and 2015, and may not take into consideration the effects of subsequent interest rate or other assumption fluctuations, or changes in the values of underlying collateral. The fair values of cash and cash equivalents, restricted cash, accounts receivable, and accounts payable and accrued expenses approximate their carrying values because of the short-term nature of these instruments.

The following table summarizes the carrying amounts and estimated fair values measured on a nonrecurring basis of our other financial instruments, including instruments classified as held for sale, as of December 31, 2016 and 2015 (amounts in thousands). See Note 7 for a discussion of our assets and liabilities measured at fair value on a recurring basis. 

	As of December 31, 2016				As of December 31, 2015
	Carrying Amount		Estimated Fair Value		Carrying Amount		Estimated Fair Value
Assets:
Fixed-rate debt-related investments, net	$	15,209	$	15,784	$	15,722	$	16,526
Liabilities:
Fixed-rate mortgage notes carried at amortized cost	$	290,329	$	291,624	$	577,978	$	576,432
Floating-rate mortgage notes	51,918		51,942		7,886		7,883
Floating-rate unsecured borrowings	706,554		711,000		511,905		517,000

The methodologies used and key assumptions made to estimate fair values of the financial instruments, other than derivatives disclosed in Note 6, described in the above table are as follows:

Debt-Related Investments—The fair value of our performing debt-related investments are estimated using a discounted cash flow methodology. This method discounts estimated future cash flows using rates management determines best reflect current market interest rates that would be offered for loans with similar characteristics and credit quality. Credit spreads and market interest rates used to determine the fair value of these instruments are based on unobservable Level 3 inputs which management has determined to be its best estimate of current market values.

Mortgage Notes and Other Borrowings—The fair value of our mortgage notes and other borrowings are estimated using a discounted cash flow analysis, based on our estimate of market interest rates. Credit spreads relating to the underlying instruments are based on unobservable Level 3 inputs, which we have determined to be our best estimate of current market spreads of similar instruments.

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9.    NONCONTROLLING INTERESTS

Our noncontrolling interests consist of two components: (i) OP Units held by third parties and (ii) joint venture partnership interests held by our partners. The following table summarizes changes to noncontrolling interest balances between December 31, 2015 and December 31, 2016 in terms of cumulative contributions, distributions and cumulative allocations of net income (loss) and redemptions and buyouts of the interests (amounts in thousands). 

	OP Units			Joint Venture Partner Interests			Noncontrolling Interests
Beginning balance as of December 31, 2015	$	94,734		$	2,412		$	97,146
Comprehensive Income and Loss
Net income (loss)	3,883			1,189			5,072
Unrealized change from cash flow hedging derivatives	307			—			307
Contributions, Distributions and Redemptions
Contributions from noncontrolling interest holders	—			3,225			3,225
Distributions to noncontrolling interest holders	(4,661		)	(4,345		)	(9,006		)
Redemption and buyout of noncontrolling interests, net	(4,996		)	—			(4,996		)
Ending balance as of December 31, 2016	$	89,267		$	2,481		$	91,748

OP Units

Securities that are redeemable for cash or other assets at the option of the holder, not solely within the control of the issuer, are classified as redeemable noncontrolling interests outside of permanent equity in our accompanying balance sheets. We have evaluated our ability to deliver shares of common stock to satisfy redemption requests from holders of our OP Units and we have concluded that we have the right to satisfy the redemption requirements of holders of our OP Units by delivering unregistered shares of our common stock. Each outstanding OP Unit is exchangeable for one share of our common stock, and the OP Unit holder cannot require redemption in cash or other assets. As a result, we classify our OP Units held by third parties as noncontrolling interests.

We are the sole general partner of our Operating Partnership and currently own, in our capacity as the general partner, 200 OP Units for which we contributed $2,000. Subsequent to that initial investment, we have contributed 100% of the proceeds received from our offerings of common stock to our Operating Partnership in exchange for OP Units representing our interest as a limited partner of the Operating Partnership. As of December 31, 2016 and 2015, we owned approximately 92.6% and 92.8% of the outstanding limited partnership interests in our Operating Partnership, respectively, and the remaining limited partnership interests in our Operating Partnership were owned by third-party investors.

Our Operating Partnership has classes of OP Units that correspond to our four classes of common stock: Class E OP Units, Class A OP Units, Class W OP Units and Class I OP Units. After a period of one year from the date of issuance, holders of Class E OP Units (other than us) may request the Operating Partnership to redeem their Class E OP Units. We have the option of redeeming the Class E OP Units with cash for an amount based on our NAV per share as of the effective date of the redemption, shares of our common stock on a one-for-one basis, or with a combination of cash and Class E shares of common stock. We did not issue any Class E shares pursuant to this option during 2016 or 2015. During the years ended December 31, 2016 and 2015, we redeemed approximately 760,000 and 360,000 Class E OP Units for approximately $5.6 million and $2.7 million in cash, respectively.

As of December 31, 2016 and 2015, our Operating Partnership had issued and outstanding approximately 12.0 million and 12.8 million Class E OP Units, respectively, to third-party investors in connection with its private placement offerings. Such units had a maximum approximate redemption value of $91.2 million and $95.6 million, as of December 31, 2016 and December 31, 2015, respectively, based on our December 31, 2016 and December 31, 2015 NAV per share, respectively, (unaudited). Furthermore, during the year ended December 31, 2015, we exercised our option to acquire, at fair value, previously sold fractional interests in a retail property in the Jacksonville, FL market for a combination of (i) approximately 1.0 million Class E OP Units issued at a price of $7.18 per OP Unit, representing approximately $7.3 million of the aggregate purchase price and (ii) approximately $783,000 in cash. The result of this activity was a net decrease in our financing obligations of approximately $17.9 million and a net increase in our noncontrolling interests of $16.2 million.

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Joint Venture Partner Interests

We consolidate all of our joint ventures in the accompanying financial statements. Our joint venture partners’ interests in our consolidated partnerships are not redeemable. As a result, we classify our joint venture partners’ interests as noncontrolling interests. During the year ended December 31, 2016, we sold two office properties held by one of our joint ventures. As a result, we no longer have any interest in that joint venture.

10.    STOCKHOLDERS' EQUITY

Common Stock

On May 27, 2005, we filed a Registration Statement on Form S-11 with the Commission in connection with an initial public offering of our Class E shares of common stock, which was declared effective on January 27, 2006. On June 11, 2007, we filed a Registration Statement on Form S-11 with the Commission in connection with a follow-on public offering of our Class E common stock, which was declared effective on January 22, 2008. As of the close of business on September 30, 2009, we terminated the primary portion of our public offerings of Class E shares of our common stock and ceased accepting new subscriptions to purchase shares of our common stock. On October 23, 2009, we filed a Registration Statement for the sale of up to $237,500,000 in Class E shares of our common stock pursuant to our distribution reinvestment plan. This distribution reinvestment plan offering is ongoing.

On July 12, 2012, the Commission declared effective our Prior Offering, which we terminated on September 15, 2015. On September 16, 2015, the Commission declared effective our Follow-On Offering, which applies to the offer and sale of shares of Class A, Class W, and Class I common stock to the public through a primary offering and a restated distribution reinvestment plan with NAV-based pricing. See Note 1 for additional information regarding the Prior Offering and Follow-On Offering. The following table describes the changes in each class of common shares during each of the years ended December 31, 2016, 2015 and 2014 (shares and dollar amounts in thousands). 

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	Class E					Class A					Class W					Class I					Total
	Shares		Amount (1)			Shares		Amount (1)			Shares		Amount (1)			Shares		Amount (1)			Shares		Amount (1)
Balances, December 31, 2013	171,254		$	1,728,146		217		$	1,534		209		$	1,437		4,327		$	29,507		176,007		$	1,760,624
Issuance of common stock:
Shares sold	—		—			955		6,879			900		6,310			9,090		63,705			10,945		76,894
Distribution reinvestment plan	2,830		19,785			15		105			10		74			123		867			2,978		20,831
Stock-based compensation	—		—			—		—			—		—			136		807			136		807
Redemptions of common stock	(11,016	)	(77,523		)	—		—			(2	)	(13		)	(648	)	(4,566		)	(11,666	)	(82,102		)
Balances, December 31, 2014	163,068		$	1,670,408		1,187		$	8,518		1,117		$	7,808		13,028		$	90,320		178,400		$	1,777,054
Issuance of common stock:
Shares sold	—		—			511		3,888			693		5,134			10,135		73,982			11,339		83,004
Distribution reinvestment plan	2,447		17,866			28		203			22		158			426		3,119			2,923		21,346
Stock-based compensation	—		—			—		—			—		—			618		1,295			618		1,295
Redemptions of common stock	(28,240	)	(206,134		)	(23	)	(171		)	(20	)	(148		)	(873	)	(6,433		)	(29,156	)	(212,886		)
Balances, December 31, 2015	137,275		$	1,482,140		1,703		$	12,438		1,812		$	12,952		23,334		$	162,283		164,124		$	1,669,813
Issuance of common stock:
Shares sold	—		—			436		3,337			782		5,799			10,960		81,479			12,178		90,615
Distribution reinvestment plan	2,004		14,859			42		311			44		331			684		5,075			2,774		20,576
Stock-based compensation	—		—			—		—			—		—			32		1,415			32		1,415
Redemptions of common stock	(26,954	)	(198,810		)	(180	)	(1,328		)	(367	)	(2,701		)	(971	)	(7,203		)	(28,472	)	(210,042		)
Balances, December 31, 2016	112,325		$	1,298,189		2,001		$	14,758		2,271		$	16,381		34,039		$	243,049		150,636		$	1,572,377

_______________________________

(1) Dollar amounts presented in this table represent the gross amount of proceeds from the sale of common shares, or the amount paid to stockholders to redeem or repurchase common shares, and do not include other costs and expenses accounted for within additional paid-in capital, such as selling commissions, dealer manager and distribution fees, offering and organizational costs, and other costs associated with our distribution reinvestment plans, share redemption programs, and self-tender offers.

Redemptions and Repurchases

During the year ended December 31, 2016, we completed four self-tender offers pursuant to which we accepted for purchase approximately 25.1 million Class E shares, at a weighted average purchase price of $7.37 per share for an aggregate cost of approximately $185.3 million.

On August 12, 2015, we completed a modified “Dutch Auction” tender offer, pursuant to which we accepted for purchase approximately 17.2 million shares of Class E common stock, at a purchase price of $7.25 per share for an aggregate cost of approximately $124.4 million. On December 23, 2015, we completed another self-tender offer, pursuant to which we accepted for purchase approximately 2.7 million shares of Class E common stock, at a purchase price of $7.39 per share for an aggregate cost of approximately $20.1 million.

We have adopted a Class E Share Redemption Program (the “Class E SRP”), whereby Class E stockholders may request that we redeem all or any portion of their Class E shares subject to certain conditions and limitations. Redemptions are only available with respect to Class E shares of common stock in the event of the death or disability of a stockholder subject to certain conditions and limitations. We also have a separate Class A, W and I Share Redemption Program (“Class AWI SRP”) for holders of our Class A, Class W or Class I shares. Our board of directors may modify, suspend or terminate our share redemption programs if it deems such action to be in the best interest of our stockholders. Our board of directors will evaluate each quarter whether to make liquidity available to Class E stockholders through the Class E SRP or through a tender offer process.

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During the years ended December 31, 2016 and 2015, we redeemed approximately 1.8 million and 8.4 million Class E shares pursuant to our Class E SRP for approximately $13.5 million and $61.7 million, respectively. During the year ended December 31, 2015, our board of directors authorized an additional $28.0 million in addition to the amounts calculated in accordance with our Class E SRP, related to these redemptions.

During the year ended December 31, 2016, we redeemed approximately 1.5 million Class I shares, Class A shares, and Class W shares pursuant to our Class AWI SRP for a total of approximately $11.2 million. During the year ended December 31, 2015, we redeemed approximately 916,000 Class I shares, Class A shares, and Class W shares pursuant to our Class AWI SRP for a total of approximately $6.8 million. During the year ended December 31, 2014, we redeemed approximately 650,000 Class I shares and Class W shares pursuant to our Class AWI SRP for a total of approximately $4.6 million.

Distributions

We accrue distributions on a daily basis and pay distributions on a quarterly basis. Historically, each quarter, our board of directors has authorized the following quarter’s daily distribution accrual. We calculate individual payments of distributions to each stockholder or OP Unit holder based upon daily record dates during each quarter, so that investors are eligible to earn distributions immediately upon purchasing shares of our common stock or upon purchasing OP Units. The following table describes our total distributions declared on our common stock for the years ended December 31, 2016, 2015 and 2014, and the portion of each distribution that was paid in cash and reinvested in shares (dollar amounts in thousands).  

	For the Year Ended December 31,
Distributions:	2016		% of Total Distributions		2015		% of Total Distributions		2014		% of Total Distributions
Paid in cash	$	36,418	63.8	%	$	41,723	66.3	%	$	41,381	66.5	%
Reinvested in shares	20,622		36.2	%	21,177		33.7	%	20,855		33.5	%
Total distributions	$	57,040	100.0	%	$	62,900	100.0	%	$	62,236	100.0	%

The following table sets forth the distributions that have been paid and/or authorized as of December 31, 2016, subject to class-specific adjustments.  

	Amount Declared per Share/Unit (1)
Quarter	Class E	Class A	Class W	Class I	Weighted Average	Payment Date
2015
1st Quarter 2015	0.0900	0.0705	0.0794	0.0882	0.0897	4/16/2015
2nd Quarter 2015	0.0900	0.0700	0.0791	0.0882	0.0896	7/2/2015
3rd Quarter 2015	0.0900	0.0695	0.0788	0.0881	0.0895	10/16/2015
4th Quarter 2015	0.0900	0.0694	0.0788	0.0881	0.0894	1/19/2016
2016
1st Quarter 2016	0.0900	0.0697	0.0789	0.0882	0.0894	4/18/2016
2nd Quarter 2016	0.0900	0.0699	0.0790	0.0882	0.0893	7/18/2016
3rd Quarter 2016	0.0900	0.0695	0.0788	0.0881	0.0892	10/18/2016
4th Quarter 2016	0.0900	0.0692	0.0787	0.0881	0.0892	1/17/2017
2017
1st Quarter 2017 (2)	0.0900	0.0692	0.0786	0.0881	0.0891	4/17/2017

_______________________________

(1) Assumes ownership of share or unit for the entire quarter.

(2) The distribution amount herein for the first quarter of 2017 is estimated based on the NAV per share as of December 31, 2016.

(3) Expected payment date.  

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Distribution Tax Characterization

Our distributions to stockholders are characterized for federal income tax purposes as (i) ordinary income, (ii) non-taxable return of capital, or (iii) long-term capital gain. Distributions that exceed our current and accumulated tax earnings and profits constitute a return of capital for tax purposes and reduce the stockholders’ basis in the common shares. To the extent that distributions exceed both current and accumulated earnings and profits and the stockholders’ basis in the common shares, they will generally be treated as a gain or loss upon the sale or exchange of our stockholders’ common shares. For the years ended December 31, 2016, 2015 and 2014, we notified stockholders of the taxability of distributions paid during the preceding year on an annual basis. The following unaudited table summarizes the information reported to investors regarding the taxability of distributions on common shares for the years ended December 31, 2016, 2015 and 2014.

	For the Year Ended December 31,
	2016		2015		2014
Per Common Share	% of Total Distributions		% of Total Distributions		% of Total Distributions
Ordinary income	53.66	%	81.01	%	63.92	%
Non-taxable return of capital	46.34	%	18.99	%	36.08	%
Total	100.00	%	100.00	%	100.00	%

11.    RELATED PARTY TRANSACTIONS

Advisory Agreement

Our day-to-day activities are managed by our Advisor, a related party, under the terms and conditions of the Advisory Agreement. Our Advisor is considered to be a related party as certain indirect owners and employees of our Advisor serve as two of our directors and all of our executive officers. The responsibilities of our Advisor cover all facets of our business, and include the selection and underwriting of our real property and debt-related investments, the negotiations for these investments, the asset management and financing of these investments and the oversight of real property dispositions.

On June 23, 2016, we entered into Tenth Amended and Restated Advisory Agreement (the “Advisory Agreement”) with our Advisor, effective June 30, 2016, which modified the fees and expense reimbursements payable to our Advisor. The Advisory Agreement may be renewed for an unlimited number of successive 1-year terms. The current term of the Advisory Agreement expires on June 30, 2017. Per the Advisory Agreement, in consideration for asset management services performed, we pay our Advisor an advisory fee comprised of two separate components: (1) a fixed amount that accrues daily in an amount equal to 1/365th of 1.15% of (a) the “Aggregate Fund NAV” (i.e. the aggregate net asset value or "NAV" for our Class E shares, Class A shares, Class W shares and Class I shares, along with OP units held by third parties) for such day, and (b) the consideration received by us or our affiliate for selling Interests (defined below) in DST Properties (defined below) to third party investors, net of up-front fees and expense reimbursements payable out of gross sale proceeds from the sale of such Interests, including but not limited to sales commissions, dealer manager fees and non-accountable expense allowances, and (2) a performance component that is based on the annual non-compounded investment return provided to holders of “Fund Interests” (defined as our Class E shares, Class A shares, Class W shares, Class I shares, and OP Units held by third parties) such that our Advisor will receive 25% of the overall return in excess of 6%; provided that in no event may the performance condition exceed 10% of the overall return for such year, and subject to certain other limitations. Additionally, our Advisor has provided us with a waiver of a portion of its fees generally equal to the amount of the performance component that would have been payable with respect to the Class E shares and the Class E OP Units held by third parties until the NAV of such shares or units exceeds $10.00 per share or unit, the benefit of which will be shared among all holders of Fund Interests.

In addition, we will pay our Advisor a fee of 1% of the total consideration we receive upon the sale of real property assets (excluding DST Properties). For these purposes, a “sale” means any transaction or series of transactions whereby we or our Operating Partnership directly or indirectly (including through the sale of any interest in a joint venture or through a sale by a joint venture in which we hold an interest) sells, grants, transfers, conveys, or relinquishes its ownership of any real property or portion thereof, including the lease of any real property consisting of a building only, and including any event with respect to any real property which gives rise to a significant amount of insurance proceeds or condemnation awards.

Further, for a substantial amount of services in connection with the sale of a property (excluding DST Properties), as determined by a majority of our independent directors, we will pay our Advisor up to 50.0% of the reasonable, customary and competitive commission paid for the sale of a comparable real property, provided that such amount shall not exceed 1% of the

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contract price of the property sold and, when added to all other real estate commissions paid to unaffiliated parties in connection with the sale, may not exceed the lesser of a competitive real estate commission or 6% of the sales price of the property.  

In addition, pursuant to the Advisory Agreement, we will pay directly, or reimburse our Advisor and our Dealer Manager (defined below) if they pay on our behalf any organizational and offering expenses (other than selling commissions, the dealer manager fee, distribution fees and non-transaction based compensation allocated to sales-related activities of employees of our Dealer Manager in connection with the offering) relating to any public offerings as and when incurred. After the termination of the primary portion of the offering and again after termination of the distribution reinvestment plan portion of the offering, our Advisor has agreed to reimburse us to the extent that total cumulative organization and offering expenses (including selling commissions, the dealer manager fee and distribution fees) that we incur exceed 15% of our gross proceeds from the applicable offering.

Subject to certain limitations, we will reimburse our Advisor for all of the costs it incurs in connection with the services it provides to us, including, without limitation, our allocable share of the personnel (and related employment) costs and overhead (including but not limited to allocated rent paid to both third parties and an affiliate of the Advisor, equipment, utilities, insurance, travel and entertainment, and other costs) incurred by our Advisor or its affiliates, including, but not limited to, total compensation, benefits and other overhead of all employees involved in the performance of such services.

Public Offering Dealer Manager Agreement

Dividend Capital Securities LLC, a related party, which we refer to as the “Dealer Manager,” is distributing the shares of our common stock in our public offering on a “best efforts” basis. Our Dealer Manager is a member of the Financial Industry Regulatory Authority, Inc., or FINRA. Our Dealer Manager coordinates our distribution effort and manages our relationships with participating broker-dealers and financial advisors and provides assistance in connection with compliance matters relating to marketing our public offering.

On September 16, 2015, we entered into a Second Amended and Restated Dealer Manager Agreement (the “Second Amended Dealer Manager Agreement”) with our Dealer Manager. The Dealer Manager served as dealer manager for the Prior Offering and serves as dealer manager for the Follow-On Offering. The purpose of the Second Amended Dealer Manager Agreement is to engage our Dealer Manager with respect to the Follow-On Offering while still paying dealer manager fees and distribution fees with respect to the Prior Offering. As amended, the Second Amended Dealer Manager Agreement may be made to apply to future offerings by naming them in a schedule to the agreement, with the consent of the Company and our Dealer Manager. Pursuant to the Second Amended Dealer Manager Agreement, we pay (i) selling commissions on Class A shares sold in the primary offering of up to 3.0% of the public offering price per share, (ii) a dealer manager fee which accrues daily in an amount equal to 1/365th of 0.6% of our NAV per share of Class A and Class W shares outstanding and an amount equal to 1/365th of 0.1% of our NAV per share of Class I shares outstanding on such day on a continuous basis, and (iii) a distribution fee which accrues daily in an amount equal to 1/365th of 0.5% of our NAV per Class A share outstanding on such day on a continuous basis. Subject to FINRA limitations on underwriting compensation, we will continue to pay the dealer manager fee and distribution fee until the earlier to occur of the following: (i) a listing of the class of such shares on a national securities exchange or (ii) such shares no longer being outstanding.

Pursuant to the Second Amended Dealer Manager Agreement, we may pay to the Dealer Manager a primary dealer fee in the amount of up to 5.0% of the gross proceeds raised from the sale of Class I shares in the primary portion of the Follow-On Offering, provided that (i) the total gross proceeds raised with respect to which the primary dealer fee will apply may not exceed $100,000,000, subject to further increase by our board of directors, in its discretion; (ii) the primary dealer fee will only be paid with respect to sales made by participating broker-dealers specifically approved by us as being eligible; and (iii) the primary dealer fee will only be paid with respect to sales made at times approved by us. The Dealer Manager may reallow a portion of the primary dealer fee to the participating broker-dealers involved in selling such Class I shares based on the portion of the gross proceeds raised from their customers. The Dealer Manager will consider the primary dealer fee to be underwriting compensation subject to the limits described below. The primary dealer fee will be paid by us and will not be considered a class-specific expense.

The Dealer Manager monitors the aggregate amount of underwriting compensation that we and the Advisor pay in connection with the Follow-On Offering and Prior Offering in order to ensure we comply with the underwriting compensation limits of applicable FINRA rules. Accordingly, the dealer manager fee and distribution fee that are payable to our Dealer Manager with respect to an offering (i.e., pursuant to the registration statement for an offering) will cease when, following the completion of the offering, total underwriting compensation in such offering equals 10% of the gross proceeds from the primary portion of the offering. We consider the portion of the dealer manager fee and the distribution fee accruing with respect

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to Class A, Class W and Class I shares issued during the term of the current offering, and not issued pursuant to a prior public offering, as underwriting compensation with respect to the current offering. In addition, we will cease paying the dealer manager fee and the distribution fee on the earlier to occur of the following: (i) a listing of the class of such shares on a national securities exchange or (ii) such shares no longer being outstanding, for example (without limitation) upon their redemption or other repurchase by us, upon our dissolution, or upon a merger or other extraordinary transaction in which we are a party and in which the shares are exchanged for cash or other securities.

The sales commissions, distribution fees, and dealer manager fees may all be reallowed to participating broker dealers who are members of FINRA. Our Dealer Manager may also receive a portion of the organization and offering expense reimbursement amounts described above under “— Compensation to our Advisor”. Our Dealer Manager is presently directly or indirectly majority owned by John A. Blumberg, James R. Mulvihill, Evan H. Zucker, and/or their affiliates.

On May 11, 2016, we notified our Dealer Manager that we would pay a primary dealer fee in the amount of up to 5.0% of the gross proceeds raised from the sale of Class I shares in the primary portion of the Follow-On Offering from May 11, 2016 through June 30, 2016, but only with respect to sales made by participating broker-dealers that we specifically approved as being eligible (the "2Q Managed Offering").

On September 19, 2016, we notified our Dealer Manager that we would pay a primary dealer fee in the amount of up to 5.0% of the gross proceeds raised from the sale of Class I shares in the primary portion of the Follow-On Offering from September 19, 2016 through November 30, 2016 (the “3Q Managed Offering”), but only with respect to sales made by participating broker-dealers that we specifically approved as being eligible. On June 23, 2016, our board of directors increased the maximum amount of total gross proceeds raised with respect to which the primary dealer fee will apply to $150.0 million. The maximum primary dealer fee we will pay our Dealer Manager is now $7.5 million, although in the future we may provide for additional primary dealer fee payments. Such amount is subject to further increase by our board of directors, in its discretion. During the year ended December 31, 2016, we raised approximately $69.3 million pursuant to the 2Q Managed Offering and the 3Q Managed Offering and incurred primary dealer fees of $3.5 million, of which 347,000 was retained by our Dealer Manager.

We conducted similar "managed offerings" during the years ended December 31, 2015 and 2014. See "— Summary of Fees and Other Amounts" for further information regarding the amount of primary dealer fees paid during during the years ended December 31, 2016, 2015 and 2014.

Property Management Agreement

On June 23, 2016, we and Dividend Capital Property Management LLC (the “Property Manager”) agreed to terminate the property management agreement dated January 9, 2006, with the Property Manager (the “Property Management Agreement”) as no services were being provided by the Property Manager under the Property Management Agreement. The Property Manager waived the notice period for termination so that the Property Management Agreement terminated immediately.

Independent Director RSU Awards

On December 5, 2013, our board of directors approved revised compensation for our independent directors. In connection with the revised compensation plan, at each annual meeting of stockholders the independent directors will automatically, upon election, each receive an annual $10,000 grant of RSUs with respect to Class I shares of our common stock, with the number of RSUs based on the NAV per Class I share as of the end of the day of the annual meeting. Effective June 23, 2016 and June 25, 2015, we granted 4,055 RSUs and 4,116 RSUs to our independent directors, respectively.

Restricted Stock Unit Agreements

Pursuant to the terms of the Advisor RSU Agreements, we have granted our Advisor approximately 842,000 Company RSUs, of which approximately 412,000 Company RSUs remained unvested and unsettled as of December 31, 2016. Each Company RSU will, upon vesting, entitle our Advisor to one Class I share of our common stock. The Company RSUs are subject to specified vesting and settlement provisions and, upon settlement in Class I shares of Company common stock, require offsets of advisory fees and expenses otherwise payable from the Company to our Advisor as described further below based on the NAV per Class I share on the grant date of the applicable Company RSU (the weighted average grant-date NAV per Class I share with respect to the unsettled Company RSUs is $7.18 as of December 31, 2016). As of December 31, 2016, our Advisor had approximately 38,000 shares of Class I common stock issued upon settlement of Company RSUs that remained subject to fee offset. The Advisor is expected to redistribute a significant portion of the Company RSUs and/or shares

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to senior level employees of our Advisor and its affiliates that provide services to us, although the terms of such redistributions (including the timing, amount and recipients) remain solely in the discretion of our Advisor.

Vesting and Payment Offset

Following specified vesting provisions, an equal percentage of the Company RSUs vest on each of the applicable vesting dates. On each vesting date, an offset amount (each, an “Offset Amount”) is calculated and deducted on a pro rata basis over the next 12 months from the cash payments otherwise due and payable to our Advisor under our then-current Advisory Agreement for any fees or expense reimbursements. The board of directors considers the amount of granted Company RSUs when evaluating the total compensation paid to the Advisor for services provided. Each Offset Amount equals the number of Company RSUs vesting on such date multiplied by the NAV per Class I share publicly disclosed by us (“the “Class I NAV”) as of the end of the grant date (the “Grant Date NAV per Class I Share”). Each Offset Amount is always calculated based on the Grant Date NAV per Class I Share, even beyond the initial Vesting Date. At the end of each 12-month period following each vesting date, if the Offset Amount has not been fully realized by offsets from the cash payments otherwise due and payable to our Advisor under the Advisory Agreement, our Advisor shall promptly pay any shortfall to us.

The chart below shows the Grant Dates, vesting dates, number of unvested shares as of December 31, 2016, and Grant Date NAV per Class I Share (share amounts in thousands). 

Award	Grant Date	Vesting Dates	Number of Unvested Shares	Grant Date NAV per  Class I Share
Company RSU	4/7/2014	4/14/17	123	$	6.96
Company RSU	2/25/2015	4/14/17	30	7.18
Company RSU	2/25/2015	4/13/18	135	7.18
Company RSU	2/4/2016	4/15/19	124	7.41
Total/ weighted average			412	$	7.18

Termination

The Advisor RSU Agreements will automatically terminate upon termination or non-renewal of the Advisory Agreement by any party for any reason. In addition, upon a change in control of us, then either our Advisor or we may immediately terminate the Advisor RSU Agreements. Further, the Advisor may immediately terminate the Advisor RSU Agreements if we exercise certain rights under the Advisor RSU Agreements to replace the Company RSUs with another form of compensation.

Upon termination of the Advisor RSU Agreements, our Advisor will promptly pay any unused Offset Amounts to us or, at our Advisor’s election, return Class I shares in equal value based on the Class I NAV as of the date of termination of the Advisor RSU Agreements. In addition, upon termination of the Advisor RSU Agreement, all unvested Company RSUs will be forfeited except that, unless the Advisor RSU Agreements were terminated at the election of our Advisor following a change in control of us or as a result of a premature termination of the Advisory Agreement at our election for cause (as defined in the Advisory Agreement) or upon the bankruptcy of our Advisor, then following such forfeiture of Company RSUs, our Advisor will have the right to acquire from us the number of Class I shares equal to the number of Company RSUs forfeited, in return for a purchase price equal to such number of Class I shares multiplied by the Grant Date NAV per Class I Share. The Advisor must notify us of its election to exercise the foregoing acquisition right within 30 days following the termination of the Advisor RSU Agreements, and the parties will close the transaction within 60 days following the termination of the Advisor RSU Agreements.

Dividend Equivalent Payments

If our board of directors declares and we pay a cash dividend on Class I shares for any period in which the Company RSUs are outstanding (regardless of whether such Company RSUs are then vested), our Advisor will be entitled to dividend equivalents (the “Dividend Equivalents”) with respect to that cash dividend equal to the cash dividends that would have been payable on the same number of Class I shares as the number of Company RSUs subject to the Advisor RSU Agreements had such Class I shares been outstanding during the same portion of such period as the Company RSUs were outstanding. Any such Dividend Equivalents may be paid in cash or Class I shares, at our Advisor’s election.

During the years ended December 31, 2016, 2015 and 2014, we recognized approximately $1.1 million, $1.1 million and $653,000, respectively, as advisory fees expense related to the issuance of approximately 153,000 shares, 153,000 shares and 123,000 shares, respectively, of our Class I common stock, respectively. Amounts reported are based on the NAV per share at

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the end of each month during the Advisor RSU Agreements. As of December 31, 2016, the total value related to nonvested awards not yet recognized was approximately $3.1 million, which we expect to recognize between 2017 and 2020.

Restricted Stock Grant

Effective February 4, 2016 and February 25, 2015, we granted 49,340 restricted shares and 49,263 restricted shares of Class I common stock, respectively, to certain employees of our Advisor and its affiliates at a price of $7.41 per share and $7.18 per share, respectively, which will vest ratably over four years. During the years ended December 31, 2016, 2015 and 2014, 27,458 shares, 19,848 shares and 11,198 shares, respectively, vested at a weighted average price of $7.39, $7.23 and $6.96, respectively, based on our NAV per share as of the vesting dates. During the years ended December 31, 2016, 2015 and 2014, we recorded approximately $250,000, $188,000 and $125,000 within “general and administrative expenses” in the accompanying consolidated statements of income, respectively. Our restricted stock generally vests ratably over a period of three to four years.

Private Placements of Delaware Statutory Trust Interests

Private Placements

In March 2016, we, through our Operating Partnership, initiated a program to raise capital in private placements exempt from registration under the Securities Act of 1933, as amended (“Private Placements”), through the sale of beneficial interests (“Interests”) in specific Delaware statutory trusts holding real properties, including properties currently indirectly owned by our Operating Partnership (the “DST Program”). From 2006 through 2009, we, through our subsidiaries, conducted similar private placement offerings of fractional interests in which it raised a total of $183.1 million in gross proceeds. These fractional interests were all subsequently acquired by our Operating Partnership in exchange for an aggregate of 17.7 million OP Units. As of December 31, 2016, we had sold approximately $2.5 million in Interests, which we include in "other liabilities" in our accompanying balance sheets.

Each Private Placement will offer Interests in one or more real properties placed into one or more Delaware statutory trust(s) by our Operating Partnership or its affiliates (“DST Properties”). We anticipate that these Interests may serve as replacement properties for investors seeking to complete like-kind exchange transactions under Section 1031 of the Internal Revenue Code of 1986, as amended (the “Code”). Additionally, properties underlying Interests sold to investors pursuant to such Private Placements will be leased-back by an indirect wholly owned subsidiary of our Operating Partnership on a long term basis of up to 29 years. The lease agreements are expected to be fully guaranteed by our Operating Partnership. Additionally, our Operating Partnership will retain a fair market value purchase option (“FMV Option”) giving it the right, but not the obligation, to acquire the Interests from the investors at a later time in exchange for OP Units.

DST Program Dealer Manager Agreement

In connection with the DST Program, in March 2016, Dividend Capital Exchange LLC (“DCX”), a wholly owned subsidiary of our taxable REIT subsidiary that is wholly owned by our Operating Partnership, entered into a Dealer Manager Agreement with our Dealer Manager, pursuant to which our Dealer Manager agreed to conduct Private Placements for Interests reflecting an indirect ownership of up to $500 million of Interests. DCX will pay certain up-front fees and reimburse certain related expenses to the Dealer Manager with respect to capital raised through any such Private Placements. DCX is obligated to pay our Dealer Manager a dealer manager fee of up to 1.5% of gross equity proceeds raised and a commission of up to 5% of gross equity proceeds raised through the Private Placements. The Dealer Manager may re-allow such commissions and a portion of such dealer manager fee to participating broker dealers.

In addition, we, or our subsidiaries, are obligated to pay directly or reimburse our Advisor and our Dealer Manager if they pay on our behalf, any organization and offering expenses (other than selling commissions and the dealer manager fee) as and when incurred. These expenses may include reimbursements for the bona fide due diligence expenses of participating broker-dealers, supported by detailed and itemized invoices, and similar diligence expenses of investment advisers, legal fees of our Dealer Manager, reimbursements for customary travel, lodging, meals and reasonable entertainment expenses of registered persons associated with our Dealer Manager, the cost of educational conferences held by us, including costs reimbursement for registered persons associated with our Dealer Manager and registered representatives of participating broker-dealers to attend educational conferences sponsored by us, and attendance fees and costs reimbursement for registered persons associated with our Dealer Manager to attend seminars conducted by participating broker-dealers and promotional items.

We intend to recoup the costs of the selling commissions and dealer manager fees described above through a purchase price “mark-up” of the initial estimated fair value of the DST Properties to be sold to investors, thereby placing the economic

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burden of these up-front fees on the investors purchasing such Interests. In addition, to offset some or all of our organization and offering expenses associated with the Private Placements, we will add a purchase price mark-up of the estimated fair value of the DST Properties to be sold to investors in the amount of 1.5% of the gross equity proceeds. Collectively, these purchase price mark-ups total up to 8% of the gross equity proceeds raised in the Private Placements. Additionally, we will be paid, by investors purchasing Interests, a non-accountable reimbursement equal to 1.0% of gross equity proceeds for real estate transaction costs that we expect to incur in selling or buying these Interests. Also, investors purchasing Interests will be required to pay their own respective closing costs upon the initial sale of the interests.

Limited Partnership Agreement

In connection with the launch of the DST Program, the Company, on behalf of itself as general partner and on behalf of all the limited partners thereto, entered into the Fifth Amended and Restated Limited Partnership Agreement of our Operating Partnership, dated as of March 2, 2016, which was further amended on August 2, 2016 (the “Amended and Restated Operating Partnership Agreement”). The Amended and Restated Operating Partnership Agreement amends the prior operating partnership agreement by establishing two series of Class E OP Units, with different redemption and registration rights. The currently existing third-party holders of Class E OP Units will now hold Series 1 Class E OP Units, and will continue to have the same redemption and registration rights they had previously, which include the right, in certain circumstances to require our Operating Partnership to redeem the OP Units for Class E shares of the Company or cash. Any purchasers of Interests in the DST Program that ultimately acquire OP Units through the FMV Option will acquire Series 2 Class E OP Units, which will have similar redemption and registration rights to those of the holders of Series 1 Class E OP Units, except that their redemption rights will in certain circumstances require our Operating Partnership to redeem the OP Units for either Class I shares of the Company or cash (as determined by our Operating Partnership in its sole discretion). In addition, the Amended and Restated Operating Partnership Agreement provides that a redemption fee of 1.5% of the shares otherwise payable to a limited partner upon redemption of Series 2 Class E Units will be paid to an affiliate of the Manager (defined below). Holders of Series 1 or Series 2 Class E OP Units cannot require us to redeem their Series 1 or Series 2 Class E OP Units with cash.

Delaware Statutory Trust Agreement

DCX Manager LLC (the “Manager”), an affiliate of our Advisor, will be engaged to act as the manager of each Delaware statutory trust holding a DST Property. Although the intention is to sell 100% of the interests to third parties, DCX may hold an interest for a period of time and therefore could be subject to the following description of fees and reimbursements paid to the Manager. The Manager will have primary responsibility for performing administrative actions in connection with the trust and any DST Property and has the sole power to determine when it is appropriate for a trust to sell a DST Property. The Manager will be entitled to the following payments from the trust: (i) a management fee equal to a stated percentage (e.g., 1.0%) of the gross rents payable to the trust, with such amount to be set on a deal-by-deal basis, (ii) a disposition fee of 1.0% of the gross sales price of any DST Property sold to a third party, and (iii) reimbursement of certain expenses associated with the establishment, maintenance and operation of the trust and DST Properties. Additionally, the Manager or its affiliate may earn a 1.0% loan fee for any financing arrangement sourced, negotiated and executed in connection with the DST Program. This loan fee only is payable to the Manager by new investors that purchase Interests and therefore is not paid by the Company or its affiliates.

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Summary of Fees and Other Amounts

The following table summarizes fees and other amounts earned by our Advisor and its related parties in connection with services performed for us during the years ended December 31, 2016, 2015 and 2014 (amounts in thousands):

	For the Year Ended December 31,
	2016		2015		2014
Advisory fees (1)	$	14,857	$	17,083	$	15,919
Other reimbursements paid to our Advisor (2)	8,368		9,008		8,287
Other reimbursements paid to our Dealer Manager	396		441		591
Advisory fees related to the disposition of real properties	2,140		4,962		2,064
Development management fee (3)	31		88		181
Primary dealer fee (4)	3,465		2,540		2,197
Selling commissions	100		114		187
Dealer manager fees	381		258		121
Distribution fees	70		50		28
Total	$	29,808	$	34,544	$	29,575

_______________________________

(1) Amounts reported for the years ended December 31, 2016, 2015 and 2014 include approximately $1.1 million, $1.1 million and $653,000 respectively, that we were not obligated to pay in consideration of the issuance of Company RSUs to our Advisor.

(2) Other reimbursements paid to our Advisor include reimbursements for a portion of compensation costs of employees of our Advisor related to activities for which our Advisor does not otherwise receive a separate fee. We reimbursed our Advisor approximately $6.8 million, $7.3 million and $6.9 million for the years ended December 31, 2016, 2015 and 2014, respectively. These reimbursements include a portion of the compensation costs for certain of our named executives. The balance of such reimbursements are made up primarily of other general overhead and administrative expenses, including, but not limited to, allocated rent paid to both third parties and affiliates of our Advisor, equipment, utilities, insurance, travel and entertainment, and other costs.

(3) Pursuant to our amended Advisory Agreement effective as of June 23, 2016, our Advisor will no longer receive a development management fee in exchange for providing development management services.

(4) Amounts reported represent primary dealer fees we paid to our Dealer Manager based on the gross proceeds raised by participating broker-dealers pursuant to certain selected dealer agreements. Of the primary dealer fee earned during the years ended December 31, 2016, 2015 and 2014, our Dealer Manager reallowed approximately $3.1 million, $2.3 million and $2.0 million, respectively, to participating third-party broker-dealers and retained approximately $347,000, $254,000 and $220,000, respectively.

See the accompanying consolidated balance sheets for the amounts we owed to our Advisor and affiliates of our Advisor for such services and reimbursement of certain expenses as of December 31, 2016 and December 31, 2015. Pursuant to the Advisory Agreement, we accrue the advisory fee on a daily basis and pay our Advisor amounts due subsequent to each month-end. In addition, we recorded a liability of approximately $3.9 million for dealer manager and distribution fees that we estimate that we may pay to our Dealer Manager in future periods for shares of our common stock sold in our Follow-On Offering as of December 31, 2016. We anticipate that our Dealer Manager will reallow a significant portion of such fees to third-party broker dealers.

Product Specialists

During the year ended December 31, 2012, our Advisor entered into a product specialist agreement with BCG Advisors LLC (“BCG”), in connection with advisory services related to our investments in real estate securities assets. Pursuant to this agreement, a portion of the asset management fee that our Advisor receives from us related to real estate securities investments is reallowed to BCG in exchange for services provided. Our Advisor incurred approximately $37,000, $24,000, and $35,000 related to services provided by BCG during the years ended December 31, 2016, 2015 and 2014, respectively.

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12.    NET INCOME PER COMMON SHARE

Reconciliations of the numerator and denominator used to calculate basic net income per common share to the numerator and denominator used to calculate diluted net income per common share for the years ended December 31, 2016, 2015 and 2014 are described in the following table (amounts in thousands, except per share information):

	For the Year Ended December 31,
	2016			2015			2014
Numerator
Income from continuing operations	$	55,048		$	131,659		$	3,990
Income from continuing operations attributable     to noncontrolling interests	(5,072		)	(7,404		)	(340		)
Income from continuing operations     attributable to common stockholders	49,976			124,255			3,650
Dilutive noncontrolling interests share     of income from continuing operations	3,883			8,632			233
Numerator for diluted earnings     per share – adjusted income from     continuing operations	$	53,859		$	132,887		$	3,883
Income from discontinued operations	—			—			30,004
Income from discontinued operations     attributable to noncontrolling interests	—			—			(4,462		)
Income from discontinued operations     attributable to common stockholders	—			—			25,542
Dilutive noncontrolling interests share     of discontinued operations	—			—			1,915
Numerator for diluted earnings     per share – adjusted income from     discontinued operations	$	—		$	—		$	27,457
Denominator
Weighted average shares outstanding-basic	159,648			175,938			178,273
Incremental weighted average shares effect     of conversion of OP Units	12,398			12,851			12,718
Weighted average shares outstanding-diluted	172,046			188,789			190,991
INCOME PER COMMON SHARE-BASIC     AND DILUTED
Net income from continuing operations	$	0.31		$	0.70		$	0.02
Net income from discontinued operations	—			—			0.14
Net income	$	0.31		$	0.70		$	0.16

13.    SEGMENT INFORMATION

We have three reportable operating segments, which include our real property operating sectors (office, industrial, and retail), and we measure our profit and loss of our operating segments based on net operating income (“NOI”). We organize and analyze the operations and results of each of these segments independently, due to inherently different considerations for each segment. Such considerations include, but are not limited to, the nature and characteristics of the investment, and investment strategies and objectives. Specifically, the physical characteristics of our buildings, the related operating characteristics, the geographic markets, and the type of tenants are inherently different for each of our segments.

-F-42-

The following table sets forth revenue and NOI of our segments for the years ended December 31, 2016, 2015 and 2014 (amounts in thousands).  

	For the Year Ended December 31,
	Revenue						NOI (unaudited)
	2016		2015		2014		2016		2015		2014
Real property (1)
Office	$	126,782	$	137,204	$	139,245	$	84,300	$	97,441	$	104,533
Industrial	6,073		8,672		23,307		4,323		6,755		20,780
Retail	82,372		72,402		61,649		61,017		54,492		47,891
Total	$	215,227	$	218,278	$	224,201	$	149,640	$	158,688	$	173,204

_______________________________

(1) Excludes results of operations of real properties categorized as discontinued operations.

We consider NOI to be an appropriate supplemental financial performance measure because NOI reflects the specific operating performance of our real properties, and excludes certain items that are not considered to be controllable in connection with the management of each property, such as depreciation and amortization, general and administrative expenses, advisory fees, acquisition-related expenses, interest and other income, interest expense, (gain) loss on extinguishment of debt and financing commitments, gain on the sale of real property, and noncontrolling interests. However, NOI should not be viewed as an alternative measure of our financial performance as a whole, since it excludes such items that could materially impact our results of operations. Further, our NOI may not be comparable to that of other real estate companies, as they may use different methodologies for calculating NOI. Therefore, we believe net income, as defined by GAAP, to be the most appropriate measure to evaluate our overall financial performance.

The following table is a reconciliation of our reported net income attributable to common stockholders to our unaudited NOI for the years ended December 31, 2016, 2015 and 2014 (amounts in thousands).

	For the Year Ended December 31,
	2016			2015			2014
Net income attributable to common stockholders	$	49,976		$	124,255		$	29,192
Debt-related income	(943		)	(6,922		)	(7,396		)
Real estate depreciation and amortization expense	80,105			83,114			88,994
General and administrative expenses	9,450			10,720			11,108
Advisory fees, related party	14,857			17,083			15,919
Acquisition-related expenses	667			2,644			1,205
Impairment of real estate property	2,677			8,124			9,500
Interest and other income	(2,207		)	(2,192		)	(1,168		)
Interest expense	40,782			47,508			61,903
(Gain) loss on extinguishment of debt and financing commitments	(5,136		)	1,168			63
Gain on sale of real property	(45,660		)	(134,218		)	(10,914		)
Discontinued operations	—			—			(30,004		)
Net income attributable to noncontrolling interests	5,072			7,404			4,802
Net operating income	$	149,640		$	158,688		$	173,204

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The following table reflects our total assets by business segment as of December 31, 2016 and December 31, 2015 (amounts in thousands). 

	As of December 31,
	2016		2015
Segment assets:
Net investments in real property
Office	$	825,961	$	1,027,132
Industrial	57,651		61,231
Retail	827,799		785,854
Total segment assets, net	1,711,411		1,874,217
Non-segment assets:
Debt-related investments, net	15,209		15,722
Cash and cash equivalents	13,864		15,769
Other non-segment assets (1)	43,244		55,183
Total assets	$	1,783,728	$	1,960,891

_______________________________

(1) Other non-segment assets primarily consist of corporate assets including restricted cash and receivables, including straight-line rent receivable.

14.    INCOME TAXES

We operate in a manner intended to qualify for treatment as a REIT for U.S. federal income tax purposes. As a REIT, we generally will not be subject to federal income taxation at the corporate level to the extent we distribute 100% of our REIT taxable income annually, as defined in the Code, to our stockholders and satisfy other requirements. To continue to qualify as a REIT for federal tax purposes, we must distribute at least 90% of our REIT taxable income annually. No material provisions have been made for federal income taxes in the accompanying financial statements. We had a gross deferred tax asset of approximately $4.4 million as of both December 31, 2016 and 2015, which is offset by a full valuation allowance. The tax years 2013 through 2016 remain open to examination by the major taxing jurisdictions to which we are subject.

15.    COMMITMENTS AND CONTINGENCIES

Environmental Matters

A majority of the properties we acquire are subjected to environmental reviews either by us or the previous owners. In addition, we may incur environmental remediation costs associated with certain land parcels we may acquire in connection with the development of the land. We have acquired certain properties in urban and industrial areas that may have been leased to or previously owned by commercial and industrial companies that discharged hazardous materials. We may purchase various environmental insurance policies to mitigate our exposure to environmental liabilities. Due to the uncertainty regarding our exposure to environmental liabilities and the timing and nature of settlement of any such liabilities, we cannot estimate the effect of such potential environmental remediation on our business, financial condition, or results of operations.

16.    QUARTERLY FINANCIAL DATA (UNAUDITED)

The following tables present selected unaudited quarterly financial data for each quarter during the years ended December 31, 2016 and 2015 (amounts in thousands, except per share information). Certain reclassifications have been made to prior period results to conform to the current presentation. Certain totals and subtotals within the following table may not sum due to de minimus rounding adjustments. The following disclosures exclude the results from discontinued operations.

F-44

	For the Quarter Ended												For the Year Ended December 31, 2016
	March 31, 2016			June 30, 2016			September 30, 2016			December 31, 2016
Rental revenue	$	55,544		$	52,702		$	53,258		$	53,723		$	215,227
Debt-related income	238			237			235			233			943
Total revenue	55,782			52,939			53,493			53,956			216,170
Total operating expenses	(43,177		)	(42,313		)	(44,567		)	(43,286		)	(173,343		)
Other income (expenses)	35,633			(10,491		)	(5,608		)	(7,313		)	12,221
Net income	48,238			135			3,318			3,357			55,048
Net income attributable to noncontrolling interests	(4,456		)	(18		)	(353		)	(245		)	(5,072		)
NET INCOME ATTRIBUTABLE TO COMMON STOCKHOLDERS	$	43,782		$	117		$	2,965		$	3,112		$	49,976
NET INCOME PER BASIC AND DILUTED COMMON SHARE	$	0.27		$	—		$	0.02		$	0.02		$	0.31

	For the Quarter Ended												For the Year Ended December 31, 2015
	March 31, 2015			June 30, 2015			September 30, 2015			December 31, 2015
Rental revenue	$	59,379		$	51,075		$	52,854		$	54,970		$	218,278
Debt-related income	3,203			1,584			807			1,328			6,922
Total revenue	62,582			52,659			53,661			56,298			225,200
Total operating expenses	(44,803		)	(41,168		)	(49,406		)	(45,898		)	(181,275		)
Other income (expenses)	114,422			(11,384		)	(5,680		)	(9,624		)	87,734
Net income (loss)	132,201			107			(1,425		)	776			131,659
Net (income) loss attributable to noncontrolling interests	(8,618		)	(37		)	1,297			(46		)	(7,404		)
NET INCOME (LOSS) ATTRIBUTABLE TO COMMON STOCKHOLDERS	$	123,583		$	70		$	(128	)	$	730		$	124,255
NET INCOME (LOSS) PER BASIC AND DILUTED COMMON SHARE	$	0.69		$	—		$	—		$	0.01		$	0.70

17.    SUBSEQUENT EVENTS

Mortgage Note Borrowing

On January 10, 2017, (the "Effective Date") we entered into a senior mortgage floating rate non-amortizing loan with New York Life Insurance Company (the "3 Second Street Mortgage Note"). The $146.6 million 3 Second Street Mortgage Note is secured by one office property in our Northern New Jersey market. We received proceeds of $127.0 million on the Effective Date, and we can request the remaining proceeds anytime after the Effective Date but prior to October 10, 2019 as reimbursement for certain approved capital expenditures, tenant improvement costs and leasing commissions. The 3 Second Street Mortgage Note matures in January 2020 and includes twoone-year extension options subject to certain provisions. The 3 Second Street Mortgage Note interest rate is based upon LIBOR plus a margin ranging from 2.00% to 2.25%. The 3 Second Street Mortgage Note contains certain restrictions and covenants that are customary for loans of this nature, including certain restrictions regarding change in control of the underlying collateral and/or borrowers.

The 3 Second Street Mortgage Note permits voluntary prepayment of the loan on or after August 10, 2017 subject to (i) payment of applicable LIBOR breakage fees and (ii) payment of the applicable prepayment premium if prepaid on or prior to January 10, 2018, which is between 0.0% and 2.25% of the principal amount prepaid depending on the amount of time that has lapsed between August 10, 2017 and the date of the voluntary prepayment.

On January 9, 2017, pursuant to the 3 Second Street Mortgage Note, we entered into an interest rate protection agreement with a notional amount of $146.6 million and a LIBOR strike rate of 3.0% with the Commonwealth Bank of Australia that expires on January 10, 2019.

F-45

The initial proceeds of $127.0 million from the 3 Second Street Mortgage Note will be used (i) to repay the Eastern Retail Portfolio Mortgage Note (as defined below) and (ii) for general corporate purposes.

Repayment of Mortgage Note

On January 10, 2017, we repaid a $110.0 million mortgage note borrowing secured by three retail properties (the "Eastern Retail Portfolio Mortgage Note") in full prior to its scheduled maturity within the open prepayment period using proceeds from the 3 Second Street Mortgage Note. The Eastern Retail Portfolio Mortgage Note had an interest rate of 5.51% and a maturity date of June 11, 2017.

Lease Expiration

On January 31, 2017, the Sybase lease was terminated. The Sybase lease comprised $18.7 million, or 11%, of our total annualized base rent as of December 31, 2016.

For information regarding other financing transactions that occurred subsequent to December 31, 2016, see “Subsequent Events” in “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” of this Annual Report on Form 10-K.

F-46

Report of Independent Registered Public Accounting Firm

The Board of Directors and Stockholders

Dividend Capital Diversified Property Fund Inc.:

Under date of March 3, 2017, we reported on the consolidated balance sheets of Dividend Capital Diversified Property Fund Inc. and subsidiaries (the Company) as of December 31, 2016 and 2015, and the related consolidated statements of income, comprehensive income, equity, and cash flows for each of the years in the three-year period ended December 31, 2016.In connection with our audits of the aforementioned consolidated financial statements, we also audited the related consolidated financial statement schedule, Schedule III - Real Estate and Accumulated Depreciation (Schedule III). Schedule III is the responsibility of the Company’s management. Our responsibility is to express an opinion on Schedule III based on our audits.

In our opinion, Schedule III - Real Estate and Accumulated Depreciation, when considered in relation to the basic consolidated financial statements taken as a whole, present fairly, in all material respects, the information set forth therein.

/s/KPMG LLP

Denver, Colorado

March 3, 2017

F-47

Dividend Capital Diversified Property Fund Inc.

Schedule III — Real Estate and Accumulated Depreciation

As of December 31, 2016

(dollar amounts in thousands)

					Initial Cost to Company									Gross Amount Carried at December 31, 2016
Property	Market	No. of Buildings	Encumbrances (1)		Land		Buildings and Improvements (2)		Total Costs		Cost Capitalized or Adjustments Subsequent to Acquisition (4)			Land		Buildings and Improvements (2)		Total Costs (3, 4)		Accumulated Depreciation (4)		Acquisition Date	Depreciable Life (years)
Office Properties:
Jay Street	Silicon Valley, CA	3	$	—	$	13,859	$	21,974	$	35,833	$	6,852		$	13,859	$	28,826	$	42,685	$	10,779	6/28/2006	1-40
Bala Pointe	Philadelphia, PA	1	—		10,115		27,516		37,631		9,277			10,115		36,793		46,908		13,869		8/28/2006	1-40
1300 Connecticut	Washington, DC	1	52,500		25,177		41,250		66,427		4,058			25,177		45,308		70,485		20,999		3/10/2009	2-40
655 Montgomery	San Francisco, CA	1	—		40,327		73,961		114,288		7,538			32,632		89,194		121,826		17,567		11/7/2013	1-40
1st Avenue Plaza	Denver, CO	2	—		15,713		65,252		80,965		2,195			15,713		67,447		83,160		9,537		8/22/2014	1-40
Rialto	Austin, TX	2	—		5,094		32,652		37,746		692			5,094		33,344		38,438		4,420		1/15/2015	1-40
CityView	Austin, TX	2	—		4,606		65,250		69,856		1,994			4,606		67,244		71,850		6,063		4/24/2015	1-40
Joyce Blvd	Fayetteville, AR	1	—		2,699		8,996		11,695		(1		)	2,699		8,995		11,694		3,239		9/28/2007	10-40
Eden Prairie	Minneapolis/St Paul, MN	1	—		3,538		25,865		29,403		112			3,538		25,977		29,515		7,732		10/3/2008	5-40
Austin-Mueller Healthcare	Austin, TX	1	—		2,663		42,315		44,978		5			2,663		42,320		44,983		12,973		12/23/2008	11-40
Campus Road Office Center	Princeton, NJ	1	—		5,302		45,773		51,075		249			5,302		46,022		51,324		13,237		11/3/2009	5-40
Preston Sherry Plaza	Dallas, TX	1	33,000		7,500		22,303		29,803		7,960			7,500		30,263		37,763		11,521		12/16/2009	1-40
Harborside Plaza	Northern New Jersey	1	—		16,800		193,742		210,542		20,487			16,800		214,229		231,029		79,502		6/25/2010	3-40
Sybase Drive	East Bay, CA	1	—		8,400		136,797		145,197		179			8,400		136,976		145,376		64,638		6/25/2010	7-40
Venture Corporate Center	South Florida	3	—		12,047		34,151		46,198		611			12,048		34,761		46,809		4,862		8/6/2015	1-40
Bank of America Tower	South Florida	1	—		5,030		30,917		35,947		(614		)	5,030		30,303		35,333		2,278		12/11/2015	1-40
Total Office Properties		23	$	85,500	$	178,870	$	868,714	$	1,047,584	$	61,594		$	171,176	$	938,002	$	1,109,178	$	283,216

F-48

					Initial Cost to Company								Gross Amount Carried at December 31, 2016
Property	Market	No. of Buildings	Encumbrances (1)		Land		Buildings and Improvements (2)		Total Costs		Cost Capitalized or Adjustments Subsequent to Acquisition (4)		Land		Buildings and Improvements (2)		Total Costs (3, 4)		Accumulated Depreciation (4)		Acquisition Date	Depreciable Life (years)
Industrial Properties:
Shiloh Road	Dallas, TX	3	$	—	$	5,162	$	30,192	$	35,354	$	574	$	5,165	$	30,763	$	35,928	$	12,174	12/21/2006	6-40
7000 Riverport	Louisville, KY	1	—		1,124		6,821		7,945		1,162		1,124		7,983		9,107		2,853		9/17/2008	1-40
7050 Riverport	Louisville, KY	1	—		672		3,862		4,534		259		672		4,121		4,793		1,718		9/17/2008	5-40
7201 Riverport	Louisville, KY	1	—		1,130		6,614		7,744		716		1,130		7,330		8,460		2,659		9/17/2008	3-40
South Columbia	Central Kentucky	1	—		730		25,092		25,822		5,018		730		30,110		30,840		12,072		6/25/2010	4-40
Total Industrial Properties		7	$	—	$	8,818	$	72,581	$	81,399	$	7,729	$	8,821	$	80,307	$	89,128	$	31,476

F-49

					Initial Cost to Company									Gross Amount Carried at December 31, 2016
Property	Market	No. of Buildings	Encumbrances (1)		Land		Buildings and Improvements (2)		Total Costs		Cost Capitalized or Adjustments Subsequent to Acquisition (4)			Land		Buildings and Improvements (2)		Total Costs (3, 4)		Accumulated Depreciation (4)		Acquisition Date	Depreciable Life (years)
Retail Properties:
Bandera Road	San Antonio, TX	1	$	—	$	8,221	$	23,472	$	31,693	$	379		$	8,221	$	23,851	$	32,072	$	8,060	2/1/2007	1-40
Beaver Creek	Raleigh, NC	1	26,200		13,017		31,375		44,392		1,322			13,017		32,697		45,714		10,258		5/11/2007	1-40
Centerton Square	Philadelphia, PA	1	67,800		26,488		76,838		103,326		1,982			26,488		78,820		105,308		26,424		5/11/2007	1-40
CB Square	Jacksonville, FL	1	—		3,768		16,660		20,428		(871		)	3,768		15,789		19,557		4,387		6/27/2007	2-40
Braintree	Greater Boston	1	—		9,270		31,266		40,536		878			9,270		32,144		41,414		10,532		8/1/2007	1-40
Holbrook	Greater Boston	1	—		3,828		10,073		13,901		487			3,828		10,560		14,388		4,339		8/1/2007	1-40
Kingston	Greater Boston	1	10,574		8,580		12,494		21,074		2,345			8,580		14,839		23,419		5,180		8/1/2007	1-40
Manomet	Greater Boston	1	—		1,890		6,480		8,370		379			1,890		6,859		8,749		2,420		8/1/2007	2-40
Orleans	Greater Boston	1	—		8,780		23,683		32,463		362			8,780		24,045		32,825		7,735		8/1/2007	1-40
Sandwich	Greater Boston	1	15,825		7,380		25,778		33,158		693			7,380		26,471		33,851		7,941		8/1/2007	1-40
Wareham	Greater Boston	1	24,400		13,130		27,030		40,160		2,205			13,130		29,235		42,365		9,584		8/1/2007	1-40
Abington	Greater Boston	1	—		14,396		594		14,990		—			14,396		594		14,990		594		8/1/2007	—
Hyannis	Greater Boston	1	—		10,405		917		11,322		—			10,405		917		11,322		469		8/1/2007	18-68
Mansfield	Greater Boston	1	—		5,340		16,490		21,830		—			5,340		16,490		21,830		4,764		8/1/2007	16-86
Meriden	Greater Boston	1	—		6,560		22,014		28,574		(1		)	6,559		22,014		28,573		6,705		8/1/2007	13-43
Weymouth	Greater Boston	2	16,000		5,170		19,396		24,566		(251		)	4,913		19,402		24,315		6,248		8/1/2007	4-40
Whitman 475 Bedford Street	Greater Boston	1	—		3,610		11,682		15,292		—			3,610		11,682		15,292		3,489		8/1/2007	16-56
Brockton Eastway Plaza	Greater Boston	1	—		2,530		2,074		4,604		1,016			2,530		3,090		5,620		1,268		8/1/2007	1-40
Cohasset	Greater Boston	1	—		3,920		7,765		11,685		1,068			3,920		8,833		12,753		2,860		8/1/2007	1-40
Hanover	Greater Boston	1	—		1,490		5,084		6,574		905			1,490		5,989		7,479		1,917		8/1/2007	1-40
Brockton Westgate Plaza	Greater Boston	1	—		3,650		6,507		10,157		273			3,650		6,780		10,430		2,503		8/1/2007	2-40
Harwich	Greater Boston	1	5,035		5,290		8,814		14,104		—			5,290		8,814		14,104		2,521		10/18/2007	21-40

F-50

New Bedford	Greater Boston	1	7,221		3,790		11,152		14,942		—			3,790		11,152		14,942		3,054		10/18/2007	22-40
Norwell	Greater Boston	1	4,392		5,850		14,547		20,397		—			5,850		14,547		20,397		4,263		10/18/2007	15-65
Greater DC Retail	Washington, DC	1	70,000		19,779		42,515		62,294		573			19,781		43,086		62,867		15,583		4/6/2009	1-40
Springdale	Greater Boston	1	—		11,866		723		12,589		8			11,866		731		12,597		385		2/18/2011	6-62
Saugus	Greater Boston	1	—		3,783		9,713		13,496		120			3,783		9,833		13,616		4,529		3/17/2011	3-40
Durgin Square	Greater Boston	2	—		7,209		21,055		28,264		1,191			7,209		22,246		29,455		3,604		5/28/2014	1-40
Salt Pond	Greater Boston	2	—		8,759		40,233		48,992		(324		)	8,759		39,909		48,668		4,707		11/4/2014	1-40
South Cape	Greater Boston	6	—		9,936		27,552		37,488		(10		)	10,307		27,171		37,478		2,928		3/18/2015	1-40
Shenandoah	South Florida	3	10,523		10,501		27,397		37,898		12			10,501		27,409		37,910		2,308		8/6/2015	1-40
Chester Springs	Northern New Jersey	4	—		7,376		51,155		58,531		428			7,376		51,583		58,959		3,879		10/8/2015	1-40
Yale Village	Tulsa, OK	4	—		3,492		30,655		34,147		(109		)	3,492		30,546		34,038		1,319		12/9/2015	3-40
Suniland Shopping Center	South Florida	4	—		34,804		33,902		68,706		13			34,804		33,915		68,719		1,462		5/27/2016	1-40
Total Retail Properties		53	$	257,970	$	293,858	$	697,085	$	990,943	$	15,073		$	293,973	$	712,043	$	1,006,016	$	178,219
Grand Total		83	$	343,470	$	481,546	$	1,638,380	$	2,119,926	$	84,396		$	473,970	$	1,730,352	$	2,204,322	$	492,911

_______________________________

(1) Encumbrances represents mortgage debt principal balances encumbering each property as of December 31, 2016.

(2) Building and improvements include intangible lease assets.

(3) As of December 31, 2016, the aggregate cost for federal income tax purposes of investments in real property was approximately $1.7 billion (unaudited).

(4) Amount is presented net of impairments and other write-offs of tenant-related assets that were recorded at acquisition as part of our purchase price accounting. Such write-offs are the results of lease expirations and terminations.

F-51

The following table summarizes activity for real estate and accumulated depreciation for the years ended December 31, 2016, 2015 and 2014 (amounts in thousands). 

	For the Year Ended December 31,
	2016			2015			2014
Investments in real estate:
Balance at the beginning of the year	$	2,380,174		$	2,472,926		$	2,570,480
Acquisitions of operating properties	68,706			357,811			158,221
Improvements	30,006			25,557			12,512
Basis of operating properties disposed of	(271,887		)	(467,996		)	(258,787		)
Impairment of real property	(2,677		)	(8,124		)	(9,500		)
Balance at the end of the year (1)	$	2,204,322		$	2,380,174		$	2,472,926
Accumulated depreciation:
Balance at the beginning of the year	$	505,957		$	523,246		$	502,847
Real estate depreciation and amortization expense	80,105			83,114			88,994
Above-market lease assets amortization expenses	5,515			5,216			6,708
Accumulated depreciation and amortization written off (2)	(98,666		)	(105,619		)	(75,303		)
Balance at the end of the year	$	492,911		$	505,957		$	523,246

_______________________________

(1) Amounts for the year ended December 31, 2014 include approximately $30.1 million of investments in real estate related to properties classified as held for sale.

(2) Amounts represent accumulated depreciation and amortization written off due to real property dispositions and early lease termination.

F-52

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized on March 3, 2017.

DIVIDEND CAPITAL DIVERSIFIED PROPERTY FUND INC.
By:	/S/    JEFFREY L. JOHNSON
Name:	Jeffrey L. Johnson
Title:	Chief Executive Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities indicated and on March 3, 2017.

Signature	Title
/s/    JEFFREY L. JOHNSON	Chief Executive Officer (principal executive officer)
Jeffrey L. Johnson
/s/    RICHARD D. KINCAID	Chairman of the Board and Director
Richard D. Kincaid
/s/    CHARLES B. DUKE	Director
Charles B. Duke
/s/    DANIEL J. SULLIVAN	Director
Daniel J. Sullivan
/s/    JOHN P. WOODBERRY	Director
John P. Woodberry
/s/    JOHN A. BLUMBERG	Director
John A. Blumberg
/s/    M. KIRK SCOTT	Chief Financial Officer and Treasurer (principal financial officer and principal accounting officer)
M. Kirk Scott

F-53

EX-10.27

Exhibit 10.27

Dividend Capital Diversified Property Fund Inc. 10-K

Record And Return To:

Kelley Drye & Warren LLP

One Jefferson Road, 2nd Floor

Parsippany, New Jersey 07054

Attn: Paul A. Keenan, Esq.

MORTGAGE, ASSIGNMENT OF LEASES AND RENTS,

SECURITY AGREEMENT AND FIXTURE FILING

AMERICAN FINANCIAL EXCHANGE, L.L.C., PLAZA X URBAN RENEWAL ASSOCIATES L.L.C. and PLAZA X LEASING ASSOCIATES L.L.C.

Mortgagor

to

NEW YORK LIFE INSURANCE COMPANY,

Mortgagee

Dated as of: January 10, 2017

Premises:

Harborside Plaza X3 Second Street

City of Jersey City, Hudson County, New Jersey

Lot 23 and 23X, Block 11603 and Lot 7, Block 11603, City of Jersey City Tax Map

TABLE OF CONTENTS
			Page
ARTICLE 1	COVENANTS AND AGREEMENTS		14
1.01	Payments, Performance and Security		14
1.02	Payment of Taxes, Assessments, etc		14
	1.02.A	Impositions	14
	1.02.B	Installments	14
	1.02.C	Receipts	14
	1.02.D	Evidence of Payment	14
	1.02.E	Payment by Mortgagee	16
	1.02.F	Change in Law	16
	1.02.G	Joint Assessment	16
	1.02.H	Permitted Contests	16
	1.02.I	No Lease Default	17
1.03	Insurance		17
	1.03.A	All Risk Coverage	17
	1.03.B	Additional Coverage	18
	1.03.C	Separate Insurance	19
	1.03.D	Insurers; Policies	19
	1.03.E	Mortgagee’s Right to Secure Coverage	19
	1.03.F	Damage or Destruction	20
	1.03.G	Transfer of Interest in Policies	20
	1.03.H	Mortgagor’s Use of Proceeds	21
	1.03.I	Amendment as a Result of Commercial Unavailability of Insurance Against Terrorist Acts	23
1.04	Escrow Payments		24
1.05	Care and Use of the Premises		25
	1.05.A	Maintenance and Repairs	25
	1.05.B	Standard of Repairs	25
	1.05.C	Removal of Equipment	25
	1.05.D	Compliance With Laws and Insurance	26
	1.05.E	Hazardous Materials	26
	1.05.F	Compliance With Instruments of Record	28
	1.05.G	Alteration of Secured Property	28
	1.05.H	Parking	28
	1.05.I	Entry on Secured Property	29
	1.05.J	No Consent to Alterations or Repairs	29
	1.05.K	Preservation of Lien; Mechanic’s Liens	29
	1.05.L	Use of Secured Property by Mortgagor	29
	1.05.M	Use of Secured Property by Public	29
	1.05.N	Management	29
	1.05.O	Permitted Contests	30
1.06	Financial Information		30
	1.06.A	Financial Statements	30
	1.06.B	Right to Inspect Books and Records	31

i

TABLE OF CONENTS
(CONTINUED)
			Page
1.07	Condemnation		31
	1.07.A	Mortgagee’s Right to Participate in Proceedings	31
	1.07.B	Application of Condemnation Award	32
	1.07.C	Reimbursement of Costs	33
	1.07.D	Existing Obligations	33
1.08	Leases		33
	1.08.A	Performance of Lessor’s Covenants	33
	1.08.B	Notice of Default	33
	1.08.C	Representations Regarding Leases	33
	1.08.D	Covenants Regarding Leases	34
	1.08.E	Application of Rents	35
	1.08.F	Indemnity Against Unapproved Lease Modifications and Amendments	36
1.09	Assignment of Leases, Rents, Income, Profits and Cash Collateral		36
	1.09.A	Assignment; Discharge of Obligations	36
	1.09.B	Entry Onto Secured Property; Lease of Secured Property	37
	1.09.C	License to Manage Secured Property	37
	1.09.D	Delivery of Assignments	37
	1.09.E	Indemnity	37
1.10	Further Assurances		37
	1.10.A	General; Appointment of Attorney-in-Fact	37
	1.10.B	Statement Regarding Obligations	38
	1.10.C	Additional Security Instruments	38
	1.10.D	Security Agreement	38
	1.10.E	Preservation of Mortgagor’s Existence	40
	1.10.F	Further Indemnities	40
	1.10.G	Absence of Insurance	40
	1.10.H	Lost Note	40
1.11	Prohibition on Transfers, Liens or Further Encumbrances		41
	1.11.A	Continuing Ownership and Management	41
	1.11.B	Prohibition on Transfers, Liens or Further Encumbrances	41
	1.11.C	Acceleration of Obligations	42
1.12	Expenses		42
1.13	Material Agreements		42
	1.13.A	Performance by Mortgagor	42
	1.13.B	Performance by Mortgagee	42
	1.13.C	Notice of Default	43
	1.13.D	No Waiver	43
	1.13.E	No Surrender or Modification	43
	1.13.F	No Merger	43
ARTICLE 2	REPRESENTATIONS AND WARRANTIES		43
2.01	Warranty of Title		43

ii

TABLE OF CONENTS
(CONTINUED)
			Page
2.02	Ownership of Additional or Replacement Improvements and Personal Property		44
2.03	No Pending Material Litigation or Proceeding; No Hazardous Materials		44
	2.03.A	Proceedings Affecting Mortgagor	44
	2.03.B	Proceedings Affecting Secured Property	44
	2.03.C	No Hazardous Material	44
	2.03.D	No Litigation Regarding Hazardous Material	45
2.04	Valid Organization, Good Standing and Qualification of Mortgagor; Other Organizational Information		45
2.05	Authorization; No Legal Restrictions on Performance		45
2.06	Compliance With Laws		46
2.07	Tax Status		46
2.08	Absence of Foreign or Enemy Status; Absence of Blocked Persons; Foreign Corrupt Practices Act		47
2.09	Federal Reserve Board Regulations		47
2.10	Investment Company Act and Public Utility Holding Company Act		48
2.11	Exempt Status of Transactions Under Securities Act and Representations Relating Thereto		48
2.12	ERISA		48
	2.12.A	Direct or Indirect Interest	48
	2.12.B	Transactions by or With Mortgagor	48
	2.12.C	Mortgagor Liability or Obligation	48
2.13	Material Agreements		48
ARTICLE 3	DEFAULTS		48
3.01	Events of Default		48
ARTICLE 4	REMEDIES		51
4.01	Acceleration, Foreclosure, etc		51
	4.01.A	Foreclosure	51
	4.01.B	Partial Foreclosure	51
	4.01.C	Entry	52
	4.01.D	Collection of Rents, etc	52
	4.01.E	Receivership	52
	4.01.F	Specific Performance	53
	4.01.G	Recovery of Sums Required to be Paid	53
	4.01.H	Other Remedies	53
	4.01.I	Compliance with Laws	53
4.02	No Election of Remedies		53
4.03	Mortgagee’s Right to Release, etc		53
4.04	Mortgagee’s Right to Remedy Defaults, etc		54
4.05	Waivers		54

iii

TABLE OF CONENTS
(CONTINUED)
		Page
4.06	Prepayment	55
ARTICLE 5	MISCELLANEOUS	56
5.01	Non-Waiver	56
5.02	Sole Discretion of Mortgagee	56
5.03	Legal Tender	57
5.04	No Merger or Termination	57
5.05	Discontinuance of Actions	57
5.06	Headings	57
5.07	Notice to Parties	57
5.08	Successors and Assigns Included In Parties	58
5.09	Changes and Modifications	59
5.10	Applicable Law	59
5.11	Invalid Provisions to Affect No Others	59
5.12	Usury Savings Clause	59
5.13	No Statute of Limitations	59
5.14	Late Charges	59
5.15	Waiver of Jury Trial	60
5.16	Continuing Effectiveness	60
5.17	Time of Essence	60
5.18	Non-Recourse	60
5.19	Non-Business Days	60
5.20	Single Purpose Entity	60
5.21	Intentionally Omitted	63
5.22	Joint and Several	63
5.23	Future Advances	63
ARTICLE 6	LOCAL LAW PROVISIONS	63
6.01	Principals of Construction	63
6.02	Hazardous Substances	63
6.03	Continuing Enforcement of Mortgage	64
6.04	Freshwater Wetlands	64
6.05	Modification of Mortgage	64
6.06	No Credit for Tax Paid	64
6.07	Receipt of Copy	64

iv

MORTGAGE, ASSIGNMENT OF LEASES AND RENTS,

SECURITY AGREEMENT AND FIXTURE FILING

MORTGAGE, ASSIGNMENT OF LEASES AND RENTS, SECURITY AGREEMENT AND FIXTURE FILING (this “Mortgage”), dated as of January 10, 2017, from AMERICAN FINANCIAL EXCHANGE, L.L.C. (“AFE”), PLAZA X URBAN RENEWAL ASSOCIATES L.L.C. (“Plaza X Urban Renewal”) and PLAZA X LEASING ASSOCIATES L.L.C. (“Plaza X Leasing”; AFE, Plaza X Urban Renewal and Plaza X Leasing are referred to herein individually and collectively, as the context may require, as “Mortgagor”), each a New Jersey limited liability company, having an office at c/o Dividend Capital, 518 17th Street, Suite 1700, Denver, Colorado 80202, to NEW YORK LIFE INSURANCE COMPANY (“Mortgagee”), a New York mutual insurance company, having an office at 51 Madison Avenue, New York, New York 10010-1603.

RECITALS

A.    WHEREAS, Mortgagee is making a loan to Mortgagor in the original principal amount of up to One Hundred Forty Six Million Six Hundred Thousand and No/100 Dollars ($146,600,000.00), of which One Hundred Twenty Seven Million and No/100 Dollars ($127,000,000.00) is being funded to Mortgagor on the date hereof.

B.    WHEREAS, in connection with such loan, Mortgagor has executed and delivered to Mortgagee a Promissory Note (together with all renewals, modifications, increases and extensions thereof, the “Note”), dated as of the date hereof, payable to the order of Mortgagee in the original principal amount of up to One Hundred Forty Six Million Six Hundred Thousand and No/100 Dollars ($146,600,000.00), lawful money of the United States of America; the terms, covenants and conditions of which Note are hereby incorporated herein and made a part hereof.

C.    NOW THEREFORE, in consideration of the sum of Ten Dollars ($10.00) paid and other good and lawful consideration, the receipt and sufficiency of which are hereby acknowledged and in order to secure the Obligations (as hereinafter defined), Mortgagor hereby mortgages, grants, assigns, releases, transfers, pledges and sets over to Mortgagee and grants to Mortgagee a security interest in the following property:

GRANTING CLAUSE ONE

All that tract or parcel of land (“Land”) more particularly described in Schedule A hereto, together with (a) the leasehold estate in and to the Land created pursuant to that certain Lease dated as of October 6, 2000, as amended by a certain First Amendment to Ground Lease dated as of September 29, 2003, between AFE, as lessor, and Plaza X Urban Renewal, as lessee (as the same has been or may hereafter be amended from time to time, the “Ground Lease”), a memorandum of which Ground Lease was recorded in the Office of the Hudson County Register of Deeds on October 7, 2003 in Book 7147, Page 318, and all right, title and interest of AFE and Plaza X Urban Renewal in, to and under said Ground Lease, and (b) the subleasehold estate in and to the Land created pursuant to that certain Lease dated as of October 6, 2000, as amended by a certain First Amendment to Lease dated as of September 29, 2003, between Plaza X Urban Renewal, as landlord, and Plaza X Leasing, as tenant, (as the same has been or may hereafter be amended from time to time, the “Master Lease”),

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a memorandum of which Master Lease was recorded in the Office of the Hudson County Register of Deeds on October 7, 2003 in Book 7147, Page 326, and all right, title and interest of Plaza X Urban Renewal and Plaza X Leasing in, to and under said Master Lease.

GRANTING CLAUSE TWO

All buildings, structures and improvements (collectively, “Improvements”) now or hereafter located on the Land, including all of Mortgagor’s machinery, apparatus, equipment and fixtures attached to, or used or procured for use in connection with the operation or maintenance of, any Improvement, all of Mortgagor’s refrigerators, shades, awnings, venetian blinds, screens, screen doors, storm doors, storm windows, stoves, ranges, curtain fixtures, partitions, attached floor coverings and fixtures, apparatus, equipment or articles used to supply sprinkler protection and waste removal, laundry equipment, furniture, furnishings, appliances, office equipment, elevators, escalators, tanks, dynamos, motors, generators, switchboards, communication equipment, electrical equipment, television and radio systems, heating, plumbing, lifting and ventilating apparatus, air-cooling and air conditioning apparatus, gas and electric fixtures, fittings and machinery and all of Mortgagor’s other personal property and equipment of every kind and description, and all accessions, renewals and replacements thereof and all articles in substitution therefor, excluding trade fixtures and personal property of any Lessee (as hereinafter defined) unless such trade fixtures or personal property become the property of Mortgagor upon expiration or termination of the Lease in question. Whether or not any of the foregoing are attached to the Land or any of the Improvements in any manner, all such items shall be deemed to be fixtures, part of the real estate and security for the Obligations. The Land and Improvements are herein collectively called “Premises”. To the extent any of the Improvements are not deemed real estate under the laws of the State, they shall be deemed personal property and this grant shall include all of Mortgagor’s right, title and interest in, under and to such personal property and all other personal property now or hereafter attached to or located upon the Premises or used or useable in the management, maintenance or operation of the Improvements or the activities conducted on the Premises, including all computer hardware and software, and all accessions, renewals and replacements thereof and all articles in substitution therefor, but excluding trade fixtures and personal property of any Lessee, unless such trade fixtures and personal property become the property of Mortgagor upon expiration or termination of the Lease in question (collectively, “Personal Property”).

GRANTING CLAUSE THREE

All now or hereafter existing easements and rights-of-way and all right, title and interest of Mortgagor, in and to any land lying within the right-of-way of any street, opened or proposed, adjoining the Premises, any and all sidewalks, alleys and strips and gores of land, streets, ways, passages, sewer rights, waters, water courses, water rights and powers, estates, rights, titles, interests, privileges, liberties, tenements, hereditaments, air rights, development rights, covenants, conditions, restrictions, credits and appurtenances of any nature whatsoever, in any way belonging, relating or pertaining to, or above or below the Premises, whether now or hereafter existing.

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GRANTING CLAUSE FOUR

All intangible rights, interests and properties of Mortgagor relating to the Premises or any part thereof, and necessary or desirable for the continued ownership, use, operation, leasing or management thereof, whether now or hereafter existing, including any trademarks, service marks, logos or trade names relating to the Premises or by which the Premises or any part thereof may be known and any other franchises or other agreements relating to services in connection with the use, occupancy, or maintenance of the Premises, instruments, actions or rights in action and all intangible property and rights relating to the Premises.

GRANTING CLAUSE FIVE

All accounts receivable, insurance policies, contract rights, interests, rights under all oil, gas and mineral leases and agreements and all benefits arising therefrom, and all other claims, both at law and in equity, relating to the Premises, which Mortgagor now has or may hereafter acquire.

GRANTING CLAUSE SIX

All estate, interest, right, title and other claim or demand which Mortgagor now has or may hereafter acquire in any and all awards or payments relating to the taking by eminent domain, or by any proceeding or purchase in lieu thereof, of the whole or any part of the Premises, including all awards resulting from a change of grade of any street and awards for severance damages, together, in all cases, with all interest thereon.

GRANTING CLAUSE SEVEN

All proceeds of, and any unearned premiums on, insurance policies covering all or any part of the Premises, including the right to receive and apply the proceeds of all insurance or judgments related to the Premises, or settlements made in lieu thereof.

GRANTING CLAUSE EIGHT

All estate, interest, right, title and other claim or demand which Mortgagor now has or may hereafter acquire against anyone with respect to any damage to all or any part of the Premises, including damage arising or resulting from any defect in or with respect to the design or construction of all or any part of the Improvements.

GRANTING CLAUSE NINE

All deposits or other security or advance payments, including rental payments, made by or on behalf of Mortgagor to others in connection with the Obligations or the ownership or operation of all or any part of the Premises, including any such deposits or payments made with respect to (a) Impositions (as hereinafter defined),(b) insurance policies, (c) utility service, (d) cleaning, maintenance, repair or similar services, (e) refuse removal or sewer service, (f) rental of equipment, if any, used by or on behalf of Mortgagor, and (g) parking or similar services or rights.

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GRANTING CLAUSE TEN

All remainders, reversions or other estates in the Premises or any part thereof.

GRANTING CLAUSE ELEVEN

All right, title and interest of Mortgagor in and to all management contracts, permits, certificates, licenses, approvals, contracts, entitlements and authorizations, however characterized, now or hereafter issued or in any way furnished for the acquisition, construction, development, operation and use of the Land, the Improvements or the Leases, including the Tax Exemption Documents, building permits, environmental certificates, licenses, certificates of operation or occupancy, warranties and guaranties, except, in each case, to the extent that such mortgage, grant, assignment, transfer or pledge is restricted by the terms of such management contract, permit, certificate, license, approval, contract, entitlement or authorization and such restriction is enforceable under applicable law.

GRANTING CLAUSE TWELVE

All right, title and interest of Mortgagor in and to all easements, roads, streets, ways, sidewalks, alleys, passages, sewer rights, other utility rights, encroachment rights, and all estates, rights, titles, interests, privileges, liberties, tenements, hereditaments, air rights, and appurtenances of any nature whatsoever, in any way belonging, relating or pertaining to, or arising under that certain Cross-Reciprocal Easement Agreement among AFE, Plaza VIII & IX Associates, L.L.C. and Cali Harborside (Fee) Associates L.P. dated September 29, 2003 and recorded in the Office of the Hudson County Register of Deeds on October 7, 2003 in Book 7147, Page 157 (as the same has been or may hereafter be amended from time to time, the “Easement Agreement”) whether now or hereafter existing.

GRANTING CLAUSE THIRTEEN

All proceeds, products, replacements, additions, substitutions, renewals and accessions of any of the foregoing, including personal property acquired with cash proceeds.

TO HAVE AND TO HOLD THE SECURED PROPERTY UNTO MORTGAGEE AND ITS SUCCESSORS AND ASSIGNS. Until the occurrence of and after the timely curing or waiver of an Event of Default, Mortgagee shall permit Mortgagor to possess and enjoy the Secured Property and to enforce the Leases and to receive, retain, use, distribute, collect and enjoy, the Rents therefrom in accordance with the terms of the Loan Instruments. The conditions of these presents is such that if Mortgagor shall pay, or cause to be paid, the Obligations as and when the same shall come due and payable, and shall observe, perform and discharge its obligations under this Mortgage, Mortgagee shall release and reconvey the Secured Property unto and at the expense of Mortgagor.

DEFINITIONS AND INTERPRETATION

As used in this Mortgage, the following terms shall have the meanings specified below:

“Acquisition Date” shall have the meaning set forth in Section 5.20.

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“Affiliate” of any specified Person shall mean any other Person that, directly or indirectly, is Controlling or Controlled by or under common Control with such specified Person.

“Assignment” shall mean that certain Assignment of Leases, Rents, Income and Cash Collateral, dated as of the date hereof, from Mortgagor, as assignor, to Mortgagee, as assignee, as the same may be amended, restated, replaced, supplemented or otherwise modified from time to time.

“Award” shall have the meaning set forth in Section 1.07A.

“Business Day” shall mean any day other than a Saturday, Sunday, or U.S. federal holiday.

“Cash Management Agreement” shall mean that certain Cash Management Agreement, dated as of the date hereof, by and between Mortgagor and Mortgagee, as the same may be amended, restated, replaced, supplemented or otherwise modified from time to time.

“Clearing Account” shall have the meaning set forth in the Cash Management Agreement.

“Clearing Account Agreement” shall mean that certain Blocked Account Control Agreement (with Lockbox Services), dated as of the date hereof, by and among Mortgagor, Mortgagee and U.S. Bank National Association, as the same may be amended, restated, replaced, supplemented or otherwise modified from time to time.

“Code” shall mean the Uniform Commercial Code of the State.

“Condemnation Proceedings” shall have the meaning set forth in Section 1.07A.

“Constituent Entity” shall have the meaning set forth in Section 2.12A.

“Control” when used with respect to any specified Person shall mean: (a) the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such specified Person whether through ownership of voting securities, beneficial interests, by contract or otherwise, including as an officer or director of such specified Person, or (b) the ownership, directly or indirectly, in the aggregate of more than fifty percent (50%) of the beneficial interest of a Controlled Person. The definition is to be construed to apply equally to variations of the word “Control” including “Controlled,” “Controlling” or “Controlled by.”

“Credit Tenant” shall mean, as of the date of determination, a tenant that has a credit rating of “BBB-” or higher by Standard & Poor’s Rating Services or Fitch Ratings, Inc. or “Baa3” or higher by Moody’s Investors Service, Inc.

“Debt Coverage Ratio” shall mean, for any period, a fraction, the numerator of which shall equal the Projected Net Operating Income for such period, and the denominator of which shall equal the aggregate of the principal and interest for such period with respect to the indebtedness due pursuant to the Loan Instruments (calculated with the interest rate equal to the sum of (i) the LIBOR Strike Price and (ii) the applicable Spread). The calculation of Debt Coverage Ratio shall be as determined by Mortgagee.

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“Direct Lease” shall mean each Lease to which Mortgagor is a party and “Direct Leases” shall mean, collectively, all of the foregoing.

“Easement Agreement” shall have the meaning set forth in Granting Clause Twelve.

“Environmental Claim” shall mean any asserted claim or demand, of any kind or nature, by any Person, for any actual or alleged Environmental Damage, whether based in contract, tort, implied or express warranty, strict liability, criminal or civil statute, ordinance or regulation, common law or otherwise.

“Environmental Damage” shall mean any and all claims, judgments, damages (including consequential and punitive damages), losses, penalties, interest, fines, liabilities (including strict liability), obligations, responsibilities, encumbrances, liens, costs and expenses, of whatever kind or nature, contingent or otherwise, matured or unmatured, foreseeable or unforeseeable, including attorneys’, experts’ and consultants’ fees and disbursements relating to Environmental Requirements in, on, under, around or in any way relating to the Secured Property, including:

(a)those relating to any investigation, defense or settlement of any claim, suit, administrative proceeding or investigation of any kind or any directive of any Governmental Agency;

(b)those relating to damages for personal injury, or injury to property including natural resources, occurring in, on, under or about the Secured Property, including lost profits and the cost of demolition and rebuilding of any improvements on real property;

(c)diminution in the value of the Secured Property, and damages for the loss, or restriction on the use or adverse impact on the marketing, of the Secured Property or any part thereof;

(d)loss of the priority of the lien of this Mortgage due to the imposition of a lien against the Secured Property; and

(e)those incurred in connection with the investigation, cleanup, remediation, removal, abatement, containment, closure, restoration, monitoring work or other cure of any violation of an Environmental Requirement required by any Governmental Agency or reasonably necessary to make full economic use of the Secured Property or in connection with any other property, including the performance of any pre-remedial studies and investigations and post remedial monitoring and cure, or any action to prevent a Release or threat of Release or to minimize the further Release of any Hazardous Material so it does not migrate or endanger or threaten to endanger public health or the environment.

“Environmental Indemnity Agreement” shall mean that certain Environmental Indemnity Agreement, dated as of the date hereof, executed by Mortgagor and Guarantor in favor of Mortgagee, as the same may be amended, restated, replaced, supplemented or otherwise modified from time to time.

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“Environmental Requirements” shall mean any and all Legal Requirements relating to the protection of the environment, health or safety, including:

(a) all Legal Requirements pertaining to reporting, licensing, permitting, investigation, remediation or removal of, or pertaining to Releases or threatened Releases of, Hazardous Materials, chemical substances, pollutants, contaminants or hazardous or toxic substances, materials or wastes, whether solid, liquid or gaseous in nature, including Releases or threatened Releases into the air, soil, surface water, ground water or land;

(b) all Legal Requirements pertaining to the manufacture, processing, distribution, use, treatment, storage, disposal, transport or handling of Hazardous Materials, chemical substances, pollutants, contaminants or hazardous or toxic substances, materials or wastes, whether solid, liquid or gaseous in nature; and

(c) all Legal Requirements pertaining to industrial hygiene or the protection of the health and safety of employees or the public.

“Equity Collateral” shall have the meaning ascribed to the word “Collateral” in the Pledge Agreement.

“ERISA” shall have the meaning set forth in Section 2.12.

“Event of Default” shall have the meaning set forth in Section 3.01.

“Governmental Agency” shall mean any government, quasi-governmental or government sponsored enterprise, legislative body, commission, board, regulatory authority, bureau, administrative or other agency, court, arbitrator, grand jury or any other public body or entity or instrumentality, whether domestic, foreign, federal, state, county or municipal.

“Ground Lease” shall have the meaning set forth in Granting Clause One.

“Guarantor,” shall mean (a) any guarantor of all or any portion of the Obligations, (b) any indemnitor (other than Mortgagor) under the Environmental Indemnity Agreement, and (c) any guarantor under the Guaranty or any other guaranty entered into in connection with the Loan.

“Guaranty” shall mean that certain Guaranty, dated as of the date hereof, executed by Dividend Capital Total Realty Operating Partnership LP, a Delaware limited partnership, in favor of Mortgagee, as the same may be amended, restated, replaced, supplemented or otherwise modified from time to time.

“Hazardous Materials” shall mean any substance:

(a)the presence of which requires notification, investigation or remediation under any Environmental Requirement;

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(b)which is or becomes designated, defined, classified or regulated as “hazardous”, “toxic”, “noxious”, “waste”, “pollutant”, “contaminant” or other similar term, or which requires remediation or is regulated under any present or future Environmental Requirement, including the Comprehensive Environmental Response, Compensation and Liability Act (42 U.S.C. Section 9601 etseq.), Resource Conservation and Recovery Act (42 U.S.C. Section 6901 etseq.), Federal Clean Air Act (42 U.S.C. Section 7401 etseq.), Federal Hazardous Materials Transportation Act (49 U.S.C. Section 5101 etseq.), Federal Clean Water Act (33 U.S.C. Section 1251 etseq.), Federal Environmental Pesticide Control Act (7 U.S.C. Section 136 etseq.), Federal Toxic Substances Control Act (15 U.S.C. Section 2601 etseq.), Federal Safe Drinking Water Act (42 U.S.C. Sections 300(f), etseq.), New Jersey Industrial Site Recovery Act, as amended, N.J.S.A. 13:1K-6 et seq., the Spill Compensation and Control Act, as amended, N.J.S.A., 58:10-23.11 et seq., the New Jersey Underground Storage of Hazardous Substances Act, as amended, N.J.S.A. 58:10A-21 et. seq., the Safe Drinking Water Act, as amended, N.J.S.A. 58:12A-1 et. seq., the Toxic Catastrophe Prevention Act N.J.S.A. 13:K-19, et. seq., the Worker and Community Right to Know Act, N.J.S.A. 34:5A-1, et. seq., the Pollution Prevention Act, N.J.S.A. 13:1D-35, et seq., the Air Pollution Control Act, N.J.S.A. 26:2C-1, et seq., the Solid Waste Management Act, N.J.S.A. 13:1E-1, et seq., the Sanitary Landfill Closure and Contingency Fund Act, N.J.S.A. 13:1E-100, et seq., the Solid Waste Utility Control Act, N.J.S.A. 48:13A-1, et seq., the Water Pollution Control Act, N.J.S.A. 58:10A-1, et seq., the Flood Hazard Control Act, N.J.S.A. 58:16A-50, et seq., the Freshwater Wetlands Protection Act, N.J.S.A. 13:9B-1, et seq., the Coastal Area Facility Review Act, N.J.S.A. 13:19-1, et seq., the Wetlands Act of 1970, N.J.S.A. 13:9A-1, et seq., the Waterfront and Harbor Facilities Act, N.J.S.A. 12:5-1, et seq., the Noise Control Act, N.J.S.A. 13:1G-1, et seq., and the Pesticide Control Act, N.J.S.A. 13:1F-1, et seq., and any other federal, state, local or foreign law or ordinance which is presently in effect or hereafter enacted relating to environmental matters; any rules and regulations promulgated under any of the foregoing; and any and all amendments to the foregoing;

(c)which is toxic, explosive, corrosive, flammable, infectious, radioactive, carcinogenic, mutagenic or otherwise hazardous and is or becomes regulated by any Governmental Agency;

(d)the presence of which on the Secured Property causes or threatens to cause a nuisance relating to the Secured Property or adjacent properties or poses or threatens to pose a hazard relating to the Secured Property or adjacent properties or to the health or safety of Persons on or about the Secured Property or adjacent properties;

(e)which contains asbestos, gasoline, diesel fuel or other petroleum hydrocarbons, volatile organic compounds, polychlorinated biphenyls (PCBs) or urea formaldehyde foam insulation;

(f)which contains or emits radioactive particles, waves or material, including radon gas;

(g)which is or constitutes a part of an underground storage tank; or

(h)which is or contains mold, mildew, fungi, bacteria or other microbial matter which poses a threat to human health or the environment.

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“Hazardous Materials Claims” shall have the meaning set forth in Section 1.05E(4).

“Impositions” shall have the meaning set forth in Section 1.02A.

“Improvements” shall have the meaning set forth in Granting Clause Two.

“Increased Rate” shall have the meaning set forth in the Note.

“Indemnified Claims” shall have the meaning set forth in Section 1.05E(1).

“Independent Director” shall mean a natural Person who (a) is not at the time of initial appointment, or at any time while serving in such capacity, and is not, and has never been, and will not while serving as Independent Director be: (i) a stockholder, director (with the exception of serving as the Independent Director of Mortgagor), officer, employee, partner, member, manager, attorney or counsel of Mortgagor, equity owners of Mortgagor or any Guarantor or any Affiliate of Mortgagor or any Guarantor; (ii) a customer, supplier or other person who derives any of its purchases or revenues from its activities with Mortgagor or any Guarantor, equity owners of Mortgagor or Guarantor or any Affiliate of Mortgagor or any Guarantor; (iii) a Person Controlling or under common Control with any such stockholder, director, officer, employee, partner, member, manager, attorney, counsel, equity owner, customer, supplier or other Person; or (iv) a member of the immediate family of any such stockholder, director, officer, employee, partner, member, manager, attorney, counsel, equity owner, customer, supplier or other Person and (b) has (i) prior experience as an independent director or independent manager for a corporation, a trust or limited liability company whose charter documents required the unanimous consent of all independent directors or independent managers thereof before such corporation, trust or limited liability company could consent to the institution of bankruptcy or insolvency proceedings against it or could file a petition seeking relief under any applicable federal or state law relating to bankruptcy and (ii) at least three years of employment experience with one or more nationally-recognized companies that provides, inter alia, professional independent directors or independent managers in the ordinary course of their respective business (a “Professional Independent Director”) and is an employee of such a company or companies at all times during his or her service as an Independent Director and (c) is satisfactory to Mortgagee. A natural Person who satisfies the foregoing definition except for being (or having been) the independent director or independent manager of a “special purpose entity” that is an Affiliate of Mortgagor (provided such Affiliate does not or did not own a direct or indirect equity interest in a Mortgagor) shall not be disqualified from serving as an Independent Director, provided that such natural Person satisfies all other criteria set forth above and that the fees such individual earns from serving as independent director or independent manager of Affiliates of Mortgagor or in any given year constitute in the aggregate less than five percent (5%) of such individual’s annual income for that year. A natural Person who satisfies the foregoing definition other than subparagraph (a)(ii) shall not be disqualified from serving as an Independent Director if such individual is a Professional Independent Director and such individual complies with the requirements of the previous sentence.

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“Insurance Advisor” shall have the meaning set forth in Section 1.03I(1).

“Interest Rate” shall have the meaning set forth in the Note.

“Internal Revenue Code” shall mean the Internal Revenue Code of 1986, as amended, as it may be further amended from time to time, and any successor statutes thereto, and applicable U.S. Department of Treasury regulations issued pursuant thereto in temporary or final form.

“Land” shall have the meaning set forth in Granting Clause One.

“Lease” shall mean each existing or future lease, license, tenancy, occupancy, sublease, sub-sublease, franchise, concession or other agreement (including, without limitation, the Schwab Lease, and all guaranties of and security for the same) and “Leases” shall mean, collectively, all of the foregoing.

“Lease Guaranty Payment” shall mean any payment, fee or penalty paid by any guarantor of any Lease, whether by reason of a default or pursuant to the terms of any guaranty under such Lease or otherwise.

“Lease Termination Fee” shall mean any payment, fee or penalty paid by a tenant in connection with the cancellation or termination of such tenant’s Lease, whether by reason of such tenant’s default or pursuant to the terms of such Lease or otherwise.

“Legal Requirements” shall mean all present or future laws, statutes, permits, approvals, plans, authorizations, guidelines, ordinances, restrictions, orders, rules, codes, regulations, judgments, decrees, injunctions or requirements of all Governmental Agencies or any officers thereof, including any Board of Fire Underwriters.

“Lessee” shall mean the lessee, licensee, occupant, subtenant, sub-subtenant, franchisee or concessionee, as applicable, under any Lease and “Lessees” shall mean, collectively, all of the foregoing.

“LIBOR Strike Price” shall mean three percent (3%).

“Loan” shall mean the mortgage loan evidenced by the Note and secured by this Mortgage and the other Loan Instruments.

“Loan Instruments” shall mean the Note, this Mortgage, the Assignment, the Pledge Agreement, the Clearing Account Agreement, the Cash Management Agreement, the Environmental Indemnity Agreement, the Guaranty, the Management and Leasing Subordination Agreements, the Side Letter and each other instrument now or hereafter given to evidence, secure, indemnify, guaranty or otherwise assure or provide for the payment or performance of the Obligations or otherwise executed in connection with the Loan by Mortgagor or Guarantor.

“Make Whole Amount” shall have the meaning set forth in the Note.

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“Management and Leasing Subordination Agreements” shall mean, collectively, (a) that certain Prime Management Subordination Agreement, dated as of the date hereof, by DPF Property Management, LLC for the benefit of Mortgagee, (b) that certain Sub-Management Subordination Agreement, dated as of the date hereof, by Cushman & Wakefield of New Jersey, Inc. for the benefit of Mortgagee and (c) that certain Leasing Subordination Agreement, dated as of the date hereof, by Cushman & Wakefield of New Jersey, Inc. for the benefit of Mortgagee, as each may be further amended, restated, replaced, supplemented or otherwise modified from time to time.

“Master Lease” shall have the meaning set forth in Granting Clause One.

“Material Agreement” shall mean each of the Ground Lease, the Master Lease, the Schwab Lease and the Tax Exemption Documents.

“Maturity Date” shall have the meaning set forth in the Note.

“Mortgagee’s Architect” shall mean a licensed architect or registered engineer approved by Mortgagee.

“Non-Recourse Exceptions” shall have the meaning set forth in the Note.

“Note” shall have the meaning set forth in the recitals of this Mortgage.

“Obligations” shall mean and include all indebtedness, obligations, covenants, agreements and liabilities of Mortgagor to Mortgagee, including all obligations to pay interest, the Make Whole Amount and all charges and advances, whether direct or indirect, existing, future, contingent or otherwise, due or to become due, pursuant to or arising out of or in connection with the Note, this Mortgage, the Assignment or any other Loan Instrument, all modifications, extensions and renewals of any of the foregoing and all expenses and costs of collection or enforcement, including attorneys’ fees and disbursements incurred by Mortgagee in the collection or enforcement of any of the Loan Instruments or in the exercise of any rights or remedies pursuant to the Loan Instruments or applicable law.

“OFAC” shall have the meaning set forth in Section 2.08

“Order” or “Orders” shall have the respective meanings set forth in Section 2.08.

“Partial Foreclosure” shall have the meaning set forth in Section 4.01B.

“Person” shall mean a corporation, a limited or general partnership, a limited liability company or partnership, a joint stock company, a joint venture, a trust, an unincorporated association, a Governmental Agency, an individual or any other entity similar to any of the foregoing.

“Personal Property” shall have the meaning set forth in Granting Clause Two.

“Phase I” shall mean, collectively, those certain environmental reports prepared by EMG, dated May 1, 2008 (bearing report #86827.08R-023.135) and dated May 25, 2010 (bearing report #93439.1OR-023.051).

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“Plan” shall mean an employee benefit plan (as defined in section 3(3) of ERISA) whether or not subject to ERISA or a plan or other arrangement within the meaning of section 4975 of the Internal Revenue Code.

“Plan Assets” shall mean assets of a Plan within the meaning of section 29 C.F.R. section 2510.3-101, as modified by section 3(42) of ERISA, or similar law.

“Pledge Agreement” shall mean the Pledge and Security Agreement, dated as of the date hereof, from the Pledgors, collectively as pledgor, to Mortgagee, as lender, as the same may be amended, restated, replaced, supplemented or otherwise modified from time to time.

“Pledgors” shall mean TRT Harborside LLC, a Delaware limited liability company, and Plaza X Realty L.L.C., a New Jersey limited liability company.

“Premises” shall have the meaning set forth in Granting Clause Two.

“Prior Loans,” shall mean, collectively, all those certain mortgage loans made to Mortgagor and secured by the Secured Property, which loans have been paid in full on or prior to the date hereof.

“Proceeds” shall have the meaning set forth in Section 1.03F(2).

“Projected Net Operating Income” shall mean (A) the projected rental income from all executed Direct Leases (excluding the Schwab Lease) and all other income from the Secured Property (including any business interruption insurance but only to the extent received and deposited into the Sponsor’s Lockbox Account or the Clearing Account, as applicable, less the anticipated revenue from any tenant that has terminated its Lease) during the twelve (12) month period following the date of determination (collectively, “Gross Revenues”), which calculation of Gross Revenues shall be adjusted to include a Free Rent Credit (as defined below), less (B) the projected expenses for the same twelve (12) month period, adjusted to include all expenses Lender reasonably determines are necessary to operate and maintain the Secured Property in an institutional-quality manner (including, without limitation, real estate taxes, insurance, and actual property management fees (not less than two and one-half percent (2.50%) of Gross Revenues)). Such calculation of Projected Net Operating Income shall be determined by Borrower subject to confirmation by Lender. “Free Rent Credit” shall mean a credit equal to (i) the actual free rent amount, or a reasonable approximation of such free rent amount, based on the anticipated rental payments to be made by Credit Tenants after their free rent period expires, as applicable, plus (ii) if Guarantor shall guarantee the free rent amount for non-Credit Tenants pursuant to the Free Rent Guaranty (as defined in the Side Letter), such guaranteed amount (which Free Rent Guaranty shall terminate upon the expiration of the free rent period of such non-Credit Tenants).

“Release” shall mean any release, spill, emission, leaking, pumping, injection, deposit, disposal, discharge, dispersal, leaching or migration into the environment.

“Rents” shall mean all rents, issues, profits, cash collateral, royalties, income and other benefits derived from the Secured Property or any part thereof (including benefits accruing from all present or future leases and agreements, including oil, gas and mineral leases and agreements).

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“Schwab Lease” shall mean that certain Amended and Restated Lease dated December 29, 2000 between Plaza X Leasing, as landlord, and Charles Schwab & Co., Inc., as tenant, as the same has been or may hereafter be amended from time to time.

“Secured Property” shall mean the Premises, the Personal Property and all other rights and interests described in the Granting Clauses of this Mortgage.

“Side Letter” shall mean that certain letter agreement, dated as of the date hereof, by and among Mortgagor, Guarantor and Mortgagee relating to extensions of the Loan, Transfers and other matters, as the same may be further amended, restated, replaced, supplemented or otherwise modified from time to time.

“SPE Certification” shall have the meaning set forth in Section 5.20.

“Sponsor’s Lockbox Account” shall have the meaning set forth in the Cash Management Agreement.

“Spread” shall have the meaning set forth in the Note.

“State” shall mean the State, Commonwealth or territory in which the Land is located.

“Tax Exemption Documents” shall mean, collectively (a) that certain Contribution Agreement dated as of November 15, 2000 between AFE and the City of Jersey City, (b) that certain Project Employment & Contracting Agreement dated as of November 15, 2000 between Plaza X Urban Renewal and the City of Jersey City, (c) that certain Financial Agreement dated as of November 15, 2000, between Plaza X Urban Renewal and the City of Jersey City, (d) that certain Addendum to Financial Agreement effective as of November 15, 2000 between Plaza X Urban Renewal and the City of Jersey City, (e) that certain Amendment to Financial Agreement dated September 23, 2003 between Plaza X Urban Renewal and the City of Jersey City, (f) the Settlement Agreement and Release about to be entered into between Plaza X Urban Renewal and the City of Jersey City and (f) any other documents now or hereafter entered into by any Mortgagor in connection with a tax exemption pursuant to the Long Term Tax Exemption Law, N.J.S.A. 40A:20-1 et seq., as any of the foregoing have been or may hereafter be amended from time to time.

“Terrorism Insurance” shall have the meaning set forth in Section 1.03A(1).

“Terrorism Insurance Cost” shall have the meaning set forth in Section 1.03I(5).

“Transfer” shall have the meaning set forth in Section 1.11B.

As used in this Mortgage (a) words such as “herein”, “hereof”, “hereto”, “hereunder” and “hereby” or similar terms refer to this Mortgage as a whole and not to any specific Section or provision hereof; (b) wherever the singular or plural number or the masculine, feminine or neuter gender is used, it shall include each other number or gender; and (c) the word “including” shall mean “including, without limitation,” and the word “includes” shall mean “includes, without limitation.”

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ARTICLE 1COVENANTS AND AGREEMENTS

Mortgagor hereby covenants and agrees as follows:

1.01Payment, Performance and Security. Mortgagor shall pay when due the amount of, and otherwise timely perform, all Obligations. This Mortgage shall secure all Obligations. Mortgagor shall not apply or permit the application of any insurance proceeds, condemnation awards, trust funds, Rents or other income to distributions to its partners, members or constituent entities when an Event of Default exists under any of the Loan Instruments.

1.02Payment of Taxes, Assessments, etc.

1.02.AImpositions. Mortgagor shall pay when due and payable, before any fine, penalty, interest or cost for the nonpayment thereof may be added thereto, and without any right of offset or credit against any interest or other amounts payable to Mortgagee pursuant to this Mortgage or on the Note, all taxes, assessments, water and sewer rents, rates and charges, transit taxes, charges for public utilities, excises, levies, vault taxes or charges, license and permit fees and other governmental charges, general and special, ordinary and extraordinary, unforeseen and foreseen, of any kind and nature whatsoever (including penalties, interest costs and charges accrued or accumulated thereon), which at any time may be assessed, levied, confirmed, imposed upon, or become due and payable out of or in respect to, or become a lien on, the Secured Property or any part thereof, or any appurtenance thereto, including amounts payable by Mortgagor under the Tax Exemption Documents (all of the foregoing collectively, “Impositions” and individually, an “Imposition”).

1.02.BInstallments. Notwithstanding anything to the contrary contained in Section 1.02A, if by law any Imposition, at the option of the taxpayer, may be paid in installments, and provided interest shall not accrue on the unpaid balance of such Impositions, Mortgagor may exercise the option to pay the same in installments and, in such event, shall pay such installments as the same become due and before any fine, penalty, interest or cost may be added thereto.

1.02.CReceipts. Mortgagor, upon request of Mortgagee, will furnish to Mortgagee within ten (10) days before the date when any Imposition would become delinquent, official receipts of the appropriate taxing authority, or other evidence reasonably satisfactory to Mortgagee, evidencing the payment thereof.

1.02.DEvidence of Payment. The bill, certificate or advice of nonpayment, issued by the appropriate official (designated by law either to make or issue the same or to receive payment of any Imposition) of the nonpayment of an Imposition shall be prima facie evidence that such Imposition is due and unpaid at the time of the making or issuance of such certificate, advice or bill. Mortgagor shall pay Mortgagee, on demand, all charges, costs and expenses of every kind including each tax service search fee or charge incurred by Mortgagee at any time or times during the term of this Mortgage in connection with obtaining evidence satisfactory to Mortgagee that the payment of all Impositions is current and that there is no Imposition due and owing or which has

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become or given rise to a lien on the Secured Property or any part thereof or any appurtenance thereto.

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1.02.EPayment by Mortgagee. If Mortgagor shall fail to pay any Imposition in accordance with the provisions of this Section 1.02, Mortgagee, at its option and at such time as it may elect, may pay such Imposition, but shall be under no obligation to do so. Mortgagor will repay to Mortgagee, within three (3) Business Days after written demand, any amount so paid by Mortgagee, with interest thereon at the Increased Rate from the date of such written demand by Mortgagee to the date of repayment by Mortgagor. This Mortgage shall secure each such amount and such interest.

1.02.FChange in Law. In the event of the passage after the date of this Mortgage of any law deducting the Obligations from the value of the Secured Property or any part thereof for the purpose of taxation or resulting in any lien thereon, or changing in any way the laws now in force for the taxation of this Mortgage or the Obligations for state or local purposes, or the manner of the operation of any such taxes so as to affect the interest of Mortgagee, then, and in such event, Mortgagor shall bear and pay the full amount of such taxes, provided that if for any reason payment by Mortgagor of any such new or additional taxes would be unlawful or if the payment thereof would constitute usury or render the Loan or the Obligations wholly or partially usurious under any of the terms or provisions of the Note, this Mortgage or otherwise, Mortgagee may, at its option, declare all Obligations secured by this Mortgage, with interest thereon, to be immediately due and payable, or Mortgagee may, at its option, pay that amount or portion of such taxes as renders the Loan or the Obligations unlawful or usurious, in which event Mortgagor shall concurrently therewith pay the remaining lawful and non-usurious portion or balance of such taxes. Mortgagor waives any right it may have to a credit against interest due on the debt secured by this Mortgage for taxes paid.

1.02.GJoint Assessment. Mortgagor shall not suffer, permit or initiate the joint assessment of the Premises and the Personal Property, or any other procedure whereby personal property taxes and real property taxes shall be assessed, levied or charged to the Secured Property as a single lien.

1.02.HPermitted Contests. Notwithstanding anything herein to the contrary, if, and for so long as, Mortgagor is not in default pursuant to any of the Loan Instruments, Mortgagor shall have the right to contest the amount or the validity, in whole or in part, of any Imposition, by appropriate proceedings diligently conducted in good faith and without cost or expense to Mortgagee. Subject to the provisions of Section 1.02I and provided Mortgagor is in compliance with the provisions of the next sentence, Mortgagor may postpone or defer payment of such Imposition if Mortgagor, on or before the due date thereof, shall do one of the following: (1) deposit or cause to be deposited with Mortgagee a surety bond issued by a surety company of recognized responsibility acceptable to Mortgagee, guaranteeing and securing the payment in full of such Imposition, pending the determination of such contest, (2) deposit or cause to be deposited with Mortgagee an amount equal to one hundred percent (100%) of such Imposition or any balance thereof remaining unpaid, and from time to time, but not more frequently than quarterly, deposit amounts in order to keep on deposit at all such times an amount equal to one hundred percent (100%) of the Imposition remaining unpaid, or (3) furnish or cause to be furnished to Mortgagee other security reasonably satisfactory to Mortgagee. If such deposit is made or such security furnished and Mortgagor continues in good faith to contest the validity of such Imposition by appropriate legal proceedings which shall operate to prevent the collection of such Imposition so contested, the

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imposition of interest, fines or other penalties with respect to such Imposition and the sale of the Secured Property or any part thereof to satisfy such Imposition, Mortgagor shall have no obligation to pay such Imposition until such time as it has been finally determined to be a valid, due and payable Imposition. Upon termination of any such proceeding, or at any earlier time that Mortgagor shall have been adjudicated liable for the payment of such Imposition, Mortgagor shall pay in full the amount of such Imposition or part thereof as shall have been finally determined in such proceeding, together with all liabilities in connection therewith. If Mortgagor shall fail to pay in full the amount that has been finally determined, Mortgagee shall have the full power and authority to apply or require the application of any amounts that may have been deposited pursuant to this Section 1.02H to payment of any unpaid Imposition. However, Mortgagee shall not have any liability for application of, or failure to apply, any amount so deposited, except for Mortgagee’s intentional and willful failure to apply a deposited amount after Mortgagor shall have notified Mortgagee of such final decision and Mortgagor or the Person making such deposit shall have requested in writing the application of such amount to the payment of the particular Imposition with respect to which it was deposited. Mortgagee shall repay to Mortgagor, or as directed by Mortgagor, the remainder of any such deposit after payment in full of the related Imposition, unless Mortgagor shall be in default pursuant to any of the Loan Instruments. If a default then exists, Mortgagee may, in its discretion, apply all or any part of such remainder to the curing of such default. After the curing of all such defaults (and the payment in full of all then due and payable Impositions), Mortgagee shall pay the remainder of such surplus, if any, to Mortgagor. Mortgagor may contest matters under the Tax Exemption Documents by appropriate proceedings diligently conducted in good faith and without cost or expense to Mortgagee, provided that if such matter involves any disputed payment obligation of Mortgagor under the Tax Exemption Documents, Mortgagor shall deposit the disputed amount with Mortgagee in accordance with the provisions of this Section 1.02H.

1.02.INo Lease Default. Notwithstanding anything to the contrary contained herein, if contesting the validity or amount of any Imposition shall cause a breach of any of the terms, conditions or covenants required to be performed by Mortgagor as lessor under any Lease, Mortgagor shall not have the right to contest the same as provided in Section 1.02H, and Mortgagor shall pay such Imposition pursuant to Section 1.02A.

1.03Insurance.

1.03.AAll Risk Coverage.

(1)    Mortgagor, at its sole cost and expense, shall keep the Improvements and the Personal Property insured against loss or damage by fire and against loss or damage by other risks now covered by “All Risk” or “Special Perils” insurance, in form and substance satisfactory to Mortgagee, subject to the terms and conditions hereof. Such All Risk or Special Perils insurance shall not exclude from coverage any loss arising from the perils of terrorist acts (both foreign and domestic) or in the alternative, Mortgagor shall maintain a separate insurance policy covering terrorist acts (both foreign and domestic) (“Terrorism Insurance”) and windstorm insurance and flood insurance as required by Mortgagee. If any of the Terrorism Insurance, windstorm insurance or flood insurance is obtained through a separate insurance policy rather than as part of an All Risk or Special Perils policy, the requirements set forth herein with respect to All

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Risk or Special Perils insurance nevertheless shall be deemed to apply to any such insurance provided in a separate policy, including the rent and/or business income interruption insurance described in Section 1.03A(3) below.

(2)    The All Risk or Special Perils insurance shall be in an amount equal to at least one hundred percent (100%) of the full replacement cost of the Improvements and the Personal Property, including work performed for tenants, without deduction for depreciation. The All Risk or Special Perils insurance shall include coverage for law and ordinance, demolition and increased cost of construction and an agreed amount endorsement for the estimated replacement cost.

(3)    The All Risk or Special Perils insurance (including any terrorism, windstorm or flood coverage included in such insurance, if required pursuant to the terms hereof) shall include business income interruption insurance coverage, including a limit for rental loss equivalent to (a) not less than twenty-four (24) months of aggregate rentals or (b) Actual Loss Sustained of not less than twenty-four (24) months, with no time element restrictions, and in the case of the coverage described in the preceding clause (a) or clause (b), an Extended Period of Indemnity of not less than twelve (12) months. The rental loss coverage with respect to each Lease shall include all Rent payable thereunder, including minimum rent, escalation charges, percentage rent and all other additional rent of every kind and any other amounts payable by tenants or other occupants, from time to time, at the Secured Property pursuant to Leases or otherwise.

1.03.BAdditional Coverage. Mortgagor, at its sole cost and expense, shall at all times also maintain:

(1)    Commercial general liability insurance against claims for bodily injury, personal injury or property damage, occurring in, on, under or about the Secured Property or in, on, under or about the adjoining streets, sidewalks and passageways; such insurance to be in amounts and in form and substance satisfactory to Mortgagee;

(2)    If the Improvements are located in a special flood hazard zone, as defined by FEMA, flood insurance on the Improvements and the Personal Property, in an amount equal to one hundred percent (100%) of the full replacement cost of the Improvements and the Personal Property, including work performed for tenants, without deduction for depreciation and including business income interruption insurance as described in Section 1.03A(3) above;

(3)    Insurance, in such amounts as Mortgagee shall from time to time require, against loss or damage from leakage or explosion of steam boilers, air conditioning equipment, pressure vessels or similar apparatus, now or hereafter installed in or on the Secured Property; and

(4)    Such other insurance and any replacements, substitutions or additions thereto as shall at any time be required by Mortgagee against other insurable hazards, including earthquake and terrorism coverage, each in such amount as Mortgagee shall determine.

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1.03.CSeparate Insurance. Mortgagor shall not carry separate insurance, concurrent in kind or form and contributing in the event of loss with any insurance required hereunder. Mortgagor may, however, effect for its own account any insurance not required pursuant to the provisions of this Mortgage, but any such insurance effected by Mortgagor on the Secured Property, whether or not required pursuant to this Section 1.03, shall be for the mutual benefit of Mortgagor and Mortgagee, as their respective interests may appear, and shall be subject to all other provisions of this Section 1.03.

1.03.DInsurers; Policies.

(1)    All insurance provided for in this Section 1.03 shall be effected under valid and enforceable policies issued by financially responsible insurers, rated by A.M. Best as “A” or better and as having a class size of at least “X(10)” and authorized to do business in the State, with deductibles acceptable to Mortgagee and otherwise in form and substance acceptable to Mortgagee. An original or certified copy of all such policies shall be deposited with and held by Mortgagee and shall contain the standard non-contributory mortgagee clause in favor of Mortgagee and a waiver of subrogation as provided in the policies, all in form and content satisfactory to Mortgagee. All such policies shall contain a provision that such policies will not be cancelled, without at least thirty (30) days’ prior written notice (or ten (10) days’ prior written notice in the event of non-payment of premiums) to Mortgagee. In addition, Mortgagor shall not cause any of the policies to be materially amended (including any reduction in the scope or limits of coverage) without Mortgagee’s prior written consent and, in the event any of the policies are materially amended by the insurers, Mortgagor shall provide notice thereof to Mortgagee within five (5) days after such event. Certificates of insurance evidencing coverage of the policies and invoices bearing notations evidencing the full payment of the annual premium or accompanied by other evidence satisfactory to Mortgagee of such payment shall be delivered by Mortgagor to Mortgagee within fifteen (15) days of renewal with the original or certified copy of each policy to follow within thirty (30) days.

(2)    Mortgagor’s insurance policies may be part of a blanket insurance policy provided that (a) such blanket policy specifically lists the Secured Property as covered and includes the per occurrence and aggregate limits (if any) for the Secured Property, which limits must be acceptable to Mortgagee, (b) Mortgagee receives the documentation reasonably required to determine the adequacy of the shared blanket limits among the properties insured by the blanket policy, which documentation shall include a list of the properties covered by the blanket policy, including the Secured Property, and their respective locations and a statement of insurable values for all Special Perils, for each of such properties, and (c) the blanket policy recognizes Mortgagee in accordance with the issuance of certificates with respect to any property insurance, as a certificate holder, mortgagee and lender loss payee and with respect to any liability insurance, as an additional insured.

1.03.EMortgagee’s Right to Secure Coverage. If Mortgagor fails to furnish to Mortgagee and keep in force the original policies of insurance required by this Section 1.03, Mortgagee, at its option, may procure such insurance, which procurement, at Mortgagee’s further option, may be by the purchase of insurance policies or by the addition of the Secured Property to

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Mortgagee’s blanket policy. In the event that Mortgagee has exercised either of such options, promptly upon demand by Mortgagee, Mortgagor (i) will reimburse Mortgagee for all premiums on the policies purchased by Mortgagee or (ii) in the event Mortgagee has added the Secured Property to its blanket policy, will pay to Mortgagee an amount equal to the estimated cost of the insurance coverage which Mortgagee has added to its blanket policy had such coverage been obtained under a separate policy and not under a blanket policy, in either case, with interest thereon at the Increased Rate from the date Mortgagee pays such premiums to the date Mortgagor repays such premiums to Mortgagee in full. Until they are so repaid, this Mortgage shall secure the amount of such premiums and interest.

1.03.FDamage or Destruction. Upon the occurrence of any damage or casualty to the Secured Property or any part thereof, the following shall apply:

(1)    Mortgagor shall give Mortgagee written notice of such damage or casualty as soon as possible, but not later than ten (10) days from the date such damage or casualty occurs.

(2)    All proceeds of insurance (“Proceeds”) paid or to be paid pursuant to any of the policies maintained pursuant to this Mortgage shall be payable to Mortgagee. Mortgagor hereby authorizes and directs any affected insurer to make payment of the Proceeds directly to Mortgagee. Mortgagee may commingle, with other monies in Mortgagee’s possession, all Proceeds received by Mortgagee. All such Proceeds shall constitute additional security for the Obligations and Mortgagor shall not be entitled to the payment of interest thereon. So long as no Event of Default then exists, Mortgagor may settle, adjust or compromise all claims for loss, damage or destruction pursuant to any policy or policies of insurance provided that such claim does not exceed $1,000,000 and Mortgagor agrees to use such proceeds (without having to comply with Section 1.03H below) to repair and restore the Property.

(3)    Mortgagee shall have the option, in its discretion, and without regard to the adequacy of its security hereunder, of applying all or part of the Proceeds to (a) the Obligations, whether or not then due, in such order as Mortgagee shall determine, (b) the repair or restoration of the Secured Property, (c) reimburse Mortgagee for its actual costs and expenses in connection with the recovery of the Proceeds, if any, or (d) any combination of the foregoing.

(4)    Nothing herein contained shall be deemed to excuse Mortgagor from repairing or maintaining the Secured Property as provided in Section 1.05 or restoring all damage or destruction to the Secured Property, regardless of whether there are Proceeds available or whether the Proceeds are sufficient in amount, and the application or release by Mortgagee of any Proceeds shall not cure or waive any Event of Default or notice of default pursuant to this Mortgage or invalidate any act done pursuant to such notice.

1.03.GTransfer of Interest in Policies. In the event of the foreclosure of this Mortgage or other transfer of title or assignment of the Secured Property in payment and performance, in whole or in part, of the Obligations, all right, title and interest of Mortgagor in and to all policies of insurance required by this Section 1.03 shall inure to the benefit of, and pass to the purchaser or grantee of the Secured Property. If, prior to Mortgagee’s receipt of the Proceeds,

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the Secured Property shall have been sold through the foreclosure of this Mortgage or other similar proceeding, Mortgagee shall have the right to receive the Proceeds to the extent that any portion of the Obligations are still unpaid after application of the proceeds of the foreclosure sale or similar proceeding, together with interest thereon at the Increased Rate, plus attorney’s fees and other costs and disbursements incurred by Mortgagee in connection with the collection of the Proceeds and in establishing the amount of and collecting the deficiency. Mortgagor hereby assigns, transfers and sets over to Mortgagee all of the Mortgagor’s right, title and interest in and to said sum. The balance, if any, shall be paid to Mortgagor, or as otherwise required by law.

1.03.HMortgagor’s Use of Proceeds.

(1)    Notwithstanding any provision herein to the contrary, but subject to the provisions of Section 1.03H(4), in the event of any destruction to the Secured Property by fire or other casualty as to which the estimated cost of repair or restoration exceeds $1,000,000, the Proceeds shall be made available to Mortgagor for repair and restoration, after deducting therefrom and payment to Mortgagee of an amount equal to Mortgagee’s costs in connection with collection, review and disbursement of the Proceeds of such damage or casualty, provided that:

(a)The Proceeds are deposited with Mortgagee;

(b)No Event of Default shall have occurred and be continuing under the terms of any of the Loan Instruments;

(c)The insurer does not deny liability to any named insured;

(d)Mortgagee is furnished with, and has approved (i) a complete, final set of plans and specifications for the work to be performed in connection with the repair or restoration, (ii) an estimate of the cost of repair and restoration, and (iii) a certificate of Mortgagee’s Architect as to such costs;

(e)The value, quality and condition of the Secured Property so repaired or restored shall be at least equal to that of the Secured Property prior to such damage or casualty;

(f)Mortgagor furnishes Mortgagee with evidence reasonably satisfactory to Mortgagee that all Improvements so repaired or restored and their use shall fully comply with all applicable (i) easements, covenants, conditions, restrictions or other private agreements or instruments of record affecting the Secured Property and (ii) Legal Requirements;

(g)If the estimated cost of such repair or restoration exceeds the Proceeds available, Mortgagor shall (i) furnish a bond of completion or provide other evidence satisfactory to Mortgagee of Mortgagor’s ability to pay such excess costs, or (ii) deposit with Mortgagee additional funds equal to such excess;

(h)Mortgagee shall have received written notice of damage or casualty from Mortgagor within ten (10) days after the date of such damage or casualty, which notice shall

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state the date of such damage or casualty, and shall contain a request to Mortgagee to make the Proceeds available to Mortgagor;

(i)Mortgagee shall have received a report or proof of claim from the insurer describing the damage or casualty and the insurer’s payment therefor;

(j)During and after the repair and restoration period, the aggregate monthly net income pursuant to rent or business income interruption insurance and/or pursuant to all Leases remaining in full force and effect shall be in an amount sufficient to pay the monthly installments of principal and interest required to be paid on the Obligations, all payments for taxes and insurance required pursuant to Section 1.04, and all operating expenses of the Secured Property, all as estimated by Mortgagee; and

(k)the Debt Coverage Ratio is not less than 1.20.

(2)    Mortgagee shall disburse the Proceeds during the course of repair or restoration upon (a) the certification of Mortgagee’s Architect as to the cost of the work done, (b) the conformity, as determined by Mortgagee, of the work to plans and specifications approved by Mortgagee, and (c) receipt of evidence from a title insurance company acceptable to Mortgagee that there are no liens arising out of the repair or restoration or otherwise. Notwithstanding the above, a portion of the Proceeds may be released prior to the commencement of repair or restoration to pay for items approved by Mortgagee in its discretion. Subject to satisfaction of the foregoing conditions, Mortgagee shall make such disbursements within ten (10) Business Days after a written request by Mortgagor. No payment made prior to the final completion of work shall exceed ninety percent (90%) of the value of the work performed from time to time, and at all times the undisbursed balance of the Proceeds remaining with Mortgagee must be at least sufficient to pay for the cost of completion of the work (as estimated by Mortgagee in its discretion), free and clear of liens. Mortgagee shall make final payment after receipt of a certification of Mortgagee’s Architect confirming the completion of the work in accordance with plans and specifications approved by Mortgagee.

(3)    At its option, Mortgagee shall (a) return to Mortgagor the balance of the Proceeds after full disbursement in accordance with Sections 1.03H(1) and (2), or (b) apply such balance to the Obligations, whether or not then due, in such order as Mortgagee shall determine.

(4)    In all cases in which any destruction of the Secured Property by fire or other casualty occurs during the last twelve (12) months prior to the Maturity Date or in Mortgagee’s judgment, Mortgagor is not using commercially reasonable efforts to restore or repair the Secured Property in a prompt manner, Mortgagee shall have the options set forth in Section 1.03 F(3).

(5)    Under no circumstances shall Mortgagee become personally liable for the fulfillment of the terms, covenants and conditions contained in any of the Leases or obligated to take any action to repair or restore the Secured Property, except as provided under applicable subordination, non-disturbance and attornment agreements or similar agreements executed by Mortgagee.

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1.03.IAmendment as a Result of Commercial Unavailability of Insurance Against Terrorist Acts.

(1)    If any insurance required to be maintained against loss arising from the perils of terrorist acts (other than insurance required to be maintained under applicable law) pursuant to Section 1.03A(1) and Section 1.03B(4) (including the limits or deductibles or any other terms under policies for such insurance) ceases to be “commercially available” (as hereinafter defined), as reasonably determined by Mortgagee based on the advice of the Insurance Advisor, Mortgagor shall provide written notice to Mortgagee, accompanied by a certificate from an independent insurance advisor of recognized national standing selected by Mortgagor and reasonably satisfactory to Mortgagee (“Insurance Advisor”), certifying that such insurance against loss arising from the perils of terrorist acts is not commercially available in the commercial insurance market for buildings of similar type and geographic location, and explaining in detail the basis for such conclusions and recommending any waivers or modification of such insurance requirement (which recommendation shall include the amount and type of insurance which is commercially available, if any).

(2)    Following receipt of such notice, certificate and recommendation of the Insurance Advisor, Mortgagee shall not unreasonably withhold its approval of the recommended waiver or modification of such insurance requirement (any such approval to be evidenced by a writing to such effect), and Mortgagee shall advise Mortgagor in writing of its decision concerning the recommended waiver or modification, including any alternative requirements it may reasonably establish, and Mortgagor shall, prior to the expiration of the insurance against loss arising from the perils of terrorist acts then in effect, obtain such insurance that is approved by Mortgagee.

(3)    In the event that such insurance requirement has been waived or modified pursuant to Section 1.03I(2), Mortgagor shall, from time to time upon written request of Mortgagee, but not more frequently than once per year, provide to Mortgagee a written supplemental report from the Insurance Advisor that provided the certificate referred to in Section 1.03I(1) (or such other independent insurance advisor reasonably acceptable to Mortgagee), updating such prior certificate and reaffirming the conclusions stated therein, including as to the insurance against loss arising from the perils of terrorist acts which is then commercially available. Such supplemental report shall be provided within thirty (30) days after a written request from Mortgagee in accordance with this paragraph. In the event that the Insurance Advisor (or such other independent insurance advisor of recognized national standing engaged by Mortgagee at Mortgagor’s expense, provided that Mortgagee shall not engage another insurance advisor more frequently than once per year), states that a different level of insurance is then commercially available, as compared to the insurance that was commercially available in the prior certificate and recommendation, Mortgagor shall promptly (and in any event within thirty (30) days after receipt of such updated report) obtain the then specified level of insurance that is then commercially available, subject to Mortgagee’s approval, in the same manner as provided in Section 1.03I(2) above.

(4)    Any waiver or modification approved pursuant to Section 1.03I(2) shall be effective for only as long as the originally required insurance is not commercially available. Failure by Mortgagor to provide the supplemental report referred to in Section 1.03I(3) within the

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period required shall give rise to a rebuttable presumption that the originally required insurance is then commercially available. In the event of such failure, any insurance waiver or modification approved pursuant to Section 1.03I(2) shall cease to satisfy the requirements of this Mortgage at the expiration of the thirty (30) day period referred to in the second sentence of Section 1.03I(3). For the avoidance of doubt, Mortgagee, at Mortgagor’s expense, but not more frequently than once per year, may establish through an independent insurance advisor of recognized national standing that insurance coverage against loss arising from the perils of terrorist acts is commercially available independent of, and without first, requesting Mortgagor to provide a supplemental report pursuant to Section 1.03I(3).

(5)    For the purpose of this Section 1.03I, insurance against loss arising from the perils of terrorist acts will be considered not “commercially available” if (A) it is not obtainable or is obtainable only at excessive costs which are not justified in terms of the risk to be insured, (B) it is not being carried by or applicable to properties or operations similar to and in the same geographic area as the Secured Property because of such excessive costs and (C) the material provisions of the Terrorism Risk Insurance Program Reauthorization Act of 2015, a subsequent extension or reauthorization of such statute, or a substantially similar federal statute, is no longer in effect. For purposes of Section 1.03I(5)(A), in no event shall the annual costs of insurance providing coverage against loss arising from the perils of terrorist acts be deemed “excessive” to the extent such annual costs are not in excess of one hundred percent (100%) of the annual premium for the required All Risk or Special Perils property insurance coverage for the relevant year (“Terrorism Insurance Cost”). In the event some or all of the costs of maintaining coverage against loss arising from the perils of terrorist acts in excess of the Terrorism Insurance Cost are determined to be not “commercially available” and are waived by Mortgagee in accordance with the terms of Section 1.03I(2), then Mortgagor shall maintain the amount of coverage that is not waived. In addition, in the event that the foregoing terms of this Section 1.03I would require Mortgagee to waive some or all of the required Terrorism Insurance coverage, if Mortgagor (or any entity which has a direct or indirect ownership interest in Mortgagor) carries terrorism insurance for its other properties as part of a blanket insurance policy, then Mortgagor, notwithstanding such waiver, shall cause such blanket policy to cover the Improvements and Personal Property to the same extent and under the same terms and conditions as the coverage provided to the other properties under such blanket insurance policy.

1.04Escrow Payments. To further secure the Obligations as to payment of the Impositions (as set forth in Section 1.02) and premiums for insurance (as set forth in Section 1.03), Mortgagor will pay to Mortgagee, or its designee, on the due date of each monthly installment of principal and/or interest pursuant to the Note, a sum equal to the Impositions and insurance premiums next due on the Secured Property, all as estimated by Mortgagee, less all sums already paid with respect to the Impositions and insurance premiums for such period, divided by the number of months to elapse before one month prior to the date when such Impositions and insurance premiums shall become due and payable. Mortgagee or its designee shall hold all payments without any obligation for the payment of interest thereon to Mortgagor and free of all liens or claims on the part of creditors of Mortgagor and as a part of the Secured Property. Mortgagee or its designee shall use such payments to pay current Impositions and insurance premiums, as the same accrue and are payable. Such payments shall not be, nor be deemed to be, trust funds, but may be commingled with the

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general funds of Mortgagee, or its designee. If at any time and for any reason Mortgagee determines that such payments are insufficient to pay the Impositions and insurance premiums in full as they become payable, Mortgagor will pay to Mortgagee or its designee, within ten (10) days after demand therefor, such additional sum or sums as may be required in order for Mortgagee or its designee to so pay such Impositions and insurance premiums in full. Mortgagor shall furnish Mortgagee with the bills therefor within sufficient time to enable Mortgagee or its designee to pay the Impositions and insurance premiums before any penalty attaches and before any policy lapses. Upon any Event of Default in the provisions of any Loan Instrument, Mortgagee may, at its discretion and without regard to the adequacy of its security hereunder, apply any unused portion of such payments to the payment of the Obligations in such manner as it may elect. Transfer of legal title to the Secured Property shall automatically transfer to the new owner any then remaining rights of Mortgagor in all sums held by Mortgagee pursuant to this Section 1.04.

1.05Care and Use of the Premises.

1.05.AMaintenance and Repairs. Mortgagor, at its sole cost and expense, shall (1) take good care of the Secured Property and the sidewalks adjoining the Secured Property and keep the same in good order and condition, (2) make all necessary repairs thereto, interior and exterior, structural and nonstructural, ordinary and extraordinary, foreseen and unforeseen, (3) not commit or suffer to be committed any waste of the Secured Property, and (4) not do or suffer to be done anything which will increase the risk of fire or other hazard to the Secured Property or any part thereof.

1.05.BStandard of Repairs. The necessity for and adequacy of repairs to the Secured Property pursuant to Section 1.05A shall be measured by the standard which is appropriate for a first class office building and related facilities of similar construction and type located in the Hudson County, New Jersey area. Further, Mortgagor shall make all repairs necessary to avoid any structural damage to the Improvements and to keep the Secured Property in a proper condition for its intended use. When used in this Section 1.05, the terms “repair” and “repairs” shall include all necessary renewals and replacements. Mortgagor shall make all repairs with new, first-class materials and in a good, substantial and workmanlike manner which shall be equal or better in quality and class to the original work.

1.05.CRemoval of Equipment. Mortgagor shall have the right, at any time and from time to time, to remove and dispose of equipment which may have become obsolete or unfit for use or which is no longer useful in the operation of the Secured Property. Mortgagor will promptly replace all equipment so disposed of or removed with other equipment of a value and serviceability equal to or greater than the original value and serviceability of the equipment so removed or disposed of, free of all liens, claims or other encumbrances. If by reason of technological or other developments in the operation and maintenance of buildings of the general character of the Improvements, no replacement of the building equipment so removed or disposed of is necessary or desirable in the proper operation or maintenance of the Improvements, Mortgagor shall not be required to replace same. The security interest of this Mortgage shall cover all such replacement equipment.

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1.05.DCompliance With Laws and Insurance. Mortgagor shall promptly comply with any and all applicable Legal Requirements including maintaining the Secured Property in compliance with all Legal Requirements. Mortgagor shall not bring or keep any article upon the Secured Property or cause or permit any condition to exist thereon which would be prohibited by or could invalidate any insurance coverage maintained, or required hereunder to be maintained, by Mortgagor on or with respect to any part of the Secured Property. Mortgagor shall do all other acts, which from the character or use of the Secured Property may be necessary to protect the Secured Property. Upon request of Mortgagee, Mortgagor shall furnish to Mortgagee a copy of any license, permit or approval required by any Governmental Agency with respect to the Secured Property and/or the operations conducted thereon.

1.05.EHazardous Materials.

(1)    Mortgagor hereby unconditionally and irrevocably agrees to indemnify, reimburse, defend, exonerate, pay and hold harmless Mortgagee, and its directors, officers, policyholders, shareholders, employees, successors (including any successor to Mortgagee’s interest in the chain of title), assigns, agents, attorneys, contractors, subcontractors, experts, licensees, affiliates, lessees, mortgagees, trustees and invitees, from and against any and all of the following (referred to collectively as the “Indemnified Claims”): all Environmental Damages and Environmental Claims that may be actually incurred by, imposed upon, or asserted against, any Person indemnified hereunder, arising out of, related to, or in connection with:

(a)the presence of Hazardous Materials in, on, under or about or the Release or threatened Release of any Hazardous Materials to or from (i) the Secured Property or (ii) any other property legally or beneficially owned (or any interest or estate which is owned) by Mortgagor, regardless of whether or not the presence of such Hazardous Materials arose prior to the present ownership or operation of the property in question or as a result of the acts or omissions of Mortgagor or any other Person,

(b)the violation or alleged violation of any Environmental Requirement affecting or applicable to the Secured Property or any activities thereon, regardless of whether or not the violation of such Environmental Requirement arose prior to the present ownership or operation of the property in question or as a result of the acts or omissions of Mortgagor or any other Person, INCLUDING MORTGAGEE’S NEGLIGENCE OR STRICT LIABILITY.

(c)the breach of any warranty or covenant or the inaccuracy of any representation contained in the Loan Instruments pertaining to Hazardous Materials or other environmental matters, including the covenants contained in Sections 1.05E(2), (3), (4) and (5) and the representations and warranties contained in Sections 1.05E(4) and 2.03C and D,

(d)the transport, treatment, recycling, storage or disposal or arrangement therefor, of any Hazardous Material to, at or from the Secured Property, or

(e)the enforcement or attempted enforcement of this indemnity.

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Mortgagor’s obligations pursuant to the foregoing indemnity shall include the burden and expense of (x) defending against all Indemnified Claims, even if such Indemnified Claims are groundless, false or fraudulent, (y) conducting all negotiations of any description with respect to the Indemnified Claims, and (z) paying and discharging any and all Indemnified Claims, when and as the same become due, against or from Mortgagee or any other Person indemnified pursuant to this Section 1.05E(1). Mortgagor’s obligations under this Section 1.05E(1) shall survive (i) the repayment of all sums due under the Note; (ii) the release of the Secured Property or any portion thereof from the lien of this Mortgage; (iii) the reconveyance of or foreclosure under this Mortgage (notwithstanding that all or a portion of the obligations secured by this Mortgage shall have been discharged thereby); (iv) the acquisition of the Secured Property by Mortgagee; and/or (v) the transfer of all of Mortgagee’s rights in and to the Note and/or the Secured Property.

(2)    Mortgagor shall maintain the Secured Property in compliance with, and shall not cause or permit the Secured Property to be in violation of, any applicable Environmental Requirements. Mortgagor shall not, and shall not permit any lessee or occupant of the Secured Property to, use, generate, manufacture, store, maintain, dispose of or permit to exist in, on, under or about the Secured Property any Hazardous Materials, except for the use, storage and disposal (such use, storage and disposal to be in all cases in compliance with all applicable Legal Requirements) of de minimis amounts of janitorial and cleaning supplies and other Hazardous Materials typically used in (A) the ordinary course of operating and maintaining a first class office building and/or (B) the ordinary course of operations of tenants’ business operations at the Secured Property. Mortgagor shall, at all times, comply fully and in a timely manner, and use its reasonable business efforts to cause all of its employees, agents, contractors and subcontractors and any other Persons occupying or present on the Secured Property to so comply, with all applicable Environmental Requirements.

(3)    Promptly, upon the written request of Mortgagee, but not more frequently than once per year, Mortgagor shall provide Mortgagee, at Mortgagor’s expense, with an environmental site assessment or environmental audit report prepared by an environmental engineering firm acceptable to Mortgagee and in a form acceptable to Mortgagee, assessing the presence or absence of any Hazardous Materials and the potential costs in connection with the abatement, cleanup or removal of any Hazardous Materials found in, on, under or about the Secured Property. Mortgagor shall cooperate in the conduct of such site assessment or environmental audit.

(4)    Mortgagor represents and warrants that, to its best knowledge, and except as set forth in the Phase I: (a) no enforcement, cleanup, removal or other governmental or regulatory action has, at any time, been instituted, contemplated or threatened against Mortgagor, or to its knowledge, the Secured Property, pursuant to any Environmental Requirements; (b) to its knowledge, no violation or noncompliance with any Environmental Requirements has occurred with respect to the Secured Property at any time; and (c) no claims have, at any time, been made or threatened by any third party against the Secured Property or against Mortgagor with respect to the Secured Property, relating to damage, contribution, cost recovery, compensation, loss or injury resulting from any Hazardous Materials (the matters set forth in this Section 1.05E(4)(a), (b) and (c) are herein referred to as “Hazardous Materials Claims”). Mortgagor shall promptly advise Mortgagee, in writing, if any Hazardous Materials Claims are hereafter asserted, or if Mortgagor

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obtains knowledge of any Release of any Hazardous Materials in, on, under or about the Secured Property.

(5)    Without Mortgagee’s prior written consent, Mortgagor shall not (a) take any remedial action in response to the presence of any Hazardous Materials in, on, under or about the Secured Property, or (b) enter into any settlement agreement, consent decree or other compromise in respect of any such Hazardous Materials or any Hazardous Materials Claims. However, Mortgagee’s prior consent shall not be necessary in the event that the presence of any Hazardous Materials in, on, under or about the Secured Property either poses an immediate threat to the health, safety or welfare of any individual or is of such a nature that an immediate remedial response is necessary and it is not possible to obtain Mortgagee’s consent before taking such action. In such event, Mortgagor shall notify Mortgagee as soon as practical of any action so taken. Mortgagee shall not withhold its consent, where such consent is required hereunder, if either (a) a particular remedial action is ordered by a court of competent jurisdiction, or (b) Mortgagor establishes to the satisfaction of Mortgagee that there is no reasonable alternative to such remedial action which would result in less impairment to the Secured Property.

(6)    Mortgagee, if it so elects, shall have the right to join and participate as a party in any legal proceedings or actions initiated by any Person in connection with any Hazardous Materials Claim and, in such case, Mortgagor shall pay all of Mortgagee’s out-of-pocket attorneys’ fees and expenses actually incurred in connection therewith.

1.05.FCompliance With Instruments of Record. Mortgagor shall promptly perform and observe, or cause to be performed and observed, all terms, covenants and conditions of all instruments of record affecting the Secured Property, non-compliance with which may affect the priority of the lien of this Mortgage, or which may impose any duty or obligation upon Mortgagor or any lessee or other occupant of the Secured Property or any part thereof. Mortgagor shall do or cause to be done all things necessary to preserve intact and unimpaired all easements, appurtenances and other interests and rights in favor, or constituting any part, of the Secured Property.

1.05.GAlteration of Secured Property. Mortgagor shall not demolish, remove, construct, restore, add to or alter any portion of the Secured Property or any extension thereof, or consent to or permit any such demolition, removal, construction, restoration, addition or alteration without Mortgagee’s prior written consent, which shall not be unreasonably withheld, except for (1) initial tenant improvement work provided for in any Direct Lease in effect on the date hereof and in any other Direct Lease approved by Mortgagee in writing (to the extent that such approval is required under the terms of the Loan Instruments), (2) ordinary, non-structural maintenance work, and (3) construction, additions or alterations costing less than $500,000.

1.05.HParking. Mortgagor shall comply with all Legal Requirements for parking and requirements for parking pursuant to the Leases, and shall grant no parking rights in the Secured Property other than to Lessees under Leases, except with Mortgagee’s prior written consent, which consent shall not be unreasonably withheld, conditioned or delayed. Parking shall be available, pursuant to the Easement Agreement, for Lessees from an adjacent parking lot to the west of the Secured Property, providing approximately 360 parking spaces and access to an additional 108 parking spaces elsewhere within the complex known as the Harborside Financial Center (0.79

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parking spaces per 1,000 square feet of rentable area in the Improvements). If any part of the automobile parking areas included within the Secured Property is taken by condemnation or such areas are otherwise reduced, Mortgagor shall provide parking facilities in kind, size and location as required to comply with all Leases and with the parking requirements set forth herein. Any lease or other contract for such facilities must be assignable and must be otherwise in form and substance satisfactory to Mortgagee. Before entering into any such lease or other contract, Mortgagor will furnish to Mortgagee satisfactory assurance of the completion of such facilities free of all liens and in conformity with all Legal Requirements.

1.05.IEntry on Secured Property. Mortgagee or its representatives may enter upon and inspect the Secured Property at all reasonable times, subject to rights of Lessees.

1.05.JNo Consent to Alterations or Repairs. Nothing contained in this Mortgage shall in any way constitute the consent or request of Mortgagee, expressed or implied, by inference or otherwise, to any contractor, subcontractor, laborer or materialman for the performance of any labor or the furnishing of any materials for any specific improvement, alteration or repair of the Secured Property or any part thereof.

1.05.KPreservation of Lien; Mechanic’s Liens. Mortgagor shall do or cause to be done everything necessary so that the lien of this Mortgage shall be fully preserved, at the sole cost of Mortgagor. Mortgagor shall discharge, pay or bond, or cause to be discharged, paid or bonded, from time to time when the same shall become due, all lawful claims and demands of mechanics, materialmen, laborers and others which, if unpaid, might result in, or permit the creation of, a lien on the Secured Property or any part thereof, or on the revenues, Rents, issues, income or profits arising therefrom.

1.05.LUse of Secured Property by Mortgagor. Mortgagor shall use, or cause to be used, the Secured Property principally and continuously as and for a first-class office building. Mortgagor shall not use, or permit the use of, the Secured Property or any part thereof, for any other principal use without the prior written consent of Mortgagee. Mortgagor shall not initiate or acquiesce to any change in any zoning or other land use classification now or hereafter in effect and affecting the Secured Property or any part thereof without in each case obtaining Mortgagee’s prior written consent thereto.

1.05.MUse of Secured Property by Public. Mortgagor shall not suffer or permit the Secured Property, or any part thereof, to be used by the public as such, without restriction or in such manner as might impair Mortgagor’s title to the Secured Property or any part thereof, or in such manner as might make possible a claim or claims of adverse usage or adverse possession, or of any implied dedication to the public of the Secured Property or any part thereof.

1.05.NManagement. Management of the Premises shall be reasonably satisfactory to Mortgagee and shall be performed by Mortgagor, DPF Property Management, LLC, Cushman & Wakefield of New Jersey, Inc. or by a management company approved in writing by Mortgagee and under a management contract satisfactory to Mortgagee, which management contract shall be subject and subordinate to the rights and title of Mortgagee under this instrument.

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1.05.OPermitted Contests. If, and for so long as, Mortgagor is not in default pursuant to any of the Loan Instruments, Mortgagor shall have the right, after prior notice to Mortgagee, to contest, by appropriate legal proceedings, diligently conducted in good faith and without cost or expense to Mortgagee, the validity or application of any Legal Requirement, subject to the following:

(1)    Such contest shall not subject Mortgagee or Mortgagor to any civil or criminal liability;

(2)    By the terms of any such Legal Requirement, compliance therewith pending the prosecution of any such legal proceedings may legally be delayed without incurring (or increasing the risk of incurring) any damage or injury of any kind to the Secured Property or any Person or property and without incurring any lien or charge of any kind against the Secured Property or any fine or penalty against Mortgagor, Mortgagor may delay compliance therewith until the final determination of such legal proceedings; and

(3)    Such contest shall not cause a breach of any of the terms, conditions or covenants of any Lease or other agreement on Mortgagor’s part to be performed.

1.06Financial Information.

1.06.AFinancial Statements. Mortgagor shall keep and maintain complete and accurate books and records of the earnings and expenses of the Secured Property. Without any expense to Mortgagee, Mortgagor shall furnish to Mortgagee within one hundred twenty (120) days after the end of each fiscal year and within thirty (30) days after the end of each fiscal quarter of Mortgagor, including the fiscal year and fiscal quarter during which the Loan is closed, annual or quarterly audited financial statements, as applicable, prepared by an officer or other authorized party on behalf of Mortgagor and certified by an independent certified public accountant reasonably satisfactory to Mortgagee, in accordance with generally accepted accounting principles relating to real estate consistently applied. Notwithstanding the foregoing, if Mortgagor is not then in default of any of the Obligations, the quarterly financial statements may be prepared and certified by any officer or other authorized party on behalf of Mortgagor. The annual and quarterly financial statements required hereunder shall include with respect to the Secured Property: (1) a balance sheet, (2) a statement of cash flows, (3) a detailed summary of operations for the Secured Property, including all rents and other income derived from and all operating and capital expenses paid or incurred in connection with the Secured Property, (4) a certified rent roll for the Secured Property, and (5) other pertinent information regarding the leasing as may be reasonably required by Mortgagee. Upon Mortgagee’s request, the financial statements shall also include annual sales figures for any Lessee that is required to provide such figures pursuant to its Lease (to the extent same is provided to Mortgagor). In addition to such annual financial statements, Mortgagor shall furnish to Mortgagee such interim statements of financial position and cash flows and such interim summaries of operations and interim rent rolls, including any of the information described in the foregoing clauses (1) through (4) above, as Mortgagee shall require; provided, however, that Mortgagee shall not require Mortgagor to furnish such interim statements more than twice annually, so long as no Event of Default has occurred and is continuing and no event, which with the giving of notice or lapse of time, or both, would constitute an Event of Default, has occurred and is continuing. Upon Mortgagee’s request, Mortgagor shall also deliver the SPE Certification.

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As to Guarantor, and without any expense to Mortgagee, Mortgagor shall make available to Mortgagee, within one hundred twenty (120) days after the end of each fiscal year and within thirty (30) days after the end of each fiscal quarter of Guarantor, including the fiscal year and fiscal quarter during which the Loan is closed, annual or quarterly audited financial statements for Guarantor, as applicable, prepared by an officer or other authorized party on behalf of Guarantor and certified by an independent, certified public accountant, reasonably satisfactory to Mortgagee, in accordance with generally accepted accounting principles, consistently applied. Notwithstanding the foregoing, but subject to the last sentence of this paragraph, if Mortgagor is not then in default of any of the Obligations, the quarterly financial statements for Guarantor may be prepared and certified by any officer or other authorized party of Guarantor. The annual and quarterly financial statements required hereunder for Guarantor shall include: (1) a balance sheet, (2) a statement of cash flows and (3) a statement of profit and loss. Notwithstanding anything to the contrary contained herein or in the other Loan Instruments, Mortgagor shall furnish, or shall cause to be furnished, to Mortgagee on a quarterly basis all of the covenant calculations that Guarantor is required to provide to the lender of Guarantor’s corporate line of credit, which calculations shall be in the same format as provided to such corporate credit line lender and shall be certified by an officer or other authorized party of Guarantor.

1.06.BRight to Inspect Books and Records. Mortgagee or its representatives shall have the right to examine and make copies of all books and records and all supporting vouchers and data related to the Secured Property. Such examination may occur at the Secured Property or at Mortgagor’s principal place of business and shall be at Mortgagor’s sole cost and expense.

1.07Condemnation.

1.07.AMortgagee’s Right to Participate in Proceedings. If the Secured Property, or any part thereof, shall be taken in condemnation proceedings or by exercise of any right of eminent domain (collectively, “Condemnation Proceedings”), Mortgagee shall have the right to participate in any such Condemnation Proceedings and all awards or payments (collectively, “Award”) that may be made in any such Condemnation Proceedings are hereby assigned to Mortgagee, and shall be deposited with Mortgagee and applied in the manner set forth in this Section 1.07. Mortgagor shall give Mortgagee immediate notice of the actual or threatened commencement of any Condemnation Proceedings affecting all or any part of the Secured Property, including all such Condemnation Proceedings as to severance and consequential damage and change in grade in streets, and will deliver to Mortgagee copies of any and all papers served or received in connection with any Condemnation Proceedings. Notwithstanding the foregoing, Mortgagee is hereby authorized, at its option, to commence, appear in and prosecute in its own or Mortgagor’s name any action or proceeding relating to any Condemnation Proceedings and to settle or compromise any claim in connection therewith. Mortgagor and Mortgagee shall cooperate with each other in connection with any such Condemnation Proceedings, including negotiation for a possible settlement. No settlement for the damages sustained in connection with any Condemnation Proceedings shall be made by Mortgagor without Mortgagee’s prior written approval, provided, however, that so long as no Event of Default then exists, Mortgagor may settle or compromise any claim that does not exceed $1,000,000.00. Mortgagor shall execute any and all further documents that may be required in order to facilitate the collection of each Award.

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1.07.BApplication of Condemnation Award.

(1)    If at any time title or temporary possession of the whole or any part of the Secured Property shall be taken in any Condemnation Proceeding or pursuant to any agreement among Mortgagor, Mortgagee and/or those authorized to exercise the right of condemnation, Mortgagee, in its discretion and without regard to the adequacy of its security hereunder, shall have the right to apply any Award received to payment of the Obligations whether or not due, in such order as Mortgagee shall determine. If all or substantially all of the Secured Property is taken and the amount of the Award received by Mortgagee is not sufficient to pay the then unpaid balance of the Obligations, the balance of the Obligations shall, at the option of Mortgagee, become immediately due and payable and Mortgagor shall, within ten (10) days after notice to Mortgagor that Mortgagee has so applied the Award, pay the difference between such balance and the amount of the Award. “Substantially all of the Secured Property” shall be deemed to have been taken if the balance of the Secured Property, in the opinion of Mortgagee,(a) cannot be restored to a self-contained and architecturally complete unit or units or (b) the balance of the Secured Property as restored will not be economically viable and capable of supporting all carrying charges and operating and maintenance expenses.

(2)    Notwithstanding any provision contained herein to the contrary, but subject to the provisions of Section 1.07B(3), if less than substantially all of the Secured Property shall be taken in a Condemnation Proceeding (except for a taking (a) of more than ten percent (10%) of the leasable area of the Improvements, (b) of more than the amount of parking spaces required to comply with all Leases, Material Agreements and all applicable Legal Requirements, and/or (c) that affects access to the Premises or any part thereof from a public right of way and an alternate method of access is not reasonably available), Mortgagee shall, after deducting Mortgagee’s costs in connection with collection, review and disbursement related to the Award and the Condemnation Proceeding, apply the balance of the Award to the cost of restoring, repairing or altering the remaining portion of the Secured Property, subject to the provisions of Section 1.03H (which provisions shall apply in all respects except that any reference therein to Proceeds shall be deemed to refer to the Award), and Mortgagor will promptly restore, repair or alter the remaining Secured Property, subject to the provisions of Section 1.03H. The provisions of this Section 1.07B(2) shall not apply unless Mortgagor shall furnish to Mortgagee evidence satisfactory to Mortgagee that the Secured Property, as so restored, reconstructed or altered, and its use would fully comply with all Legal Requirements. The balance of the Award so deposited with Mortgagee, after disbursement in accordance with this Section 1.07B(2), shall be applied to the payment of the Obligations, whether or not due, in such order as Mortgagee shall determine. The Award and other sums deposited with Mortgagee, until disbursed or applied as provided in this Section 1.07B(2), may be commingled with the general funds of Mortgagee, shall constitute additional security for the Obligations, and shall not bear interest.

(3)    In all cases in which any taking occurs during the last twelve (12) months prior to the Maturity Date, or in Mortgagee’s judgment, Mortgagor is not using commercially reasonable efforts to restore or repair the Secured Property in a prompt manner, Mortgagee, without regard to the adequacy of its security hereunder, shall have the right to apply the Award to payment of the Obligations, whether or not then due, in such order as Mortgagee shall determine.

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1.07.CReimbursement of Costs. In the case of any taking covered by the provisions of thisSection 1.07, Mortgagee (to the extent that Mortgagee has not been reimbursed therefor by Mortgagor) shall be entitled, as a first priority, to reimbursement out of any Award for all reasonable costs, fees, and expenses actually incurred in the determination and collection of the Award.

1.07.DExisting Obligations. Notwithstanding any taking by Condemnation Proceedings or any application of the Award to the Obligations, Mortgagor shall continue to pay the monthly installments due pursuant to the Note, as well as all other sums secured by this Mortgage. If prior to Mortgagee’s receipt of the Award, the Secured Property shall have been sold through foreclosure of this Mortgage or other similar proceeding, Mortgagee shall have the right to receive the Award to the extent that any portion of the Obligations are still unpaid after application of the proceeds of the foreclosure sale or similar proceeding, with interest thereon at the Increased Rate, plus attorneys’ fees and other costs and disbursements incurred by Mortgagee in connection with the collection of the Award and in establishing the amount of, and collecting, any deficiency. The application of the Award to the Obligations, whether or not then due or payable, shall not postpone, abate or reduce any of the periodic installments of interest or principal thereafter to become due pursuant to the Note or this Mortgage until the Obligations are paid and performed in full.

1.08Leases.

1.08.APerformance of Lessor’s Covenants. Mortgagor, as lessor, has entered and will enter into Direct Leases with Lessees for parts or all of the Secured Property. Mortgagor shall faithfully perform the lessor’s covenants under the Direct Leases. Mortgagor shall neither do, nor neglect to do, nor permit to be done (other than enforcing the terms of such Direct Leases and exercising the lessor’s remedies thereunder following a default or event of default on the part of any Lessee in the performance of its obligations pursuant to the Direct Lease), anything which may cause the modification or termination of any of the Leases in violation of the terms hereof, or of the obligations of any Lessee or any other Person claiming through such Lessee, or which may diminish or impair the value of any Lease or the Rents provided for therein, or the interest of the lessor or of Mortgagee therein or thereunder. Each Direct Lease shall make provision for the attornment of the Lessee thereunder to any Person succeeding to the interest of Mortgagor as the result of any judicial or nonjudicial foreclosure or transfer in lieu of foreclosure hereunder, such provision to be in form and substance approved by Mortgagee, provided that nothing herein shall be construed to require Mortgagee to agree to recognize the rights of any Lessee under any Direct Lease following any such foreclosure or transfer in lieu thereof unless Mortgagee shall expressly hereafter agree thereto in writing with respect to a particular Direct Lease.

1.08.BNotice of Default. Mortgagor shall give Mortgagee immediate notice of any notice of a material default or of any event of default, extension, renewal, expansion, surrender or cancellation Mortgagor gives to or receives from any Lessee or from any other Person with respect to any Lease and shall furnish Mortgagee with a copy of each such notice.

1.08.CRepresentations Regarding Leases. Mortgagor represents and warrants that: (1) Mortgagor is the absolute owner of each Direct Lease with full right and title to assign the same and the Rents thereunder to Mortgagee; (2) each Direct Lease is valid and in full force and effect; (3) there is no outstanding assignment or pledge thereof or of the Rents due or to become due under

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any Direct Lease; (4) to Mortgagor’s best knowledge, no Lessee has any defense, set-off or counterclaim against Mortgagor; (5) each Lessee under any Direct Lease is in possession of its leased space and has commenced payment of Rent thereunder; all Rents and other charges due and payable under the Leases have been paid; (6) no Rents payable pursuant to any Direct Lease have been or will be anticipated, discounted, released, waived, compromised or otherwise discharged, except as may be expressly permitted by such Direct Lease or by the Loan Instruments; (7) all representations made by Mortgagor in any Direct Lease are true in all material respects; (8) all Improvements and the leased space demised and let pursuant to each Direct Lease have been completed to the satisfaction of the applicable Lessee other than work to be performed by the Lessee thereunder; (9) no Rents have been prepaid more than one month in advance, except as expressly provided pursuant to the applicable Lease or as may be permitted herein; (10) to Mortgagor’s best knowledge, there is no existing default or breach of any covenant or condition on the part of any Lessee or lessor under any Direct Lease; (11) there are no options to purchase all or any portion of the Secured Property contained in any Direct Lease; (12) there are no options to renew, cancel, extend or expand by any Lessee under a Direct Lease, except as stated in such Direct Lease; (13) there are no amendments of or modifications to any Direct Lease, except as disclosed in writing to Mortgagee or as otherwise permitted in accordance with the Loan Instruments; and (14) all Direct Leases are subject and subordinate to this Mortgage to the extent set forth in a separate subordination, non-disturbance and attornment agreement by and between the Lessee and Mortgagee, to the extent required pursuant to the Loan Instruments.

1.08.DCovenants Regarding Leases. Except as expressly permitted by the Loan Instruments, Mortgagor shall not, without the prior written consent of Mortgagee in each instance:

(1)    lease or permit the leasing to any Person, all or any part of the space in, on or over any of the Premises;

(2)    cancel, terminate or accept a surrender, or suffer or permit any cancellation, termination or surrender, of the Schwab Lease or any other Direct Lease or any guaranty of any Direct Lease, except for cancellation or termination in the case of a Lessee default or as specifically provided in the Direct Lease;

(3)    modify or amend any Direct Lease so as to (i) reduce the term thereof or the Rents payable thereunder, (ii) change any renewal provision contained therein, (iii) otherwise increase any obligation of Mortgagor thereunder, (iv) reduce any obligation of any Lessee thereunder (including granting any termination or rent abatement rights to such Lessee) or (v) grant any rights of first refusal, rights of first offer or purchase options;

(4)    commence any summary proceeding or other action to recover possession of any space demised pursuant to any Direct Lease, other than a proceeding brought in good faith by reason of a default of any Lessee;

(5)    receive or collect, or permit the receipt or collection of, any Rents for more than one month in advance of the payment due dates;

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(6)    take any other action with respect to any Lease which would reasonably be expected to impair the security of Mortgagee pursuant to this Mortgage or the Assignment;

(7)    extend the Schwab Lease or any other present Lease other than in accordance with the terms presently expressly provided for therein;

(8)    execute any agreement or instrument, or create or permit a lien, which may be or become superior to any Lease;

(9)    with respect to any Direct Lease, suffer or permit to occur any release of liability of any Lessee thereunder or the accrual of any right in any Lessee thereunder to withhold payment of any Rent;

(10)    sell, assign, transfer, mortgage, pledge or otherwise dispose of or encumber, whether by merger, consolidation, operation of law or otherwise, any Lease or any Rents;

(11)    alter, modify or change the terms of any guaranty of any Lease or consent to the release of any party thereto;

(12)    request, consent, agree to, or accept, the subordination of any Lease to any mortgage (other than this Mortgage) or other encumbrance now or hereafter affecting the Premises;

(13)    consent to the assignment of any Lease or any subletting of the Premises demised pursuant to any Lease (to the extent that the Lease (a) is in effect as of the date of this Mortgage and (b) allows for Mortgagor to give or withhold such consent in Mortgagor’s sole discretion); or

(14)    enter into any lease for space in any Improvements for purposes other than occupancy by the tenant.

1.08.EApplication of Rents. Mortgagor shall use and apply all Rents from the Secured Property first to the payment and performance of the Obligations in accordance with the terms of the Loan Instruments, and then to the payment of all Impositions and the costs and expenses of management, operation, repair, maintenance, preservation, reconstruction and restoration of the Secured Property in accordance with the requirements of this Mortgage and the obligations of Mortgagor as the lessor under any Lease; provided, however, that security deposits under any Lease shall be applied as required or contemplated under such Lease. Mortgagor shall not use any Rents for purposes unrelated to the Secured Property unless and until all current payments of the Obligations, Impositions and such costs and expenses have been paid or provided for and adequate cash reserves have been set aside to ensure the timely future payment of all such items. Any Lease Guaranty Payment or Lease Termination Fee shall be either paid directly to Mortgagee or deposited with Mortgagee upon Mortgagor’s receipt thereof and any such amounts may, at Mortgagee’s election, be applied to prepay the outstanding Obligations (including any applicable Make Whole Amount).

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1.08.FIndemnity Against Unapproved Lease Modifications and Amendments. In the event that Mortgagee or any grantee or assignee of Mortgagee takes title to, or otherwise comes into possession of, the Secured Property and thereafter a Lessee under a Lease attorns to Mortgagee or such other party pursuant to a subordination, non-disturbance and attornment agreement entered into by Mortgagee and such Lessee, Mortgagor hereby indemnifies and holds Mortgagee harmless from and against any and all claims, liabilities, costs and expenses of any kind or nature against or incurred by Mortgagee arising out of the enforcement by any Lessee against Mortgagee or any grantee or assignee of Mortgagee, of any affirmative claim, cost or expense, or any defense, abatement or right of set off under any modification or amendment to a Lease which is binding upon Mortgagee and which was entered into by Mortgagor after the date of this Mortgage in violation of the requirements of Section 1.08D hereof.

1.09Assignment of Leases, Rents, Income, Profits and Cash Collateral.

1.09.AAssignment; Discharge of Obligations. Mortgagor hereby unconditionally, absolutely and presently bargains, sells, grants, assigns, releases and sets over unto Mortgagee (1) all Leases and all other tenancies, occupancies, subleases, franchises and concessions of the Land or Improvements or which in any way affect the use or occupancy of all or any part of the Land or Improvements, and any other agreements affecting the use and occupancy of all or any part of the Land or Improvements, in each case, whether now or hereafter existing, and all right, title and interest of Mortgagor thereunder, including all rights to all security or other deposits, (2) all guarantees of the obligations of any lessee, licensee or other similar party under any of the foregoing, whether now or hereafter existing, and (3) the Rents, regardless of whether the Rents accrue before or after foreclosure or during the full period of redemption. For the aforesaid purpose, Mortgagor does hereby irrevocably constitute and appoint Mortgagee its attorney-in-fact, in its name, to receive and collect all Rents, as the same accrue, and, out of the amount so collected, Mortgagee, its successors and assigns, are hereby authorized (but not obligated) to pay and discharge the Obligations (including any accelerated Obligations) in such order as Mortgagee may determine and whether due or not, and to pay the remainder, if any, to Mortgagor, or as otherwise required by law. Neither this assignment nor any such action shall constitute Mortgagee as a “mortgagee in possession” or otherwise make Mortgagee responsible or liable in any manner with respect to the Secured Property or the use, occupancy, enjoyment or operation of all or any portion thereof, unless and until Mortgagee, in person or by agent, assumes actual possession thereof. Nor shall appointment of a receiver for the Secured Property by any court at the request of Mortgagee or by agreement with Mortgagor, or the entering into possession of the Secured Property or any part thereof by such receiver, be deemed to make Mortgagee a mortgagee-in-possession or otherwise responsible or liable in any manner with respect to the Secured Property or the use, occupancy, enjoyment or operation of all or any portion thereof. The assignment of all Leases and Rents in this Section 1.09 is intended to be an absolute, unconditional and present assignment from Mortgagor to Mortgagee and not merely the passing of a security interest. Mortgagor shall, at any time or from time to time, upon request of Mortgagee, execute and deliver any instrument as may be reasonably requested by Mortgagee to further evidence the assignment and transfer to Mortgagee of Mortgagor’s interest in any Lease or Rents. Nothing herein shall in any way limit Mortgagee’s remedies or Mortgagor’s Obligations under the Assignment.

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1.09.BEntry Onto Secured Property; Lease of Secured Property. Mortgagee, at its option, may enter and take possession of the Secured Property and manage and operate the same as provided in Section 4.01, such management and operation to include the right to enter into Leases and new agreements and to take any action which, in Mortgagee’s judgment, is necessary or proper to conserve the value of the Secured Property. The expenses (including any receiver’s fees, attorneys’ fees and agent’s compensation) incurred pursuant to the powers herein contained shall be secured hereby. Mortgagee shall not be liable to account to Mortgagor for any action taken pursuant hereto other than to account for any Rents actually received by Mortgagee.

1.09.CLicense to Manage Secured Property. Notwithstanding anything to the contrary contained in Section 1.09A or Section 1.09B, so long as there shall exist no Event of Default hereunder, Mortgagor shall have the license to manage and operate the Secured Property, including the right to enter into Leases, and collect all Rents as they accrue (but not more than one month in advance).

1.09.DDelivery of Assignments. Mortgagor shall execute such additional documents as may be reasonably requested from time to time by Mortgagee, to evidence the assignment to Mortgagee or its nominee of any Leases now or hereafter made, such assignment documents to be in form and content acceptable to Mortgagee. Mortgagor shall deliver to Mortgagee, within thirty (30) days after Mortgagee’s request (1) a duplicate original or photocopy of each Lease which is at the time of such request outstanding upon the Secured Property and (2) a complete schedule, certified by Mortgagor, of each Lease, showing the suite number, type, Lessee name, monthly rental, date to which Rents have been paid, term of Lease, date of occupancy, date of expiration, existing defaults, if any, and every special provision, concession or inducement granted to such Lessee.

1.09.EIndemnity. Mortgagor shall assert no claim or liability related to Mortgagee’s exercise of its rights pursuant to this Section 1.09. Mortgagor expressly waives all such claims and liabilities, INCLUDING SPECIFICALLY ALL ACTS OF NEGLIGENCE OF MORTGAGEE OR STRICT LIABILITY, but not for gross negligence or willful misconduct of Mortgagee. Mortgagor hereby holds Mortgagee harmless from and against any and all claims, liabilities and expenses of any kind or nature against or incurred by Mortgagee arising out of Mortgagee’s exercise of its rights pursuant to this Section 1.09, including Mortgagee’s management, operation or maintenance of the Secured Property or the collection and disposition of Rents, INCLUDING SPECIFICALLY ALL ACTS OF NEGLIGENCE OF MORTGAGEE OR STRICT LIABILITY, but not for the gross negligence or willful misconduct of Mortgagee.

1.10Further Assurances.

1.10.AGeneral; Appointment of Attorney-in-Fact. Upon request by Mortgagee, from time to time, Mortgagor shall prepare, execute and deliver, or cause to be prepared, executed and delivered, to Mortgagee, all instruments, certificates and other documents which may, in the reasonable opinion of Mortgagee, be necessary or desirable in order to effectuate, complete, perfect or continue and preserve the Obligations and the lien of this Mortgage. Upon any failure by Mortgagor to do so, Mortgagee may prepare, execute and record any such instruments, certificates and documents for and in the name of Mortgagor and Mortgagor hereby appoints Mortgagee the

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agent and attorney-in-fact of Mortgagor for such purposes. This power is coupled with an interest and shall be irrevocable so long as any part of the Obligations remain unpaid or unperformed. Mortgagor shall reimburse Mortgagee for all sums expended by Mortgagee in preparing, executing and recording such instruments, certificates and documents and such sums shall be secured by this Mortgage.

1.10.BStatement Regarding Obligations. Mortgagor shall, within ten (10) days after request by Mortgagee, furnish Mortgagee with a written statement, duly acknowledged, setting forth (1) the unpaid principal balance of the Loan and the accrued but unpaid interest thereon, (2) whether or not any setoffs or defenses exist against the payment of such principal or interest, and (3) if such setoffs or defenses exist, the particulars thereof.

1.10.CAdditional Security Instruments. Mortgagor, from time to time and within fifteen (15) days after request by Mortgagee, shall execute, acknowledge and deliver to Mortgagee such chattel mortgages, security agreements or other similar security instruments, in form and substance satisfactory to Mortgagee, covering all property of any kind whatsoever owned by Mortgagor or in which Mortgagor may have any interest which, in the opinion of Mortgagee, is necessary to the operation and maintenance of the Secured Property or is otherwise a part of the Secured Property. Mortgagor, from time to time and within fifteen (15) days after request by Mortgagee, shall also execute, acknowledge and deliver any financing statement, renewal, affidavit, certificate, continuation statement, supplementary mortgage or other document as Mortgagee may request in order to perfect, preserve, continue, extend or maintain the security interest under, and the priority of, this Mortgage or such chattel mortgage or other security instrument, as a first lien. Mortgagor shall pay to Mortgagee on demand all costs and expenses incurred by Mortgagee in connection with the preparation, execution, recording, filing and refiling of any such instrument or document, including charges for examining title and attorneys’ fees and expenses for rendering an opinion as to the priority of this Mortgage and of each such chattel mortgage or other security agreement or instrument as a valid and subsisting first lien on such property. Neither a request so made by Mortgagee, nor the failure of Mortgagee to make such a request, shall be construed as a release of such property, or any part thereof, from the lien of this Mortgage. This covenant and each such mortgage, chattel or other security agreement or instrument, delivered to Mortgagee are cumulative and given as additional security. Mortgagor shall pay all premiums and related costs in connection with any title insurance policy or policies in full or partial replacement of the title insurance policy now insuring or which will insure the lien of this Mortgage.

1.10.DSecurity Agreement. This Mortgage shall constitute a security agreement under Article 9 of the Code with respect to the Personal Property covered by this Mortgage. Pursuant to the applicable Granting Clauses hereof, Mortgagor has granted Mortgagee a security interest in the Personal Property and in all additions and accessions thereto, substitutions therefor and proceeds thereof for the purpose of securing all Obligations now or hereafter secured by this Mortgage. The following provisions relate to such security interest:

(1)    The Personal Property includes all now existing or hereafter acquired or arising equipment, inventory, accounts, chattel paper, instruments, documents, deposit accounts, investment property, letter of credit rights, commercial tort claims, supporting obligations and

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general intangibles now or hereafter used or procured for use on the Premises or otherwise relating to the Premises. If Mortgagor shall at any time acquire a commercial tort claim relating to the Premises, Mortgagor shall immediately notify Mortgagee in a writing signed by Mortgagor of the brief details thereof and grant to Mortgagee a security interest therein and in the proceeds thereof.

(2)    Mortgagor hereby irrevocably authorizes Mortgagee at any time and from time to time to file in any filing office in any Uniform Commercial Code jurisdiction any initial financing statements and amendments thereto that (a) indicate the collateral as “all assets used or procured for use or otherwise relating to” the Premises or words of similar effect, or as being of equal or lesser scope or in greater detail, and to indicate the Premises as defined, or in a manner consistent with the term as defined, in this Mortgage and (b) contain any other information required by part 5 of Article 9 of the Uniform Commercial Code of the filing office for the sufficiency or filing office acceptance of any initial financing statement or amendment, including whether Mortgagor is an organization, the type of organization and any organizational identification number issued to Mortgagor. Mortgagor agrees to provide any such information to Mortgagee promptly upon request. Mortgagor also ratifies its authorization for Mortgagee to have filed in any filing office in any Uniform Commercial Code jurisdiction any like initial financing statements or amendments thereto if filed prior to the date hereof. Mortgagor shall pay to Mortgagee, from time to time, upon demand, any and all costs and expenses incurred by Mortgagee in connection with the filing of any such initial financing statements and amendments, including attorneys’ fees and all disbursements. Such costs and expenses shall bear interest at the Increased Rate from the date paid by Mortgagee until the date repaid by Mortgagor and such costs and expenses together with such interest shall be part of the Obligations and shall be secured by this Mortgage.

(3)    Mortgagor shall any time and from time to time take such steps as Mortgagee may reasonably request for Mortgagee to obtain “control” of any Personal Property for which control is a permitted or required method to perfect or to insure priority of the security interest in such Personal Property granted hereby.

(4)    Upon the occurrence of an Event of Default, Mortgagee shall have the rights and remedies of a secured party under the Code as well as all other rights and remedies available at law or in equity or under this Mortgage.

(5)    This Mortgage also constitutes a fixture filing.

(6)    If Mortgagor does not have an organizational identification number and later obtains one, Mortgagor shall forthwith notify Mortgagee of such organizational identification number.

(7)    Terms defined in the Code and not otherwise defined in this Mortgage have the same meanings in this Section 1.10D as are set forth in the Code. In the event that a term is used in Article 9 of the Code and also in another Article of the Code, the term used in this Section 1.10D is that used in Article 9. The term “control”, as used in this Paragraph, has the meaning given in Section 9-104, 9-105, 9-106 or 9-107 of Article 9 of the Code, as applicable.

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1.10.EPreservation of Mortgagor’s Existence. Mortgagor shall do all things necessary to preserve and keep in full force and effect its existence, franchises, rights and privileges under the laws of the jurisdiction of its formation and of the State, and shall comply with all applicable Legal Requirements. Unless Mortgagor has provided Mortgagee with at least thirty (30) days’ prior written notice thereof, Mortgagor shall not change its place of business (or if Mortgagor has more than one place of business, its chief executive office), mailing address or organizational identification number if it has one.

1.10.FFurther Indemnities. In addition to any other indemnities contained in the Loan Instruments, Mortgagor hereby agrees to indemnify and hold Mortgagee harmless from and against all losses, liabilitie;’s, suits, obligations, fines, damages, penalties, claims, costs, charges and expenses, including architects’, engineers’ and attorneys’ fees and disbursements which may be imposed upon, actually incurred or asserted against Mortgagee by reason of: (1) the construction of the Improvements, (2) any capital improvements, other work or things, done in, on, under or about the Secured Property or any part thereof, (3) any use, nonuse, misuse, possession, occupation, alteration, repair, condition, operation, maintenance or management of the Secured Property or any part thereof or any street, drive, sidewalk, curb, passageway or space adjacent thereto, (4) any negligence or willful act or omission on the part of Mortgagor, any Lessee or any agent, contractor, servant, employee, licensee or invitee of any Lessee or of Mortgagor, (5) any accident, injury (including death) or damage to any person or property occurring in, on, under or about the Secured Property or any part thereof or in, on, under or about any street, drive, sidewalk, curb, passageway or space adjacent thereto, (6) any default under any Loan Instrument or any Event of Default, (7) any lien or claim arising or alleged to have arisen on or against the Secured Property or any part thereof under any Legal Requirement or any liability asserted against Mortgagee with respect thereto, (8) any tax attributable to the execution, delivery, filing or recording of any Loan Instrument, (9) any contest permitted pursuant to the provisions of this Mortgage, or (10) the enforcement or attempted enforcement of this indemnity; provided that the foregoing indemnity shall not apply to any matter resulting from the gross negligence or willful misconduct of Mortgagee.

1.10.GAbsence of Insurance. The obligations of Mortgagor under this Mortgage and the other Loan Instruments shall not in any way be affected by (1) the absence, in any case, of adequate insurance, (2) the amount of the insurance or (3) the failure or refusal of any insurer to perform any obligation required to be performed by it pursuant to any insurance policy affecting the Secured Property. If any claim, action or proceeding is made or brought against Mortgagee by reason of any event as to which Mortgagor is obligated to indemnify Mortgagee, then, upon demand by Mortgagee, Mortgagor, at Mortgagor’s sole cost and expense, shall resist or defend such claim, action or proceeding in Mortgagee’s name, if necessary, by such attorneys as Mortgagee shall approve. Notwithstanding the foregoing, Mortgagee may engage its own attorneys, in its discretion, to defend it or to assist in its defense, and Mortgagor shall pay the reasonable out-of-pocket fees and disbursements of such attorneys and, until so paid, such amounts shall bear interest at the Increased Rate and shall be secured by this Mortgage.

1.10.HLost Note. Upon Mortgagee furnishing to Mortgagor an affidavit stating that the Note has been mutilated, destroyed, lost or stolen (and an indemnity regarding the same if the Note is found), Mortgagor shall deliver to Mortgagee, in substitution therefor, a new note

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containing the same terms and conditions as the Note, with a notation thereon of the unpaid principal balance and accrued and unpaid interest thereon. Upon execution and delivery of the replacement note, all references in any of the Loan Instruments to the “Note” shall mean the replacement note.

1.11Prohibition on Transfers, Liens or Further Encumbrances.

1.11.AContinuing Ownership and Management. Mortgagor acknowledges that the continuous ownership of the Secured Property and its continuous management and operational control by Mortgagor are material to the making of the Loan.

1.11.BProhibition on Transfers, Liens or Further Encumbrances. Except with the prior written consent of Mortgagee or as otherwise expressly permitted pursuant to the Loan Instruments, neither Mortgagor, nor any other Person owning a direct or indirect interest in Mortgagor, may transfer, convey, assign, sell, alienate, mortgage, encumber, pledge, hypothecate, grant a security interest in, or otherwise dispose of (in each instance whether voluntarily or involuntarily, by operation of law or otherwise, directly or indirectly, and, in each case, also prohibiting the granting of an option or the execution of an agreement relating to any of the foregoing):

(1) all or any part of the Secured Property and/or the Rents, or any interest therein;

(2) any legal or beneficial ownership interest in Mortgagor or in any of Mortgagor’s beneficial owners, whether direct or indirect, and on all levels, whether made directly or through an intermediary, and whether made in one transaction or effected in more than one transaction; or

(3) the leasing, management or operation by Mortgagor of the Secured Property.

Without limiting the generality of the foregoing, for purposes of this Section 1.11, a transfer or disposition of the Secured Property (or the Rents, as applicable) or any part thereof or interest therein shall include: (a) the change of Mortgagor’s type of organization, jurisdiction of organization or other legal structure (such as the conversion of a limited liability company to a limited partnership), (b) the transfer of the Secured Property or any part thereof or interest therein to a cooperative corporation or association, (c) the conversion of all or any part of the Secured Property or interest therein to a condominium form of ownership, (d) any lease for space in the Improvements for purposes other than use and occupancy by the tenant, (e) any lease for space in the Improvements containing an option to purchase, (f) any conditional sale or any title retention agreement with regard to, all or any part of the Secured Property or the Rents and (g) unless Mortgagor has provided Mortgagee with at least thirty (30) days prior written notice thereof, any change of Mortgagor’s name, place of business or, if Mortgagor has more than one place of business, any change of its chief executive office, or any change of Mortgagor’s mailing address or organizational identification number if it has one. Any action or event described in this Section 1.11B is herein called a “Transfer” and all Transfers are prohibited without the prior written consent of Mortgagee. The foregoing

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restrictions on Transfers shall not apply to the pledges of ownership interests in Mortgagor securing the Loan.

1.11.CAcceleration of Obligations. In the event of a Transfer without the prior written consent of Mortgagee, Mortgagee may, without limiting any other right or remedy available to Mortgagee at law, in equity or by agreement with Mortgagor, and in Mortgagee’s discretion, and without regard to the adequacy of its security, accelerate the maturity of the Note and require the payment of all then existing Obligations, including the Make Whole Amount provided in Section 4.06. The giving of consent by Mortgagee to a Transfer in any one or more instances shall not limit or waive the need for such consent in any other or subsequent instances.

1.12Expenses. Promptly after Mortgagee’s demand therefor, Mortgagor shall pay Mortgagee for all out-of-pocket costs and expenses, including attorneys’ fees and expenses and costs of obtaining evidence of title, actually incurred by Mortgagee in connection with any action, suit, legal proceeding, claim or dispute (a) arising under or in connection with the performance of any rights or obligations under any Loan Instrument or affecting the Obligations or the Secured Property, (b) involving any insurance proceeds or condemnation awards with respect to the Secured Property, (c) to protect the security hereof, (d) as to any concern of Mortgagee with the condition of the Secured Property, or (e) of any other kind or nature in which Mortgagee is made a party relating to the Secured Property or the Loan, or appears as a party, including those related to the estate of an insolvent or decedent or any bankruptcy, receivership, or other insolvency under any chapter of the Bankruptcy Code (Title 11 of the United States Code), as amended, or any other insolvency proceeding or any exercise of the power of sale or judicial foreclosure as set forth in this Mortgage. If the Obligations are referred to attorneys for collection, foreclosure or any cause set forth in Article 3, Mortgagor shall pay all costs and expenses incurred by Mortgagee, including attorneys’ fees and expenses, all costs of collection, litigation costs and costs (which may be estimated as to items to be expended after completion of any foreclosure or other action) of procuring title insurance policies, whether or not obtained, Torrens certificates and similar assurances with respect to title and value as Mortgagee may deem necessary together with all statutory costs, with or without the institution of an action or proceeding. All costs and expenses described in this Section 1.12, with interest thereon at the Increased Rate from the date paid by Mortgagee to the date paid by Mortgagor, shall be paid by Mortgagor on demand, and shall be secured by this Mortgage.

1.13Material Agreements.

1.13.APerformance by Mortgagor. Mortgagor shall, at its sole cost and expense, promptly and timely perform and observe all the terms, covenants and conditions required to be performed and observed by Mortgagor under the Material Agreements (including, but not limited to, the payment when due of all amounts payable by Mortgagor).

1.13.BPerformance by Mortgagee. If Mortgagor shall be in default under the any Material Agreement, then, subject to the terms of such Material Agreement, Mortgagee shall have the right (but not the obligation), to cause the default or defaults under such Material Agreement to be remedied and otherwise exercise any and all rights of Mortgagor under such Material Agreement, as may be necessary to prevent or cure any default under such Material Agreement. The actions or payments of Mortgagee to cure any default by Mortgagor under any Material Agreement shall not

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remove or waive, as between Mortgagor and Mortgagee, any default that occurred under this Mortgage by virtue of the default by Mortgagor under such Material Agreement. All sums expended by Mortgagee to cure any such default shall be paid by Mortgagor to Mortgagee, upon demand, with interest on such sum at the Increased Rate from the date such sum is expended to and including the date the reimbursement payment is made to Mortgagee. All such indebtedness shall be deemed to be secured by this Mortgage.

1.13.CNotice of Default. Mortgagor shall notify Mortgagee promptly in writing of the occurrence of any default under any Material Agreement or the occurrence of any event that, with the passage or time or service of notice, or both, would constitute a default under a Material Agreement. Without limitation of the foregoing, Mortgagor shall promptly deliver to Mortgagee any notice (written or otherwise) noting or claiming the occurrence of any default by Mortgagor under any Material Agreement or the occurrence of any event that, with the passage of time or service of notice, or both, would constitute a default by Mortgagor under any Material Agreement.

1.13.DNo Waiver. Mortgagor shall not waive, excuse, condone or in any way release or discharge any other party from any material obligations, covenant and/or conditions under any Material Agreement without the prior written consent of Mortgagee.

1.13.ENo Surrender or Modification. Mortgagor shall not, without Mortgagee’s prior written consent, surrender, terminate, forfeit, or suffer or permit the surrender, termination or forfeiture of, or change, modify or amend any Material Agreement. Consent to one amendment, change, agreement or modification shall not be deemed to be a waiver of the right to require consent to other, future or successive amendments, changes, agreements or modifications.

1.13.FNo Merger. Any acquisition of any interest in the Land, the Ground Lease or the Master Lease by Mortgagor or any Affiliate of Mortgagor shall be accomplished by Mortgagor in such a manner so as to avoid a merger of the interests or estates of lessor and lessee in each of the Ground Lease and the Master Lease, unless prior written consent to such merger is granted by Mortgagee.

ARTICLE 2REPRESENTATIONS AND WARRANTIES

Mortgagor represents and warrants:

2.01Warranty of Title. Mortgagor (a) lawfully owns and holds title to the Secured Property (other than the Personal Property), in fee simple, subject to no mortgage, lien, charge or other encumbrance, except as specifically set forth in the title insurance policy issued to Mortgagee upon recordation of this Mortgage, (b) has full power and lawful authority to grant, bargain, sell, convey, assign, release, pledge, set over, transfer and mortgage the Secured Property as set forth herein,(c) lawfully owns and holds title to the Personal Property subject to no mortgage, lien, charge or other encumbrance, and (d) does warrant and will defend the title to the Secured Property against all claims and demands whatsoever.

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2.02Ownership of Additional or Replacement Improvements and Personal Property. All Improvements and Personal Property hereafter affixed, placed or used by Mortgagor on the Secured Property shall be owned by Mortgagor free from all mortgages, liens, charges or other encumbrances.

2.03No Pending Material Litigation or Proceeding; No Hazardous Materials.

2.03.AProceedings Affecting Mortgagor. Except for matters disclosed in that certain 10K filing of Guarantor, dated September 30, 2016 (the “10K Filing”), which has previously been delivered to Mortgagee, there are no actions, suits, investigations or proceedings of any kind pending, or, to the best knowledge and belief of Mortgagor, threatened, against or affecting Mortgagor, or any Guarantor, or against any shareholder, general partner or member (a) of Mortgagor or (b) owning more than five percent (5%) of any Guarantor, or the business, operations, properties or assets of Mortgagor or any Guarantor, or any shareholder, general partner or member (a) of Mortgagor or (b) owning more than five percent (5%) of any Guarantor, or before or by any Governmental Agency, which may result in any material adverse change in the business, operations, properties or assets or in the condition, financial or otherwise, of Mortgagor or any Guarantor or any shareholder, general partner or member (a) of Mortgagor or (b) owning more than five percent (5%) of any Guarantor, or in the ability of Mortgagor to pay or otherwise perform the Obligations. Except for matters disclosed in the 10K Filing, to the best knowledge and belief of Mortgagor, no default exists with respect to any judgment, order, writ, injunction, decree, demand, rule or regulation of any Governmental Agency, which might materially and adversely affect the business, operations, properties or assets or the condition, financial or otherwise, of Mortgagor or any Guarantor or any shareholder, general partner or member (a) of Mortgagor or (b) owning more than five percent (5%) of any Guarantor, or the ability of Mortgagor to pay or otherwise perform the Obligations.

2.03.BProceedings Affecting Secured Property. There are no actions, suits, investigations or proceedings of any kind pending, or, to the best knowledge and belief of Mortgagor, threatened, against or affecting the Secured Property (including any attempt or threat by any Governmental Agency to condemn or rezone all or any portion of the Secured Property), or involving the validity, enforceability or priority of the Loan Instruments or enjoining or preventing or threatening to enjoin or prevent the use and occupancy of the Secured Property or the performance by Mortgagee of the Obligations, and there are no rent controls, governmental moratoria or environmental controls (other than those generally imposed by federal or state law) presently in existence or, to the best knowledge and belief of Mortgagor, threatened, affecting the Secured Property.

2.03.CNo Hazardous Material. Except as disclosed in the Phase I, neither Mortgagor nor, to the best knowledge and belief of Mortgagor, any other Person has ever:

(1)    caused or knowingly permitted any Hazardous Material to be placed, held, located or disposed of, in, on, under or about the Secured Property or any part thereof, except for the use, storage and disposal (such use, storage and disposal to be in all cases in accordance with all applicable Legal Requirements) of de minimis amounts of janitorial and cleaning supplies and other Hazardous Materials typically used in (A) the ordinary course of operating and maintaining a first class office building and/or (B) the ordinary course of operations of tenants’ business operations at the Secured Property, or caused or knowingly permitted, in violation of any Legal

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Requirement, any Hazardous Material to be placed, held, located or disposed of, in, on, under or about any other real property legally or beneficially owned (or any interest or estate which is so owned) by Mortgagor in any jurisdiction now or hereafter having in effect a so-called “superlien” law or ordinance (the effect of which superlien law or ordinance would be to permit the creation of a lien on the Secured Property to secure any obligation), and neither the Secured Property, nor any part thereof, nor any other real property legally or beneficially owned (or any interest or estate therein which is so owned) by Mortgagor in any jurisdiction now or hereafter having in effect a so-called “superlien” law or ordinance or any part thereof, has ever been used (whether by Mortgagor or, to the best knowledge or belief of Mortgagor, by any other Person) as a dump site, storage (whether permanent or temporary) site or transfer site for any Hazardous Material; or

(2)    caused or knowingly permitted any asbestos or underground fuel storage facility to be located in, on, under or about the Secured Property; or

(3)    discovered any occurrence or condition on any real property adjoining or in the vicinity of the Secured Property that could cause the Secured Property or any part thereof to be subject to any remediation requirements or any restrictions on the ownership, occupancy, transferability or use of the Secured Property under any Environmental Requirement.

2.03.DNo Litigation Regarding Hazardous Material. No Person has brought, settled or, to the best knowledge and belief of Mortgagor, threatened any litigation or administrative action or proceeding alleging the presence, Release or threatened Release of any Hazardous Material in, on, under or about the Secured Property.

2.04Valid Organization, Good Standing and Qualification of Mortgagor; Other Organizational Information. Mortgagor is a duly and validly organized limited liability company in good standing under the laws of the jurisdiction of its organization, and is duly licensed or qualified and in good standing in all other jurisdictions where its ownership or leasing of property or the nature of the business transacted by it makes such qualification necessary, and is entitled to own its properties and assets and to carry on its business, all as, and in the places where, such properties and assets are now owned or operated or such business is now conducted. Mortgagor has paid all franchise and similar taxes in the jurisdiction in which the Secured Property is located and in all of the jurisdictions in which it is so qualified, insofar as such taxes are due and payable at the date of this Mortgage. Mortgagor’s exact legal name is that indicated on the signature page hereof. Mortgagor is an organization of the type, and is organized in the jurisdiction, as set forth in the first paragraph of this Mortgage. AFE’s organizational identification number is 0600050147; Plaza X Urban Renewal’s organizational identification number is 0600098737; and Plaza X Leasing’s organizational identification number is 0600099077. Section 5.07 accurately sets forth Mortgagor’s place of business or, if Mortgagor has more than one place of business, its chief executive office as well as Mortgagor’s mailing address if different.

2.05Authorization; No Legal Restrictions on Performance. The execution and delivery by Mortgagor of the Loan Instruments and its compliance with the terms and conditions of the Loan Instruments have been duly and validly authorized by all necessary corporate, partnership, membership or other applicable action by Mortgagor and its constituent entities and the Loan Instruments are valid and enforceable obligations of Mortgagor in accordance with the terms thereof.

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Neither the execution and delivery by Mortgagor of the Loan Instruments, nor the consummation of the transactions contemplated by the Loan Instruments, nor compliance with the terms and conditions thereof will (A) conflict with or result in a breach of, or constitute a default under, any of the terms, obligations, covenants or conditions or provisions of (1) any corporate charter or bylaws, partnership agreement, limited liability company operating agreement, or other organizational or qualification document, restriction, indenture, mortgage, deed of trust, pledge, bank loan or credit agreement, or any other agreement or instrument to which Mortgagor is now a party or by which Mortgagor or its properties may be bound or affected, or (2) to the best knowledge and belief of Mortgagor, any judgment, order, writ, injunction, decree or demand of any Governmental Agency, or (B) result in (1) the creation or imposition of any lien, charge or encumbrance of any nature whatsoever upon any property or asset of Mortgagor pursuant to the terms or provisions of any of the foregoing or (2) the violation of any Legal Requirement applicable to Mortgagor or any Guarantor. Mortgagor is not in default in the performance, observance or fulfillment of any of the terms, obligations, covenants or conditions contained in any indenture or other agreement creating, evidencing or securing the Obligations or pursuant to which Mortgagor is a party or by which the Mortgagor or its properties may be bound or affected.

In addition, (a) the Obligations incurred by Mortgagor and the granting of this Mortgage and of the security interest, rights, and/or lien in and to the Secured Property in connection with the Loan are not made or incurred with the intent to hinder, delay, or defraud any present or future creditor of Mortgagor; (b) Mortgagor has not received less than reasonably equivalent value in exchange for incurring the Obligations and/or the granting of this Mortgage and of the security interest, rights, and/or lien in and to the Secured Property in connection with the Loan; (c) Mortgagor is solvent as of the date hereof, and Mortgagor will not become insolvent as a result of incurring the Obligations and/or the granting of this Mortgage and of the security interest, rights, and/or lien in and to the Secured Property in connection with the Loan; (d) Mortgagor is not engaged, and Mortgagor is not about to engage, in business or a transaction for which any property remaining with Mortgagor is an unreasonably small capital; (e) Mortgagor has not and does not intend to incur, and Mortgagor does not believe that it will incur, debts that would be beyond Mortgagor’s ability to pay as such debts mature; and (f) Mortgagor is not granting this Mortgage and the security interest, rights, and/or lien in and to the Secured Property and/or incurring the Obligations to or for the benefit of an insider (as defined in 11 U.S.C. § 101(31)), under an employment contract and other than in the ordinary course of business.

2.06Compliance With Laws. Mortgagor has, to the best knowledge and belief of Mortgagor, complied with all applicable Legal Requirements with respect to the conduct of its business and ownership of its properties. No governmental orders, permissions, consents, approvals or authorizations are required to be obtained, and no registrations or declarations are required to be filed in connection with the execution, delivery or performance by Mortgagor of its obligations under the Loan Instruments.

2.07Tax Status. Mortgagor has filed all United States income tax returns and all state and municipal tax returns which are required to be filed, and has paid, or made provision for the payment of, all taxes which have become due pursuant to such returns or pursuant to any assessment received by Mortgagor. The United States income tax liability of Mortgagor has been finally

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determined by the Internal Revenue Service and satisfied for all taxable years up to and including the taxable year ending 2015.

2.08Absence of Foreign or Enemy Status; Absence of Blocked Persons; Foreign Corrupt Practices Act. Neither the Loan, nor Mortgagor’s use of the proceeds thereof, will violate the Trading with the Enemy Act, as amended, or any of the foreign assets control regulations of the United States Treasury Department (31 CFR, Subtitle B, Chapter V, as amended) or any enabling legislation or executive order relating thereto. Mortgagor is and shall remain in compliance with the requirements of (a) all applicable anti-money laundering laws and regulations, including without limitation, the USA Patriot Act of 2001, as amended, and (b) Executive Order 13224 of September 23, 2001 Blocking Property and Prohibiting Transactions With Persons Who Commit, Threaten to Commit, or Support Terrorism (66 Fed. Reg. 49079 (2001)) (the “Order”) and other similar requirements contained in the rules and regulations of the Office of Foreign Assets Control, Department of the Treasury (“OFAC”) and in any enabling legislation or other executive orders or regulations in respect thereof (the Order and such other rules regulations, legislation or orders are referred to hereinafter, collectively, as the “Orders”). Without limiting the generality of the foregoing, neither Mortgagor, nor any subsidiary or affiliate of Mortgagor, nor any member, partner or shareholder or other beneficial owner of Mortgagor or of any such subsidiary, affiliate, member, partner, shareholder or other beneficial owner (A) is listed on the Specially Designated Nationals and Blocked Persons List maintained by OFAC pursuant to the Order and/or on any other list of terrorists or terrorist organizations maintained pursuant to any of the rules and regulations of OFAC or pursuant to any other applicable Orders, (B) is or will become a “blocked person” described in Section 1 of the Order or (C) knowingly engages or will engage in any dealings or transactions, or is or will be otherwise associated, with any such blocked person. No part of the proceeds of the Loan will be used, directly or indirectly, for any payments to any governmental official or employee, political party, official of a political party, candidate for political office, or anyone else acting in an official capacity, in order to obtain, retain or direct business or obtain any improper advantage, in violation of the Foreign Corrupt Practices Act of 1977, as amended. Mortgagor shall promptly notify Mortgagee should Mortgagor become aware of any information which would render untrue any of the representations, warranties or covenants set forth in this Section 2.08.

2.09Federal Reserve Board Regulations. No part of the proceeds of the Loan will be used, directly or indirectly, for the purpose of buying or carrying any margin stock within the meaning of Regulation U of the Board of Governors of the Federal Reserve System (12 CFR 221), or for the purpose of buying or carrying or trading in any securities under such circumstances as to involve Mortgagor in a violation of Regulation X of said Board (12 CFR 224) or to involve any broker or dealer in a violation of Regulation T of said Board (12 CFR 220). Margin stock does not constitute 25% or more of the value of the consolidated assets of Mortgagor and its subsidiaries, if any, and Mortgagor does not have any present intention that margin stock will constitute 25% or more of the value of such assets. As used in this Section, the terms “margin stock” and “purpose of buying or carrying” shall have the meanings assigned to them in said Regulation U.

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2.10Investment Company Act and Public Utility Holding Company Act. Neither Mortgagor, nor any subsidiary of Mortgagor, if any, is subject to regulation under the Investment Company Act of 1940, as amended, the Public Utility Holding Company Act of 1935, as amended, the Interstate Commerce Act, as amended, or the Federal Power Act as amended.

2.11Exempt Status of Transactions Under Securities Act and Representations Relating Thereto. Neither Mortgagor, nor anyone acting on its behalf, has (a) solicited offers to make all or any part of the Loan, from more than 35 Persons or (b) otherwise approached, negotiated or communicated with more than 35 Persons regarding the making of all or any part of the Loan by such Person(s). Neither Mortgagor, nor anyone acting on its behalf has taken, or will take, any action that would subject the making of the Loan to the registration requirements of Section 5 of the Securities Act of 1933, as amended.

2.12ERISA.

2.12.ANeither Mortgagor nor any entity that holds a direct or indirect interest in Mortgagor (a “Constituent Entity”) is or shall be (i) an employee benefit plan within the meaning of Section 3(3) of the Employee Retirement Income Security Act of 1974 (“ERISA”) regardless of whether such plan is actually subject to ERISA, (ii) a plan to which Internal Revenue Code Section 4975 applies, or (iii) an entity the underlying assets of which include ERISA “plan assets”

2.12.BTransactions by or with Mortgagor are not and will not be subject to any Legal Requirements regulating investments of and fiduciary obligations with respect to an employee benefit plan (within the meaning of Section 3(3) of ERISA), regardless of whether such plan is actually subject to ERISA.

2.12.CAny liability or obligation that Mortgagor (or any Constituent Entity) may have in respect of an employee benefit plan as defined in Section 3(3) of ERISA regardless of whether such plan is actually subject to ERISA has been and shall continue to be satisfied in full.

2.13Material Agreements. Mortgagor represents and warrants that (A) the Material Agreements are in full force and effect; (B) all amounts due and payable by Mortgagor under the Material Agreements have been paid; (C) to Mortgagor’s best knowledge, there is no existing default or breach of any covenant or condition on the part of any Mortgagor or any other party under any Material Agreement; (D) to Mortgagor’s best knowledge, no other party to a Material Agreement has any defense, set-off or counterclaim against Mortgagor; and (E) there are no amendments of or modifications to any Material Agreements except as disclosed in writing to Mortgagee.

ARTICLE 3DEFAULTS

3.01Events of Default. The existence of any of the following circumstances shall be deemed an “Event of Default” pursuant to this Mortgage, without cure or grace period unless expressly otherwise provided herein:

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3.01.Aif Mortgagor fails to pay any portion of the Obligations as and when the same shall become due and payable as provided in the Loan Instruments; or

3.01.Bif Mortgagor fails to perform or observe any other term, provision, covenant or agreement in the Loan Instruments other than as described in the other clauses of this Section 3.01 and Mortgagor fails to cure same within twenty (20) days after written notice from Mortgagee to Mortgagor, provided that if such failure is of a curable nature, but not within twenty (20) days, such curative period shall be extended for an additional reasonable period of time, not to exceed an additional thirty (30) days, so long as Mortgagor has commenced during the initial twenty (20) day curative period, and diligently pursues to completion, appropriate curative action; or

3.01.Cif any representation, warranty, certification, financial statement or other information made or furnished at any time pursuant to the terms of the Loan Instruments or otherwise, by or on behalf of Mortgagor, any Guarantor or any other Person liable for the Obligations, shall prove to be materially false and, if of a correctable nature, Mortgagor fails to correct same within twenty (20) days after written notice from Mortgagee to Mortgagor, provided that if same is of a curable nature, but not within twenty (20) days, such curative period shall be extended for an additional reasonable period of time, not to exceed an additional thirty (30) days, so long as Mortgagor has commenced during the initial twenty (20) day curative period, and diligently pursues completion, appropriate curative action; or

3.01.Dif Mortgagor shall:

(1)    apply for, consent to or acquiesce in the appointment of a receiver, trustee or liquidator of Mortgagor or of all or any part of Mortgagor’s assets or the Secured Property or any interest in any part thereof (the term “acquiesce” includes the failure to file a petition or motion to vacate or discharge any order, judgment or decree providing for such appointment within ten (10) days after the appointment); or

(2)    commence a voluntary case or other proceeding in bankruptcy, or admit in writing its inability to pay its debts as they come due; or

(3)    make a general assignment for the benefit of creditors; or

(4)    file a petition or an answer seeking reorganization, arrangement, composition, readjustment, liquidation, dissolution or similar relief for itself under any present or future bankruptcy code or any other statute or law relating to bankruptcy, insolvency or other relief for debtors; or

(5)    file an answer admitting the material allegations of, or consent to, or default in answering, a petition filed against it in any bankruptcy, reorganization or insolvency case or proceeding; or

3.01.Eif a court of competent jurisdiction enters an order for relief against Mortgagor under any present or future bankruptcy code or any other statute or law relating to

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bankruptcy, insolvency or other relief for debtors, which order shall continue unstayed and in effect for any period of sixty (60) consecutive days; or

3.01.Fif a court of competent jurisdiction enters an order, judgment or decree adjudicating Mortgagor insolvent, approving a petition seeking reorganization or arrangement of Mortgagor or appointing a receiver, custodian, trustee or liquidator of Mortgagor or of all or any part of Mortgagor’s assets or the Secured Property or any interest in any part thereof, and such order, judgment or decree shall continue unstayed and in effect for any period of sixty (60) consecutive days; or

3.01.Gif Mortgagor assigns or purports to assign the whole or any part of the Rents arising from the Secured Property or any part thereof without the prior written consent of Mortgagee; or

3.01.Hif a Transfer shall occur without the prior written consent of Mortgagee; or

3.01.I3.01I.    if Mortgagor shall be in default beyond any applicable grace period pursuant to any other mortgage, security instrument or other agreement affecting Mortgagor or any substantial part of its assets or all or any part of the Secured Property; or

3.01.Jif any mechanic’s, laborer’s or materialman’s lien, federal tax lien, state or local income tax lien, broker’s lien or other lien not permitted hereunder and affecting the Secured Property or any part thereof is not discharged, by payment, bonding, order of a court of competent jurisdiction or otherwise, within twenty (20) days after Mortgagor receives notice thereof from the lienor or from Mortgagee; or

3.01.Kif any of the events described in Section 3.01(D), Section 3.01(E) and/or Section 3.01(F) shall occur in respect of any Guarantor; or

3.01.Lif a default by any Guarantor or other Person (other than Mortgagee) shall occur under any guaranty, indemnity agreement, or other instrument which it has executed in connection with the Loan, which default remains uncured after the expiration of applicable grace or cure periods; or

3.01.Mif any Guarantor shall deny, disaffirm, contest, repudiate or purport to revoke any guaranty, indemnity agreement or other instrument which it has executed in connection with the Loan for any reason or if any such guaranty, indemnity or other instrument shall cease to be in full force and effect as to the Guarantor or shall be judicially declared null and void as to the Guarantor, or if any Guarantor shall be liquidated, dissolved or wound-up; or

3.01.Nif a default by Mortgagor occurs beyond any applicable notice or cure periods (if any) under any Material Agreement (except, with respect to the Tax Exemption Documents, matters that are being contested by Mortgagor pursuant to Section 1.02(H)); or

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3.01.Oif any Material Agreement is terminated or cancelled by Mortgagor or if Mortgagor accepts a surrender or modification of any Material Agreement without the prior written consent of Mortgagee; or

3.01.Pif any Lease Termination Fee or Lease Guaranty Payment is not paid directly to Mortgagee or deposited with Mortgagee upon Mortgagor’s receipt thereof.

ARTICLE 4REMEDIES

4.01Acceleration, Foreclosure, etc. Upon the happening of any Event of Default, Mortgagee may, at its sole option, declare the entire unpaid balance of the Obligations, including, the Make Whole Amount and any other prepayment charges, if any, due pursuant to any Loan Instrument, immediately due and payable without notice or demand, provided, however, simultaneously with the occurrence of an Event of Default under Sections 3.01D, 3.01E or 3.01F,and without the necessity of any notice or other action by the Mortgagee, all Obligations shall automatically become and be due and payable, without notice or demand. In addition, upon the happening of any Event of Default, Mortgagee may, at its sole option, without further delay, undertake any one or more of the following or exercise any other remedies available to it under applicable law or equity:

4.01.AForeclosure. Institute an action, judicial or otherwise, to foreclose this Mortgage, or take such other action as may be allowed at law or in equity, for the enforcement hereof and realization on the Secured Property or any other security which is herein or elsewhere provided for, or proceed thereon to final judgment and execution thereon for the entire unpaid balance of the Obligations, including interest at the rate specified in the Loan Instruments to the date of the Event of Default and thereafter at the Increased Rate, and all other sums secured by this Mortgage, including all attorneys' fees and expenses, costs of suit and other collection costs, interest at the Increased Rate on any judgment obtained by Mortgagee from and after the date of any sale of the Secured Property (which may be sold in one parcel or in such parcels, manner or order as Mortgagee shall elect) until actual payment is made of the full amount due Mortgagee pursuant to the Loan Instruments, any law, usage or custom to the contrary notwithstanding.

4.01.BPartial Foreclosure. Mortgagee shall have the right to foreclose the lien hereof to satisfy payment and performance of any part of the Obligations from time to time. If an Event of Default exists as to the payment of any part of the Obligations, as an alternative to the right of foreclosure to satisfy payment of the Obligations after acceleration thereof, to the extent permitted by applicable law, Mortgagee may institute partial foreclosure proceedings (“Partial Foreclosure”) with respect to the portion of the Obligations as to which the Event of Default exists, as if under a full foreclosure, and without declaring the entire unpaid balance of the Obligations due. If Mortgagee institutes a Partial Foreclosure, Mortgagee may sell, from time to time, such part or parts of the Secured Property as Mortgagee, in its discretion, deems appropriate, and may make each such sale subject to the continuing lien of this Mortgage for the remainder, from time to time, of the Obligations. No Partial Foreclosure, if so made, shall in any manner affect the remainder, from time to time, of the Obligations or the priority of this Mortgage. As to such remainder, this

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Mortgage and the lien hereof shall remain in full force and effect as though no foreclosure sale had been made pursuant to the provisions of this Section 4.01B. Notwithstanding the filing of any Partial Foreclosure or the entry of a decree of sale therein, Mortgagee may elect, at any time prior to any Partial Foreclosure, to discontinue such Partial Foreclosure and the acceleration of the Obligations by reason of any Event of Default upon which such Partial Foreclosure was predicated, and to proceed with full foreclosure proceedings. Mortgagee may commence a Partial Foreclosure, from time to time, as to any part of the Obligations without exhausting the right of full foreclosure or Partial Foreclosure for any other part of the Obligations as to which such Partial Foreclosure shall not have occurred.

4.01.CEntry. Mortgagee personally, or by its agents or attorneys, may enter all or any part of the Secured Property, and may exclude Mortgagor, its agents and servants wholly therefrom without liability for trespass, damages or otherwise. Mortgagor shall surrender possession of the Secured Property to Mortgagee on demand after the happening of any Event of Default. Thereafter, Mortgagee may use, operate, manage and control the Secured Property and conduct the business thereof, either personally or by its superintendents, managers, agents, servants, attorneys or receivers. Upon each such entry, Mortgagee, at the expense of Mortgagor from time to time, either by purchase, repairs or construction, may maintain and restore the Secured Property, may complete the construction of the Improvements and in the course of such completion may make such changes in the contemplated or completed Improvements as Mortgagee may deem desirable and may insure the same. At the expense of Mortgagor, Mortgagee may make, from time to time, all necessary or desirable repairs, renewals and replacements and such alterations, additions, betterments and improvements thereto and thereon as Mortgagee may deem advisable. In each of the circumstances described in this Section 4.01C, Mortgagee shall have the right to manage and operate the Secured Property and to carry on the business thereof and exercise all rights and powers of Mortgagor with respect thereto, either in the name of Mortgagor or otherwise as Mortgagee shall deem best.

4.01.DCollection of Rents, etc. Mortgagee may collect and receive all Rents. Mortgagee may deduct, from the monies so collected and received, all expenses of conducting the business of the Secured Property and of all maintenance, repairs, renewals, replacements, alterations, additions, betterments and improvements and amounts necessary to pay for Impositions, insurance, taxes and assessments, liens or other charges upon the Secured Property or any part thereof, as well as reasonable compensation for the services of Mortgagee and for all attorneys, agents, clerks, servants, and other employees engaged and employed by Mortgagee. After such deductions and the establishment of all reasonable reserves, Mortgagee shall apply all such monies to the payment of the unpaid Obligations. Mortgagee shall account only for Rents actually received by Mortgagee.

4.01.EReceivership. Mortgagee may have a receiver appointed to enter into possession of the Secured Property, collect the Rents therefrom and apply the same as the court may approve. Mortgagee may have a receiver appointed, as a matter of right without notice and without the necessity of proving either the inadequacy of the security provided by this Mortgage or the insolvency of Mortgagor or any other Person who may be legally or equitably liable to pay the Obligations. Mortgagor and each such Person, presently and prospectively, waive such proof and consent to the appointment of such receiver. If Mortgagee or any receiver collects the Rents,

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the monies so collected shall not be substituted for payment of the Obligations, nor can they be used to cure an Event of Default, without the prior written consent of Mortgagee. Mortgagee shall not be liable to account for Rents not actually received by Mortgagee.

4.01.FSpecific Performance. Mortgagee may institute an action for specific performance of any covenant contained herein or in aid of the execution of any power herein granted.

4.01.GRecovery of Sums Required to be Paid. Mortgagee may, from time to time, take action to recover any sum or sums which constitute a part of the Obligations as such sums shall become due, without regard to whether or not the remainder of the Obligations shall be due, and without prejudice to the right of Mortgagee thereafter to bring an action of foreclosure or any other action for each Event of Default existing from time to time.

4.01.HOther Remedies. Mortgagee may take all actions permitted under the Uniform Commercial Code of the State and may take any other action, or pursue any other right or remedy, as Mortgagee may have under applicable law, and Mortgagor does hereby grant such rights to Mortgagee.

4.01.ICompliance with Laws. The provisions of this Mortgage are intended to comply, and to be read together with, the laws of the State. Where applicable law is contrary to the provisions of this Mortgage, such applicable law shall prevail if and only to the extent such applicable law is mandatory by its terms, it being the express intent of the parties that any contrary legal authority that is permissive is hereby knowingly and voluntarily waived by the parties as set forth in the covenants, terms and conditions of this Mortgage.

4.02No Election of Remedies. Mortgagee may, in its discretion, exercise all or any of the rights and remedies provided herein or in the other Loan Instruments, or which may be provided by statute, law, equity or otherwise, in such order and manner and from time to time, as Mortgagee shall elect without impairing Mortgagee’s lien, or rights pursuant to any of the Loan Instruments and without affecting the liability of any Person for the Obligations.

4.03Mortgagee’s Right to Release, etc. Mortgagee may, in its discretion, from time to time, release (for such consideration as Mortgagee may require) any part of the Secured Property (A) without notice to, or the consent, approval or agreement of any other party in interest, (B) without, as to the remainder of the Secured Property, in any way impairing or affecting the validity or the lien of this Mortgage or any of the other Loan Instruments, or the priority thereof and (C) without releasing Mortgagor from any liability for any of the Obligations. Mortgagee may accept, by assignment, pledge or otherwise, any other property in place of any part of the Secured Property as Mortgagee may require without being accountable for so doing to any other lienor or other Person. To the extent permitted by law, neither Mortgagor, nor the holder of any lien or encumbrance affecting the Secured Property or any part thereof shall have the right to require Mortgagee to marshal assets.

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4.04Mortgagee’s Right to Remedy Defaults, etc. If Mortgagor defaults in the performance of any of the covenants or agreements contained in this Mortgage or any of its other obligations under the other Loan Instruments, or if any action or proceeding is commenced which affects Mortgagee’s interest in the Secured Property or any part thereof, including, but not limited to, eminent domain, code enforcement, or proceedings of any nature whatsoever under any federal or state law, whether now existing or hereafter enacted or amended, relating to bankruptcy, insolvency, arrangement, reorganization or other form of debtor relief, then Mortgagee may, but without obligation to do so and without releasing Mortgagor from any obligation hereunder, cure such defaults, make such appearances, disburse such sums and/or take such other action as Mortgagee deems necessary or appropriate to protect Mortgagee’s interest, including disbursement of attorneys’ fees, entry upon the Secured Property to make repairs, payment of Impositions or insurance premiums or otherwise cure the default in question or protect the security of the Secured Property, and payment, purchase, contest or compromise of any encumbrance, charge or lien encumbering the Secured Property. Mortgagor further agrees to pay all expenses incurred by Mortgagee (including fees and disbursements of counsel) pursuant to this Section 4.04, including those incident to the curing of any default and/or the protection of the rights of Mortgagee hereunder, and enforcement or collection of payment of the Note or any future advances whether by judicial or nonjudicial proceedings, or in connection with any bankruptcy, insolvency, arrangement, reorganization or other debtor relief proceeding of Mortgagor, or otherwise. Any amounts disbursed by Mortgagee pursuant to this Section 4.04 shall be additional indebtedness of Mortgagor secured by this Mortgage as of the date of disbursement and shall bear interest at the Increased Rate from such date until paid by Mortgagor in full. All such amounts shall be payable by Mortgagor immediately without demand. Nothing contained in this Section 4.04 shall be construed to require Mortgagee to incur any expense, make any appearance, or take any other action and any action taken by Mortgagee pursuant to this Section 4.04 shall be without prejudice to any other rights or remedies available to Mortgagee pursuant to any Loan Instrument or at law or in equity.

4.05Waivers. Mortgagor waives and releases (A) all benefits that might accrue to Mortgagor by virtue of any present or future laws exempting the Secured Property, or any part of the proceeds arising from any sale of the Secured Property, from attachment, levy or sale under execution, or providing for any stay of execution, exemption from civil process or extension of time; (B) all benefits that might accrue to Mortgagor from requiring valuation or appraisal of any part of the Secured Property levied or sold on execution of any judgment recovered for the Obligations; (C) all notices not herein or in any other Loan Instrument specifically required as a result of Mortgagor’s default or of Mortgagee’s exercise, or election to exercise, any option pursuant to any of the Loan Instruments; and (D) all rights of redemption to the extent that Mortgagor may lawfully waive same. At no time will Mortgagor insist upon, plead or in any manner whatsoever claim or take any benefit or advantage of any stay or extension or moratorium law or any exemption from execution or sale of the Secured Property or any part thereof, whenever enacted, now or at any time hereafter in force, which may affect the covenants or terms of performance of the Loan Instruments. Similarly, Mortgagor will not claim, take or insist upon any benefit or advantage of any law now or hereafter in force providing for the valuation or appraisal of the Secured Property or any part thereof, prior to any sale or sales thereof which may be made pursuant to any provision hereof, or pursuant to the decree, judgment or order of any court of competent jurisdiction. After any such sale or sales, to the extent permitted by law, Mortgagor shall not claim or exercise any

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right under any law or laws heretofore or hereafter enacted to redeem the property so sold or any part thereof. Mortgagor waives all benefits or advantages of any such law or laws, and covenants not to hinder, delay or impede the execution of any power herein granted or delegated to Mortgagee. Mortgagor shall suffer and permit the execution of every such power as though no such law or laws had been made or enacted. To the extent permitted by law, the Secured Property may be sold in one parcel, as an entirety, or in such parcels, manner or order as Mortgagee in its discretion may decide. To the extent permitted by law, neither Mortgagor nor the holder of any lien or encumbrance affecting the Secured Property or any part thereof may require Mortgagee to marshal assets.

4.06Prepayment. Mortgagor shall pay the charge provided in the Note for prepayment of the Obligations if for any reason (including the acceleration of the due date of the Obligations by Mortgagee following the occurrence of an Event of Default) any of such Obligations shall be due and payable or paid prior to the stated maturity date thereof, whether or not such payment is made prior to or at any sale held pursuant to or by virtue of this Article 4. Mortgagee has relied on Mortgagor’s creditworthiness and its agreement to repay the Obligations in strict accordance with the terms set forth in the Loan Instruments, and would not make the Loan without the promises by Mortgagor to make all payments due pursuant to the Loan Instruments and not to prepay all or any part of the principal balance of the Note prior to the final maturity date thereof, except on the terms expressly set forth herein and in the Note. Therefore, any prepayment of the Note, whether occurring as a voluntary prepayment by Mortgagor or occurring upon an acceleration of the Note by Mortgagee or otherwise, will prejudice Mortgagee’s ability to meet its obligations and to earn the return on the funds advanced to Mortgagor, which Mortgagee intended and expected to earn when it made the Loan, and will also result in other losses and additional expenses to Mortgagee. In consideration of Mortgagee making the Loan at the interest rate and for the term set forth in the Note, except as expressly permitted pursuant to the Note, Mortgagor expressly waives all rights it may have under applicable law to prepay, without charge or premium, all or any part of the Note, either voluntarily or upon an acceleration of the Note by Mortgagee, including an acceleration upon the making or suffering by Mortgagor of any transfer or disposition prohibited by Section 1.11. If a prepayment of all or any part of the principal balance of the Note is made by or on behalf of Mortgagor, for any reason, whether due to the voluntary acceptance by Mortgagee of a prepayment tendered by Mortgagor, or the acceleration of the Note by Mortgagee, or in connection with any reinstatement of the Loan Instruments pursuant to any foreclosure proceedings, or any right of redemption exercised by Mortgagor or any other party having the right to redeem or to prevent any foreclosure of this Mortgage, or upon the consummation of any foreclosure sale, or under any other circumstances, Mortgagor or any other Person making any such prepayment shall be obligated to pay, concurrently therewith, the Make Whole Amount, as defined and as set forth in the Note, and the payment of the Make Whole Amount shall be a condition to the making of such prepayment, and the payment of the Make Whole Amount shall be secured by this Mortgage and the other Loan Instruments. Mortgagor shall pay the Make Whole Amount without prejudice to the right of Mortgagee to collect any other amounts due pursuant hereto or to declare a default hereunder. Nothing herein shall be construed as permitting any partial prepayment of the Obligations, except with Mortgagee’s prior written consent thereto obtained in each instance.

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ARTICLE 5MISCELLANEOUS

5.01Non-Waiver. The failure of Mortgagee to insist upon strict performance of any term of this Mortgage or any other Loan Instrument shall not be deemed to be a waiver of any term of this Mortgage or any other Loan Instrument. Mortgagor shall not be relieved of its obligation to pay and perform the Obligations, at the time and in the manner provided in the Loan Instruments, by reason of (A) a failure by Mortgagee to take any action to foreclose this Mortgage or otherwise enforce any of the provisions of this Mortgage or of any other Loan Instrument (regardless of whether or not Mortgagor has requested Mortgagee to do so), (B) the release, regardless of consideration, of the whole or any part of the Secured Property or any other security for the Obligations, or (C) any agreement or stipulation between Mortgagee and any subsequent owner or owners of the Secured Property or any other Person extending the time of payment or otherwise modifying or supplementing the terms of this Mortgage or any other Loan Instrument, without first having obtained the consent of Mortgagor. Mortgagor shall pay and perform the Obligations at the time and in the manner provided in this Mortgage and the other Loan Instruments as so extended, modified or supplemented, unless expressly released and discharged by Mortgagee. Regardless of consideration, and without the necessity for any notice to or consent by the holder of any subordinate lien, encumbrance, right, title or interest in or to the Secured Property, Mortgagee may release any Person at any time liable for the payment or performance of the Obligations, or any part thereof, or any part of the security held for the Obligations, and may extend the time of such payment or performance or otherwise modify the terms of any Loan Instrument, including a modification of the interest rate payable on the principal balance of the Note, without Mortgagor’s prior written consent and without in any manner impairing or affecting any of the Loan Instruments or the lien thereof or the priority of this Mortgage, as so extended and modified, as security for the Obligations over any such subordinate lien, encumbrance, right, title or interest. Mortgagee may resort for the payment and performance of the Obligations to any other security held by Mortgagee in such order and manner as Mortgagee, in its discretion, may elect. Mortgagee may take action to require payment and performance of the Obligations, or any part thereof, or to enforce any term of this Mortgage, without prejudice to the right of Mortgagee thereafter to foreclose this Mortgage. In addition to the rights and remedies stated in this Mortgage, Mortgagee may exercise every additional right and remedy now or hereafter afforded by law or in equity. Each right of Mortgagee pursuant to this Mortgage shall be separate, distinct and cumulative, and no such right shall be given effect to the exclusion of any other. No act of Mortgagee shall be construed as an election to proceed pursuant to any one provision of this Mortgage to the exclusion of any other provision.

5.02Sole Discretion of Mortgagee. Whenever in this Mortgage or in any other Loan Instrument it provides that (A) Mortgagee exercises any right to approve or disapprove or to give or withhold its consent, (B) any arrangement or term is to be satisfactory to Mortgagee, or (C) any other decision or determination is to be made by Mortgagee, Mortgagee may give or withhold such approval or consent, determine whether or not such arrangement or term is satisfactory, and make all other decisions or determinations, in Mortgagee’s sole and absolute discretion, and Mortgagee’s decision shall be final and conclusive except where this Mortgage expressly provides to the contrary. If Mortgagor shall seek the consent or approval of Mortgagee pursuant to this Mortgage and

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Mortgagee shall fail or refuse to give such consent or approval, Mortgagor shall not be entitled to any damages for any withholding of such approval or consent by Mortgagee. Mortgagor’s sole remedy shall be an action for injunctive or declaratory relief, which remedy shall be available only in those cases where Mortgagee has expressly agreed not to unreasonably withhold its consent or approval.

5.03Legal Tender. Mortgagor shall pay all payments of principal, interest or other amounts required or provided for herein in lawful money of the United States of America at the time of payment, at the above described office of Mortgagee or at such other place as Mortgagee may from time to time designate.

5.04No Merger or Termination. If both the lessor’s and Lessee’s estates under any Lease or any portion thereof which constitutes a part of the Secured Property shall at any time become vested in one owner, this Mortgage and the lien created hereby shall not be destroyed or terminated by the application of the doctrine of merger and in such event, Mortgagee shall continue to have and enjoy all of its rights and privileges as to the separate estates. In addition, the foreclosure of this Mortgage shall not destroy or terminate any Lease or sublease then existing and created by Mortgagor, whether by application of the law of merger or as a matter of law or otherwise, unless Mortgagee or any purchaser at any sale related to such foreclosure shall so elect. No act by or on behalf of Mortgagee or any such purchaser shall constitute a termination of any Lease or sublease, unless Mortgagee or such purchaser shall give written notice thereof to the related Lessee or sublessee.

5.05Discontinuance of Actions. If Mortgagee shall enforce any right pursuant to this Mortgage by foreclosure, sale, entry or otherwise and discontinue or abandon such enforcement for any reason or any such proceedings shall have been determined adversely, then, in each such case, Mortgagor and Mortgagee shall be restored to their former positions and rights hereunder, and the Secured Property shall remain subject to the lien of this Mortgage.

5.06Headings. The headings of the Sections and other subdivisions of this Mortgage are for the convenience of reference only, are not to be considered a part hereof, and shall not limit or otherwise affect any of the terms hereof.

5.07Notice to Parties. All notices and demands or other communications hereunder shall be in writing, and shall be deemed to have been sufficiently given or served for all purposes when presented personally or sent by generally recognized overnight delivery service, with postage prepaid, addressed to Mortgagor or Mortgagee, as applicable, at the addresses stated below, or at such other address of which either Mortgagor or Mortgagee may hereafter notify the other in writing:

Mortgagor:

AMERICAN FINANCIAL EXCHANGE, L.L.C.,
PLAZA X URBAN RENEWAL ASSOCIATES L.L.C. and
PLAZA X LEASING ASSOCIATES L.L.C.

c/o Dividend Capital

518 17th Street, Suite 1700

57

Denver, Colorado 80202

Attn: General Counsel

with copies to:    

DIVIDEND CAPITAL GROUP

518 17th Street, Suite 1700

Denver, Colorado 80202

Attn: Lainie Minnick

BRYAN CAVE LLP

1700 Lincoln Street

Suite 4100

Denver, Colorado 80203

Attn: Robert H. Bach, Esq.

Mortgagee:

NEW YORK LIFE INSURANCE COMPANY

c/o New York Life Real Estate Investors

51 Madison Avenue

New York, New York 10010-1603

Attn: Senior Director - Loan Administration Division

Loan No.: 374-0800

with a copy to:

NEW YORK LIFE INSURANCE COMPANY

Office of the General Counsel

51 Madison Avenue

New York, New York 10010-1603

Attn: Managing Director - Real Estate Section

Each notice or demand so given or served shall be deemed given and effective, (A) if personally delivered, on the day of actual delivery or refusal and (B) if sent by generally recognized overnight delivery service, on the next Business Day. Notwithstanding the foregoing, service of any notice of default or notice of sale provided or required by law shall, if mailed as required by law, be deemed given and effective on the date of mailing.

5.08Successors and Assigns Included In Parties. Subject to the provisions of Section 1.11, each reference herein to Mortgagor or Mortgagee shall mean and include, the heirs, legal representatives, successors and assigns of such Person. All covenants and agreements contained in this Mortgage by or on behalf of Mortgagor shall bind and inure to the benefit of Mortgagor’s heirs, legal representatives, successors and assigns, and all covenants and agreements by or on behalf of Mortgagee shall bind and inure to the benefit of Mortgagee’s successors and assigns.

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5.09Changes and Modifications. This Mortgage may only be changed or modified by an agreement in writing, signed by both Mortgagor and Mortgagee.

5.10Applicable Law. This Mortgage and the rights and obligations of the parties hereunder shall be governed by, and construed in accordance with, the laws of the State, without regard to principles of conflicts of laws.

5.11Invalid Provisions to Affect No Others. The unenforceability or invalidity of any provision or provisions of this Mortgage as to any Persons or circumstances shall not render that provision or those provisions unenforceable or invalid as to any other Persons or circumstances, and all provisions hereof, in all other respects, shall remain valid and enforceable.

5.12Usury Savings Clause. Mortgagor and Mortgagee intend to conform strictly to the usury laws now or hereafter in force in the State and all interest payable pursuant to the Note, this Mortgage or any other Loan Instrument, unless exempt from such laws, shall be subject to reduction to the amount equal to the maximum non-usurious amount allowed pursuant to such usury laws as now or hereafter construed by the courts having jurisdiction over such matters. The aggregate of all interest (whether designated as interest, service charges, points or otherwise) contracted for, chargeable or receivable pursuant to the Note, this Mortgage or any other Loan Instrument shall under no circumstances exceed the maximum legal interest rate which Mortgagee may charge under applicable law from time to time. Any interest in excess of the maximum amount permitted by law shall be deemed a mistake and shall be canceled automatically and, if theretofore paid, Mortgagee shall, at its option, either rebate such interest to Mortgagor or credit such interest to the principal amount of the Obligations, or if all such principal has been repaid, Mortgagee shall rebate such excess to Mortgagor.

5.13No Statute of Limitations. To the full extent permitted by law, Mortgagor hereby waives the pleading of any statute of limitations as a defense to any or all of the Obligations.

5.14Late Charges. If Mortgagor fails to pay when due any installment of interest or principal, any payment due pursuant to Section 1.04 or any deposit or reserve due pursuant to this Mortgage or any other Loan Instrument, Mortgagor shall pay to Mortgagee (unless waived by Mortgagee) the Late Charge (as defined and described in the Note) pursuant to the terms of the Note. Each such Late Charge, if not previously paid, shall, at the option of Mortgagee, be added to and become part of the succeeding monthly payment to be made pursuant to the Note, and shall be secured by this Mortgage. Any such Late Charge shall be in addition to any fees and charges of any agents or attorneys which Mortgagee is entitled to employ on any default hereunder whether authorized herein or by law. Mortgagor acknowledges that any default in the payment of any installment of principal or interest due under the Note or any other payment required hereunder will result in loss and additional expenses to Mortgagee in servicing the indebtedness secured hereby, handling such delinquent payments and meeting its other financial obligations, and that the extent of such loss and additional expense is extremely difficult and impractical to ascertain. Accordingly, Mortgagor acknowledges that such Late Charge is a reasonable estimate of such loss and expenses.

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5.15Waiver of Jury Trial. MORTGAGOR WAIVES ANY RIGHT TO TRIAL BY JURY WITH RESPECT TO ANY ACTION OR PROCEEDING (A) BROUGHT BY MORTGAGOR, MORTGAGEE OR ANY OTHER PERSON RELATING TO (I) THE OBLIGATIONS OR ANY UNDERSTANDINGS OR PRIOR DEALINGS BETWEEN MORTGAGOR AND MORTGAGEE OR (II) THE LOAN INSTRUMENTS, OR (B) TO WHICH MORTGAGEE IS A PARTY.

5.16Continuing Effectiveness. This Mortgage shall secure all advances made pursuant to the Loan Instruments, all rearrangements, modifications, replacements and renewals of the Obligations and all extensions as to the time of payment thereof, whether or not such advances, rearrangements, modifications, replacements and renewals or extensions are evidenced by new promissory notes or other instruments hereafter executed and irrespective of whether filed or recorded. The execution of this Mortgage shall not impair or affect any other security which may be given to secure the payment of the Obligations, and all such additional security shall be considered as cumulative. The taking of additional security, execution from time to time of partial releases as to the Secured Property or any extension of time of payment of the Obligations shall not diminish the force, effect or lien of this Mortgage, and shall not affect or impair the liability of any maker, surety or endorser for the payment of the Obligations.

5.17Time of Essence. Time is of the essence as to Mortgagor’s performance of each provision of this Mortgage, the Note and the other Loan Instruments. Mortgagor agrees that where, by the terms of this Mortgage, the Note or any other Loan Instrument, a day is named or a time is fixed for the payment of any sum of money or the performance of any obligation by Mortgagor, the day and/or time stated enters into the consideration and is of the essence of the whole contract.

5.18Non-Recourse. This Mortgage is, and shall be, subject to, the exculpation provisions of Section 15 of the Note.

5.19Non-Business Days. If any payment required hereunder or under any other Loan Instrument becomes due on a day that is not a Business Day, then such payment shall be due and payable on the immediately preceding Business Day.

5.20Single Purpose Entity. Mortgagor represents and warrants that at all times since June 25, 2010 (the “Acquisition Date”) and covenants that at all times hereafter:

5.20.AMortgagor has not owned, and will not own, either directly or indirectly, any asset or property other than (1) the Secured Property (or a leasehold interest therein) and (2) incidental personal property necessary for the ownership or operation of the Secured Property.

5.20.BMortgagor has not engaged in, and will not engage in, any business other than the ownership, leasing, management and operation of the Secured Property and Mortgagor will conduct and operate its business as presently conducted and operated.

5.20.CMortgagor has not entered into, and will not enter into, any contract or agreement with any Affiliate of Mortgagor, any constituent party of Mortgagor or any Affiliate of any constituent party, except upon terms and conditions that are no less favorable than those that would be available on an arms-length basis with unaffiliated third parties.

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5.20.DMortgagor has not incurred, and will not incur, any indebtedness, secured or unsecured, direct or indirect, absolute or contingent (including guaranteeing any obligation), other than (1) the Prior Loans, (2) the Obligations, and (3) trade and operational debt incurred in the ordinary course of business with trade creditors in amounts as are normal and reasonable under the circumstances, provided that such trade and operational debt is paid within sixty (60) days of the date it is incurred. No indebtedness other than the Obligations may be secured (subordinate or pari passu) by the Secured Property (except for the Prior Loans).

5.20.EMortgagor has not made, and will not make, any loans or advances to any Person (including any Affiliate, any constituent party of Mortgagor or any Affiliate of any constituent party), and has not acquired, and will not acquire, obligations or securities of its Affiliates or any constituent party.

5.20.FMortgagor has been, is and will remain solvent to the extent of available cash flow from the Secured Property and Mortgagor has paid and will pay its debts and liabilities from its assets (to the extent of such assets), as the same shall become due.

5.20.GMortgagor has done and will do all things necessary to observe organizational formalities and preserve its existence. Mortgagor has not permitted, and will not permit, any constituent party to amend, modify or otherwise change the partnership certificate, partnership agreement, articles of incorporation, bylaws, articles of organization, operating agreement, trust agreement or other organizational document of Mortgagor or such constituent party in a manner which would result in a breach of any of the representations, warranties or covenants set forth in this Section 5.20 or in a manner that would otherwise adversely affect Mortgagor's single purpose status.

5.20.HMortgagor has maintained, and will maintain, all of its books, records, financial statements and bank accounts separate from those of any other Person (including, without limitation, any Affiliate of Mortgagor, any constituent party of Mortgagor or any Affiliate of any constituent party) and Mortgagor will file its own tax returns, if any, although Mortgagor may file consolidated tax returns to the extent that Mortgagor is a “disregarded entity” for tax purposes and is not required to file tax returns under applicable law. Mortgagor has maintained and will maintain its books, records, resolutions and agreements as official records.

5.20.IMortgagor has been and will be, and at all times, has held and will hold itself out to the public as, a legal entity separate and distinct from any other Person (including, without limitation, any Affiliate of Mortgagor, any constituent party of Mortgagor or any Affiliate of any constituent party), has maintained and will maintain an arms'-length association with its Affiliates, has corrected and will correct any known misunderstanding regarding its status as a separate entity, has conducted and will conduct business in its own name, has not identified and will not identify itself or any of its Affiliates as a division or part of the other and has maintained and will maintain and utilize a separate telephone number and separate stationery, invoices and checks to the extent its business requires the same.

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5.20.JMortgagor has maintained and will maintain adequate capital for the normal obligations reasonably foreseeable in a business of its size and character and in light of its contemplated business operations to the extent of available cash flow from the Secured Property.

5.20.KNeither Mortgagor nor any constituent party has caused or will cause, or has permitted or will permit, the dissolution, winding up, liquidation, consolidation or merger in whole or in part, of Mortgagor.

5.20.LMortgagor has not commingled, and will not commingle, the funds and other assets of Mortgagor with those of any Affiliate or constituent party, or any other Person.

5.20.M    Mortgagor has maintained, and will maintain, its assets in such a manner that it will not be costly or difficult to segregate, ascertain or identify its individual assets from those of any Affiliate or constituent party, or any other Person.

5.20.NMortgagor has not held (except in connection with the Prior Loans), and will not hold, itself out to be responsible for the debts or obligations of any other Person.

5.20.OMortgagor does and will continue to (1) allocate fairly and reasonably any overhead and expense for office space shared with any affiliated Person, (2) pay any liabilities, including salaries of its employees, out of its own funds and not from funds of any affiliated Person and/or (3) maintain a sufficient number of employees (which may be zero) in light of its contemplated business operations.

5.20.PMortgagor shall have at least one (1) Independent Director and Mortgagor shall not, without the prior written consent of each such Independent Director institute proceedings to be adjudicated bankrupt or insolvent, or consent to the institution of such proceedings against it, or file a petition seeking, or consent to, reorganization or relief, under any chapter of the Bankruptcy Code (Title 11 of the United States Code), as amended, or any other bankruptcy or similar laws, or consent to the appointment of a receiver, liquidator, assignee, trustee, sequestrator or similar official of it or of a substantial part of its assets or property, or make an assignment for the benefit of creditors, or admit in writing its inability to pay its debts generally as they become due, or take any action in furtherance of any of the foregoing. No termination or change of the Independent Director shall be made without giving Mortgagee at least ten (10) Business Days’ prior written notice, which notice shall include a copy of a resume for such proposed replacement Independent Director that reflects that such individual meets the requirements contained herein; provided further, that Mortgagee shall have the right to object to the appointment of said replacement and in the event of such objection, the proposed replacement shall not be admitted. Notwithstanding the foregoing, any current Independent Director that receives notice of the termination of its duties shall provide a copy of said notice to Mortgagee within five (5) Business Days of receipt thereof.

An inadvertent and immaterial failure to satisfy or comply with any one of the covenants contained in this Section 5.20 shall not, in and of itself, disqualify Mortgagor as a single purpose entity so long as under the circumstances in question, no Person would have a reasonable basis for asserting that Mortgagor is not a single purpose entity and Mortgagor takes all steps reasonably

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required in light of such failure to so satisfy or comply with such covenants in order to correct any known misunderstanding regarding Mortgagor’s status as a single purpose entity.

Promptly following Mortgagee’s request, Mortgagor shall deliver to Mortgagee a certification executed by an officer of Mortgagor certifying to Mortgagee that, as of such date, Mortgagor complies with the provisions of this Section 5.20 (the “SPE Certification”).

5.21Intentionally Omitted.

5.22Joint and Several. The obligations of each Person and entity comprising Mortgagor shall be joint and several. The unenforceability or invalidity of any provision of this Mortgage as to any Person or circumstance shall not render that provision unenforceable or invalid as to any other Person or circumstance, and all provisions hereof, in all other respects, shall remain valid and enforceable.

5.23Future Advances. This Mortgage secures not only existing Obligations, but also future or additional advances made pursuant hereto or pursuant to the other Loan Instruments, whether such advances are obligatory or optional. To the maximum extent provided by applicable law, all such future advances shall have the same priority of lien as if such future advances or Obligations were made on the date of execution of this Mortgage, and all such future advances shall relate back to the recording date of this Mortgage. The lien of this Mortgage, as to third persons with or without actual knowledge thereof, shall be valid as to all such future advances, from the date of recordation, to the extent permitted by the laws of the State.

ARTICLE 6LOCAL LAW PROVISIONS

6.01Principals of Construction. In the event of any inconsistencies between the terms and conditions of this Article 6 and the terms and conditions of this Mortgage, the terms and conditions of this Article 6 shall control and be binding.

6.02Hazardous Substances. Mortgagor shall not conduct or cause or permit to be conducted on the Premises any activity which constitutes an Industrial Establishment (as such term is defined in the New Jersey Industrial Site Recovery Act, as amended (“ISRA”)) without the prior written consent of Mortgagee. In the event that the provisions of ISRA become applicable to the Premises subsequent to the date hereof, Mortgagor shall give prompt written notice thereof to Mortgagee and shall take immediate requisite action to insure compliance with ISRA. Mortgagor shall deliver to Mortgagee copies of all correspondence, notices and submissions that it sends to or receives from the New Jersey Department of Environmental Protection in connection with such ISRA compliance. Mortgagor’s obligation to comply with ISRA shall, notwithstanding its general applicability, also specifically apply to sale, transfer, closure or termination of operations associated with any foreclosure action respecting the Secured Property, including, without limitation, a foreclosure action brought with respect to this Mortgage.

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6.03Continuing Enforcement of Mortgage. If, after receipt of any payment of all or any part of the obligations under the Note, this Mortgage, and the other Loan Instruments, Mortgagee is compelled or agrees, for settlement purposes, to surrender such payment to any Person for any reason (including, without limitation, a determination that such payment is void or voidable as a preference or fraudulent conveyance, an impermissible setoff, or a diversion of trust funds), then this Mortgage and the other Loan Instruments shall continue in full force and effect, and Mortgagor shall be liable for, and shall indemnify, defend and hold harmless Mortgagee with respect to the full amount so surrendered. The provisions of this Section shall survive the cancellation or discharge of this Mortgage and shall remain effective notwithstanding the payment of the obligations, under the Note, this Mortgage and the other Loan Instruments, the cancellation of the Note, the release of any security interest, lien or encumbrance securing the obligations under the Note, this Mortgage and the other Loan Instruments, or any other action which Mortgagee may have taken in reliance upon its receipt of such payment. Any cancellation, release or other such action by Mortgagee shall be deemed to have been conditioned upon any payment of the obligations under the Note, this Mortgage and the other Loan Instruments, having become final and irrevocable.

6.04Freshwater Wetlands. Mortgagor hereby represents and warrants to Mortgagee that, to the best of Mortgagor’s knowledge, the Secured Property is not located within a “freshwater wetlands” or a “transition area”, each as defined by N.J.S.A. 13:9B-3, and is not subject to the terms of the New Jersey Freshwater Wetlands Protection Act, as amended, N.J.S.A. 13:9B-1 et. seq., or the rules and regulations promulgated thereunder.

6.05Modification of Mortgage. This Mortgage is subject to “modification” as such term is defined in P.L. 1985 c.353 (N.J.S.A. 46:9-8.l et. seq.) and shall be subject to the priority provisions thereof.

6.06No Credit for Tax Paid. Mortgagor waives any right it may have to a credit against interest due under the Obligations secured by this Mortgage pursuant to N.J.S.A. 54:4-33.

6.07Receipt of Copy. Mortgagor hereby acknowledges receipt of a true copy of this Mortgage without charge.

[SIGNATURE ON FOLLOWING PAGE]

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IN WITNESS WHEREOF, Mortgagor has executed this Mortgage as of the date first above written.

AMERICAN FINANCIAL EXCHANGE, L.L.C.,

a New Jersey limited liability company

By: TRT Harborside LLC,

     a Delaware limited liability company,

     its manager

     By: DCTRT Real Estate Holdco LLC,

a Delaware limited liability company,

its manager

By: Dividend Capital Total Realty Operating Partnership LP,

a Delaware limited partnership,

its sole member

By: Dividend Capital Diversified Property Fund Inc.,

a Maryland corporation,

its general partner

By:    /s/ M. Kirk Scott                                                 

Name: M. Kirk Scott

Title: Chief Financial Officer

PLAZA X URBAN RENEWAL ASSOCIATES L.L.C.,

a New Jersey limited liability company

         By: Plaza X Realty L.L.C.,

a New Jersey limited liability company,

its manager

By: American Financial Exchange, L.L.C.,

a New Jersey limited liability company,

its manager

By: TRT Harborside LLC,

a Delaware limited liability company,

its manager

By: DCTRT Real Estate Holdco LLC,

a Delaware limited liability company,

its manager

By: Dividend Capital Total Realty

Operating Partnership LP,

a Delaware limited partnership,

its sole member

By: Dividend Capital Diversified

Property Fund Inc.,

a Maryland corporation,

its general partner

By: /s/ M. Kirk Scott                                      

Name: M. Kirk Scott

Title: Chief Financial Officer

PLAZA X LEASING ASSOCIATES L.L.C.,

a New Jersey limited liability company

By:  Plaza X Realty L.L.C.,

         a New Jersey limited liability company,

         its manager

By: American Financial Exchange, L.L.C.,

a New Jersey limited liability company,

its manager

By: TRT Harborside LLC,

a Delaware limited liability company,

its manager

By: DCTRT Real Estate Holdco LLC,

a Delaware limited liability company,

its manager

By: Dividend Capital Total Realty

Operating Partnership LP,

a Delaware limited partnership,

its sole member

By: Dividend Capital Diversified

Property Fund Inc.,

a Maryland corporation,

its general partner

By:  /s/ M. Kirk Scott                                   

Name: M. Kirk Scott

Title: Chief Financial Officer

ACKNOWLEDGMENT

STATE OF COLORADO        )

) SS:

COUNTY OF DENVER        )

BE IT REMEMBERED that on this __5th_day of _January______, 2017, M. Kirk Scott, Chief Financial Officer of Dividend Capital Diversified Property Fund Inc., a Maryland corporation, the general partner of Dividend Capital Total Realty Operating Partnership LP, a Delaware limited partnership, the sole member of DCTRT Real Estate Holdco LLC, a Delaware limited liability company, the manager of TRT Harborside LLC, a Delaware limited liability company, the manager of American Financial Exchange, L.L.C., a New Jersey limited liability company, personally appeared before me, the undersigned, and thereupon acknowledged, under oath, to my satisfaction, that he is the person who executed the within instrument; that he was authorized to execute the within instrument on behalf of such entity and that he executed the within instrument as the voluntary act and deed of such entity for the purposes therein expressed.

/s/ Kara Meairs____________________________

Notary Public

My Commission Expires: October 10, 2018

[seal]

ACKNOWLEDGMENT

STATE OF COLORADO        )

) SS:

COUNTY OF DENVER        )

BE IT REMEMBERED that on this __5th__day of _January_____, 2017, M. Kirk Scott, Chief Financial Officer of Dividend Capital Diversified Property Fund Inc., a Maryland corporation, the general partner of Dividend Capital Total Realty Operating Partnership LP, a Delaware limited partnership, the sole member of DCTRT Real Estate Holdco LLC, a Delaware limited liability company, the manager of TRT Harborside LLC, a Delaware limited liability company, the manager of American Financial Exchange, L.L.C., a New Jersey limited liability company, the manager of Plaza X Realty L.L.C., a New Jersey limited liability company, the manager of Plaza X Urban Renewal Associates L.L.C., a New Jersey limited liability company, personally appeared before me, the undersigned, and thereupon acknowledged, under oath, to my satisfaction, that he is the person who executed the within instrument; that he was authorized to execute the within instrument on behalf of such entity and that he executed the within instrument as the voluntary act and deed of such entity for the purposes therein expressed.

/s/ Kara Meairs____________________________

Notary Public

My Commission Expires: October 10, 2018

[seal]

ACKNOWLEDGMENT

STATE OF COLORADO        )

) SS:

COUNTY OF DENVER        )

BE IT REMEMBERED that on this _5th____day of __January___, 2017, M. Kirk Scott, Chief Financial Officer of Dividend Capital Diversified Property Fund Inc., a Maryland corporation, the general partner of Dividend Capital Total Realty Operating Partnership LP, a Delaware limited partnership, the sole member of DCTRT Real Estate Holdco LLC, a Delaware limited liability company, the manager of TRT Harborside LLC, a Delaware limited liability company, the manager of American Financial Exchange, L.L.C., a New Jersey limited liability company, the manager of Plaza X Realty L.L.C., a New Jersey limited liability company, the manager of Plaza X Leasing Associates L.L.C., a New Jersey limited liability company, personally appeared before me, the undersigned, and thereupon acknowledged, under oath, to my satisfaction, that he is the person who executed the within instrument; that he was authorized to execute the within instrument on behalf of such entity and that he executed the within instrument as the voluntary act and deed of such entity for the purposes therein expressed.

/s/ Kara Meairs____________________________

Notary Public

My Commission Expires: October 10, 2018

[seal]

Schedule A

LEGAL DESCRIPTION

Real property in the City of Jersey City, County of Hudson, State of New Jersey, described as follows:

ALL that certain lot, parcel or tract of land, situate and lying in the City of Jersey City, County of Hudson and State of New Jersey being more particularly described as follows:
PARCEL ONE:
Beginning at a point on the Southerly side of Second Street Extension (52’ wide) said point being the following two (2) courses along said southerly side of Second Street Extension (52’ wide) as extended, from its intersection with the Easterly side of Hudson Street (62’ wide) as extended, and running; thence
a. South 83 degrees 50 minutes 02 seconds East 195.11 feet to a bend; thence
b. South 84 degrees 47 minutes 48 seconds East 102.62 feet to a point of beginning and running; thence
1. South 84 degrees 47 minutes 48 seconds East 35.65 feet along the Southerly side of Second Street Extension (52’ wide) to a point of curvature; thence
2. Along a curve to the right having a radius of 50.00 feet, an arc length of 60.93 feet (chord which bears South 49 degrees 53 minutes 06 seconds East 57.23 feet) to a point of reverse curvature; thence
3. Along a curve to the left having a radius of 60.00 feet, an arc length of 160.03 feet along the Easterly terminus of Second Street Extension (chord which bears North 88 degrees 37 minutes 11 seconds East 116.64 feet) to a point on curve, thence
4. South 83 degrees 50 minutes 02 seconds East 98.17 feet to a point; thence
5. South 06 degrees 09 minutes 58 seconds West 23.06 feet to a point on curve; thence
6. Southerly along a curve to the right having a radius of 502.36 feet, an arc length of 195.70 feet (chord which bears South 00 degrees 42 minutes 02 seconds West 194.47 feet) to a point on curve; thence
7. North 87 degrees 59 minutes 06 seconds West 204.55 feet to a point; thence
8. North 75 degrees 59 minutes 06 second West 120.02 feet to a point; thence

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9. North 08 degrees 00 minutes 54 seconds East 231.23 feet to the point of beginning.
Being known as proposed Lot 35.01 in Block 15 as shown on a certain map entitled “Proposed Subdivision of Lots 35 & 36 in Block 15 and Lots 6 & 18 in Block 10 prepared for Mack-Cali Realty Corp. in the City of Jersey City, Hudson County, New Jersey” prepared by John Zanetakos Associates, Inc., dated January 30, 2001 and labeled Job No. 00-7628-300, and filed in the Hudson County Clerk’s office on August 29, 2001 as map number 3813.
FOR INFORMATIONAL PURPOSES ONLY: Also known as Lot 23 and 23X Block 11603 on the City of Jersey City Tax Map.
TOGETHER WITH the easements granted to American Financial Exchange, L.L.C. in the Cross Reciprocal Easement Agreement (“CREA”) between and among American Financial Exchange, L.L.C., Plaza VIII & IX Associates, L.L.C., and Cali Harborside (Fee) Associates, L.P., dated September 29, 2003 and recorded on October 7, 2003 in the Hudson County Register’s office in Deed Book 7147, at page 157; as such easements are defined and described therein:
“Plaza X Storm Water Easement” in, to, under and within the “Plaza 8/9 Storm Water Easement Area” “Plaza X Communication Easement” in, to, under and within the “Plaza 8/9 Communication Easement Area”
“Temporary Plaza X Communication Easement” in, to, under and within the “Temporary Communication Easement Area”
“Plaza X Water Easement” in, to, under and within the “Plaza 8/9 Water Main Easement Area”
“Plaza X Vehicular Easement” over and across the “Plaza 8/9 Vehicular Easement Area”
“Plaza X Pedestrian Easement” over and across the “Plaza 8/9 Pedestrian Easement Area”
“Plaza X Parking Easement” over, on, along and across the “Plaza 8/9 Parking Easement Areas”
TOGETHER WITH the easements granted to American Financial Exchange, L.L.C. or its predecessor-in-interest, in the Reciprocal Operation and Easement Agreement for The Harborside Financial Center, dated December 4th, 1995, recorded December 7th, 1995 in Deed Book 4936, Page 001, as same was amended by First Amendment, recorded October 18, 1996 in Deed Book 5055, Page 164 and as amended by Second Amendment, recorded January 10, 2001 in Deed Book 5739, Page 284 and Covenant and Restriction Agreement (governed by the above Reciprocal Operation and Easement Agreement and Amendments), recorded October 07, 2003 in Deed Book 7147, Page 292.
PARCEL TWO:
Beginning at a point in the dividing line between Lot 48 in Block 15 as shown on the City of Jersey City Tax Assessment to the south and Lot 30 in Block 15 (Tax Map) to the North, said point of beginning being S 83 degrees 50 minutes 02 seconds E, 48.53 feet along the dividing line between Lots 48 and 30 in Block 15 (Tax Map) from its intersection with the Easterly line of Second Street Extension and running; thence
1. N 06 degrees 09 minutes 58 seconds E 1.66 feet to a point; thence

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2. S 83 degrees 54 minutes 00 seconds E 50.74 feet to a point; thence
3. S 05 degrees 35 minutes 27 seconds W 23.12 feet to a point on curve; thence
4. Southerly along a curve to the right having a radius of 694.85 feet an arc length of 136.45 feet, a central angle of 11 degrees 15 minutes 06 seconds and a chord which bears S 04 degrees 19 minutes 57 seconds E 136.23 feet to a point of compound curvature; thence
5. Southerly along a curve to the right having a radius of 395.13 feet, an arc length of 60.77 feet, a central angle of 08 degrees 48 minutes 42 seconds and a chord which bears S 05 degrees 41 minutes 57 seconds W 60.71 feet to a point on curve; thence
6. N 87 degrees 59 minutes 06 seconds W 8.16 feet along the Easterly extension of the dividing line between Lots 48 and 49 in Block 15 (Tax Map); thence the following three (3) courses along the Easterly line of Lot 48 in Block 15 (Tax Map)
7. Northerly along a curve to the left having a radius of 502.36 feet, an arc length of 195.70 feet, a central angle of 22 degrees 19 minutes 15 seconds and a chord which bears N 00 degrees 42 minutes 02 seconds E 194.47 feet to a point on curve; thence
8. N 06 degrees 09 minutes 58 seconds E 23.06 feet to a point on curve; thence
9. N 83 degrees 50 minutes 02 seconds W 49.64 feet to a point, the point and place of beginning.
FOR INFORMATIONAL PURPOSES ONLY: Also known as a part of Lot 7 in Block 11603 on the City of Jersey City Tax Map.

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EX-10.28

Exhibit 10.28

Dividend Capital Diversified Property Fund Inc. 10-K

PROMISSORY NOTE

$146,600,000.00 Jersey City, New Jersey

January 10, 2017

FOR VALUE RECEIVED, AMERICAN FINANCIAL EXCHANGE, L.L.C., PLAZA X URBAN RENEWAL ASSOCIATES L.L.C. and PLAZA X LEASING ASSOCIATES L.L.C. (collectively, “Maker”), each a New Jersey limited liability company, having an office at c/o Dividend Capital, 518 17th Street, Suite 1700, Denver, Colorado 80202, promises to pay, jointly and severally, to NEW YORK LIFE INSURANCE COMPANY (“Holder”), a New York mutual insurance company, having its principal office at 51 Madison Avenue, New York, New York 10010-1603, on order, without offset, at its principal office in New York, New York, or at such other place as may be designated in writing by Holder, the principal sum of ONE HUNDRED FORTY-SIX MILLION SIX HUNDRED THOUSAND AND NO/100 DOLLARS ($146,600,000.00), or so much thereof as may be advanced by Holder pursuant to the terms of the Loan Instruments (as hereinafter defined), lawful money of the United States of America, together with interest thereon at the Interest Rate (as hereinafter defined) and all other sums due and/or payable hereunder; provided, however, only the principal sum of ONE HUNDRED TWENTY SEVEN MILLION AND NO/100 DOLLARS ($127,000,000.00) (the “Initial Advance”) shall be disbursed on the date hereof (the “Closing Date”).

1.This Note is secured by, among other things, (a) a Mortgage, Assignment of Leases and Rents, Security Agreement and Fixture Filing (“Mortgage”), dated as of the date hereof, granted by Maker to Holder and encumbering premises and other property (“Secured Property”) more particularly described in the Mortgage and (b) an Assignment of Leases, Rents, Income and Cash Collateral, dated as of the date hereof, from Maker to Holder. “Obligations,” “Loan Instruments” and all other capitalized terms used in this Note and not expressly defined herein shall have the meanings assigned to such terms in the Mortgage. The terms and provisions of the Loan Instruments, other than this Note, are hereby fully incorporated into this Note by reference. As used in this Note, the following additional defined terms shall have the respective meanings set forth below:

(i)“Business Day” shall mean any day other than a Saturday, Sunday, or U.S. federal holiday.

(ii)“Debt Yield” shall mean, for any period, the percentage obtained by dividing the Projected Net Operating Income for such period by the outstanding principal balance of the Loan. Such calculation shall be confirmed by Lender.

(iii)“Initial Period” shall mean the period commencing on the Closing Date and ending on the commencement of the Stabilized Period.

(iv)“Initial Term” shall mean period commencing on the Closing Date and ending on January 10, 2020.

(v)“Interest Period” shall mean a period commencing on the tenth (10th) day of a calendar month and terminating at the end of the ninth (9th) day of the succeeding calendar month;

provided, however, if the Closing Date is not the tenth (10th) day of the month, the first Interest Period shall be computed from and including the Closing Date to and including the next occurring ninth (9th) calendar day of a month.

(vi)“Interest Rate” shall mean, with respect to each Interest Period, a rate per annum equal to the sum of (x) LIBOR applicable to such Interest Period plus (y) the LIBOR Spread.

(vii)“LIBOR” shall mean the rate of interest per annum, rounded upwards to the nearest 1/16th of one percent (1%) reported in the Wall Street Journal or by Bloomberg, LP as the thirty (30) day London Interbank Offered Rate on the date which is three (3) LIBOR Business Days prior to the commencement of each Interest Period, for deposits in U.S. dollars in an amount approximately equal to the then outstanding principal balance of this Note. If the Wall Street Journal or Bloomberg, LP no longer reports the thirty (30) day London Interbank Offered Rate, or reports a different rate from the other, or Holder determines in good faith that the rate so reported no longer accurately reflects the rate generally available in the London Interbank Market, and has made a similar determination for substantially all other similarly situated borrowers, Holder may select a replacement rate reasonably approximating LIBOR as described above and has selected the same replacement rate for substantially all other similarly situated borrowers. Notwithstanding anything in this Note to the contrary, if LIBOR determined as provided above would be less than twenty-five hundredths percent (0.25%), then LIBOR shall be deemed to be twenty-five hundredths percent (0.25%).

(viii)“LIBOR Breakage Fee” shall mean an amount, as determined by Holder, equal to the amount of any losses, expenses and liabilities (but, without limiting the immediately succeeding sentence of this definition, excluding in any event lost profits) that Holder would sustain as a result of an acceleration or prepayment of the Loan on a day which is not the last day of the Interest Period with respect thereto if Holder funded the Loan through the purchase of a matching deposit or other borrowing in the Interbank Eurodollar market in the principal amount of the Loan and bearing interest at the LIBOR rate whether or not Holder actually purchased such deposit or instrument. For purposes of calculating such amount payable to Holder, Holder shall be deemed to have actually purchased a matching deposit or other borrowing in the Interbank Eurodollar market bearing interest at the then current LIBOR rate in the principal amount of the Loan and having a maturity and repricing characteristics comparable to the Interest Period; provided however that the foregoing assumption shall be only for the calculation of amounts payable in connection with a prepayment of the Note.

(ix)“LIBOR Business Day” shall mean a Business Day on which dealings in U.S. dollars are carried on in the London Interbank Market.

(x)“LIBOR Spread” shall mean (a) with respect to each Interest Period during the Initial Period, two hundred twenty five basis points (i.e., 2.25%) and (b) with respect to each Interest Period during the Stabilization Period, two hundred basis points (i.e., 2.00%).

(xi)“Maturity Date” shall mean January 10, 2020, as the same may be extended in accordance with the terms of the Side Letter.

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(xii)“Payment Date” shall mean the tenth (10th) calendar day of each month during the term of the Loan.

(xiii)“Spread Maintenance Premium” shall mean an amount equal to the product of the following: (A) the outstanding principal amount of the Loan as of the date of prepayment, multiplied by (B) the LIBOR Spread (expressed as a percentage), multiplied by (C) a fraction (expressed as a percentage) having a numerator equal to the number of calendar days from the start of the succeeding Interest Period after such prepayment occurs through and including the last day of the Spread Maintenance Premium Period and a denominator equal to 360.

(xiv)“Spread Maintenance Premium Period” shall mean the period commencing on August 10, 2017 and continuing through and including the Payment Date occurring in January, 2018.

(xv)“Stabilization” shall mean the date on which the following conditions have been satisfied: (a) the Secured Property is ninety percent (90%) leased (excluding the Schwab Lease) to tenants under Leases that are either approved or are deemed approved by Lender in accordance with the Loan Instruments and (b) the Secured Property has achieved a Debt Yield of not less than nine and one half percent (9.50%).

(xvi)“Stabilized Period” shall mean the period commencing on the first Interest Period next occurring after the following conditions have been satisfied: (a) no default has occurred under any of the Loan Instruments and is continuing beyond any applicable cure period and no event exists, which, with the giving of notice or the lapse of time, or both, would constitute such a default and (b) Borrower has provided Lender with at least fifteen (15) days prior written notice and all documents reasonably necessary to demonstrate that the Secured Property has achieved Stabilization.

2.Maker shall make the following payments (each, a “Payment”) to Holder:

(a)On the Closing Date (unless the Closing Date is the same calendar day as a Payment Date, in which case no payment shall be due), Maker shall pay to Holder a payment of interest only on the Initial Advance for the first Interest Period.

(b)Commencing with the Payment Date occurring on February 10, 2017, and on each Payment Date thereafter during the term of the Loan, Maker shall pay to Holder a monthly payment of interest only on the outstanding principal balance of this Note calculated at the Interest Rate which has accrued through the last day of the Interest Period immediately preceding such Payment Date.

(c)On the Maturity Date (or such earlier date resulting from acceleration of the Obligations by Lender or otherwise), Maker shall pay to Holder the entire outstanding principal balance of this Note, together with all interest then accrued thereon pursuant to this Note and all other Obligations then unpaid pursuant to the Loan Instruments.

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Holder shall apply each Payment, when received, first to the Obligations, other than principal and interest, which are then due and payable, but only if so elected by Holder in its sole and absolute discretion, and then to the payment of accrued interest on the outstanding principal balance hereof and the remainder to the reduction of such principal balance. Interest shall be computed on the basis of the actual number of days in a period over a 360 day year.

3.In the event that electronic fund transfer debiting is established for regularly scheduled payments under the Loan Instruments, Maker will cooperate with Holder and provide such documentation as is required to effectuate such payments by electronic fund transfer debit transactions through the Automated Clearing House network. Once the payment authorization is established, the failure of the electronic funds transfer debit entry transaction to be timely completed, for whatever reason, other than Holder’s failure to initiate the debit, shall not relieve Maker of its obligations to make all payments required hereunder or under the other Loan Instruments when due, and to comply with Maker’s other obligations under the Loan Instruments.

4.From and after the earlier to occur of an Event of Default or the Maturity Date, the aggregate amount of the Obligations shall automatically bear interest at an annual rate (“Increased Rate”) equal to the Interest Rate plus five percentage points, unless compliance with applicable law requires a lesser interest rate, in which event the aggregate amount of the Obligations shall bear interest at the maximum rate permitted by law.

5.Any default in the making of any Payment or in the making of any payment due pursuant to Section 1.04 of the Mortgage or in the making of any other deposit or reserve due pursuant to any Loan Instrument on the date the same is due will result in loss and additional expense to Holder in servicing the Obligations, handling such delinquent payments and meeting its other financial obligations. Accordingly, upon the occurrence of any such default, Maker shall pay a late charge (“Late Charge”) of four percent (4%) of each such overdue payment (except that the Late Charge shall not apply to the failure to pay the outstanding principal balance of this Note on the Maturity Date, or on such other date on which the entire outstanding principal balance of this Note becomes due). Maker agrees that (a) the exact amount of such loss and additional expense is extremely difficult, if not impossible to determine, (b) the Late Charge is a reasonable estimate of such loss and expense and therefore does not constitute a penalty and (c) in addition to, and not in lieu of, the exercise of any other remedies to which Holder may be entitled, Holder may collect from Maker all Late Charges for the purpose of defraying such loss and expense, unless applicable law requires a lesser such charge, in which event Holder may collect from Maker a Late Charge at the maximum rate permitted by applicable law.

6.(a)    Maker may not prepay this Note prior to August 10, 2017 (such period through and including August 9, 2017 is referred to as, the “Closed Period”). On August 10, 2017 or at any time after the Closed Period, Maker may prepay this Note (in whole but not in part, except as expressly permitted in Section 7(b) below), upon satisfaction of the following conditions: (i) Maker gives Holder not less than thirty (30) and not more than one hundred (100) days prior written notice of Maker’s intention to make such prepayment and (ii) Maker pays to Holder (A) the entire outstanding principal balance of this Note, (B) all accrued and unpaid interest thereon calculated at the Interest Rate through and including the date of prepayment, (C) the Make Whole Amount (as

4

hereinafter defined), and (D) all other Obligations then due under the Loan Instruments. Any prepayment notice given by Maker shall be deemed null and void if the prepayment covered by such notice is not made within thirty (30) days of the date specified in Maker’s prepayment notice as the designated date for prepayment. Maker waives any right of prepayment except as expressly provided herein and as may be provided in the other Loan Instruments.

(b)    “Make Whole Amount” means, with respect to any prepayment that occurs after the Closed Period, an amount equal to the sum of (i) the LIBOR Breakage Fee, plus (ii) if such prepayment occurs during the Spread Maintenance Premium Period, the Spread Maintenance Premium.

7.(a)    If the outstanding principal balance of this Note or any portion thereof shall become due and payable or shall be paid as a result of (a) an Event of Default (which Event of Default shall be presumed to be, and conclusively shall be deemed to be, a willful default and a deliberate attempt on Maker’s part to avoid payment of the Make Whole Amount), (b) the exercise by Maker or any other Person of any right of redemption or the taking by Maker or any other Person of any other action to prevent a foreclosure of the Secured Property, (c) any prepayment of the Loan in connection with a foreclosure or similar proceeding or a foreclosure judgment, (d) any prepayment of the Loan in connection with the application of any Lease Guaranty Payment or Lease Termination Fee, (e) a casualty or condemnation with respect to the Secured Property (except as expressly permitted in Section 7(b) below), or (f) any other prepayment not permitted by the Loan Instruments, then Maker shall pay to Holder the Make Whole Amount computed, to the extent not prohibited by applicable law, as if Maker had elected to prepay this Note, as provided in Section 6 above, on the date of such Event of Default, exercise, action, prepayment, casualty or condemnation, as applicable. If such Event of Default, exercise, action, prepayment, casualty or condemnation occurs during the Closed Period, then, to the extent not prohibited by applicable law, the Make Whole Amount shall be equal to the greater of (a) ten percent (10%) of the principal balance of this Note then unpaid or (b) the Make Whole Amount that would have been payable as if the prepayment had not occurred during the Closed Period, as calculated in the manner set forth in Section 6 above.

(b)    Notwithstanding the foregoing, in the event of a casualty or condemnation with respect to the Secured Property, if no monetary or material, non-monetary Event of Default then exists under the Loan Instruments and Holder is not willing to permit the insurance proceeds or condemnation award, as applicable, to be used for the restoration of the Secured Property pursuant to the terms of the Mortgage and such proceeds or award is applied to prepay the Obligations (in whole or in part) as a result of the casualty or condemnation, then no Make Whole Amount shall be due with respect to such prepayment.

8.From and after the existence of an Event of Default, Holder, at its option, may declare all Obligations to be immediately due and payable, then or thereafter, as Holder may elect, regardless of the stated Maturity Date of this Note.

9.If Holder collects all or any part of the Obligations by an action, at law or in equity, or in any bankruptcy, receivership or other court proceeding (whether at the trial or appellate level), or if this Note is placed in the hands of attorney(s) for collection, Maker shall pay, in addition to the principal and interest due or deemed to be due, whether by acceleration or otherwise, and in

5

addition to the Make Whole Amount: (a) all costs, including, without limitation, attorneys’ fees and expenses, of collecting or attempting to collect all amounts due pursuant to this Note and all other Obligations, of enforcing or attempting to enforce Holder’s rights and remedies pursuant to the Loan Instruments and of protecting the collateral securing this Note, (b) all Late Charges due pursuant to this Note and (c) interest, at the Increased Rate, computed on the amount of the Obligations.

10.The failure by Holder to exercise any right, power, privilege, remedy or option as to maturity, foreclosure or otherwise, provided in any Loan Instrument or otherwise available at law or in equity (each a “Remedy” and collectively, “Remedies”) before or after any Event of Default, in any one or more instances, or the acceptance by Holder of any partial payment or partial performance, shall not constitute a waiver of any default or any Remedy, each of which shall remain continuously in force, until waived in writing by Holder. Holder, at its option, may rescind, in writing, any acceleration of this Note, but the tender and acceptance of partial payment or partial performance alone shall not rescind or in any other way affect any acceleration of this Note or the exercise by Holder of any of its Remedies.

11.Maker and Holder intend to comply strictly with all usury laws now or hereafter in force in the State of New Jersey, and all interest payable pursuant to this Note or any other Loan Instrument shall be reduced to the maximum amount which is not in excess of the maximum non-usurious rate of interest applicable to this Note or any other Loan Instrument (“Legal Rate”) allowed under the usury laws of the State of New Jersey, as now or hereafter construed by the courts having jurisdiction over such matters. If the aggregate of all interest (whether designated as interest, Late Charges, Increased Rate, Make Whole Amount or otherwise) contracted for, chargeable or receivable pursuant to this Note or any other Loan Instrument, whether upon regular payment or acceleration or otherwise, exceeds the Legal Rate, it shall conclusively be deemed a mutual mistake. Such excess shall be canceled automatically, and, if theretofore paid, shall, at the option of Holder, either be rebated to Maker or credited in reduction of the outstanding principal balance of this Note, or, if this Note has been repaid, such excess shall be rebated to Maker. In the event of a conflict between the provisions of this paragraph and the provisions of any other portion of this Note or any other Loan Instrument, the provisions of this paragraph shall control.

12.Maker waives all requirements for presentment, protest, notice of protest, notice of dishonor, demand for payment and diligence in collection of this Note or the Loan Instruments, notice of intention to accelerate, notice of acceleration and any and all other notices and matters of a like nature, except for those expressly required by this Note or the other Loan Instruments. Without notice to Maker and without discharging Maker’s liability hereunder, Maker consents to any extension of time (whether one or more) of payment of this Note, release of all or any part of the security for the payment of this Note or release of any Person liable for payment of this Note.

13.This Note may be changed only by an agreement, in writing, signed by Maker and Holder. Maker waives and renounces all homestead exemption rights as to the Obligations or any renewal or extension thereof. No failure or delay on the part of Holder in exercising any Remedy pursuant to this Note or any Loan Instrument, and no course of dealing between Maker and Holder, shall operate as a waiver of any Remedy, nor shall any single or partial exercise of any Remedy

6

preclude any other or further exercise thereof or the exercise of any other Remedy. All Remedies expressly provided for in the Loan Instruments are cumulative, and are not exclusive of any rights, powers, privileges or remedies which Holder would otherwise have at law or equity. No notice to or demand on Maker in any case shall entitle Maker to any other or further notice or demand in similar or other circumstances, nor shall any such notice or demand constitute a waiver of the right of Holder to take any other or further action in any circumstances without notice or demand.

14.The obligations of each Person comprising Maker shall be joint and several. The unenforceability or invalidity of any provision of this Note as to any Person or circumstance shall not render that provision unenforceable or invalid as to any other Person or circumstance, and all provisions hereof, in all other respects, shall remain valid and enforceable.

15.If an Event of Default has occurred (and regardless of whether or not it has been cured), Holder may exercise any and all Remedies, and shall have full recourse to the Secured Property, the Equity Collateral and to any other collateral given by Maker, Pledgor or any other Person to secure any or all of the Obligations, provided that any judgment obtained by Holder in any proceeding to enforce the Remedies shall be enforced only against the Secured Property, the Equity Collateral and/or such other collateral. Notwithstanding the foregoing, Holder may name Maker, Pledgor or any of their respective successors or assigns or any Person holding under or through them as parties to any actions, suits or other proceedings initiated by Holder to enforce any Remedies against the Secured Property, the Equity Collateral and/or such other collateral, including without, limitation, any action, suit or proceeding to foreclose the lien of the Mortgage or the Pledge Agreement or to otherwise realize upon any other lien or security interest created in any other collateral given to secure the payment of any or all of the Obligations. The restriction on enforcement contained in the first sentence of this Section 15 shall not apply to, and Maker shall be personally liable for, and Holder may seek and enforce judgment against Maker for (the following clauses (i), (ii) and (iii), collectively, the “Non-Recourse Exceptions”):

(i) any and all losses, claims, damages, costs, expenses and/or liabilities, including, without limitation, attorneys’ fees and expenses, incurred by Holder:

(a) relating to or as a result of any material misstatement of fact to Holder or its affiliates (including, but not limited to, any material misstatements contained in any reports, certificates or other documents prepared or caused to be prepared by Maker, on behalf of Maker or by Maker at the specific direction or request of Maker and provided to Holder, but excluding any material misstatements contained in any reports, certificates or other documents prepared by or at the direction of and engaged directly by Holder) (1) by Maker or any Person constituting Maker, made to induce Holder to advance the principal amount evidenced hereby or (2) contained in any Loan Instrument,

(b) relating to or as a result of fraud committed by Maker or any Person constituting Maker,

7

(c) relating to or as a result of the collection or application of any insurance proceeds, condemnation awards, trust funds, tenant security deposits or Rents (including any Lease Termination Fee or Lease Guaranty Payment) in a manner which is not in accordance with the provisions of the Loan Instruments,

(d) relating to or as a result of the breach of any representation or warranty contained in the Sections of the Mortgage pertaining to environmental matters, including without limitation, Sections 1.05E(4), 2.03(C) and 2.03(D), or any default with respect to any covenant contained in the Sections of the Mortgage pertaining to environmental matters, including without limitation, Section 1.05(E),

(e) relating to or as a result of any default with respect to Maker’s covenant to pay Impositions or insurance premiums pursuant to the Mortgage or with respect to Maker’s covenant to obtain and maintain the insurance required by the Mortgage, including, without limitation, the Terrorism Insurance,

(f) arising from, in respect of, as a consequence of, or in connection with: (1) the existence of any circumstance or the occurrence of any action described in Section 1.05E(1) of the Mortgage, (2) claims asserted by any Person (including, without limitation, any Governmental Agency) in connection with, or in any way arising out of, the presence, storage, use, disposal, generation, transportation or treatment of any Hazardous Material on, in, under or about the Secured Property, (3) the violation or claimed violation of any law relating to any Hazardous Material or any other Environmental Requirement in regard to the Secured Property, regardless of whether or not such violation or claimed violation occurred prior to or after the date of this Note or whether or not such violation or claimed violation occurred prior to or after the time that Maker became the owner of the Secured Property, or (4) the preparation of any environmental audit as to the Secured Property as required under the terms of the Mortgage, whether conducted or authorized by Maker, Holder or any other Person or the implementation of any environmental audit’s requirements in order to have the Secured Property comply with Environmental Requirements,

(g) relating to or as a result of any intentional, bad faith waste of the Secured Property committed by Maker or its agents (such damages to include, without limitation, all repair costs incurred by Maker),

(h) relating to or as a result of the misappropriation of the rental payments of the Secured Property in violation of the Cash Management Agreement,

(i) arising from, in respect of or as a consequence of the failure to deliver the Rental Income Guaranty (as defined in the Side Letter) or the Rental Income LC (as defined in the Side Letter) as required by the Side Letter,

8

(j) arising from, in respect of or as a consequence of the failure to purchase a LIBOR Rate Cap on the Closing Date and to maintain such LIBOR Rate Cap throughout the term of the Loan as required by the Side Letter, and/or

(k) arising from, in respect of or as a consequence of a violation of Section 5.20 of the Mortgage which does not result in a substantive consolidation of Maker or, if applicable, any SPE Principal with any other Person;

(ii) all outstanding principal, interest and other Obligations, including the Make Whole Amount:

(a) if there shall be a violation of Section 1.11 of the Mortgage (Prohibition on Transfers, Liens or Further Encumbrances), except for an encumbrance in the nature of a mechanic’s or materialman’s lien, and/or

(b) in the event that (1) any petition for bankruptcy, reorganization or arrangement pursuant to federal bankruptcy law, or any similar federal or state law, shall be filed by, consented to or acquiesced in by Maker or any Guarantor and/or if any proceeding for the liquidation, dissolution, receivership or other similar proceeding of Maker or any Guarantor shall be instituted by Maker or any Guarantor and/or (2) Maker or any Guarantor shall be the subject of any petition or proceeding for an involuntary bankruptcy, reorganization or arrangement pursuant to federal bankruptcy law, or any similar federal or state law and/or the subject of any liquidation, dissolution, receivership or other similar proceeding in which Maker or any Guarantor or any Affiliate of such Persons colludes with, or otherwise assists, the petitioning party or solicits or causes to be solicited petitioning creditors, and/or

(c) if there shall be a violation of Section 5.20 of the Mortgage and such violation results in a substantive consolidation of Maker or any SPE Principal with any other Person; and/or

(iii) in the event (a) the Schwab Lease is terminated or cancelled by Maker or Maker accepts a surrender of the Schwab Lease without Holder’s prior written consent or (b) a default by Maker occurs beyond any applicable notice or cure periods (if any) under the Schwab Lease and the tenant thereunder terminates or cancels the Schwab Lease, an amount equal to the rent and other amounts that would have been paid by such tenant had the Schwab Lease not been terminated, cancelled or surrendered.

The restriction on enforcement contained in the first sentence of this Section 15 shall not apply to the Environmental Indemnity Agreement and/or to the obligations of any Guarantor specifically set forth in any Guaranty. It is expressly understood and agreed, however, that nothing contained in this Section 15 shall (a) in any manner or way constitute or be deemed to be a release of the Obligations or otherwise affect or impair the enforceability of the liens, assignments, rights and security interests created by the Mortgage or any of the other Loan Instruments or any future

9

advance or any related agreements or (b) preclude Holder from foreclosing the Mortgage or from exercising its other remedies set forth in the Mortgage or the Assignment, or from enforcing any of its rights and remedies in law or in equity (including, without limitation, injunctive and declaratory relief, restraining orders and receivership proceedings), except as provided above in this Section 15.

16.If any payment required hereunder or under any other Loan Instrument becomes due on a day that is not a Business Day, then such payment shall be due and payable on the immediately preceding Business Day.

17.“Maker” and “Holder” shall be deemed to include the respective heirs, administrators, legal representatives, successors and assigns of Maker and Holder.

18.Time is of the essence with respect to each and every provision hereof.

19.This Note shall be governed by, and construed and enforced in accordance with the laws of the State of New Jersey, other than such laws with respect to conflicts of laws.

20.In the event of any inconsistencies between the terms of this Note and the terms of any other Loan Instruments, the terms of this Note shall prevail.

[SIGNATURE ON FOLLOWING PAGE]

10

IN WITNESS WHEREOF, Maker has executed this Note as of the date first above written.

MAKER:

AMERICAN FINANCIAL EXCHANGE, L.L.C.,

a New Jersey limited liability company

By: TRT Harborside LLC,

              a Delaware limited liability company,

its manager

By: DCTRT Real Estate Holdco LLC,

a Delaware limited liability company,

its manager

By: Dividend Capital Total Realty

Operating Partnership LP,

a Delaware limited partnership,

its sole member

By: Dividend Capital Diversified

Property Fund Inc.,

a Maryland corporation,

its general partner

By: /s/ M. Kirk Scott                                          

Name: M. Kirk Scott

Title: Chief Financial Officer

[Signature Page to Promissory Note]

[signatures continue on next page]

PLAZA X URBAN RENEWAL ASSOCIATES L.L.C.,

     a New Jersey limited liability company

         By: Plaza X Realty L.L.C.,

a New Jersey limited liability company,

its manager

     By: American Financial Exchange, L.L.C.,

a New Jersey limited liability company,

its manager

By: TRT Harborside LLC,

a Delaware limited liability company,

its manager

By: DCTRT Real Estate Holdco LLC,

a Delaware limited liability company,

its manager

By: Dividend Capital Total Realty

Operating Partnership LP,

a Delaware limited partnership,

its sole member

By: Dividend Capital Diversified

Property Fund Inc.,

a Maryland corporation,

its general partner

By: /s/ M. Kirk Scott                             

Name: M. Kirk Scott

Title: Chief Financial Officer

[Signature Page to Promissory Note]

[signatures continue on next page]

    PLAZA X LEASING ASSOCIATES L.L.C.,

a New Jersey limited liability company

By:  Plaza X Realty L.L.C.,

a New Jersey limited liability company,

its manager

By: American Financial Exchange, L.L.C.,

a New Jersey limited liability company,

its manager

By: TRT Harborside LLC,

a Delaware limited liability company,

its manager

By: DCTRT Real Estate Holdco LLC,

a Delaware limited liability company,

its manager

By: Dividend Capital Total Realty

Operating Partnership LP,

a Delaware limited partnership,

its sole member

By: Dividend Capital Diversified

Property Fund Inc.,

a Maryland corporation,

its general partner

By:   /s/ M. Kirk Scott                         

Name: M. Kirk Scott

Title: Chief Financial Officer

[Signature Page to Promissory Note]

EX-10.29

Dividend Capital Diversified Property Fund Inc. 10-K

Exhibit 10.29

FIRST AMENDMENT TO AMENDED AND RESTATED CREDIT AND TERM LOAN AGREEMENT

This First Amendment to Amended and Restated Credit and Term Loan Agreement (this “Amendment”) is made as of December 22, 2016, by and among DIVIDEND CAPITAL TOTAL REALTY OPERATING PARTNERSHIP L.P., a Delaware limited partnership (the “Borrower”), several banks, financial institutions and other entities referred to in the signature pages to this Agreement (collectively, the “Lenders”), and BANK OF AMERICA, N.A., not individually, but as “Administrative Agent”.

RECITALS

A.    The Borrower, the Administrative Agent, and the Lenders are parties to an Amended and Restated Credit and Term Loan Agreement dated as of January 13, 2015 (the “Credit Agreement”). All capitalized terms used in this Amendment and not otherwise defined herein shall have the meanings ascribed to such terms in the Credit Agreement.

B.    Pursuant to the terms of Section 2.15 of the Credit Agreement, the Borrower has requested an increase in the amount of the Term Commitments under the Term Facility from $150,000,000 to $275,000,000 the proceeds of which shall be used to repay secured debt, to fund anticipated Class-E shareholder redemptions, and for other general corporate purposes. The Borrower has also requested certain other modifications to the Credit Agreement which the Lenders have agreed to as provided herein.

NOW, THEREFORE, in consideration of the foregoing recitals and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:

AMENDMENTS

1.The foregoing recitals to this Amendment are incorporated into and made part of this Amendment.

2.    Schedule 2.01 of the Credit Agreement is replaced with Schedule 2.01 attached hereto. In accordance with Section 2.15 of the Credit Agreement, the Lenders whose Term Commitment amounts in Schedule 2.01 have changed, have each agreed to increase their respective Commitments as set forth in such revised Schedule 2.01. Each Lender (if any) listed in Schedule 2.01 that was not previously a party to the Credit Agreement (each a "New Lender") by its execution of this Amendment has become a Lender, with a Term Commitment as set forth in such Schedule 2.01. Each New Lender agrees to fully and timely perform each and every obligation of a Lender under the Credit Agreement from and after the effective date of this Amendment and shall have all of the rights of a Lender as set forth in the Credit Agreement. The effective date of this Amendment shall be the date hereof provided that the conditions precedent to such effectiveness set forth in Section 2.15(e) and Section 5 below have been satisfied. The amount of the increase in the Term Commitments shall be disbursed in a single draw on the effective date of this Amendment upon satisfaction of such conditions and the delivery of a Committed Loan Notice. The representations and warranties in Section 4 below shall satisfy the requirements of clause (y) of such Section 2.15(e).

3.     The following definitions contained in Article I of the Credit Agreement are hereby modified to read as follows:

“Capitalization Rate” means (i) 6.25% for industrial properties, (ii) 6.75% for retail properties, (iii) 7.0% for single-tenant triple net office properties (not described in (vii) below), (iv) 7.50% for multi-tenant suburban office properties, (v) 6.75% for multi-tenant non-suburban office properties, (vi) 6.50% for multifamily properties, (vii) 6.0% for CBD office in San Francisco, CA, New York, NY, Boston, MA, Chicago, IL, and Washington, D.C., and (viii) a rate agreed upon by Borrower and the Required Lenders for any other property type. The Parties agree that the project known as “Harborside Plaza X” and located in Jersey City, New Jersey, shall be considered a multi-tenant non-suburban office property under (v) above; and that with respect to all other Properties, the determination of the Property type shall be subject to approval by the Administrative Agent in its reasonable discretion.

"Unencumbered Property" means, a Property (other than an Exchange Property) that is designated by the Borrower as an Unencumbered Property and: (i) is completed and located in the continental United States or, subject to the limitations in the definition of Total Unencumbered Property Pool Value, which is an Asset Under Development; (ii) is 100% owned in fee simple (or, subject to the limitation set forth in the definition of Total Unencumbered Property Pool Value, is ground leased pursuant to a Financeable Ground Lease) by the Borrower, a wholly owned Subsidiary, an Exchange Fee Titleholder, or subject to the limitation set forth in the definition of Total Unencumbered Property Pool Value, a Subsidiary that is at least 90% owned directly or indirectly by Borrower provided no consent from a minority owner is required in order for the Borrower to cause a sale or refinancing of such Unencumbered Property, and so long as any such Subsidiary (whether or not wholly-owned) is a Guarantor (to the extent required by the Section entitled "Release of Guarantors"); (iii) is not subject to any Liens or encumbrances other than clauses (a), (b), (c), (d), (f), (j), (k), and (n) of Permitted Encumbrances; (iv) is not subject to any agreement (including (a) any agreement governing Indebtedness incurred in order to finance or

1

refinance the acquisition of such Property, and (b) if applicable, the organizational documents of Borrower or the Subsidiary Owner) which prohibits or limits the ability of the Borrower or any Subsidiary Owner, as the case may be, to create, incur, assume or suffer to exist any Lien upon any Unencumbered Property or Equity Interests of the Subsidiary Owner, except for covenants that are not materially more restrictive than the covenants contained in this Agreement, in favor of holders of unsecured Indebtedness of the Borrower and such Subsidiary Owner not prohibited hereunder; (v) is not subject to any agreement (including (a) any agreement governing Indebtedness incurred in order to finance or refinance the acquisition of such Property, and (b) if applicable, the organizational documents of Borrower or any Subsidiary Owner) which entitles any Person to the benefit of any Lien on such Property or the Equity Interests in the Subsidiary Owner or would entitle any Person to the benefit of any Lien on such Property or Equity Interests upon the occurrence of any contingency (including, without limitation, pursuant to an “equal and ratable” clause) other than any agreement entered into in connection with the financing of such Property and the pledge of such Property as security for any financing pending the closing of such financing, provided that such Property shall cease to be an Unencumbered Property upon the closing of such financing; (vi) is not subject to any agreement (including (a) any agreement governing Indebtedness incurred in order to finance or refinance the acquisition of such Property, and (b) if applicable, the organizational documents of Borrower or any Subsidiary Owner) which prohibits or limits the ability of the Borrower or any Subsidiary Owner, as the case may be, to make Restricted Payments to Borrower or any Subsidiary Owner of income arising out of such Property or prevents such Subsidiary Owner from transferring such Property (other than (x) any restriction with respect to a Property imposed pursuant to an agreement entered into for the sale or disposition of such Property pending the closing of such sale or disposition or in connection with a 1031 exchange, and (y) any restriction with respect to a Subsidiary Owner that owns such Property imposed pursuant to an agreement entered into for the sale or disposition of all or substantially all the Equity Interests or assets of such Subsidiary Owner pending the closing of such sale or disposition); and (vii) is not the subject of any issues which would materially and adversely impact the operation of such Property. No Property owned by a Subsidiary Owner shall be deemed to be an Unencumbered Property unless (a) both such Property and all Equity Interests of the Subsidiary Owner held directly or indirectly by the Borrower are not subject to any Lien, (b) each intervening entity between the entity immediately below TRT Real Estate Holdco LLC and such Subsidiary Owner does not have any Indebtedness for borrowed money or, if such entity has any Indebtedness, such Indebtedness is unsecured and such entity is a Subsidiary Guarantor if such Subsidiary Owner is required to be a Subsidiary Guarantor pursuant to the terms of this Agreement, and (c) neither such Subsidiary Owner nor any intervening entity between the entity immediately below TRT Real Estate Holdco LLC and such Subsidiary Owner is subject to insolvency proceedings, unable to pay debts or subject to any writ or warrant of attachment. A Property that is subject to an option to purchase shall not be disqualified by the requirement in clause (vi) from being an Unencumbered Property so long as the Property can be transferred subject to the rights of the optionee provided that if the option to purchase is for a fixed price as distinguished from a market price, the Unencumbered Asset Value for such Property shall be equal to the lesser of (x) the amount determined in accordance with the definition of Unencumbered Asset Value, or (y) the option price for such Property. Nothing herein shall prohibit an Unencumbered Property hereunder from constituting an unencumbered asset in connection with any other Indebtedness; provided that such Indebtedness is otherwise not prohibited pursuant to the terms of this Agreement.

"Total Unencumbered Property Pool Value" means, as of any date of calculation, the aggregate, without duplication, of: (a) the Unencumbered Property Values of all Unencumbered Properties (other than any that are Assets Under Development); plus (b) any unrestricted cash; plus (c) an amount equal to one hundred percent (100%) of the Property Investment Value of each Unencumbered Property that is an Asset Under Development; plus (d) an amount equal to one hundred percent (100%) of the then current book value of each First Mortgage Investment, provided that such First Mortgage Investment is not subject to any Liens or encumbrances and so long as the mortgagor with respect to such First Mortgage Investment is not delinquent thirty (30) days or more in any payment of interest or principal payments thereunder; plus (e) the amount of all Eligible Cash 1031 Proceeds resulting from the sale of Unencumbered Properties; provided that no more than twenty five percent (25%) of Total Unencumbered Property Pool Value may be attributable in the aggregate to, (i) Assets Under Development, or (ii) Unencumbered Properties that are ground leased under Financeable Ground Leases (as opposed to being owned in fee simple by the Borrower or a Subsidiary Guarantor, or an Exchange Fee Titleholder), or (iii) First Mortgage Investments, or (iv) Unencumbered Properties that are owned by Subsidiaries that are at least 90% but less than 100% owned (directly or indirectly) by Borrower with any such Unencumbered Properties that are not 100% owned comprising no more than ten percent (10%) of Total Unencumbered Property Value, and provided further that no more than thirty percent (30%) of Total Unencumbered Property Pool Value may be attributable to properties utilizing subsection (x) of Alternative Value calculations, and in either case any excess shall not constitute a default but rather shall be excluded for covenant calculation purposes.

4.    The Borrower hereby represents and warrants the following as of the date hereof:

a)    no Default exists under the Loan Documents;

b)    the Loan Documents are in full force and effect and Borrower has no defenses or offsets to, or claims or counterclaims relating to, its obligations under the Loan Documents;

c)    there has been no material adverse change in the financial condition of the Borrower as shown in its December 31, 2015 financial statements;

2

d)    the Borrower has full power and authority to execute this Amendment and no consents are required for such execution other than any consents which have already been obtained; and

e)    all representations and warranties contained in Article V of the Credit Agreement are true and correct in all material respects as of the date hereof both before and after giving effect to the increase in the Aggregate Commitment, except to the extent any such representation or warranty is stated to relate solely to an earlier date, in which case such representation or warranty is true and correct in all material respects on and as of such earlier date, and except that for purposes of this clause (e), the representations and warranties contained in subsections (a) and (b) of Section 5.05 of the Credit Agreement shall be deemed to refer to the most recent statements furnished pursuant to clauses (a) and (b), respectively, of Section 6.01 of the Credit Agreement.

5.    The effectiveness of this Amendment shall be conditioned on the following:

a)    This Amendment shall have been executed by the Required Lenders, which must include each New Lender, and each Lender whose Term Commitment is changing.

b)    The representations and warranties in Section 4 above being true and correct.

c)    Any fees required to be paid to the Administrative Agent or any Lender in connection with this Agreement on or before the date hereof shall have been paid.

d)    Unless waived by the Administrative Agent, the Borrower shall have paid all reasonable and documented fees, charges and disbursements of counsel to the Administrative Agent (directly to such counsel if requested by the Administrative Agent) to the extent invoiced prior to or on the date that is three Business Days prior to the date hereof, plus such additional amounts of such fees, charges and disbursements as shall constitute its reasonable estimate of such fees, charges and disbursements incurred or to be incurred by it through the closing (provided that such estimate shall not thereafter preclude a final settling of accounts between the Borrower and the Administrative Agent).

e)    If there are any New Lenders, Borrower shall have executed and delivered to each New Lender a Term Note in the amount of such New Lender's Term Commitment.

6.    Schedule 7.06 of the Credit Agreement is hereby amended and restated by replacing it with Schedule 7.06 attached hereto.

7.    Except as specifically modified hereby, the Credit Agreement is and remains unmodified and in full force and effect and is hereby ratified and confirmed. All references in the Loan Documents to the “Credit Agreement” henceforth shall be deemed to refer to the Credit Agreement as amended by this Amendment.

8.    This Amendment may be executed in any number of counterparts, all of which taken together shall constitute one agreement, and any of the parties hereto may execute this Amendment by signing any such counterpart. This Amendment shall be construed in accordance with the internal laws (and not the law of conflicts) of the State of New York, but giving effect to federal laws applicable to national banks.

9.    This Amendment shall become effective when it has been executed by the Borrower, the Administrative Agent, the Required Lenders, each new Lender, and each Lender whose Commitment is being increased pursuant to this Amendment.

[Remainder of Page Intentionally Left Blank.]

3

IN WITNESS WHEREOF, the parties hereto have executed this Amendment as of the date first above written.

DIVIDEND CAPITAL TOTAL REALTY OPERATING PARTNERSHIP LP, a Delaware limited partnership

By: Dividend Capital Diversified Property Fund Inc., a Maryland corporation, its sole general partner

By:    /s/ Lainie P. Minnick_____________

Name:    Lainie P. Minnick

Title:    Senior Vice President

S-1

BANK OF AMERICA, N.A.,

as Administrative Agent

By:    /s/ Kurt L. Mathison________________

Name:    Kurt L. Mathison

Title:    Senior Vice President

S-2

BANK OF AMERICA, N.A.,
as Lender, L/C Issuer and Swing Line Lender

By:    /s/ Kurt L. Mathison    __________________

Name:    Kurt L. Mathison

Title:    Senior Vice President

S-3

PNC BANK, NATIONAL ASSOCIATION, as Co-Syndication Agent and as a Lender

By:    /s/ James A. Harmann    _________________

Name:    James A. Harmann

Title:    Senior Vice President

S-4

WELLS FARGO BANK, NATIONAL ASSOCIATION, as Co-Syndication Agent and as a Lender

By:    /s/ Kevin S. Stacker____________________

Name:    Kevin S. Stacker

Title:    Senior Vice President

S-5

REGIONS BANK, as Co-Documentation Agent and as a Lender

By:    /s/ Ghi Gavin_________________________

Name:    Ghi Gavin

Title:    Senior Vice President

S-6

U.S. BANK NATIONAL ASSOCIATION, as

Co-Documentation Agent and as a Lender

By:    /s/ Steve Kirby________________________

Name:    Steve Kirby

Title:    Assistant Vice President

S-7

KEYBANK NATIONAL ASSOCIATION, as a Lender

By:    /s/ Christopher T. Neil__________________

Name:    Christopher T. Neil

Title:    Vice President

S-8

MUFGUNION BANK, N.A., as a Lender

By:    /s/ Katherine Davidson________________

Name:    Katherine Davidson

Title:    Director

S-9

FIFTH THIRD BANK, as a Lender

By:    /s/ Matthew Rodgers___________________

Name:    Matthew Rodgers

Title:    Senior Vice President

S-10

BANK OF THE WEST, a California banking corporation, as a Lender

By:    /s/ Benjamin Arroyo__________________

Name:    Benjamin Arroyo

Title:    Vice President

S-11

BANK OF THE WEST, a California banking corporation, as a Lender

By:    /s/ Sarah Burns__________________

Name:    Sarah Burns

Title:    Vice President

S-12

CAPITAL ONE NATIONAL ASSOCIATION, as a Lender

By:    /s/ Frederick H. Denecke_______________

Name:    Frederick H. Denecke

Title:    Senior Vice President

S-13

JPMORGAN CHASE BANK, N.A., as a Lender

By:    /s/ Ryan Dempsey____________________

Name:    Ryan Dempsey

Title:    Authorized Officer

S-14

RAYMOND JAMES BANK, N.A., as a Lender

By:    /s/ James M. Armstrong________________

Name:    James M. Armstrong

Title:    Senior Vice President

S-15

SCHEDULE 2.01

COMMITMENTS
AND APPLICABLE PERCENTAGES

Dividend Capital Diversified Property Fund Inc.
$675,000,000 Senior Unsecured Credit Facility
	Revolver				Term Loan				Total Facility
Institution	Allocation		Percentage		Allocation		Percentage		Allocation		Percentage
Bank of America, N.A.	$	43,636,363.64	10.909090910	%	$	42,363,636.36	15.404958676	%	$	86,000,000.00	12.740740741	%
PNC Bank, National Association	41,818,181.82		10.454545455	%	40,681,818.18		14.793388429	%	82,500,000.00		12.222222222	%
US Bank National Association	40,000,000.00		10.000000000	%	45,000,000.00		16.363636364	%	85,000,000.00		12.592592593	%
Wells Fargo Bank, NA	41,818,181.82		10.454545455	%	30,681,818.18		11.157024793	%	72,500,000.00		10.740740741	%
Fifth Third Bank	36,363,636.36		9.090909090	%	13,636,363.64		4.958677687	%	50,000,000.00		7.407407407	%
TD Bank, N.A.	36,363,636.36		9.090909090	%	13,636,363.64		4.958677687	%	50,000,000.00		7.407407407	%
JPMorgan Chase Bank, N.A.	18,181,818.18		4.545454545	%	26,818,181.82		9.752066116	%	45,000,000.00		6.666666667	%
Regions Bank	32,727,272.73		8.181818183	%	12,272,727.27		4.462809916	%	45,000,000.00		6.666666667	%
Capital One, N.A.	29,090,909.09		7.272727273	%	10,909,090.91		3.966942149	%	40,000,000.00		5.925925926	%
KeyBank, National Association	25,454,545.46		6.363636365	%	9,545,454.54		3.471074378	%	35,000,000.00		5.185185185	%
Bank of the West, N.A.	18,181,818.18		4.545454545	%	15,818,181.82		5.752066116	%	34,000,000.00		5.037037037	%
Associated Bank, N.A.	18,181,818.18		4.545454545	%	6,818,181.82		2.479338844	%	25,000,000.00		3.703703704	%
MUFG Union Bank, N.A.	10,909,090.91		2.727272727	%	4,090,909.09		1.487603306	%	15,000,000.00		2.222222222	%
Raymond James Bank, N.A.	7,272,727.27		1.818181817	%	2,727,272.73		0.991735539	%	10,000,000.00		1.481481481	%
Total	$	400,000,000.00	100.000000000	%	$	275,000,000.00	100.000000000	%	$	675,000,000.00	100.000000000	%

Schedule 7.06

TRANSACTIONS WITH AFFILIATES ⁽¹⁾

Second Amended and Restated Dealer Manager Agreement between Dividend Capital Diversified Property Fund Inc. and Dividend Capital Securities LLC, dated September 16, 2015, including Form of Selected Dealer Agreement, incorporated by reference to Exhibit 1.1 to the Company’s Current Report on Form 8-K, filed September 16, 2015

Selected Dealer Agreement with Raymond James & Associates, Inc., incorporated by reference to Exhibit 1.1 to the Company’s Current Report on Form 8-K, filed May 11, 2016.

Selected Dealer Agreement with Raymond James & Associates, Inc., incorporated by reference to Exhibit 1.1 to the Company’s Current Report on Form 8-K, filed on September 19, 2016

Amended and Restated Dealer Manager Agreement between Dividend Capital Diversified Property Fund Inc. and Dividend Capital Securities LLC, dated February 8, 2013, including Form of Selected Dealer Agreement, incorporated by reference to Exhibit 10.8 to the Company’s Annual Report on Form 10-K, filed March 19, 2013

Amendment No. 1 to Amended and Restated Dealer Manager Agreement between Dividend Capital Diversified Property Fund Inc. and Dividend Capital Securities LLC, dated May 31, 2013, incorporated by reference to Exhibit 1.1 of the Company’s Current Report on Form 8-K, filed June 5, 2013

Amendment No. 2 to Amended and Restated Dealer Manager Agreement between Dividend Capital Diversified Property Fund Inc. and Dividend Capital Securities LLC, dated June 26, 2013, incorporated by reference to Exhibit 1.3 to Post-Effective Amendment No. 5 to the Company’s Registration Statement on Form S-11 (File No. 333-175989), filed August 2, 2013

Amendment No. 3 to Amended and Restated Dealer Manager Agreement between Dividend Capital Diversified Property Fund Inc. and Dividend Capital Securities LLC, dated March 20, 2014, incorporated by reference to Exhibit 1.4 to Post-Effective Amendment No. 8 to the Company’s Registration Statement on Form S-11 (File No. 333-175989), filed April 11, 2014

Selected Dealer Agreement among Dividend Capital Diversified Property Fund Inc., Dividend Capital Securities LLC, Dividend Capital Total Advisors LLC, and Raymond James & Associates, Inc., dated May 31, 2013, incorporated by reference to Exhibit 1.2 to the Company’s Current Report on Form 8-K, filed June 5, 2013

Primary Dealer Fee Extension Notice between Dividend Capital Diversified Property Fund Inc. and Dividend Capital Securities LLC, dated May 27, 2014, incorporated by reference to Exhibit 1.1 to the Company’s Current Report on Form 8-K, filed June 2, 2014

Selected Dealer Agreement among Dividend Capital Diversified Property Fund Inc., Dividend Capital Securities LLC, Dividend Capital Total Advisors LLC, and Raymond James & Associates, Inc., dated May 27, 2014, incorporated by reference to Exhibit 1.2 to the Company’s Current Report on Form 8-K, filed June 2, 2014

Primary Dealer Fee Extension Notice between Dividend Capital Diversified Property Fund Inc. and Dividend Capital Securities LLC, dated July 21, 2014, incorporated by reference to Exhibit 1.1 to the Company’s Current Report on Form 8-K, filed July 23, 2014

Amendment No. 1 to Selected Dealer Agreement among Dividend Capital Diversified Property Fund Inc., Dividend Capital Securities LLC, Dividend Capital Total Advisors LLC, and Raymond James & Associates, Inc., dated July 21, 2014, incorporated by reference to Exhibit 1.2 to the Company’s Current Report on Form 8-K, filed July 23, 2014

Dealer Manager Agreement between Dividend Capital Diversified Property Fund Inc. and Dividend Capital Securities LLC, dated July 12, 2012

Dealer Manager Agreement between Dividend Capital Total Realty Trust Inc. and Dividend Capital Securities LLC, dated January 3, 2006

Dealer Manager Agreement between Dividend Capital Total Realty Trust Inc. and Dividend Capital Securities LLC, dated January 22, 2008

Tenth Amended and Restated Advisory Agreement between Dividend Capital Diversified Property Fund Inc., Dividend Capital Total Realty Operating Partnership LP and Dividend Capital Total Advisors LLC, dated June 23, 2016

Fifth Amended and Restated Operating Partnership Agreement of Dividend Capital Total Realty Operating Partnership LP, dated March 2, 2016

Amendment No. 1 to Fifth Amended and Restated Operating Partnership Agreement of Dividend Capital Total Realty Operating Partnership LP, dated August 2, 2016

Amendment No. 2 to Fifth Amended and Restated Operating Partnership Agreement of Dividend Capital Total Realty Operating Partnership LP, dated September 19, 2016

Special Unit Repurchase Agreement, between Dividend Capital Total Realty Operating Partnership LP, and Dividend Capital Total Advisors Group LLC, dated July 12, 2012, incorporated by reference to Exhibit 10.3 to the Company’s Current Report on Form 8-K, filed July 12, 2012

Property Management Agreement between Dividend Capital Total Realty Trust Inc. and Dividend Capital Property Management LLC, incorporated by reference to Exhibit 10.3 to Amendment No.5 to the Trust's Registration Statement on Form S-11, Commission File No. 333-125338, filed January 13, 2006

Indemnification agreements with past, present and future officers and directors consistent with the Form of Indemnification Agreement between Dividend Capital Total Realty Inc. and the officers and directors of Dividend Capital Total Realty Trust Inc., incorporated by reference to Exhibit 10.4 to Amendment No. 5 to the Trust's Registration Statement on Form S-11, Commission File No. 333-125338, filed January 13, 2006

Equity Incentive Plan, incorporated by reference to Exhibit 10.6 to Amendment No. 5 to the Trust's Registration Statement on Form S-11, Commission File No. 333-125338, filed January 13, 2006

Agreements with past, present and future directors consistent with the Form of Director Option Agreement, incorporated by reference to Exhibit 99.1 to the Trust's Current Report on Form 8-K, filed April 7, 2006

Amended and Restated Equity Incentive Plan, incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K, filed December 10, 2013

Secondary Equity Incentive Plan, incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K, filed December 10, 2013

Second Amended and Restated Equity Incentive Plan, incorporated by reference to Exhibit 10.7 to Pre-Effective Amendment No. 2 to the Company’s Registration Statement on Form S-11 (File No. 333-197767), filed May 20, 2015

Amended and Restated Secondary Equity Incentive Plan, incorporated by reference to incorporated by reference to Exhibit 10.9 to Pre-Effective Amendment No. 2 to the Company’s Registration Statement on Form S-11 (File No. 333-197767), filed May 20, 2015

Form of Independent Director Restricted Stock Unit Agreement, incorporated by reference to Exhibit 10.17 to the Company’s Annual Report on Form 10-K, filed March 10, 2014

Restricted Stock Unit Agreement between the Company and Dividend Capital Total Advisors LLC, dated April 7, 2014, incorporated by reference to Exhibit 10.14 to Post-Effective Amendment No. 8 to the Company’s Registration Statement on Form S-11 (File No. 333-175989), filed April 11, 2014

Restricted Stock Unit Agreement between the Company and Dividend Capital Total Advisors LLC, dated February 25, 2015, relating to 135,358.636 restricted stock units

Restricted Stock Unit Agreement between the Company and Dividend Capital Total Advisors LLC, dated February 25, 2015, relating to 88,788.301 restricted stock units

Restricted Stock Unit Agreement between the Company and Dividend Capital Total Advisors LLC, dated February 4, 2016 (relating to 124,451 restricted stock units), incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K, filed February 5, 2016

Investment Advisory Agreement between Dividend Capital Total Advisors LLC, Dividend Capital Total Realty Trust Inc. and BCG TRT Advisors LLC dated as of March 26, 2012

Form of Trust Agreement, incorporated by reference to Exhibit 10.22 to Post-Effective Amendment No. 3 to the Company’s Registration Statement on Form S-11 (File No. 333-197767), filed April 7, 2016

Form of Master Lease, incorporated by reference to Exhibit 10.23 to Post-Effective Amendment No. 3 to the Company’s Registration Statement on Form S-11 (File No. 333-197767), filed April 7, 2016

Form of Guaranty, incorporated by reference to Exhibit 10.24 to Post-Effective Amendment No. 3 to the Company’s Registration Statement on Form S-11 (File No. 333-197767), filed April 7, 2016

Dealer Manager Agreement between Dividend Capital Exchange LLC and Dividend Capital Securities LLC dated March 2, 2016, and Form of Selected Dealer Agreement, incorporated by reference to Exhibit 10.25 to Post-Effective Amendment No. 3 to the Company’s Registration Statement on Form S-11 (File No. 333-197767), filed April 7, 2016

Property management agreements with past, present and future property owning entities consistent with the Form of Property Management Agreement between DPF Property Management LLC and the property owning entities

(1) Dividend Capital Diversified Property Fund Inc. was formerly known as Dividend Capital Total Realty Trust Inc., therefore references to Dividend Capital Diversified Property Fund Inc.

EX-21

Dividend Capital Diversified Property Fund Inc. 10-K

Exhibit 21

Subsidiaries of Registrant

DPF Entity Name	State of Formation
American Financial Exchange L.L.C.	New Jersey
Bala Pointe GP, LLC	Delaware
Bala Pointe Owner LP	Delaware
CB Square Leasing LLC	Delaware
Centerton Square LLC	Delaware
DCTRT Bala Pointe GP LLC	Delaware
DCTRT Bala Pointe LP	Delaware
DCTRT Greenwood Lease Management LLC	Delaware
DCTRT Greenwood Leasing LLC	Delaware
DCTRT Leasing Corp. (TRS)	Delaware
DCTRT Real Estate Holdco LLC	Delaware
DCTRT REPO Holdco LLC	Delaware
DCTRT Securities Holdco LLC	Delaware
DCTRT Springing Member Inc.	Delaware
DCX Greenwood DST	Delaware
DCX Kingston Leasing LLC	Delaware
DCX Manager Group LLC	Delaware
DCX Manager LLC	Delaware
DCX Master Tenant LLC	Delaware
DCX Rialto Manager LLC	Delaware
DCX Rialto Master Tenant LLC	Delaware
DCX Sandwich Leasing LLC	Delaware
DCX Springdale DST	Delaware
DCX Springdale Manager LLC	Delaware
DCX Springdale Master Tenant LLC	Delaware
DCX Springdale TRS LLC	Delaware
Div Cap Amerimar Bala Pointe 1 General Partnership	Delaware
Dividend Capital Diversified Property Fund Inc.	Maryland
Dividend Capital Exchange LLC	Delaware
Dividend Capital Total Realty Operating Partnership LP	Delaware
Dividend Jay, LLC	Delaware
Dividend Lundy, LLC	Delaware
DPF 1031 Parent LLC	Delaware
DPF 1500 Wilson Mezz LLC	Delaware
DPF 1600 Woodbury Avenue LLC	Delaware
DPF 1618 Woodbury Avenue LLC	Delaware
DPF 655 Montgomery GP LLC	Delaware
DPF 655 Montgomery Holdings General Partnership	Delaware
DPF 655 Montgomery Lease Management LLC	Delaware
DPF 655 Montgomery LP	Delaware
DPF Acquisitions LLC	Delaware
DPF Brockton Westgate Plaza II LLC	Delaware

Dividend Capital Diversified Property Fund Inc. 10-K

DPF Cherry Creek Lease Management LLC	Delaware
DPF Cherry Creek LLC	Delaware
DPF Chester LLC	Delaware
DPF CityView GP LLC	Delaware
DPF CityView Lease Management LLC	Delaware
DPF CityView LP	Delaware
DPF DeGuigne JV Owner II LLC	Delaware
DPF DeGuigne Owner LLC	Delaware
DPF DeGuigne Partners	Delaware
DPF Jay JV Owner II LLC	Delaware
DPF Jay Owner LLC	Delaware
DPF Jay Partners	Delaware
DPF LOC Lender LLC	Delaware
DPF Lundy JV Owner II LLC	Delaware
DPF Lundy Owner LLC	Delaware
DPF Lundy Partners	Delaware
DPF Mashpee LLC	Delaware
DPF Mashpee Manager LLC	Delaware
DPF Narragansett Lease Management LLC	Delaware
DPF Narragansett LLC	Delaware
DPF Palmetto Park Road Lease Management LLC	Delaware
DPF Palmetto Park Road LLC	Delaware
DPF Property Management LLC	Delaware
DPF Rialto GP LLC	Delaware
DPF Rialto Lease Management LLC	Delaware
DPF Rialto LP	Delaware
DPF Services LLC	Delaware
DPF Shenandoah Square LLC	Delaware
DPF Shiloh JV Owner II LLC	Delaware
DPF Shiloh Owner LLC	Delaware
DPF Shiloh Partners	Delaware
DPF Suniland Lease Management LLC	Delaware
DPF Suniland LLC	Delaware
DPF TRS Holdings I LLC	Delaware
DPF Venture Corporate Center Lease Management LLC	Delaware
DPF Venture Corporate Center LLC	Delaware
DPF Weymouth III LLC	Delaware
DPF Yale Village Lease Management LLC	Delaware
DPF Yale Village LLC	Delaware
iStar CTL Sunset Hills - Reston LLC	Delaware
Liberty Avenue Holdings LLC	Delaware
Liberty Avenue Partners	Delaware
Mibarev Development I, LLC	Georgia
Plaza X Leasing Associates L.L.C	New Jersey
Plaza X Realty L.L.C.	New Jersey
Plaza X Urban Renewal Associates L.L.C.	New Jersey

Dividend Capital Diversified Property Fund Inc. 10-K

Shackleford West Leasing LLC	Delaware
Southcape Village, LLC	Massachusetts
TRT 1100 Campus Road LLC	Delaware
TRT 1300 Connecticut Avenue GP LLC	Delaware
TRT 1300 Connecticut Avenue Limited Partnership	Delaware
TRT 1300 Connecticut Avenue LP Partner LLC	Delaware
TRT 1300 Connecticut Avenue Owner LLC	Delaware
TRT 1303 Joyce Blvd LLC	Delaware
TRT 1345 Philomena Street GP LLC	Delaware
TRT 1345 Philomena Street Limited Partnership	Delaware
TRT 1345 Philomena Street LP LLC	Delaware
TRT 1345 Philomena Street Owner LLC	Delaware
TRT 270 Center Holdings LLC	Delaware
TRT 270 Center Owner LLC	Delaware
TRT 625 Liberty Avenue JV LLC	Delaware
TRT Abington LLC	Delaware
TRT Alliance Diehl LLC	Delaware
TRT Alliance JV I Diehl LLC	Delaware
TRT Alliance JV I GP	Delaware
TRT Alliance JV II GP	Delaware
TRT Alliance JV II Skokie LLC	Delaware
TRT Alliance Skokie LLC	Delaware
TRT Beaver Creek LLC	Delaware
TRT Braintree II LLC	Delaware
TRT Braintree LLC	Delaware
TRT Brockton Eastway Plaza LLC	Delaware
TRT Brockton Westgate Plaza LLC	Delaware
TRT Cohasset LLC	Delaware
TRT Cranston LLC	Delaware
TRT Eastern Retail Holdings I LLC	Delaware
TRT Eastern Retail Holdings I Owner LLC	Delaware
TRT Flying Cloud Drive LLC	Delaware
TRT Hanover LLC	Delaware
TRT Harborside LLC	Delaware
TRT Harwich LLC	Delaware
TRT HEB Marketplace GP LLC	Delaware
TRT HEB Marketplace LP	Delaware
TRT Holbrook LLC	Delaware
TRT Hyannis LLC	Delaware
TRT Industrial Fund I LLC	Delaware
TRT Industrial Fund II LLC	Delaware
TRT Industrial Fund III LLC	Delaware
TRT Kingston II LLC	Delaware
TRT Kingston LLC	Delaware
TRT Lending LLC	Delaware
TRT Lending Subsidiary I Holdco LLC	Delaware

Dividend Capital Diversified Property Fund Inc. 10-K

TRT Lending Subsidiary I LLC	Delaware
TRT Lending Subsidiary II Holdco LLC	Delaware
TRT Lending Subsidiary II LLC	Delaware
TRT Manomet LLC	Delaware
TRT Mansfield LLC	Delaware
TRT Master Retail Holdco LLC	Delaware
TRT Meriden LLC	Delaware
TRT Mt. Nebo Pad LLC	Delaware
TRT Mt. Nebo Pad Owner LLC	Delaware
TRT New Bedford LLC	Delaware
TRT New England Retail Floating Rate Holdco LLC	Delaware
TRT NOIP CEVA Lease Holdco LLC	Delaware
TRT NOIP Colshire McLean GP LLC	Delaware
TRT NOIP Colshire McLean LLC	Delaware
TRT NOIP Colshire McLean LP	Delaware
TRT NOIP Columbia - Campbellsville LLC	Delaware
TRT NOIP Columbia - Richfield LLC	Delaware
TRT NOIP Connection - Irving GP LLC	Delaware
TRT NOIP Connection - Irving LP	Delaware
TRT NOIP Connection - Irving LP LLC	Delaware
TRT NOIP Corporate Center Drive - Newbury Park GP LLC	Delaware
TRT NOIP Corporate Center Drive - Newbury Park LP	Delaware
TRT NOIP Corporate Drive - Dixon LLC	Delaware
TRT NOIP Doolittle - Redondo Beach GP LLC	Delaware
TRT NOIP Doolittle - Redondo Beach LP	Delaware
TRT NOIP Dublin GP LLC	Delaware
TRT NOIP Dublin LP	Delaware
TRT NOIP Eagle GP LLC	Delaware
TRT NOIP Eagle LP	Delaware
TRT NOIP East 28 - Aurora LLC	Delaware
TRT NOIP Fixed CA Holdco LLC	Delaware
TRT NOIP Fixed Mezz Holdco LLC	Delaware
TRT NOIP Fixed Real Estate Holdco LLC	Delaware
TRT NOIP Floating CA LP Holdco LLC	Delaware
TRT NOIP Floating Mezz Holdco LLC	Delaware
TRT NOIP Floating Real Estate Holdco LLC	Delaware
TRT NOIP Glenville - Richardson GP LLC	Delaware
TRT NOIP Glenville - Richardson LP	Delaware
TRT NOIP Glenville - Richardson LP LLC	Delaware
TRT NOIP Inverness - Englewood II LLC	Delaware
TRT NOIP Maple - El Segundo GP LLC	Delaware
TRT NOIP Maple El Segundo LP	Delaware
TRT NOIP Shadelands - Walnut Creek GP LLC	Delaware
TRT NOIP Shadelands - Walnut Creek LP	Delaware
TRT NOIP Sheila - Commerce GP LLC	Delaware
TRT NOIP Sheila - Commerce LP	Delaware

Dividend Capital Diversified Property Fund Inc. 10-K

TRT NOIP South Havana - Englewood LLC	Delaware
TRT NOIP Sunset Hills - Reston LLC	Delaware
TRT NOIP SW 80 - Plantation LLC	Delaware
TRT NOIP Sylvan Way - Parsippany LLC	Delaware
TRT Norwell LLC	Delaware
TRT Orleans LLC	Delaware
TRT Park Place LLC	Delaware
TRT Preston Sherry LLC	Delaware
TRT Rockland 201 Market LLC	Delaware
TRT Rockland 360-372 Market LLC	Delaware
TRT Sandwich LLC	Delaware
TRT Saugus LLC	Delaware
TRT Shackleford West Boulevard LLC	Delaware
TRT Shiloh LLC	Delaware
TRT Springdale LLC	Delaware
TRT Wareham LLC	Delaware
TRT Weymouth II LLC	Delaware
TRT Weymouth LLC	Delaware
TRT Whitman 475 Bedford LLC	Delaware
TRT-DCT 130 Greenwood II LLC	Delaware
TRT-DCT 130 Greenwood LLC	Delaware
TRT-DCT 4155 Patriot Drive TX GP LLC	Delaware
TRT-DCT 4155 Patriot Drive TX LP	Delaware
TRT-DCT 4255 Patriot Drive TX GP LLC	Delaware
TRT-DCT 4255 Patriot Drive TX LP	Delaware
TRT-DCT 6900 Riverport LLC	Delaware
TRT-DCT 7000 Riverport LLC	Delaware
TRT-DCT 7050 Riverport LLC	Delaware
TRT-DCT 7201 Intermodal LLC	Delaware
TRT-DCT Creekside V LLC	Delaware
TRT-DCT Eagle Creek East LLC	Delaware
TRT-DCT Eagle Creek West LLC	Delaware
TRT-DCT Hanson Way LLC	Delaware
TRT-DCT Industrial JV II General Partnership	Delaware
TRT-DCT Industrial JV III General Partnership	Delaware
TRT-DCT Minnesota Valley III LLC	Delaware
TRT-DCT Park West L1 LLC	Delaware
TRT-DCT Park West Q LLC	Delaware
TRT-DCT Pencader LLC	Delaware
TRT-DCT Perry Road LLC	Delaware
TRT-DCT Rickenbacker IV LLC	Delaware
TRT-DCT Westport LLC	Delaware
TRT-DCT Westport Owner LLC	Delaware
TRT-Westcore De Guigne Owner LLC	Delaware

EX-23.1

Dividend Capital Diversified Property Fund Inc. 10-K

Exhibit 23.1

Consent of Independent Registered Public Accounting Firm

The Board of Directors

Dividend Capital Diversified Property Fund Inc.:

We consent to the incorporation by reference in the registration statements No. 333-162636 on Form S-3 and No. 333-194237 on Form S-8 of Dividend Capital Diversified Property Fund Inc. and subsidiaries of our reports dated March 3, 2017, with respect to the consolidated balance sheets of Dividend Capital Diversified Property Fund Inc. as of December 31, 2016 and 2015, and the related consolidated statements of income, comprehensive income, equity and cash flows for each of the years in the three-year period ended December 31, 2016, and the related financial statement schedule, which reports appear in the December 31, 2016 annual report on Form 10-K of Dividend Capital Diversified Property Fund Inc.

/s/ KPMG LLP

Denver, Colorado 

March 3, 2017

EX-31.1

Dividend Capital Diversified Property Fund Inc. 10-K

Exhibit 31.1

Certification of Principal Executive Officer Pursuant to

Rule 13a-14(a), Under the Securities Exchange Act of 1934, As Amended

I, Jeffrey L. Johnson, certify that:

1. I have reviewed this annual report on Form 10-K of Dividend Capital Diversified Property Fund Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

	/s/ JEFFREY L. JOHNSON
Name:	Jeffrey L. Johnson
Title:	Chief Executive Officer

Date: March 3, 2017

EX-31.2

Dividend Capital Diversified Property Fund Inc. 10-K

Exhibit 31.2

Certification of Principal Financial Officer Pursuant to

Rule 13a-14(a), Under the Securities Exchange Act of 1934, As Amended

I, M. Kirk Scott, certify that:

1. I have reviewed this annual report on Form 10-K of Dividend Capital Diversified Property Fund Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

	/S/ M. KIRK SCOTT
Name:	M. Kirk Scott
Title:	Chief Financial Officer and Treasurer

Date: March 3, 2017

EX-32.1

Dividend Capital Diversified Property Fund Inc. 10-K

Exhibit 32.1

Certification of Principal Executive Officer Pursuant to

18 U.S.C. Section 1350

I, Jeffrey L. Johnson, as Chief Executive Officer of the Company, certify, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350, that:

1. The Annual Report on Form 10-K of the Company for the annual period ended December 31, 2016 (the “Report”) fully complies with the requirements of Section 13(a) of the Securities Exchange Act of 1934 (15 U.S.C. 78m); and

2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Dated: March 3, 2017

	/s/ JEFFREY L. JOHSON
Name:	Jeffrey L. Johnson
Title:	Chief Executive Officer

A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

EX-32.2

Dividend Capital Diversified Property Fund Inc. 10-K

Exhibit 32.2

Certification of Principal Financial Officer Pursuant to

18 U.S.C. Section 1350

I, M. Kirk Scott, as Chief Financial Officer of the Company, certify, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350, that:

1.  The Annual Report on Form 10-K of the Company for the annual period ended December 31, 2016 (the “Report”) fully complies with the requirements of Section 13(a) of the Securities Exchange Act of 1934 (15 U.S.C. 78m); and

2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Dated: March 3, 2017

	/S/ M. KIRK SCOTT
Name:	M. Kirk Scott
Title:	Chief Financial Officer and Treasurer

A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

EX-99.2

Dividend Capital Diversified Property Fund Inc. 10-K

Exhibit 99.2

CONSENT OF INDEPENDENT VALUATION FIRM

We hereby consent to the reference to our name, the description of our role and the valuation of the real properties and related assumptions provided under the heading “Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities—Net Asset Value Calculation” in Part II, Item 5 of the Annual Report on Form 10-K for the period ended December 31, 2016 of Dividend Capital Diversified Property Fund Inc., being incorporated by reference in (i) the Registration Statement on Form S-3 (No. 333-162636) of Dividend Capital Diversified Property Fund Inc., and the related prospectus, and (ii) the Registration Statement on Form S-8 (No. 333-194237) of Dividend Capital Diversified Property Fund Inc. We also hereby consent to the same information and the reference to our firm under the captions “Net Asset Value Calculation and Valuation Procedures” and “Experts” being included in a supplement to the prospectus related to the Registration Statement on Form S-11 (File No. 333-197767) of Dividend Capital Diversified Property Fund Inc. In giving such consent, we do not thereby admit that we are in the category of persons whose consent is required under Section 7 of the Securities Act of 1933.  

/s/ Altus Group U.S., Inc.

Altus Group U.S., Inc.

March 3, 2017

XML

Document and Entity Information - USD ($)	12 Months Ended
	Dec. 31, 2016	Feb. 24, 2017	Jun. 30, 2016
Document Information [Line Items]
Document Type	10-K
Amendment Flag	false
Document Period End Date	Dec. 31, 2016
Document Fiscal Year Focus	2016
Document Fiscal Period Focus	FY
Entity Registrant Name	Dividend Capital Diversified Property Fund Inc.
Entity Central Index Key	0001327978
Current Fiscal Year End Date	--12-31
Entity Well-known Seasoned Issuer	No
Entity Voluntary Filers	No
Entity Current Reporting Status	Yes
Entity Filer Category	Non-accelerated Filer
Entity Public Float			$ 0
Class E
Document Information [Line Items]
Entity Common Stock, Shares Outstanding		112,526,991
Class A
Document Information [Line Items]
Entity Common Stock, Shares Outstanding		2,027,074
Class W
Document Information [Line Items]
Entity Common Stock, Shares Outstanding		2,372,400
Class I
Document Information [Line Items]
Entity Common Stock, Shares Outstanding		33,942,117

XML

CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands		Dec. 31, 2016	Dec. 31, 2015
ASSETS
Investments in real property		$ 2,204,322	$ 2,380,174
Accumulated depreciation and amortization		(492,911)	(505,957)
Total net investments in real property		1,711,411	1,874,217
Debt-related investments, net		15,209	15,722
Total net investments		1,726,620	1,889,939
Cash and cash equivalents		13,864	15,769
Restricted cash		7,282	18,394
Other assets, net		35,962	36,789
Total Assets		1,783,728	1,960,891
Liabilities:
Accounts payable and accrued expenses	[1]	34,085	39,645
Mortgage notes		342,247	585,864
Unsecured borrowings		706,554	511,905
Intangible lease liabilities, net		59,545	63,874
Other liabilities		33,206	33,652
Total Liabilities		1,175,637	1,234,940
Stockholders' equity:
Common stock, $0.01 par value; 1,000,000,000 shares authorized; 150,636,393 and 164,124,057 shares issued and outstanding, as of December 31, 2016 and December 31, 2015, respectively	[2]	1,506	1,641
Additional paid-in capital		1,361,638	1,470,859
Distributions in excess of earnings		(839,896)	(832,681)
Accumulated other comprehensive loss		(6,905)	(11,014)
Total stockholders’ equity		516,343	628,805
Noncontrolling interests		91,748	97,146
Total Equity		608,091	725,951
Total Liabilities and Equity		$ 1,783,728	$ 1,960,891

[1] Includes approximately $3.6 million and $5.1 million that we owed to our Advisor and affiliates of our Advisor for services and reimbursement of certain expenses as of December 31, 2016 and December 31, 2015, respectively.

[2] Includes 112,325,127 shares of Class E common stock, 2,001,359 shares of Class A common stock, 2,271,361 shares of Class W common stock, and 34,038,546 shares of Class I common stock issued and outstanding as of December 31, 2016, and 137,275,396 shares of Class E common stock, 1,703,109 shares of Class A common stock, 1,812,277 shares of Class W common stock, and 23,334,275 shares of Class I common stock issued and outstanding as of December 31, 2015.

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CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands		Dec. 31, 2016	Dec. 31, 2015
Common stock, par value		$ 0.01	$ 0.01
Common stock, shares authorized		1,000,000,000	1,000,000,000
Common stock, shares issued		150,636,393	164,124,057
Common stock, shares outstanding		150,636,393	164,124,057
Accounts payable and accrued expenses	[1]	$ 34,085	$ 39,645
Class E
Common stock, shares issued		112,325,127	137,275,396
Common stock, shares outstanding		112,325,127	137,275,396
Class A
Common stock, shares issued		2,001,359	1,703,109
Common stock, shares outstanding		2,001,359	1,703,109
Class W
Common stock, shares issued		2,271,361	1,812,277
Common stock, shares outstanding		2,271,361	1,812,277
Class I
Common stock, shares issued		34,038,546	23,334,275
Common stock, shares outstanding		34,038,546	23,334,275
Advisor And Advisor Affiliates
Accounts payable and accrued expenses		$ 3,600	$ 5,100

[1] Includes approximately $3.6 million and $5.1 million that we owed to our Advisor and affiliates of our Advisor for services and reimbursement of certain expenses as of December 31, 2016 and December 31, 2015, respectively.

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CONSOLIDATED STATEMENTS OF INCOME - USD ($) shares in Thousands, $ in Thousands		12 Months Ended
		Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2014
REVENUE:
Rental revenue		$ 215,227	$ 218,278	$ 224,201
Debt-related income		943	6,922	7,396
Total Revenue		216,170	225,200	231,597
EXPENSES:
Rental expense		65,587	59,590	50,997
Real estate depreciation and amortization expense		80,105	83,114	88,994
General and administrative expenses	[1]	9,450	10,720	11,108
Advisory fees, related party		14,857	17,083	15,919
Acquisition-related expenses		667	2,644	1,205
Impairment of real estate property	[2]	2,677	8,124	9,500
Total Operating Expenses		173,343	181,275	177,723
Other Income (Expenses):
Interest and other income		2,207	2,192	1,168
Interest expense		(40,782)	(47,508)	(61,903)
Gain (loss) on extinguishment of debt and financing commitments		5,136	(1,168)	(63)
Gain on sale of real property	[3]	45,660	134,218	10,914
Income from continuing operations		55,048	131,659	3,990
Discontinued operations	[4]	0	0	30,004
Net income		55,048	131,659	33,994
Net income attributable to noncontrolling interests		(5,072)	(7,404)	(4,802)
NET INCOME ATTRIBUTABLE TO COMMON STOCKHOLDERS		$ 49,976	$ 124,255	$ 29,192
Net income per basic and diluted common share:
Continuing operations (usd per share)		$ 0.31	$ 0.70	$ 0.02
Discontinued operations (usd per share)		0.00	0.00	0.14
NET INCOME PER BASIC AND DILUTED COMMON SHARE (usd per share)		$ 0.31	$ 0.70	$ 0.16
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING
Basic (in shares)		159,648	175,938	178,273
Diluted (in shares)		172,046	188,789	190,991

[1] Includes approximately $6.4 million, $7.1 million and $6.8 million incurred by our Advisor and its affiliates for reimbursable expenses during the years ended December 31, 2016, 2015, and 2014, respectively.

[2] Includes approximately $265,000 and $125,000 paid to our Advisor for advisory fees associated with the disposition of real properties during the years ended December 31, 2016 and 2015, respectively.

[3] Includes approximately $1.9 million, $4.8 million, and $419,000 paid to our Advisor for advisory fees associated with the disposition of real properties during the years ended December 31, 2016, 2015 and 2014, respectively.

[4] Includes approximately $1.6 million paid to our Advisor for fees associated with the disposition of real properties during the year ended December 31, 2014.

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CONSOLIDATED STATEMENTS OF INCOME (Parenthetical) - USD ($) $ in Thousands		12 Months Ended
		Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2014
General and administrative expenses	[1]	$ 9,450	$ 10,720	$ 11,108
Impairment of real estate property	[2]	2,677	8,124	9,500
Gain on sale of real property	[3]	45,660	134,218	10,914
Discontinued operations	[4]	0	0	30,004
Advisory Fees Related to the Disposition Of Real Properties
Impairment of real estate property		265	125
Gain on sale of real property		1,900	4,800	419
Discontinued operations				1,600
Series of Individually Immaterial Business Acquisitions
General and administrative expenses		$ 6,400	$ 7,100	$ 6,800

[1] Includes approximately $6.4 million, $7.1 million and $6.8 million incurred by our Advisor and its affiliates for reimbursable expenses during the years ended December 31, 2016, 2015, and 2014, respectively.

[2] Includes approximately $265,000 and $125,000 paid to our Advisor for advisory fees associated with the disposition of real properties during the years ended December 31, 2016 and 2015, respectively.

[3] Includes approximately $1.9 million, $4.8 million, and $419,000 paid to our Advisor for advisory fees associated with the disposition of real properties during the years ended December 31, 2016, 2015 and 2014, respectively.

[4] Includes approximately $1.6 million paid to our Advisor for fees associated with the disposition of real properties during the year ended December 31, 2014.

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CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2014
Statement of Comprehensive Income [Abstract]
Net Income	$ 55,048	$ 131,659	$ 33,994
Other Comprehensive (Loss) Income:
Net unrealized change from available-for-sale securities	0	0	(211)
Change from cash flow hedging derivatives	4,416	(977)	721
Total Other Comprehensive (Loss) Income	4,416	(977)	510
Comprehensive income	59,464	130,682	34,504
Comprehensive income attributable to noncontrolling interests	(5,379)	(7,321)	(4,637)
COMPREHENSIVE INCOME ATTRIBUTABLE TO COMMON STOCKHOLDERS	$ 54,085	$ 123,361	$ 29,867

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CONSOLIDATED STATEMENTS OF EQUITY - USD ($) $ in Thousands	Total	Common Stock	Additional Paid-in Capital	Distributions in Excess of Earnings	Accumulated Other Comprehensive Loss	Noncontrolling Interests
Beginning Balances (in shares) at Dec. 31, 2013		176,007,000
Beginning balance at Dec. 31, 2013	$ 805,011	$ 1,760	$ 1,582,886	$ (860,747)	$ (10,794)	$ 91,906
Comprehensive income (loss):
Net Income	33,994			29,192		4,802
Net unrealized change from available-for-sale securities	(211)				(196)	(15)
Unrealized change from cash flow hedging derivatives	721				671	50
Common stock:
Issuance of common stock, net of offering costs (in shares)		13,923,000
Issuance of common stock, net of offering costs	87,101	$ 140	86,961
Issuance of common stock, stock-based compensation plans (in shares)		136,000
Issuance of common stock, stock-based compensation plans	777	$ 1	776
Redemptions of common stock (in shares)		(11,666,000)
Redemptions of common stock	(82,236)	$ (117)	(82,119)
Amortization of stock-based compensation	30		30
Distributions declared on common stock	(62,236)			(62,236)
Noncontrolling interests:
Contributions from noncontrolling interest	104					104
Distributions declared to noncontrolling interests	(9,390)					(9,390)
Redemptions of noncontrolling interests	(7,900)		(1,121)		199	(6,978)
Buyout of noncontrolling interest	(1,785)		(969)			(816)
Ending Balances (in shares) at Dec. 31, 2014		178,400,000
Ending balance at Dec. 31, 2014	763,980	$ 1,784	1,586,444	(893,791)	(10,120)	79,663
Comprehensive income (loss):
Net Income	131,659			124,255		7,404
Net unrealized change from available-for-sale securities	0
Unrealized change from cash flow hedging derivatives	(977)				(922)	(55)
Common stock:
Issuance of common stock, net of offering costs (in shares)		14,262,000
Issuance of common stock, net of offering costs	96,949	$ 142	96,807
Issuance of common stock, stock-based compensation plans (in shares)		618,000
Issuance of common stock, stock-based compensation plans	1,263	$ 6	1,257
Redemptions of common stock (in shares)		(29,156,000)
Redemptions of common stock	(213,796)	$ (291)	(213,505)
Amortization of stock-based compensation	32		32
Distributions declared on common stock	(62,900)			(62,900)
Distributions on Unvested Advisor RSUs	(245)			(245)
Noncontrolling interests:
Contributions from noncontrolling interest	17,337					17,337
Distributions declared to noncontrolling interests	(4,689)					(4,689)
Redemptions of noncontrolling interests	$ (2,662)		(176)		28	(2,514)
Ending Balances (in shares) at Dec. 31, 2015	164,124,057	164,124,000
Ending balance at Dec. 31, 2015	$ 725,951	$ 1,641	1,470,859	(832,681)	(11,014)	97,146
Comprehensive income (loss):
Net Income	55,048			49,976		5,072
Net unrealized change from available-for-sale securities	0
Unrealized change from cash flow hedging derivatives	4,416				4,109	307
Common stock:
Issuance of common stock, net of offering costs (in shares)		14,952,000
Issuance of common stock, net of offering costs	100,447	$ 150	100,297
Issuance of common stock, stock-based compensation plans (in shares)		32,000
Issuance of common stock, stock-based compensation plans	306	$ 0	306
Redemptions of common stock (in shares)		(28,472,000)
Redemptions of common stock	(210,572)	$ (285)	(210,287)
Amortization of stock-based compensation	1,109		1,109
Distributions declared on common stock	(57,040)			(57,040)
Distributions on Unvested Advisor RSUs	(151)			(151)
Noncontrolling interests:
Contributions from noncontrolling interest	3,225					3,225
Distributions declared to noncontrolling interests	(9,006)					(9,006)
Redemptions of noncontrolling interests	$ (5,642)		(646)		0	(4,996)
Ending Balances (in shares) at Dec. 31, 2016	150,636,393	150,636,000
Ending balance at Dec. 31, 2016	$ 608,091	$ 1,506	$ 1,361,638	$ (839,896)	$ (6,905)	$ 91,748

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CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands		12 Months Ended
		Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2014
OPERATING ACTIVITIES:
Net Income		$ 55,048	$ 131,659	$ 33,994
Adjustments to reconcile net income to net cash provided by operating activities:
Real estate depreciation and amortization expense		80,105	83,114	88,994
Gain on disposition of real property		(45,660)	(134,218)	(40,592)
Impairment loss on real estate property	[1]	2,677	8,124	9,500
Collection of accrued interest from debt investment		0	6,421	0
(Gain) loss on extinguishment of debt and financing commitments		(5,136)	1,168	63
Other adjustments to reconcile net income to net cash provided by operating activities		8,120	4,660	8,565
Changes in operating assets and liabilities		(4,858)	4,602	(13,295)
Net cash provided by operating activities		90,296	105,530	87,229
INVESTING ACTIVITIES:
Acquisition of real property		(65,861)	(319,577)	(125,509)
Capital expenditures in real property		(28,951)	(26,204)	(14,944)
Proceeds from disposition of real properties		208,604	359,817	105,322
Principal collections on debt-related investments		469	64,769	24,052
Other investing activities		8,269	(4,384)	(4,023)
Net cash provided by (used in) investing activities		122,530	74,421	(15,102)
FINANCING ACTIVITIES:
Mortgage note proceeds		84,045	70,626	0
Mortgage note principal repayments		(314,816)	(136,658)	(52,977)
Defeasance of mortgage note borrowings		0	(53,267)	0
Net proceeds from revolving line of credit borrowings		69,000	92,000	45,000
Net proceeds from term loan borrowings		124,411	80,000	0
Other secured borrowings repayments		0	(25,796)	(1,122)
Redemption of common shares		(212,878)	(225,720)	(81,990)
Distributions on common stock		(37,647)	(42,439)	(41,239)
Proceeds from sale of common stock		88,206	80,609	74,916
Offering costs for issuance of common stock		(5,417)	(4,602)	(4,568)
Distributions to noncontrolling interest holders		(6,641)	(4,591)	(9,501)
Redemption of OP Unit holder interests		(5,309)	(2,750)	(8,219)
Other financing activities		2,315	(6,055)	(2,744)
Net cash used in financing activities		(214,731)	(178,643)	(82,444)
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS		(1,905)	1,308	(10,317)
CASH AND CASH EQUIVALENTS, beginning of period		15,769	14,461	24,778
CASH AND CASH EQUIVALENTS, end of period		13,864	15,769	14,461
Supplemental Disclosure of Cash Flow Information:
Cash paid for interest		38,161	45,321	58,330
Supplemental Disclosure of Noncash Investing and Financing Activities:
Assumed mortgage		0	11,869	0
Common stock issued pursuant to the distribution reinvestment plan		20,576	21,347	20,831
Issuances of OP Units for beneficial interests		0	7,324	0
Non-cash repayment of mortgage note and other secured borrowings	[2]	0	139,236	115,387
Non-cash disposition of real property	[2]	7,830	128,008	107,075
Non-cash origination of debt related investments	[2]	0	11,228	7,125
Non-cash investment in real property		$ 0	$ 11,869	$ 12,232

[1] Includes approximately $265,000 and $125,000 paid to our Advisor for advisory fees associated with the disposition of real properties during the years ended December 31, 2016 and 2015, respectively.

[2] Represents the amount of sales proceeds and debt repayments from the disposition of real property or the repayment of borrowings that we did not receive or pay in cash, primarily due to the repayment or assumption of related borrowings by the purchaser or borrower at closing.

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Organization

12 Months Ended

Dec. 31, 2016

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Organization

ORGANIZATION

Dividend Capital Diversified Property Fund Inc. is a Maryland corporation formed on April 11, 2005 to invest in a diverse portfolio of real property and real estate related investments. As used herein, “the Company,” “we,” “our” and “us” refer to Dividend Capital Diversified Property Fund Inc. and its consolidated subsidiaries and partnerships except where the context otherwise requires.

We believe we have operated in such a manner as to qualify as a real estate investment trust (“REIT”) for federal income tax purposes, and we utilize an Umbrella Partnership Real Estate Investment Trust (“UPREIT”) organizational structure to hold all or substantially all of our assets through our operating partnership, Dividend Capital Total Realty Operating Partnership, L.P. (our “Operating Partnership”). Furthermore, our Operating Partnership wholly owns a taxable REIT subsidiary, DCTRT Leasing Corp. (the “TRS”), through which we have executed certain business transactions that might otherwise have an adverse impact on our status as a REIT if such business transactions were to occur directly or indirectly through our Operating Partnership.

We are the sole general partner of our Operating Partnership. In addition, we have contributed 100% of the proceeds received from our offerings of common stock to our Operating Partnership in exchange for partnership units (“OP Units”) representing our interest as a limited partner of the Operating Partnership.

Dividend Capital Total Advisors LLC (our “Advisor”), a related party, manages our day-to-day activities under the terms and conditions of an advisory agreement (as amended from time to time, the “Advisory Agreement”). Our Advisor and its affiliates receive various forms of compensation, reimbursements and fees for services relating to the investment and management of our real estate assets.

On July 12, 2012, the Securities and Exchange Commission (the “Commission”) declared effective our Registration Statement on Form S-11 (Registration Number 333-175989) (as amended, the “Prior Registration Statement”). The Prior Registration Statement applied to the offer and sale (the “Prior Offering”) of up to $3,000,000,000 of our shares of common stock, of which $2,250,000,000 of shares were expected to be offered to the public in a primary offering and $750,000,000 of shares were expected to be offered to our stockholders pursuant to an amended and restated distribution reinvestment plan (subject to our right to reallocate such amounts). In the Prior Offering, we offered to the public three classes of shares: Class A shares, Class W shares and Class I shares with net asset value (“NAV”) based pricing. See “Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities” and Exhibit 99.1 of this Annual Report on Form 10-K for a description of our valuation procedures and valuation components, including important disclosure regarding real property valuations provided by Altus Group U.S., Inc., an independent valuation firm. Our independent registered public accounting firm does not audit our NAV. Selling commissions, dealer manager fees, and distribution fees are allocated to Class A shares, Class W shares, and Class I shares on a class-specific basis and differ for each class, even when the NAV of each class is the same. On September 15, 2015, we terminated the Prior Offering. Through September 15, 2015, the date our Prior Offering terminated, we had raised gross proceeds of approximately $183.0 million from the sale of approximately 25.8 million shares in the Prior Offering, including approximately $3.4 million through our distribution reinvestment plan.

On September 16, 2015, the Commission declared effective our Registration Statement on Form S-11 (Registration Number 333-197767) (the “Follow-On Registration Statement”). The Follow-On Registration Statement applies to the Company’s follow-on “best efforts” offering of up to $1,000,000,000 of the Company’s Class A, Class I and Class W shares of common stock, of which $750,000,000 of shares are expected to be offered to the public in a primary offering and $250,000,000 of shares are expected to be offered to stockholders of the Company pursuant to its distribution reinvestment plan (subject to the Company’s right to reallocate such amounts) (the “Follow-On Offering”). As of December 31, 2016, we had raised gross proceeds of approximately $110.0 million from the sale of approximately 14.8 million shares in the Follow-On Offering.

As of December 31, 2016, we had raised aggregate gross proceeds of approximately $293.0 million from the sale of approximately 40.6 million shares, including approximately $10.4 million raised through our distribution reinvestment plan. As of December 31, 2016, approximately $890.0 million in shares remained available for sale pursuant to the Follow-on Offering, including approximately $243.1 million in shares available for sale through our distribution reinvestment plan.

We are offering to sell any combination of Class A shares, Class W shares and Class I shares with a dollar value up to the maximum offering amount pursuant to the Follow-On Offering. We also sell shares of our unclassified common stock, which we refer to as “Class E” shares, pursuant to our distribution reinvestment plan offering registered on our Registration Statement on Form S-3 (Registration Number 333-162636). In the event of a liquidation event, such assets, or the proceeds therefrom, will be distributed ratably in proportion to the respective NAV for each class until the NAV for each class has been paid. Other than differing allocable fees and liquidation rights, Class E shares, Class A shares, Class W shares, and Class I shares have identical rights and privileges.

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Summary of Significant Accounting Policies

12 Months Ended

Dec. 31, 2016

Accounting Policies [Abstract]

Summary of Significant Accounting Policies

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Principles of Consolidation

Due to our control of our Operating Partnership through our sole general partnership interest and the limited rights of the limited partners, we consolidate our Operating Partnership, and limited partner interests not held by us are reflected as noncontrolling interests in the accompanying consolidated financial statements (herein referred to as “financial statements”). All significant intercompany accounts and transactions have been eliminated in consolidation.

Our financial statements also include the accounts of our consolidated subsidiaries and joint ventures through which we are the primary beneficiary, when such subsidiaries and joint ventures are variable interest entities, or through which we have a controlling interest. In determining whether we have a controlling interest in a joint venture and the requirement to consolidate the accounts of that entity, we consider factors such as ownership interest, board representation, management representation, authority to make decisions, and contractual and substantive participating rights of the partners/members as well as whether the entity is a variable interest entity in which we have the power to direct the activities that most significantly impact the entity’s economic performance and the obligation to absorb losses that could potentially be significant to the entity or the right to receive benefits that could potentially be significant to the entity.

Our Operating Partnership qualifies as a variable interest entity for accounting purposes and substantially all of the assets of the Company are held by our Operating Partnership, which, subject to certain Operating Partnership and subsidiary level financing restrictions, can be used to settle its obligations. Creditors of certain liabilities of our Operating Partnership have recourse to the Company. All joint ventures in which we have investments are variable interest entities. All of our investments in joint ventures represent our interests in real estate partnerships, formed for the purpose of acquiring, leasing, managing, holding for investment, selling and otherwise dealing with real property investments. Our involvement with our joint ventures affects our financial position, financial performance and cash flows in ways similar to direct ownership of real property investment. We own a significantly disproportionate majority of the ownership interests of our joint ventures. In each of our joint ventures, our joint venture partner performs the day-to-day management of the real properties owned by the respective joint ventures. However, in each of our joint ventures, we approve the activities that most significantly impact the joint venture’s economic performance. Due to our substantive approval rights and our exposure to the economic returns and losses of each of the joint ventures, we are the primary beneficiary of each of our joint ventures. Based on these considerations, we consolidate all of our investments in joint ventures. The accompanying consolidated balance sheets include approximately $48.2 million and $76.9 million, after accumulated depreciation and amortization, in consolidated real property variable interest entity investments as of December 31, 2016 and 2015, respectively. The accompanying consolidated balance sheets include approximately $50.1 million in consolidated mortgage notes in variable interest entity investments as of December 31, 2015. There were no mortgage notes related to variable interest entities as of December 31, 2016.

Judgments made by us with respect to our level of influence or control of an entity and whether we are the primary beneficiary of a variable interest entity involve consideration of various factors, including the form of our ownership interest, the size of our investment (including loans), our ability to direct the activities of the entity, and our obligation to absorb the losses of, or, our right to receive benefits from the entity. Our ability to correctly assess our influence or control over an entity affects the presentation of these investments in our financial statements and, consequently, our financial position and specific items in our results of operations that are used by our stockholders, lenders and others in their evaluation of us. The maximum risk of loss related to our investment in these consolidated variable interest entities is limited to our recorded investments in such entities. The creditors of the consolidated variable interest entities do not have recourse to our general credit.

Generally, we consolidate real estate partnerships and other entities that are not variable interest entities when we own, directly or indirectly, a majority voting interest in the entity.

Reclassifications

Certain previously reported amounts have been reclassified to conform to the current period financial statement presentation. In April 2015, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update 2015-03 (“ASU 2015-03”), which requires that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability. The guidance is effective for all reporting periods beginning after December 15, 2015 and requires retrospective application. As a result of adopting this guidance, we reclassified approximately $5.1 million and $1.2 million of net debt issuance costs to “unsecured borrowings” and “mortgage notes”, respectively, in the accompanying consolidated balance sheet as of December 31, 2015. We recorded approximately $4.4 million and $1.8 million of net debt issuance costs into “unsecured borrowings” and “mortgage notes”, respectively, in the accompanying consolidated balance sheet as of December 31, 2016.

Investments

Real Property

Costs associated with the acquisition of real property, including acquisition fees paid to our Advisor, are expensed as incurred. In addition, we estimate the fair value of contingent consideration and contingencies related to acquisitions of real property in determining the total cost of the property acquired. Subsequent changes in the fair value of such contingent consideration are recorded either as a gain or loss in our consolidated statements of income. Contingencies are subsequently adjusted through the consolidated statements of income when new information becomes available indicating that settlement of a contingent liability is probable and can be estimated at an amount greater than the acquisition date fair value, or the contingency is resolved, in which case the contingent asset or liability is derecognized.

Costs associated with the development and improvement of our real property assets are capitalized as incurred. Costs incurred in making repairs and maintaining real estate assets are expensed as incurred. During the land development and construction periods, we capitalize interest costs, insurance, real estate taxes and certain general and administrative costs if such costs are incremental and identifiable to a specific activity to get the asset ready for its intended use. The results of operations for acquired real property are included in our accompanying statements of income from their respective acquisition dates.

Upon acquisition, the total cost of a property is allocated to land, building, building and land improvements, tenant improvements and intangible lease assets and liabilities. The purchase price allocation of the total cost to land, building, building improvements, tenant improvements, intangible lease assets and intangible lease liabilities is based on our estimate of the property’s as-if vacant fair value. The as-if vacant fair value is calculated by using all available information such as the replacement cost of such asset, appraisals, property condition reports, market data and other related information. The difference between the fair value and the face value of debt assumed in an acquisition is recorded as an adjustment to the purchase price allocation. The allocation of the total cost of a property to an intangible lease asset includes the value associated with the in-place leases, which may include lost rent, leasing commissions, tenant improvements, legal and other costs.

We record acquired “above-market” and “below-market” leases at their fair value equal to the difference between the contractual amounts to be paid pursuant to each in-place lease and our estimate of fair market lease rates for each corresponding in-place lease, measured over a period equal to the remaining term of the lease for above-market leases and the remaining term of the lease plus the term of any below-market fixed-rate renewal option periods for below-market leases. In addition, we allocate a portion of the purchase price of an acquired property to the estimated value of customer relationships, if any. As of December 31, 2016, we had not recognized any estimated value to customer relationships.

The following table summarizes the amounts that we have incurred in amortization expense for intangible lease assets and adjustments to rental revenue for above-market lease assets and below-market lease liabilities for the years ended December 31, 2016, 2015 and 2014 (amounts in thousands). 

	For the Year Ended December 31,
	2016			2015			2014
Above-market lease assets	$	(5,515	)	$	(5,216	)	$	(6,708	)
Below-market lease liabilities	6,050			6,029			7,324
Net increase to rental revenue	$	535		$	813		$	616
Intangible lease asset amortization	$	(40,797	)	$	(44,260	)	$	(48,937	)

We expense any unamortized intangible lease asset or record an adjustment to rental revenue for any unamortized above-market lease asset or below-market lease liability when a tenant terminates a lease before the stated lease expiration date. During the year ended December 31, 2016, we recorded $1.7 million related to write-offs of unamortized intangible lease assets and liabilities due to early lease terminations. We recorded an insignificant amount of adjustments related to write-offs of unamortized intangible lease assets and liabilities due to early lease terminations during the years ended December 31, 2015 and 2014.

Real property assets, including land, building, building and land improvements, tenant improvements, lease commissions, and intangible lease assets and liabilities are stated at historical cost less accumulated depreciation and amortization. Depreciation and amortization are computed on a straight-line basis over their estimated useful lives as described in the following table.   

Description	Depreciable Life
Land	Not depreciated
Building	40 years
Building and land improvements	10-40 years
Tenant improvements	Lesser of useful life or lease term
Lease commissions	Over lease term
Intangible in-place lease assets	Over lease term
Above-market lease assets	Over lease term
Below-market lease liabilities	Over lease term, including below-market fixed-rate renewal options

The following table presents expected amortization during the next five years and thereafter related to the acquired above-market lease assets, below-market lease liabilities and acquired in-place lease intangibles, for properties owned as of December 31, 2016 (amounts in thousands).

	For the Year Ended December 31,
	2017			2018			2019			2020			2021			Thereafter			Total
Acquired above-market lease assets	$	(2,379	)	$	(727	)	$	(633	)	$	(213	)	$	(201	)	$	(456	)	$	(4,609	)
Acquired below-market lease liabilities	5,307			4,695			3,977			3,272			2,847			39,447			59,545
Net rental revenue increase	$	2,928		$	3,968		$	3,344		$	3,059		$	2,646		$	38,991		$	54,936
Acquired in-place lease intangibles	$	27,158		$	16,909		$	11,863		$	6,898		$	5,412		$	15,572		$	83,812

Discontinued Operations and Held for Sale

Beginning with the year ended December 31, 2014, a discontinued operation is defined as a component (or group of components) of the entity, the disposal of which would represent a strategic shift that has (or will have) a major effect on the entity’s operations and financial results, when such a component (or group of components) has been disposed of or classified as held for sale. Interest expense is included in discontinued operations only if it is directly attributable to these operations or properties. The results of operations of properties that have been classified as discontinued operations are reported as discontinued operations for all periods presented. We classify real property as held for sale when our management commits to a plan to sell the property, the plan has appropriate approvals, the sale of the property is probable, and certain other criteria are met. At such time, the respective assets and liabilities are presented separately on our balance sheets and depreciation is no longer recognized. Assets held for sale are reported at the lower of their carrying amount or their estimated fair value less the costs to sell the assets. We recognize an impairment loss for assets held for sale if the current net book value of the property exceeds its fair value less selling costs. As of December 31, 2014, one of our properties was classified as held for sale.

Debt-Related Investments

Debt-related investments are considered to be held for investment, as we have both the intent and ability to hold these investments until maturity. Accordingly, these assets are carried at cost, net of unamortized loan origination costs and fees, discounts, repayments and unfunded commitments unless such loans or investments are deemed to be impaired.

Revenue Recognition

Revenue Recognition — Real Property

We record rental revenue for the full term of each lease on a straight-line basis. Certain properties have leases that offer the tenant a period of time where no rent is due or where rent payments increase during the term of the lease. Accordingly, we record a receivable from tenants for rent that we expect to collect over the remaining lease term rather than currently, which is recorded as straight-line rents receivable. When we acquire a property, the term of existing leases is considered to commence as of the acquisition date for purposes of this calculation. Tenant recovery income includes payments from tenants for real estate taxes, insurance and other property operating expenses and is recognized as rental revenue.

The following table summarizes straight-line rental adjustments and tenant recovery income received from tenants for real estate taxes, insurance and other property operating expenses and recognized as rental revenue for the years ended December 31, 2016, 2015, and 2014 (amounts in thousands): 

	For the Year Ended December 31,
	2016			2015			2014
Straight-line rent adjustments	$	(1,263	)	$	(976	)	$	3,037
Tenant recovery income (1)	$	41,707		$	37,526		$	31,092

_______________________________

(1) Tenant recovery income excludes real estate taxes that were paid directly by our tenants that are subject to triple net lease contracts. Such payments totaled approximately $4.3 million, $7.0 million and $12.4 million during the years ended December 31, 2016, 2015, and 2014, respectively.

Impairment

Impairment — Real Property

We review our investments in real property individually on a quarterly basis, and more frequently when such an evaluation is warranted, to determine their appropriate classification, as well as whether there are indicators of impairment. The investments in real property are either classified as held and used or held for sale.

As of December 31, 2016, all of our properties were classified as held and used. The held and used assets are reviewed for indicators of impairment, which may include, among others, vacancy, each tenant’s inability to make rent payments, operating losses or negative operating trends at the property level, notification by a tenant that it will not renew its lease, a decision to dispose of a property, including a change in estimated holding periods, or adverse changes in the fair value of any of our properties. If indicators of impairment exist on a held and used asset, we compare the future estimated undiscounted cash flows from the expected use of the property to its net book value to determine if impairment exists. If the sum of the future estimated undiscounted cash flows is greater than the current net book value, we conclude no impairment exists. If the sum of the future estimated undiscounted cash flows is less than its current net book value, we recognize an impairment loss for the difference between the net book value of the property and its estimated fair value. If a property is classified as held for sale, we recognize an impairment loss if the current net book value of the property exceeds its fair value less selling costs. If our assumptions, projections or estimates regarding a property change in the future, we may have to record an impairment charge to reduce or further reduce the net book value of the property. See Note 3 for a discussion of impairment charges relating to our real properties recorded during the years ended December 31, 2016, 2015, and 2014.

Impairment — Debt-Related Investments

We review our debt-related investments on a quarterly basis, and more frequently when such an evaluation is warranted, to determine if impairment exists. Accordingly, we do not group our debt-related investments into classes by credit quality indicator. A debt-related investment is impaired when, based on current information and events (including economic, industry and geographical factors), it is probable that we will be unable to collect all amounts due, both principal and interest, according to the contractual terms of the agreement. When an investment is deemed impaired, the impairment is measured based on the expected future cash flows discounted at the investment’s effective interest rate. As a practical expedient, the FASB issued ASC Topic 310, Receivables, which permits a creditor to measure impairment based on the fair value of the collateral of an impaired collateral-dependent debt-related investment or to measure impairment based on an observable market price for the impaired debt-related investment as an alternative to discounting expected future cash flows. Regardless of the measurement method, a creditor should measure impairment based on the fair value of the collateral when the creditor determines that foreclosure is probable. A debt-related investment is also considered impaired if its terms are modified in a troubled debt restructuring (“TDR”). A TDR occurs when we grant a concession to a borrower in financial difficulty by modifying the original terms of the loan. Impairments on TDR loans are generally measured based on the present value of expected future cash flows discounted at the effective interest rate of the original loan. See Note 4 for a discussion of impairment charges relating to our debt-related investments recorded during the years ended December 31, 2016, 2015, and 2014.

Derivative Instruments and Hedging Activities

We record all derivative instruments in the accompanying balance sheets at fair value. Accounting for changes in the fair value of a derivative instrument depends on the intended use of the derivative instrument and the designation of the derivative instrument. Derivative instruments used to hedge exposure to changes in the fair value of an asset, liability, or firm commitments attributable to a particular risk, such as interest rate risk, are considered “fair value” hedges. Derivative instruments used to hedge exposure to variability in expected future cash flows, such as future interest payments, or other types of forecasted transactions, are considered “cash flow” hedges. We do not have any fair value hedges.

For derivative instruments designated as cash flow hedges, the changes in the fair value of the derivative instrument that represent changes in expected future cash flows, which are effectively hedged by the derivative instrument, are initially reported as other comprehensive income (loss) in the statement of equity until the derivative instrument is settled. Upon settlement, the effective portion of the hedge is recognized as other comprehensive income (loss) and amortized over the term of the designated cash flow or transaction the derivative instrument was intended to hedge. The change in value of any derivative instrument that is deemed to be ineffective is charged directly to earnings when the determination of hedge ineffectiveness is made. We assess the effectiveness of each hedging relationship by comparing the changes in fair value or cash flows of the derivative instrument with the changes in fair value or cash flows of the designated hedged item or transaction. For purposes of determining hedge ineffectiveness, management estimates the timing and potential amount of future fixed-rate debt issuances each quarter in order to estimate the cash flows of the designated hedged item or transaction. Management considers the likelihood of the timing and amount of entering into such forecasted transactions when determining the expected future fixed-rate debt issuances. We do not use derivative instruments for trading or speculative purposes. We classify cash paid to settle our forward starting swaps as financing activities in our statements of cash flows.

Cash and Cash Equivalents

Cash and cash equivalents consist of cash on hand and highly liquid investments with original maturities of three months or less such as money market mutual funds or certificates of deposits. As of both December 31, 2016 and 2015, we have not realized any losses in such cash accounts or investments and believe that we are not exposed to any significant credit risk.

Restricted Cash

Restricted cash consists primarily of lender and property-related escrow accounts. As of both December 31, 2016 and 2015, we had not realized any losses in such restricted cash accounts or investments related to, and believe that we are not exposed to, any significant credit risk.

Collectability of Receivables

We evaluate the collectability of our rent and other receivables on a regular basis based on factors including, among others, the age of the receivable, payment history, the financial strength of the tenant or borrower and any guarantors. Specifically with regards to our debt-related investments, we evaluate the collectability of our receivables based on factors including, among others, the value of the underlying collateral, the operations and operating trends of the underlying collateral, if any, the asset type and current economic conditions. If our evaluation of these factors indicates we may not recover the full amount of the receivable, we provide a reserve against the portion of the receivable that we estimate may not be recovered. This analysis requires us to determine whether there are factors indicating a receivable may not be fully collectible and to estimate the amount of the receivable that may not be collected. As of December 31, 2016 and 2015, we had rent and other receivables of approximately $29.9 million and $34.1 million included in the caption other assets in our accompanying balance sheets, respectively, related to which we recorded allowances of approximately $1.0 million and $628,000 included in the caption "other assets, net" respectively. If our assumptions or estimates regarding the collectability of a receivable change in the future, we may have to record allowances to reduce or further reduce the carrying value of the receivable.

Accumulated Other Comprehensive Loss

Accumulated other comprehensive loss as reported in the accompanying consolidated statements of equity as of December 31, 2016 primarily consists of the cumulative loss related to our derivatives of $5.9 million, before attribution to noncontrolling interests of $1.2 million, and cumulative gain related to our real estate securities of approximately $1.1 million, before attribution of a cumulative loss to noncontrolling interests of $1.3 million.

Basic and Diluted Net Income (Loss) per Common Share

Basic net income (loss) per common share is determined by dividing net income (loss) attributable to common stockholders by the weighted average number of common shares outstanding during the period. Diluted net income (loss) per common share includes the effects of potentially issuable common stock, but only if dilutive, including the presumed exchange of OP Units.

Stock-Based Compensation

Independent Director RSU Awards

On December 5, 2013, our board of directors approved revised compensation for our independent directors. In connection with the revised compensation plan, at each annual meeting of stockholders the independent directors will automatically, upon election, receive an award of restricted stock units (“RSUs”) with respect to Class I shares of our common stock, with the number of RSUs based on the NAV per Class I share as of the end of the day of the annual meeting. RSUs granted under this plan are measured at fair value on the grant date and amortized to compensation expense on a straight-line basis over the service period after which the awards fully vest. Such expense is included in “general and administrative expenses” in the accompanying consolidated statements of income. The fair value of these awards is measured at our NAV per share. RSUs awarded to our independent directors vest no later than one year from the date of grant.

Advisor RSU Agreements

We have entered into Restricted Stock Unit Agreements (the “Advisor RSU Agreements”) with our Advisor. The purposes of the Advisor RSU Agreements are to promote an alignment of interests among our stockholders, our Advisor and the personnel of our Advisor and its affiliates, and to promote retention of the personnel of our Advisor and its affiliates. Each restricted stock unit granted pursuant to the Advisor RSU Agreements (the “Company RSU”) will, upon vesting, entitle our Advisor to one Class I share of our common stock. The Advisor is expected to redistribute a significant portion of the Company RSUs and/or shares to senior level employees of our Advisor and its affiliates that provide services to us, although the terms of such redistributions (including the timing, amount and recipients) remain solely in the discretion of our Advisor. The Company RSUs are subject to specified vesting and settlement provisions and, upon settlement in Class I shares of Company common stock, require offsets of advisory fees and expenses otherwise payable from the Company to our Advisor. Each offset amount equals the number of Company RSUs vesting on such date multiplied by the NAV per Class I share publicly disclosed by us as of the end of the grant date. Each offset amount is always calculated based on the grant date NAV per Class I share, even beyond the initial vesting date. At the end of each 12-month period following each vesting date, if the offset amount has not been fully realized by offsets from the cash payments otherwise due and payable to our Advisor under the Advisory Agreement, our Advisor shall promptly pay any shortfall to us.

If our board of directors declares and we pay a cash dividend on Class I shares for any period in which the Company RSUs are outstanding (regardless of whether such Company RSUs are then vested), our Advisor will be entitled to dividend equivalents (“Dividend Equivalents”) with respect to that cash dividend equal to the cash dividends that would have been payable on the same number of Class I shares as the number of Company RSUs subject to the Advisor RSU Agreements had such Class I shares been outstanding during the same portion of such period as the Company RSUs were outstanding. Any such Dividend Equivalents may be paid in cash or Class I shares, at our Advisor’s election. Accordingly, we classify Company RSUs as participating securities because participants receive dividends on unvested shares.

Restricted Stock Grants

We granted restricted shares of Class I common stock, respectively, to certain employees of our Advisor and its affiliates, none of which are our named executive officers. Restricted stock grants are measured at fair value during the service period and recorded to compensation expense over the service period after which the grants fully vest. Such expense is included in “general and administrative expenses” in the accompanying consolidated statements of income. The fair value of these awards is measured at our NAV per share as of the date the shares vest.

Dealer Manager and Distribution Fees

Dividend Capital Securities LLC, which we refer to as our “Dealer Manager,” distributes the shares of our common stock in our public offering on a “best efforts” basis. Our Dealer Manager coordinates our distribution effort and manages our relationships with participating broker-dealers and financial advisors and provides assistance in connection with compliance matters relating to marketing our public offering. Among other fees, we pay our Dealer Manager (i) a dealer manager fee which accrues daily in an amount equal to 1/365th of 0.6% of our NAV per share of Class A and Class W shares outstanding and an amount equal to 1/365th of 0.1% of our NAV per share of Class I shares outstanding on such day on a continuous basis, and (ii) a distribution fee which accrues daily in an amount equal to 1/365th of 0.5% of our NAV per share of Class A shares outstanding on such day on a continuous basis. We cease paying the dealer manager fee and distribution fee with respect to shares sold in the offering on the earlier to occur of the following: (i) a listing of the class of such shares on a national securities exchange, (ii) following the completion of an offering, total underwriting compensation in the offering equaling 10% of the gross proceeds from the primary portion of the respective offering, or (iii) such shares no longer being outstanding.

We account for these dealer manager and distribution fees as a reduction in proceeds received from the sale of common stock. We record a liability for dealer manager and distribution fees that we estimate that we may pay our Dealer Manager in future periods for shares of our common stock sold pursuant to the Prior Offering and Follow-On Offering with a corresponding reduction in proceeds received from the sale of common stock. The payment of dealer manager and distribution fees may extend several years after the sale of the related shares of common stock. Accordingly, as of December 31, 2016, we recorded a liability for estimated future dealer manager and distribution fees of approximately $3.9 million. This liability included an immaterial amount related to shares issued prior to December 31, 2015. See Note 11 for further discussion of dealer manager and distribution fees.

Use of Estimates

The preparation of the financial statements in conformity with accounting principles generally accepted in the United States (“GAAP”) requires management to make estimates and assumptions relating to the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ materially from those estimates. Estimates and assumptions are reviewed periodically and the effects of revisions are reflected in the periods they are determined to be necessary.

New Accounting Pronouncements

In January 2017, the FASB issued Accounting Standards Update 2017-01 ("ASU 2017-01"), which clarifies the definition of a business in order to provide additional guidance to assist entities with evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. This guidance will be effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. Earlier adoption is permitted. The guidance in ASU 2017-01 should be adopted on a prospective basis. We adopted ASU 2017-01 as of January 1, 2017 and anticipate that future acquisitions of real property will likely be accounted for as asset acquisitions rather than business combinations. Among other things, accounting for an asset acquisition requires capitalization of acquisition costs as a component of the acquired assets whereas accounting for business combinations requires acquisition costs to be expensed. For the years ended December 31, 2016, 2015 and 2014, we expensed $667,000, $2.6 million and $1.2 million of acquisition costs, respectively, under accounting for business combinations. Additionally, goodwill is not recognized and contingent consideration is recorded when probable and reasonably estimable under accounting for asset acquisitions.

In November 2016, the FASB issued Accounting Standards Update 2016-18 ("ASU 2016-18"), which requires that a statement of cash flows explain the change during the period in the total of cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents. Therefore, amounts generally described as restricted cash and restricted cash equivalents should be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the statement of cash flows. The total amount of restricted cash and restricted cash equivalents and cash and cash equivalents will be reconciled to amounts on the balance sheet and the nature of the restrictions disclosed. This guidance will be effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. Earlier adoption is permitted. The guidance in ASU 2016-18 should be adopted on a retrospective basis. We do not anticipate the adoption will have a significant impact on our financial statements.

In June 2016, the FASB issued Accounting Standards Update 2016-13, which introduces a new model for recognizing credit losses for certain financial instruments, including loans, accounts receivable and debt securities. The new model requires an estimate of expected credit losses over the life of exposure to be recorded through the establishment of an allowance account, which is presented as an offset to the related financial asset. The expected credit loss is recorded upon the initial recognition of the financial asset. The guidance will be effective for annual reporting periods (including interim reporting periods within those periods) beginning after December 15, 2019. Earlier application is permitted. The guidance will generally be adopted on a modified retrospective basis, with exceptions for certain types of financial assets. We do not anticipate the adoption will have a significant impact on our financial statements.

In March 2016, the FASB issued Accounting Standards Update 2016-05, which clarifies the effect of derivative contract novations on existing hedge accounting relationships. The guidance states that a change in the counterparty to a derivative instrument that has been designated as the hedging instrument under ASC Topic 815, Derivatives and Hedging (“ASC Topic 815”) does not, in and of itself, require dedesignation of that hedging relationship provided that all other hedge accounting criteria continue to be met. The guidance will be effective for annual reporting periods (including interim reporting periods within those periods) beginning after December 15, 2016. The guidance can be adopted on either a prospective basis or a modified retrospective basis. Earlier application is permitted. We do not anticipate the adoption will have a significant impact on our financial statements.

In February 2016, the FASB issued Accounting Standards Update 2016-02, Leases (Topic 842) (“ASU 2016-02”), which amends the accounting guidance regarding lessees accounting, leveraged leases, and sale and leaseback transactions. The accounting applied by a lessor is largely unchanged under ASU 2016-02, however, the standard requires that lessors expense certain initial direct costs that are not incremental in negotiating a lease. Under existing standards, certain of these costs are capitalizable and therefore this new standard may result in certain of these costs being expensed as incurred after adoption. Such costs are not material to the Company. This standard may also impact the timing, recognition and disclosures related to our rental recoveries from tenants earned from leasing our operating properties. The guidance will be effective for annual reporting periods (including interim reporting periods within those periods) beginning after December 15, 2018. Earlier application is permitted. We plan to early adopt ASU 2016-02 beginning January 1, 2018. The guidance should be adopted using a modified retrospective transition, which will require application of ASU 2016-02 at the beginning of the earliest comparative period presented. Our initial analysis of our lease contracts indicates that the adoption of ASU 2016-02 will not have a material impact on our consolidated financial statements; however, we are still in the process of evaluating the impact of ASU 2016-02.

In May 2014, the FASB issued Accounting Standards Update 2014-09, Revenue from Contracts with Customers (Topic 606) (“ASU 2014-09”), which provides new guidance outlining a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers that supersedes most current revenue recognition guidance. This guidance requires an entity to recognize revenue when it transfers 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. The new guidance specifically excludes revenue associated with lease contracts. Additionally, this guidance expands related disclosure requirements regarding the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers. In June 2015, the FASB agreed to defer the effective date of this guidance for a year from the original effective date outlined in ASU 2014-09, and as a result, the guidance will be effective for annual reporting periods (including interim reporting periods within those periods) beginning after December 15, 2017 and will require full or modified retrospective application. Early adoption is permitted for annual reporting periods (including interim reporting periods within those periods) beginning after December 15, 2016. We plan to adopt the standard when it becomes effective for us beginning January 1, 2018 and have not determined whether the full or modified retrospective application will be applied. Rental revenues and certain recoveries earned from leasing our operating properties will be evaluated with the adoption of the lease accounting standard (discussed above). Additionally, we do not expect the standard to significantly impact the accounting for sales of our properties. Our initial analysis of our non-lease related revenue contracts indicates that the adoption of ASU 2014-09 will not have a material effect on our consolidated financial statements; however, we are still in the process of evaluating the impact of ASU 2014-09.

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Investments in Real Property

12 Months Ended

Dec. 31, 2016

Real Estate [Abstract]

Investments in Real Property

INVESTMENTS IN REAL PROPERTY

Currently, our consolidated investments in real property consist of investments in office, industrial and retail properties. The following tables summarize our consolidated investments in real property as of December 31, 2016 and 2015 (amounts in thousands):

Real Property	Land		Building and Improvements			Intangible Lease Assets			Total Investment Amount			Intangible Lease Liabilities			Net Investment Amount
As of December 31, 2016:
Office	$	171,176	$	701,859		$	236,143		$	1,109,178		$	(15,121	)	$	1,094,057
Industrial	8,821		63,999			16,308			89,128			(344		)	88,784
Retail	293,973		599,020			113,023			1,006,016			(75,515		)	930,501
Total gross book value	473,970		1,364,878			365,474			2,204,322			(90,980		)	2,113,342
Accumulated depreciation/amortization	—		(215,858		)	(277,053		)	(492,911		)	31,435			(461,476		)
Total net book value	$	473,970	$	1,149,020		$	88,421		$	1,711,411		$	(59,545	)	$	1,651,866
As of December 31, 2015:
Office	$	203,889	$	833,655		$	310,629		$	1,348,173		$	(18,923	)	$	1,329,250
Industrial	9,572		65,307			16,436			91,315			(344		)	90,971
Retail	260,761		570,700			109,225			940,686			(74,282		)	866,404
Total gross book value	474,222		1,469,662			436,290			2,380,174			(93,549		)	2,286,625
Accumulated depreciation/amortization	—		(208,281		)	(297,676		)	(505,957		)	29,675			(476,282		)
Total net book value	$	474,222	$	1,261,381		$	138,614		$	1,874,217		$	(63,874	)	$	1,810,343

Acquisitions

The following table summarizes our acquisition of real property during the year ended December 31, 2016 (dollar amounts and square footage in thousands): 

Real Property	Property Type	Market	Date of Acquisition	Acquired Ownership	Contract Price		Net Rentable Square Feet	Percent Leased at Acquisition
Suniland Shopping Center	Retail	South Florida	5/27/2016	100%	$	66,500	82	93.2	%

The following table summarizes the allocations of the fair value of the real property we acquired during the year ended December 31, 2016 to land, building and improvements, intangible lease assets, intangible lease liabilities, and mark-to-market adjustment on assumed debt (dollar amounts in thousands). We have not made any material adjustments related to these allocations. 

																	Weighted-Average Amortization Period (Years)
Real Property	Land		Building and Improvements		Intangible Lease Assets		Intangible Lease Liabilities			Total Fair Value		Prorations and Credits			Contract Price		Intangible Lease Assets	Intangible Lease Liabilities
Suniland Shopping Center	$	34,804	$	28,022	$	5,880	$	(2,113	)	$	66,593	$	(93	)	$	66,500	5.8	10.4

Dispositions

During 2016, 2015 and 2014 we disposed of the following properties (dollar amounts and square footage in thousands): 

Property Type	Market	Ownership		Net Rentable Square Feet	Percentage Leased		Disposition Date	Contract Sales Price		Gain (loss) on Sale
2016 Dispositions:
Office	Washington, DC	100	%	574	100	%	2/18/2016	$	158,400	$	41,241
Office	Chicago, IL	80	%	107	66	%	3/1/2016	9,850		—
Office	Chicago, IL	80	%	199	81	%	3/1/2016	18,000		159
Retail	Greater Boston	100	%	39	100	%	8/5/2016	3,625		975
Industrial	Louisville, KY	90	%	126	33	%	9/2/2016	5,400		1,120
Office	Washington, DC	100	%	178	—	%	9/30/2016	18,600		—
Retail (1)	Greater Boston	100	%	13	100	%	11/18/2016	6,200		2,165
Total 2016 real property dispositions				1,236	73	%		$	220,075	$	45,660
2015 Dispositions:
Retail	Greater Boston	100	%	11	100	%	12/18/2015	$	1,625	$	14
Office	Silicon Valley, CA	100	%	53	100	%	12/14/2015	16,750		970
Land Parcel	Denver, CO	100	%	N/A	N/A		8/12/2015	7,577		1,701
Office	Los Angeles, CA	100	%	111	—	%	7/20/2015	12,549		2,866
Retail	Pittsburgh, PA	100	%	103	93	%	5/5/2015	12,500		—
Office and Industrial     Portfolio (2)	Various (2)	100	%	2,669	100	%	3/11/2015	398,635		105,542
Office	Dallas, TX	100	%	177	88	%	1/16/2015	46,600		23,125
Total 2015 real property dispositions				3,124	95	%		$	496,236	$	134,218
2014 Dispositions:
Office	Denver, CO	100	%	138	100	%	11/7/2014	$	9,100	$	4,032
Industrial (3)	Silicon Valley, CA	100	%	177	41	%	10/15/2014	13,579		—
Office	East Bay, CA	100	%	60	0	%	6/13/2014	5,700		2,755
Land Parcel	Denver, CO	100	%	N/A	N/A		4/14/2014	780		93
Office	Little Rock, AR	100	%	102	100	%	2/25/2014	19,550		1,350
Retail	Greater Boston	100	%	110	0	%	2/18/2014	6,750		2,276
Industrial Portfolio	Various (4)	93	%	3,387	99	%	1/22/2014	175,000		29,545
Total 2014 real property dispositions				3,974	93	%		$	230,459	$	40,051

_______________________________

(1) Disposed property was a single building from a multi-building grocery-anchored retail property. We continue to operate the remaining portion of the property.

(2) The Portfolio includes (i) six office properties comprising 1.1 million net rentable square feet located in the following markets: Los Angeles, CA (three properties, of which one disposed property was a single building from a two-building office property), Northern New Jersey, Miami, FL, and Dallas, TX, and (ii) six industrial properties comprising 1.6 million net rentable square feet located in the following markets: Los Angeles, CA, Dallas, TX, Cleveland, OH, Chicago, IL, Houston, TX, and Denver, CO. We incurred closing costs and fees of approximately $7.8 million upon the closing of this transaction, including approximately $4.0 million in advisory fees related to the disposition of real property paid to our Advisor. For the years ended December 31, 2015 and 2014, our consolidated statements of income include approximately $6.2 million and $33.7 million of aggregate revenue attributable to the Portfolio, respectively.

(3) On October 15, 2014, we disposed of a wholly owned industrial property comprising approximately 177,000 net rentable square feet in three buildings located in the Silicon Valley, CA market (“Lundy”). At the time of the disposition, the property had a net investment amount of approximately $13.1 million. The property was transferred to the lender through a foreclosure sale which extinguished amounts due, including related principal of $13.6 million.

(4) Industrial portfolio included 12 properties located in the following markets: Atlanta, GA, Central Pennsylvania, Cincinnati, OH, Columbus, OH, Dallas, TX, Indianapolis, IN, and Minneapolis/St. Paul, MN.

Discontinued Operations

We present the results of operations and the respective aggregate net gains (losses) of any property or group of properties, the disposal of which would represent a strategic shift that has (or will have) a major effect on our operations and financial results, when such property (or group of properties) have been disposed of or classified as held for sale, as discontinued operations in our accompanying statements of income.

We did not have any discontinued operations for the years ended December 31, 2016 and 2015. Discontinued operations for the year ended December 31, 2014 include the results of operations and net gain on the disposition of 12 industrial properties classified as held for sale as of December 31, 2013. The following table summarizes amounts recorded as discontinued operations for the years ended December 31, 2014 (amounts in thousands): 

	For the Year Ended December 31, 2014
Revenues	$	969
Rental expense	(340		)
Real estate depreciation and amortization expense	—
Interest expense	(296		)
Other expenses	(8		)
Income from discontinued operations	325
Gain on disposition	29,679
Discontinued operations	30,004
Discontinued operations attributable to noncontrolling interests	(4,462		)
Discontinued operations attributable to common stockholders	$	25,542

Real Property Impairment

During the year ended December 31, 2016, we recorded a $2.1 million impairment charge related to a consolidated office property located in the Washington, DC market, which we acquired in June 2010 ("Sunset Hills"). We sold Sunset Hills in September 2016. Prior to the disposition, the net book value of Sunset Hills exceeded the contract sales price less the cost to sell by $2.1 million. Accordingly, we recorded an impairment charge to reduce the net book value of Sunset Hills to our estimate of its fair value less the cost to sell.

Additionally, we recorded a $587,000 impairment charge related to a consolidated office property located in the Chicago, IL market ("40 Boulevard"), which we acquired in January 2007 and we held through a joint venture in which we were not the managing partner. We held an 80% ownership interest in 40 Boulevard. We sold 40 Boulevard in March 2016. Prior to the disposition, the net book value of 40 Boulevard exceeded the contract sales price less the cost to sell by approximately $587,000. Accordingly, we recorded an impairment charge to reduce the net book value of 40 Boulevard to our estimate of its fair value less the cost to sell.

The fair value measurements for the impairment charges related to Sunset Hills and 40 Boulevard were based on the contract sales price less selling costs. The fair value used in determining impairment for Sunset Hills and 40 Boulevard was $18.6 million and $9.9 million, respectively as of December 31, 2016.We considered the Level 3 inputs used in determining the fair value of these real property investments to be significant. As such, these investments fall under the Level 3 category of the fair value hierarchy as defined in ASC Topic 820, Fair Value Measurements and Disclosures ("ASC Topic 820"). The key assumption used in determining the fair value of these properties was our expectation of the sales price of the properties. Our expectation of the sales price was developed based on the valuations provided by a third-party broker quote.

During the year ended December 31, 2015, we recorded a $6.5 million impairment charge related to a consolidated office property located in the Chicago, IL market ("Washington Commons"), which we acquired in February 2007 and we held through a joint venture in which we are not the managing partner. We held an 80% ownership interest in Washington Commons. We recorded an impairment charge to reduce the net book value of Washington Commons to our estimate of its fair value less the cost to sell. The impairment charge was based on a reduction of our estimated holding period for Washington Commons, triggering impairment recognition with the related fair value measurement based on our estimate of future cash flows from the operation and disposition of Washington Commons. The fair value used in determining impairment for Washington Commons was $17.0 million as of December 31, 2015. We considered the Level 3 inputs used in determining the fair value of this real property investment to be significant. As such, this investment falls under the Level 3 category of the fair value hierarchy. The key assumption used in determining the fair value of Washington Commons was our expectation of the sales price of the property. Our expectation of the sales price was developed based on the valuation provided by a third-party broker quote. 

In addition, during the year ended December 31, 2015, we recorded approximately $1.6 million of impairment charges related to a wholly owned retail property that we acquired in May 2007 in the Pittsburgh, PA market, which was disposed of in May 2015 (“Mt. Nebo”). Accordingly, we recorded an impairment charge to reduce the net book value of Mt. Nebo to our estimate of its fair value less the cost to sell. The fair value measurement was based on the contract sales price less selling costs. The fair value used in determining impairment for Mt. Nebo was $12.5 million as of December 31, 2015. We considered the Level 3 inputs used in determining the fair value of this real property investment to be significant. As such, this investment falls under the Level 3 category of the fair value hierarchy. The key assumption used in determining the fair value of Mt. Nebo was our expectation of the sales price of the property. Our expectation of the sales price was developed based on the valuation provided by a third-party broker quote. 

During the year ended December 31, 2014, we recorded a $9.5 million impairment related to Mt. Nebo. During the year ended December 31, 2014, we began to consider possible disposition opportunities for this property. Such disposition opportunities caused us to significantly reduce our estimated holding period for this property. As a result of our review and based on our estimate of future cash flow and fair value of the retail property, we recognized the impairment charge to adjust the carrying value to our estimate of fair value as of December 31, 2014.

In the calculation of our daily NAV, our real estate assets are carried at fair value using valuation methodologies consistent with ASC Topic 820. As a result, the timing of valuation changes recorded in our NAV will not necessarily be the same as for impairment charges recorded to our consolidated financial statements prepared pursuant to GAAP. Since we determine our NAV daily, impairment charges pursuant to GAAP will likely always be delayed and potentially significantly delayed compared to the change in fair value of our properties included in the calculation of our daily NAV.

Future Minimum Rentals

Future minimum rentals to be received under non-cancelable operating and ground leases in effect as of December 31, 2016, are as follows (amounts in thousands): 

For the Year Ended December 31,	Future Minimum Rentals
2017	$	144,932
2018	128,008
2019	116,595
2020	85,928
2021	68,617
Thereafter	214,531
Total	$	758,611

The table above does not reflect future rental revenues from the potential renewal or replacement of existing and future leases and excludes property operating expense reimbursements and rental revenue beyond a penalty free termination option.

Concentration of Credit Risk

Concentration of credit risk with respect to our sources of revenue exists due to a number of tenants whose rental payments to us make up a relatively high percentage of our rental revenue. Rental revenue from our lease with Charles Schwab & Co., Inc., as master tenant of one of our office properties, represented approximately $25.4 million, or 11.8%, of our total revenue from continuing operations for the year ended December 31, 2016. The following is a summary of amounts related to the top five tenants based on annualized base rent, as of December 31, 2016 (dollar amounts and square feet in thousands): 

Tenant	Locations	Industry	Annualized Base Rent (1)		% of Total Annualized Base Rent		Square Feet	% of Total Portfolio Square Feet
Charles Schwab & Co., Inc. (2)	2	Securities, Commodities, Fin. Inv./Rel. Activities	$	23,645	13.9	%	602	7.4	%
Sybase (3)	1	Publishing Information (except Internet)	18,692		11.0	%	405	5.0	%
Stop & Shop	14	Food and Beverage Stores	14,125		8.3	%	853	10.4	%
Novo Nordisk	1	Chemical Manufacturing	4,627		2.7	%	167	2.0	%
Seton Health Care	1	Hospitals	4,339		2.6	%	156	1.9	%
	19		$	65,428	38.5	%	2,183	26.7	%

_______________________________

(1) Annualized base rent represents the annualized monthly base rent of executed leases as of December 31, 2016.

(2) The amount presented for Schwab reflects the total annualized base rent for our two leases in place with Schwab as of December 31, 2016. One of these leases, which expires in September 2017, entails the lease of all 594,000 square feet of our 3 Second Street (formerly known as Harborside) office property and accounts for $23.5 million or 13.8% of our annualized base rent as of December 31, 2016. We do not expect Schwab to renew this lease. Schwab has subleased 100% of 3 Second Street to 27 sub-tenants through September 2017. We have executed leases directly with nine of these subtenants that comprise 352,000 square feet or 59% of 3 Second Street that effectively extend their leases beyond the Schwab lease expiration. These direct leases will expire between September 2020 and September 2032.

(3) The Sybase lease was terminated on January 31, 2017.

The top two tenants in the table above comprise 24.9% of annualized base rent as of December 31, 2016. However, due to the expiration of the Sybase lease and the near-term expiration of the Schwab lease at 3 Second Street, these two tenants are no longer in the top three tenants based on future minimum rental revenue, together comprising less than 3% of our total future minimum rental revenue as ofDecember 31, 2016. Alternatively, based on future minimum rental revenue as of December 31, 2016, our top five tenants rank as follows: 1) Stop & Shop, 2) Mizuho Bank Ltd., 3) Shaw's Supermarket, 4) Novo Nordisk, and 5) Schwab.

Our properties in New Jersey, Massachusetts, California, and Texas accounted for approximately 20%, 20%, 14%, and 12%, respectively, of our total gross investment in real property portfolio as of December 31, 2016. A deterioration of general economic or other relevant conditions, changes in governmental laws and regulations, acts of nature, demographics or other factors in any of those states or the geographical region in which they are located could result in the loss of a tenant, a decrease in the demand for our properties and a decrease in our revenues from those markets, which in turn may have a disproportionate and material adverse effect on our results of operations and financial condition.

Third Party Purchase Options

"3 Second Street, formerly known as Harborside,” an office property located in Northern New Jersey, was subject to a purchase option held by a third party with an exercise price that we estimated to be approximately $239.4 million and an exercise date in May 2016. On August 5, 2015, we paid the option holder approximately $12.0 million to terminate the option. Such payment is included within capital expenditures in real property in the accompanying consolidated statements of cash flows. As a result, the option is no longer outstanding.

“Colshire,” an office property located in the Washington, DC area, was subject to a purchase option held by the tenant, Northrop Grumman, with an exercise price that we estimated to be approximately $158.4 million and an expiration date in March 2016. The tenant exercised the purchase option during January 2016, triggering a sale of the property to Northrop Grumman in February 2016. See our discussion under "—Dispositions"for information regarding the disposition of this office property during the year ended December 31, 2016.

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Debt-Related Investments

12 Months Ended

Dec. 31, 2016

Receivables [Abstract]

Debt-Related Investments

DEBT-RELATED INVESTMENTS

As of December 31, 2016 and 2015, we had invested in three debt-related investments. The weighted average maturity of our debt-related investments structured as mortgage notes as of December 31, 2016 was 2.2 years, based on our recorded net investments. The following table describes our debt-related income for the years ended December 31, 2016, 2015, and 2014 (dollar amounts in thousands):   

	For the Year Ended December 31,						Weighted Average Yield as of December 31, 2016 (1)
Investment Type	2016		2015		2014
Mortgage notes (2)	$	943	$	5,136	$	4,521	6.1	%
Mezzanine debt (3)	—		1,786		2,875		N/A
Total	$	943	$	6,922	$	7,396	6.1	%

_______________________________

(1) Weighted average yield is calculated on an unlevered basis using the amount invested, current interest rates and accretion of premiums or discounts realized upon the initial investment for each investment type as of December 31, 2016. As of December 31, 2016, all of our debt-related investments bear interest at fixed rates.

(2) None of our debt-related investments structured as mortgage notes were repaid in full during the year ended December 31, 2016. Six and three of our debt-related investments structured as mortgage notes were repaid in full during the years ended December 31, 2015 and 2014, respectively. Amounts recorded include early repayment fees received and accelerated amortization of origination fees offset by accelerated amortization of deferred due diligence costs related to certain of these repayments.

(3) Our debt-related investment structured as a mezzanine loan was repaid in full during the year ended December 31, 2015. During the year ended December 31, 2015, amounts recorded were offset by accelerated amortization of deferred due diligence costs.

The following table describes our debt-related investment activity for the years ended December 31, 2016 and 2015 (amounts in thousands). 

	Year Ended December 31,
	2016			2015
Investment in Debt-Related Investments:
Balance at January 1,	$	15,722		$	94,951
Investments (1)	—			3,465
Principal repayments	(469		)	(82,417		)
Amortization of deferred fees, costs, and discounts/premiums	(44		)	(277		)
Balance at December 31,	$	15,209		$	15,722

_______________________________

(1) Investment includes approximately $2 million of accrued interest that was capitalized into the principal balance of our mezzanine debt investment during the year ended December 31, 2015.

Debt-Related Investment and Repayment Activity

As of December 31, 2016, all of our debt-related investments required both interest and principal payments on a monthly basis. We did not have any debt-related investment that was subject to delinquent principal or interest payments. We are the senior lender in all of our debt-related investments with respect to the underlying collateral. The following table summarizes our debt-related investments as of December 31, 2016 (dollar amounts in thousands).

Description	Region	Interest Rate Fixed or Variable	Interest Rate as of December 31, 2016		Maturity Date	Face Amount of Debt (1)		Amount of Debt Related Investments
Mortgage note	Northeast	Fixed	6.2	%	11/1/2017	$	3,609	$	3,622
Mortgage note	Southeast	Fixed	7.0	%	3/1/2019	8,483		8,551
Mortgage note	Mountain	Fixed	5.2	%	3/1/2021	3,048		3,036
Total/weighted average			6.4	%		$	15,140	$	15,209

_______________________________

(1) Reflects the principal amount of the debt investment outstanding, which is net of principal repayments.

Impairment

As of December 31, 2016 and December 31, 2015, we did not have any allowance for loan loss. During the year ended December 31, 2016, we did not record any current period provision for loan loss or recoveries of amounts previously charged off. During the year ended December 31, 2015, we determined that an impaired debt-related investment did not have any value and therefore we recorded a direct write-off of the allowance for loan loss of $3 million. We did not have any debt-related investments on non-accrual status as of December 31, 2016 or December 31, 2015. We did not record any interest income related to our impaired debt-related investment during the years ended December 31, 2016, 2015, or 2014.

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Debt Obligations

12 Months Ended

Dec. 31, 2016

Debt Disclosure [Abstract]

Debt Obligations

DEBT OBLIGATIONS

The following table describes our borrowings as of December 31, 2016 and 2015 (dollar amounts in thousands):

	Principal Balance as of December 31,						Weighted Average Interest Rate as of December 31,				Gross Investment Amount Securing Borrowings  as of December 31,(1)
	2016			2015			2016		2015		2016		2015
Fixed-rate mortgages (2)	$	290,970		$	580,959		4.9	%	5.6	%	$	462,954	$	1,016,560
Floating-rate mortgages (3)	52,500			7,890			2.3	%	3.4	%	70,485		16,618
Total mortgage notes	343,470			588,849			4.5	%	5.5	%	533,439		1,033,178
Line of credit (4)	236,000			167,000			2.3	%	1.9	%	N/A		N/A
Term loans (5)	475,000			350,000			3.2	%	2.6	%	N/A		N/A
Total unsecured borrowings	711,000			517,000			2.9	%	2.4	%	N/A		N/A
Total borrowings	$	1,054,470		$	1,105,849		3.4	%	4.1	%	N/A		N/A
Less: net debt issuance costs (6)	(6,295		)	(6,317		)
Add: mark-to-market adjustment on assumed debt	626			1,304
Less: GAAP principal amortization on restructed debt	—			(3,067		)
Total borrowings (net basis)	$	1,048,801		$	1,097,769

_______________________________

(1) “Gross Investment Amount” as used here and throughout this document represents the allocated gross basis of real property and debt-related investments, after certain adjustments. Gross Investment Amount for real property (i) excludes the effect of intangible lease liabilities, (ii) excludes accumulated depreciation and amortization, and (iii) includes the impact of impairments. 

(2) Amount as of December 31, 2016 includes a floating-rate mortgage note that was subject to an interest rate spread of 1.60% over one-month LIBOR, which we have effectively fixed using an interest rate swap at 3.051% for the term of the borrowing.

(3) As of December 31, 2016, our floating-rate mortgage note was subject to an interest rate spread of 1.65% over one-month LIBOR. As of December 31, 2015 our floating-rate mortgage note was subject to an interest rate spread of 3.00% over one-month LIBOR.

(4) As of December 31, 2016 and 2015, borrowings under our line of credit were subject to interest at a floating rate of 1.55% and 1.40% over one-month LIBOR, respectively. However, as of December 31, 2016, we had effectively fixed the interest rate of approximately $12.1 million of the total of $236.0 million in borrowings using interest rate swaps, resulting in a weighted average interest rate on the total line of credit of 2.28%. As of December 31, 2015, we had effectively fixed the interest rate of approximately $25.4 million of the total of $167.0 million in borrowings using interest rate swaps, resulting in a weighted average interest rate on the total line of credit of 1.88%.

(5) As of December 31, 2016 and 2015, borrowings under our term loans were subject to interest at weighted average floating rates of 1.60% and 1.52%, respectively, over one-month LIBOR. However, we had effectively fixed the interest rates of the borrowings using interest rate swaps at 3.17% and 2.59% as of December 31, 2016 and 2015, respectively.

(6) See Note 2 for additional information related to the reclassification of net debt issuance costs in accordance with ASU 2015-03.

As of December 31, 2016, seven mortgage notes were interest-only and four mortgage notes were fully amortizing with outstanding principal balances of approximately $316.3 million and $27.2 million, respectively. None of our mortgage notes are recourse to us.

Revolving Credit Facility and Five-Year Term Loan

Through a syndicate of 14 lenders (the "BofA Lenders") led by Bank of America, N.A., as Administrative Agent ("BofA"), we have a $675 million senior unsecured term loan and revolving line of credit (the “Facility”). The Facility provides us with the ability from time to time to increase the size of the Facility up to a total of $900 million less the amount of any prepayments under the term loan component of the Facility, subject to receipt of lender commitments and other conditions.

The Facility consists of a $400 million revolving credit facility (the “Revolving Credit Facility”) and a $275 millionfive-year term loan (the “Term Loan”). The Revolving Credit Facility contains a sublimit of $50 million for letters of credit and a sublimit of $50 million for swing line loans. The primary interest rate for the Revolving Credit Facility is based on LIBOR, plus a margin ranging from 1.40% to 2.30%, depending on our consolidated leverage ratio. The maturity date of the Revolving Credit Facility is January 31, 2019 and contains one one-year extension option that we may exercise upon (i) payment of an extension fee equal to 0.15% of the sum of the amount outstanding under the Revolving Credit Facility and the unused portion of the Revolving Credit Facility at the time of the extension, and (ii) compliance with the other conditions set forth in the credit agreement. The primary interest rate within the Term Loan is based on LIBOR, plus a margin ranging from 1.35% to 2.20%, depending on our consolidated leverage ratio. The maturity date of the Term Loan is January 31, 2018 and contains twoone-year extension options that we may exercise upon (i) payment of an extension fee equal to 0.125% of the sum of the amount outstanding under the Term Loan at the time of each extension, and (ii) compliance with the other conditions set forth in the credit agreement.

Borrowings under the Facility are available for general business purposes including, but not limited to, refinancing of existing indebtedness and financing the acquisition of permitted investments, including commercial properties. As of December 31, 2016 and 2015, the unused portion of the Facility was approximately $164.0 million and $230.8 million, respectively, and we had full access to the unused portion of the Facility.

Seven-Year Term Loan

Through a syndicate of six lenders led by Wells Fargo Bank, National Association as Administrative Agent and Regions Bank as Syndication Agent, we have a $200 millionseven-year term loan credit agreement (the “$200 million Term Loan”) . The primary interest rate within the $200 million Term Loan is based on LIBOR, plus a margin ranging from 1.65% to 2.55%, depending on our consolidated leverage ratio. The maturity date of the $200 million Term Loan is February 27, 2022 with no extension options.

Borrowings under the $200 million Term Loan are available for general business purposes including, but not limited to financing the acquisition of permitted investments, including commercial properties.

As of December 31, 2016, we were in compliance with all our debt covenants.

Mortgage Note Borrowings

During the year ended December 31, 2016, we entered into two mortgage note borrowings. The following table describes the new borrowings in more detail (dollar amounts in thousands):

Borrowings	Date Borrowed	Principal Balance		Fixed or Floating Interest Rate	Stated Interest Rate		Contractual Maturity Date	Extension Options	Collateral Type	Collateral Market
Preston Sherry Plaza (1)	4/13/2016	$	33,000	Fixed	3.05	%	3/1/2023	None	Office Property	Dallas, TX
1300 Connecticut (2)	8/5/2016	52,500		Floating	2.17	%	8/5/2023	None	Office Property	Washington, DC
Total borrowings		$	85,500		2.51	%

(1) As of December 31, 2016, the Preston Sherry Plaza term loan was subject to an interest rate spread of 1.60% over one-month LIBOR, which we have effectively fixed using an interest rate swap at 3.051% for the term of the borrowing.

(2) As of December 31, 2016, the 1300 Connecticut term loan was subject to an interest rate spread of 1.65% over one-month LIBOR. However, we entered into interest rate swaps which will effectively fix the interest rate of the borrowing at 2.852% from July 1, 2018 to July 1, 2021.

Repayment of Mortgage Notes

During the year ended December 31, 2016, we repaid nine mortgage note borrowings in full during the respective free-prepayment periods prior to their scheduled maturities using proceeds from the Facility and the disposition of real properties. The following table describes these repayments in more detail (dollar amounts in thousands):

Debt Obligation	Repayment Date	Balance Repaid/Extinguished		Interest Rate Fixed or Floating	Stated Interest Rate		Contractual Maturity Date	Collateral Type	Collateral Market
1300 Connecticut	1/12/2016	$	44,979	Fixed	6.81	%	4/10/2016	Office Property	Washington, DC
Washington Commons (1)	2/1/2016	21,300		Fixed	5.94	%	2/1/2016	Office Property	Chicago, IL
40 Boulevard (2)	3/1/2016	7,830		Floating	3.44	%	3/11/2016	Office Property	Chicago, IL
Jay Street	4/11/2016	23,500		Fixed	6.05	%	7/11/2016	Office Property	Silicon Valley, CA
655 Montgomery	4/11/2016	55,683		Fixed	6.01	%	6/11/2016	Office Property	San Francisco, CA
Bala Pointe	7/1/2016	24,000		Fixed	5.89	%	9/1/2016	Office Property	Philadelphia, PA
Harborside	9/9/2016	104,675		Fixed	5.50	%	12/10/2016	Office Property	Northern New Jersey
Bandera Road	12/8/2016	21,500		Fixed	5.46	%	2/8/2017	Retail Property	San Antonio, TX
Shiloh	12/8/2016	22,700		Fixed	5.57	%	1/8/2017	Industrial Property	Dallas, TX
Total/weighted average borrowings		$	326,167		5.82	%

(1) Amount presented includes a $5.1 million contingently payable mortgage note that was not ultimately required to be repaid. As a result of the transaction, we recognized a gain on extinguishment of debt and financing commitments of approximately $5.1 million during the year ended December 31, 2016.

(2) The mortgage note was subject to an interest rate of 3.0% over one-month LIBOR.

Debt Maturities

The following table reflects our contractual debt maturities as of December 31, 2016, specifically our obligations under our mortgage notes and unsecured borrowings (dollar amounts in thousands):   

	As of December 31, 2016
	Mortgage Notes				Unsecured Borrowings				Total
Year Ending December 31,	Number of Borrowings Maturing	OutstandingPrincipalBalance			Number of BorrowingsMaturing	Outstanding PrincipalBalance (1)			Outstanding Principal Balance
2017	4	$	162,460		—	$	—		$	162,460
2018	—	2,698			1	275,000			277,698
2019	—	3,698			1	236,000			239,698
2020	—	3,860			—	—			3,860
2021	1	12,764			—	—			12,764
2022	1	3,660			1	200,000			203,660
2023	2	77,899			—	—			77,899
2024	—	1,034			—	—			1,034
2025	1	71,094			—	—			71,094
2026	—	1,157			—	—			1,157
Thereafter	2	3,146			—	—			3,146
Total	11	$	343,470		3	$	711,000		$	1,054,470
Less: net debt issuance costs		(1,849		)		(4,446		)
Add: mark-to-market adjustment on assumed debt		626				—
Total borrowings (net basis)		$	342,247			$	706,554

_______________________________

(1) Unsecured borrowings presented include (i) borrowings under the Term Loan of $275.0 million, which were scheduled to mature in 2018, subject to twoone-year extension options, (ii) borrowings under the Revolving Credit Facility of $236.0 million, which were scheduled to mature in 2019, subject to a one-year extension option, and (iii) borrowings under the $200 million Term Loan of $200.0 million which are scheduled to mature in 2022 with no extension options.

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Derivatives and Hedging Activities

12 Months Ended

Dec. 31, 2016

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Derivatives and Hedging Activities

DERIVATIVES AND HEDGING ACTIVITIES

Risk Management Objective of Using Derivatives

We maintain risk management control systems to monitor interest rate risk attributable to both our outstanding and forecasted debt obligations. We generally seek to limit the impact of interest rate changes on earnings and cash flows by selectively utilizing derivative instruments to hedge exposures to changes in interest rates on our unsecured floating rate borrowings. While this hedging strategy is designed to minimize the impact on our net income (loss) and cash provided by operating activities from changes in interest rates, the overall returns on our investments may be reduced. Our board of directors has established policies and procedures regarding our use of derivative instruments for hedging or other purposes to achieve these risk management objectives.

Cash Flow Hedges of Interest Rate Risk

Our objectives in using interest rate derivatives are to add stability to interest expense and to manage our exposure to interest rate movements. To accomplish this objective, we primarily use interest rate swaps as part of our interest rate risk management strategy. Interest rate swaps designated as cash flow hedges involve the receipt of variable-rate amounts from counterparties in exchange for us making fixed-rate payments over the life of the agreements without exchange of the underlying notional amounts. We have entered into and plan to enter into certain interest rate derivatives with the goal of mitigating our exposure to adverse fluctuations in the interest payments on our one-month LIBOR-indexed debt. Certain of our floating rate borrowings are not hedged and therefore, to an extent, we have ongoing exposure to interest rate movements.

The effective portion of changes in the fair value of derivatives designated and that qualify as cash flow hedges under ASC Topic 815 is recorded in accumulated other comprehensive income (loss) and is subsequently reclassified into earnings in the period that the hedged forecasted transaction affects earnings. During the next 12 months, we estimate that approximately $3.3 million will be reclassified as an increase to interest expense related to active effective hedges of existing floating-rate debt, and we estimate that approximately $2.0 million will be reclassified as an increase to interest expense related to effective forward started interest rate swaps where the hedging instrument has been terminated. The ineffective portion of the change in fair value of the derivatives is recognized directly in earnings. The table below presents a reconciliation of the beginning and ending balances, between December 31, 2015 and December 31, 2016, of our accumulated other comprehensive loss (“OCI”), net of amounts attributable to noncontrolling interests, related to the effective portion of our cash flow hedges as presented on our financial statements, as well as amounts related to our available-for-sale securities (amounts in thousands):  

	(Losses) and Gains on Cash Flow Hedges			Unrealized (Losses) and Gains on Available-For-Sale Securities			Accumulated Other Comprehensive Loss
Beginning balance as of December 31, 2015:	$	(9,967	)	$	(1,047	)	$	(11,014	)
Other comprehensive income:
Amount of loss reclassified from OCI into interest expense (effective portion) (net of tax benefit of $0)	4,620			—			4,620
Change in fair value recognized in OCI (effective portion) (net of tax benefit of $0)	(204		)	—			(204		)
Net current-period other comprehensive income	4,416			—			4,416
Attribution of and other adjustments to OCI attributable to noncontrolling interests	(298		)	(9		)	(307		)
Ending balance as of December 31, 2016:	$	(5,849	)	$	(1,056	)	$	(6,905	)

Fair Values of Derivative Instruments

The valuation of interest rate derivatives is determined using widely accepted valuation techniques, including discounted cash flow analysis on the expected cash flows of each derivative. This analysis reflects the contractual terms of the derivatives, including the period to maturity, and uses observable market-based inputs, including interest rate curves and implied volatilities. The fair values of interest rate swaps are determined using the market standard methodology of netting the discounted future fixed cash receipts (or payments) and the discounted expected variable cash payments (or receipts). The variable cash payments (or receipts) are based on an expectation of future interest rates (forward curves) derived from observable market interest rate curves.

To comply with the provisions of ASC Topic 820, we incorporate credit valuation adjustments to appropriately reflect both our own nonperformance risk and the respective counterparty’s nonperformance risk in the fair value measurements. In adjusting the fair value of our derivative for the effect of nonperformance risk, we have considered the impact of netting and any applicable credit enhancements, such as collateral postings, thresholds, mutual puts and guarantees.

The majority of the inputs used to value our derivative instruments fall within Level 2 of the fair value hierarchy. However, the credit valuation adjustments associated with our derivative instruments utilize Level 3 inputs, such as estimates of current credit spreads, to evaluate the likelihood of potential default by us and our counterparties. As of December 31, 2016, we had assessed the significance of the impact of the credit valuation adjustments and had determined that it was not significant to the overall valuation of our derivative instruments. As a result, we have determined that our derivative valuations are classified in Level 2 of the fair value hierarchy.

Designated Derivatives

As of December 31, 2016 and 2015, we had 11 and 12 outstanding interest rate swaps that were designated as cash flow hedges of interest rate risk, with a total notional amount of $395.1 million and $375.4 million, respectively. In addition, as of December 31, 2016, we had one interest rate swap with a total notional amount of $52.5 million that will become effective in July 2018 and mature in July 2021, which is designated as a cash flow hedge of interest rate risk. The table below presents the gross fair value of our designated derivative financial instruments as well as their classification on our accompanying consolidated balance sheets as of December 31, 2016 and 2015 (amounts in thousands): 

		Fair Value of Asset Derivatives as of					Fair Value of Liability Derivatives as of
	Balance Sheet Location	December 31, 2016		December 31, 2015		Balance Sheet Location	December 31, 2016			December 31, 2015
Interest rate contracts	Other assets, net(1)	$	2,135	$	197	Other liabilities (1)	$	(2,777	)	$	(3,303	)

_______________________________ 

(1) Although our derivative contracts are subject to master netting arrangements which serve as credit mitigants to both us and our counterparties under certain situations, we do not net our derivative fair values or any existing rights or obligations to cash collateral on the accompanying consolidated balance sheets. If we did net our derivative fair values on the accompanying consolidated balance sheets, the derivative fair values would be lowered by approximately $157,000 as of December 31, 2015. This would result in net fair values of our asset derivatives of approximately $41,000 and and net fair values of our liability derivatives of approximately $3.1 million as of December 31, 2015. As of December 31, 2016, there would not be an impact if we net our derivative fair values.

Non-Designated Derivatives

Derivatives not designated as hedges are not speculative and are used to hedge our exposure to interest rate movements and other identified risks but do not meet hedge accounting requirements. As of December 31, 2016, 2015, and 2014, we did not have any outstanding derivatives that were not designated as hedges.

Effect of Derivative Instruments on the Statements of Comprehensive Income

The table below presents the effect of our derivative financial instruments on our financial statements for the years ended December 31, 2016, 2015, and 2014 (amounts in thousands):

	For the Year Ended December 31,
	2016			2015			2014
Derivatives Designated as Hedging Instruments
Derivative type	Interest rate contracts			Interest rate contracts			Interest rate contracts
Amount of (loss) recognized in OCI (effective portion)	$	(204	)	$	(5,797	)	$	(2,370	)
Location of loss reclassified from accumulated OCI into income (effective portion)	Interest expense			Interest expense			Interest expense
Amount of loss reclassified from accumulated OCI into income (effective portion)	$	4,620		$	4,820		$	3,091
Location of gain (loss) recognized in income (ineffective portion and amount excluded from effectiveness testing)	Interest and other income			Interest and other income			Interest and other income
Amount of gain (loss) recognized in income (ineffective portion and amount excluded from effectiveness testing)	$	—		$	3		$	(1	)

Credit-Risk-Related Contingent Features

We have agreements with certain of our derivative counterparties that contain a provision where we could be declared in default on our derivative obligations if repayment of the underlying indebtedness is accelerated by the lender due to our default on the indebtedness. We have agreements with certain other derivative counterparties that contain a provision whereby if we default on any of our indebtedness held by our Operating Partnership, including default where repayment of the indebtedness has not been accelerated by the lender, then we could also be declared in default on our derivative obligations.

As of December 31, 2016, the fair value of derivatives in a net liability position, which included accrued interest but excluded any credit valuation adjustments related to these agreements, was approximately $2.9 million. As of December 31, 2016, we have not posted any collateral related to these agreements. If we had breached any of these provisions at December 31, 2016, we could have been required to settle our obligations under the agreements at their termination value of $2.9 million.

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Fair Value Disclosures

12 Months Ended

Dec. 31, 2016

Fair Value Disclosures [Abstract]

Fair Value Disclosures

FAIR VALUE DISCLOSURES

ASC Topic 820, defines fair value, establishes a framework for measuring fair value, and expands disclosures about fair value measurements. ASC Topic 820 applies to reported balances that are required or permitted to be measured at fair value under existing accounting pronouncements; accordingly, the standard does not require any new fair value measurements of reported balances.

ASC Topic 820 emphasizes that fair value is a market-based measurement, not an entity-specific measurement. Therefore, a fair value measurement should be determined based on the assumptions that market participants would use in pricing the asset or liability. As a basis for considering market participant assumptions in fair value measurements, ASC Topic 820 establishes a fair value hierarchy that distinguishes between market participant assumptions based on market data obtained from sources independent of the reporting entity (observable inputs that are classified within Levels 1 and 2 of the hierarchy) and the reporting entity’s own assumptions about market participant assumptions (unobservable inputs classified within Level 3 of the hierarchy).

Level 1 inputs utilize quoted prices (unadjusted) in active markets for identical assets or liabilities that we have the ability to access. Level 2 inputs are inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly. Level 2 inputs may include quoted prices for similar assets and liabilities in active markets, as well as inputs that are observable for the asset or liability (other than quoted prices), such as interest rates, foreign exchange rates, and yield curves that are observable at commonly quoted intervals. Level 3 inputs are unobservable inputs for the asset or liabilities, which are typically based on an entity’s own assumptions, as there is little, if any, related market activity. In instances where the determination of the fair value measurement is based on inputs from different levels of the fair value hierarchy, the level in the fair value hierarchy within which the entire fair value measurement falls is based on the lowest level input that is significant to the fair value measurement in its entirety. Our assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment, and considers factors specific to the asset or liability.

The table below presents certain of our assets and liabilities measured at fair value on a recurring basis as of December 31, 2016 and 2015, aggregated by the level in the fair value hierarchy within which those measurements fall as defined above (amounts in thousands). The fair value estimates presented herein are based on information available to management as of December 31, 2016 and December 31, 2015. Please see Note 6 for a discussion of our methodology for estimating the fair value of our derivative instruments. These estimates are not necessarily indicative of the amounts we could ultimately realize. There were no changes between fair value hierarchy levels during the years ended December 31, 2016 and 2015.

	Level 1		Level 2			Level 3		Total
As of December 31, 2016:
Assets
Real estate securities	$	—	$	—		$	200	$	200
Derivative instruments	—		2,135			—		2,135
Total assets	$	—	$	2,135		$	200	$	2,335
Liabilities
Derivative instruments	$	—	$	(2,777	)	$	—	$	(2,777	)
Total liabilities	$	—	$	(2,777	)	$	—	$	(2,777	)
As of December 31, 2015:
Assets
Real estate securities	$	—	$	—		$	200	$	200
Derivative instruments	—		197			—		197
Total assets	$	—	$	197		$	200	$	397
Liabilities
Derivative instruments	$	—	$	(3,303	)	$	—	$	(3,303	)
Total liabilities	$	—	$	(3,303	)	$	—	$	(3,303	)

We review our fair value hierarchy classifications on a quarterly basis. Transfers into or out of Level 3 are made if the significant inputs used in measuring the fair values of the assets and liabilities became unobservable or observable, respectively, in the current market environment. When assets and liabilities are transferred between levels, we recognize the transfer at the beginning of the period. There were no transfers into or out of assets having fair value measurements based on significant unobservable inputs (Level 3) between December 31, 2015 and December 31, 2016. Additionally, there was no change in fair value or carrying value for our assets having fair value measurements based on significant unobservable inputs (Level 3) between December 31, 2015 and December 31, 2016.

Nonrecurring Fair Value Measurements

See Note 3 for a discussion of the nonrecurring fair value measurements used in recording impairment charges related to our real estate properties during the years ended December 31, 2016 and 2015.

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Fair Value of Financial Instruments

12 Months Ended

Dec. 31, 2016

Financial Instruments, Owned, at Fair Value [Abstract]

Fair Value of Financial Instruments

FAIR VALUE OF FINANCIAL INSTRUMENTS

We are required to disclose an estimate of fair value of our financial instruments for which it is practicable to estimate the value. The fair value of a financial instrument is the amount at which such financial instrument could be exchanged in a current transaction between willing parties, other than in a forced sale or liquidation. For certain of our financial instruments, fair values are not readily available since there are no active trading markets as characterized by current exchanges between willing parties. Accordingly, we derive our estimated fair value using various valuation techniques, such as computing the present value of estimated future cash flows using discount rates commensurate with the risks involved. However, the determination of estimated cash flows may be subjective and imprecise and changes in assumptions or estimation methodologies can have a material effect on these estimated fair values. In that regard, the fair value estimates may not be substantiated by comparison to independent markets, and in many cases, may not be realized in immediate settlement of the instrument.

We use the framework established in ASC Topic 820 to measure the fair value of our financial instruments as disclosed in the table below. The fair values estimated below are indicative of certain interest rate and other assumptions as of December 31, 2016 and 2015, and may not take into consideration the effects of subsequent interest rate or other assumption fluctuations, or changes in the values of underlying collateral. The fair values of cash and cash equivalents, restricted cash, accounts receivable, and accounts payable and accrued expenses approximate their carrying values because of the short-term nature of these instruments.

The following table summarizes the carrying amounts and estimated fair values measured on a nonrecurring basis of our other financial instruments, including instruments classified as held for sale, as of December 31, 2016 and 2015 (amounts in thousands). See Note 7 for a discussion of our assets and liabilities measured at fair value on a recurring basis. 

	As of December 31, 2016				As of December 31, 2015
	Carrying Amount		Estimated Fair Value		Carrying Amount		Estimated Fair Value
Assets:
Fixed-rate debt-related investments, net	$	15,209	$	15,784	$	15,722	$	16,526
Liabilities:
Fixed-rate mortgage notes carried at amortized cost	$	290,329	$	291,624	$	577,978	$	576,432
Floating-rate mortgage notes	51,918		51,942		7,886		7,883
Floating-rate unsecured borrowings	706,554		711,000		511,905		517,000

The methodologies used and key assumptions made to estimate fair values of the financial instruments, other than derivatives disclosed in Note 6, described in the above table are as follows:

Debt-Related Investments—The fair value of our performing debt-related investments are estimated using a discounted cash flow methodology. This method discounts estimated future cash flows using rates management determines best reflect current market interest rates that would be offered for loans with similar characteristics and credit quality. Credit spreads and market interest rates used to determine the fair value of these instruments are based on unobservable Level 3 inputs which management has determined to be its best estimate of current market values.

Mortgage Notes and Other Borrowings—The fair value of our mortgage notes and other borrowings are estimated using a discounted cash flow analysis, based on our estimate of market interest rates. Credit spreads relating to the underlying instruments are based on unobservable Level 3 inputs, which we have determined to be our best estimate of current market spreads of similar instruments.

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Noncontrolling Interests

12 Months Ended

Dec. 31, 2016

Noncontrolling Interest [Abstract]

Noncontrolling Interests

NONCONTROLLING INTERESTS

Our noncontrolling interests consist of two components: (i) OP Units held by third parties and (ii) joint venture partnership interests held by our partners. The following table summarizes changes to noncontrolling interest balances between December 31, 2015 and December 31, 2016 in terms of cumulative contributions, distributions and cumulative allocations of net income (loss) and redemptions and buyouts of the interests (amounts in thousands). 

	OP Units			Joint Venture Partner Interests			Noncontrolling Interests
Beginning balance as of December 31, 2015	$	94,734		$	2,412		$	97,146
Comprehensive Income and Loss
Net income (loss)	3,883			1,189			5,072
Unrealized change from cash flow hedging derivatives	307			—			307
Contributions, Distributions and Redemptions
Contributions from noncontrolling interest holders	—			3,225			3,225
Distributions to noncontrolling interest holders	(4,661		)	(4,345		)	(9,006		)
Redemption and buyout of noncontrolling interests, net	(4,996		)	—			(4,996		)
Ending balance as of December 31, 2016	$	89,267		$	2,481		$	91,748

OP Units

Securities that are redeemable for cash or other assets at the option of the holder, not solely within the control of the issuer, are classified as redeemable noncontrolling interests outside of permanent equity in our accompanying balance sheets. We have evaluated our ability to deliver shares of common stock to satisfy redemption requests from holders of our OP Units and we have concluded that we have the right to satisfy the redemption requirements of holders of our OP Units by delivering unregistered shares of our common stock. Each outstanding OP Unit is exchangeable for one share of our common stock, and the OP Unit holder cannot require redemption in cash or other assets. As a result, we classify our OP Units held by third parties as noncontrolling interests.

We are the sole general partner of our Operating Partnership and currently own, in our capacity as the general partner, 200 OP Units for which we contributed $2,000. Subsequent to that initial investment, we have contributed 100% of the proceeds received from our offerings of common stock to our Operating Partnership in exchange for OP Units representing our interest as a limited partner of the Operating Partnership. As of December 31, 2016 and 2015, we owned approximately 92.6% and 92.8% of the outstanding limited partnership interests in our Operating Partnership, respectively, and the remaining limited partnership interests in our Operating Partnership were owned by third-party investors.

Our Operating Partnership has classes of OP Units that correspond to our four classes of common stock: Class E OP Units, Class A OP Units, Class W OP Units and Class I OP Units. After a period of one year from the date of issuance, holders of Class E OP Units (other than us) may request the Operating Partnership to redeem their Class E OP Units. We have the option of redeeming the Class E OP Units with cash for an amount based on our NAV per share as of the effective date of the redemption, shares of our common stock on a one-for-one basis, or with a combination of cash and Class E shares of common stock. We did not issue any Class E shares pursuant to this option during 2016 or 2015. During the years ended December 31, 2016 and 2015, we redeemed approximately 760,000 and 360,000 Class E OP Units for approximately $5.6 million and $2.7 million in cash, respectively.

As of December 31, 2016 and 2015, our Operating Partnership had issued and outstanding approximately 12.0 million and 12.8 million Class E OP Units, respectively, to third-party investors in connection with its private placement offerings. Such units had a maximum approximate redemption value of $91.2 million and $95.6 million, as of December 31, 2016 and December 31, 2015, respectively, based on our December 31, 2016 and December 31, 2015 NAV per share, respectively, (unaudited). Furthermore, during the year ended December 31, 2015, we exercised our option to acquire, at fair value, previously sold fractional interests in a retail property in the Jacksonville, FL market for a combination of (i) approximately 1.0 million Class E OP Units issued at a price of $7.18 per OP Unit, representing approximately $7.3 million of the aggregate purchase price and (ii) approximately $783,000 in cash. The result of this activity was a net decrease in our financing obligations of approximately $17.9 million and a net increase in our noncontrolling interests of $16.2 million.

Joint Venture Partner Interests

We consolidate all of our joint ventures in the accompanying financial statements. Our joint venture partners’ interests in our consolidated partnerships are not redeemable. As a result, we classify our joint venture partners’ interests as noncontrolling interests. During the year ended December 31, 2016, we sold two office properties held by one of our joint ventures. As a result, we no longer have any interest in that joint venture.

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Stockholders' Equity

12 Months Ended

Dec. 31, 2016

Stockholders' Equity Attributable to Parent [Abstract]

Stockholders' Equity

STOCKHOLDERS' EQUITY

Common Stock

On May 27, 2005, we filed a Registration Statement on Form S-11 with the Commission in connection with an initial public offering of our Class E shares of common stock, which was declared effective on January 27, 2006. On June 11, 2007, we filed a Registration Statement on Form S-11 with the Commission in connection with a follow-on public offering of our Class E common stock, which was declared effective on January 22, 2008. As of the close of business on September 30, 2009, we terminated the primary portion of our public offerings of Class E shares of our common stock and ceased accepting new subscriptions to purchase shares of our common stock. On October 23, 2009, we filed a Registration Statement for the sale of up to $237,500,000 in Class E shares of our common stock pursuant to our distribution reinvestment plan. This distribution reinvestment plan offering is ongoing.

On July 12, 2012, the Commission declared effective our Prior Offering, which we terminated on September 15, 2015. On September 16, 2015, the Commission declared effective our Follow-On Offering, which applies to the offer and sale of shares of Class A, Class W, and Class I common stock to the public through a primary offering and a restated distribution reinvestment plan with NAV-based pricing. See Note 1 for additional information regarding the Prior Offering and Follow-On Offering. The following table describes the changes in each class of common shares during each of the years ended December 31, 2016, 2015 and 2014 (shares and dollar amounts in thousands). 

	Class E					Class A					Class W					Class I					Total
	Shares		Amount (1)			Shares		Amount (1)			Shares		Amount (1)			Shares		Amount (1)			Shares		Amount (1)
Balances, December 31, 2013	171,254		$	1,728,146		217		$	1,534		209		$	1,437		4,327		$	29,507		176,007		$	1,760,624
Issuance of common stock:
Shares sold	—		—			955		6,879			900		6,310			9,090		63,705			10,945		76,894
Distribution reinvestment plan	2,830		19,785			15		105			10		74			123		867			2,978		20,831
Stock-based compensation	—		—			—		—			—		—			136		807			136		807
Redemptions of common stock	(11,016	)	(77,523		)	—		—			(2	)	(13		)	(648	)	(4,566		)	(11,666	)	(82,102		)
Balances, December 31, 2014	163,068		$	1,670,408		1,187		$	8,518		1,117		$	7,808		13,028		$	90,320		178,400		$	1,777,054
Issuance of common stock:
Shares sold	—		—			511		3,888			693		5,134			10,135		73,982			11,339		83,004
Distribution reinvestment plan	2,447		17,866			28		203			22		158			426		3,119			2,923		21,346
Stock-based compensation	—		—			—		—			—		—			618		1,295			618		1,295
Redemptions of common stock	(28,240	)	(206,134		)	(23	)	(171		)	(20	)	(148		)	(873	)	(6,433		)	(29,156	)	(212,886		)
Balances, December 31, 2015	137,275		$	1,482,140		1,703		$	12,438		1,812		$	12,952		23,334		$	162,283		164,124		$	1,669,813
Issuance of common stock:
Shares sold	—		—			436		3,337			782		5,799			10,960		81,479			12,178		90,615
Distribution reinvestment plan	2,004		14,859			42		311			44		331			684		5,075			2,774		20,576
Stock-based compensation	—		—			—		—			—		—			32		1,415			32		1,415
Redemptions of common stock	(26,954	)	(198,810		)	(180	)	(1,328		)	(367	)	(2,701		)	(971	)	(7,203		)	(28,472	)	(210,042		)
Balances, December 31, 2016	112,325		$	1,298,189		2,001		$	14,758		2,271		$	16,381		34,039		$	243,049		150,636		$	1,572,377

_______________________________

(1) Dollar amounts presented in this table represent the gross amount of proceeds from the sale of common shares, or the amount paid to stockholders to redeem or repurchase common shares, and do not include other costs and expenses accounted for within additional paid-in capital, such as selling commissions, dealer manager and distribution fees, offering and organizational costs, and other costs associated with our distribution reinvestment plans, share redemption programs, and self-tender offers.

Redemptions and Repurchases

During the year ended December 31, 2016, we completed four self-tender offers pursuant to which we accepted for purchase approximately 25.1 million Class E shares, at a weighted average purchase price of $7.37 per share for an aggregate cost of approximately $185.3 million.

On August 12, 2015, we completed a modified “Dutch Auction” tender offer, pursuant to which we accepted for purchase approximately 17.2 million shares of Class E common stock, at a purchase price of $7.25 per share for an aggregate cost of approximately $124.4 million. On December 23, 2015, we completed another self-tender offer, pursuant to which we accepted for purchase approximately 2.7 million shares of Class E common stock, at a purchase price of $7.39 per share for an aggregate cost of approximately $20.1 million.

We have adopted a Class E Share Redemption Program (the “Class E SRP”), whereby Class E stockholders may request that we redeem all or any portion of their Class E shares subject to certain conditions and limitations. Redemptions are only available with respect to Class E shares of common stock in the event of the death or disability of a stockholder subject to certain conditions and limitations. We also have a separate Class A, W and I Share Redemption Program (“Class AWI SRP”) for holders of our Class A, Class W or Class I shares. Our board of directors may modify, suspend or terminate our share redemption programs if it deems such action to be in the best interest of our stockholders. Our board of directors will evaluate each quarter whether to make liquidity available to Class E stockholders through the Class E SRP or through a tender offer process.

During the years ended December 31, 2016 and 2015, we redeemed approximately 1.8 million and 8.4 million Class E shares pursuant to our Class E SRP for approximately $13.5 million and $61.7 million, respectively. During the year ended December 31, 2015, our board of directors authorized an additional $28.0 million in addition to the amounts calculated in accordance with our Class E SRP, related to these redemptions.

During the year ended December 31, 2016, we redeemed approximately 1.5 million Class I shares, Class A shares, and Class W shares pursuant to our Class AWI SRP for a total of approximately $11.2 million. During the year ended December 31, 2015, we redeemed approximately 916,000 Class I shares, Class A shares, and Class W shares pursuant to our Class AWI SRP for a total of approximately $6.8 million. During the year ended December 31, 2014, we redeemed approximately 650,000 Class I shares and Class W shares pursuant to our Class AWI SRP for a total of approximately $4.6 million.

Distributions

We accrue distributions on a daily basis and pay distributions on a quarterly basis. Historically, each quarter, our board of directors has authorized the following quarter’s daily distribution accrual. We calculate individual payments of distributions to each stockholder or OP Unit holder based upon daily record dates during each quarter, so that investors are eligible to earn distributions immediately upon purchasing shares of our common stock or upon purchasing OP Units. The following table describes our total distributions declared on our common stock for the years ended December 31, 2016, 2015 and 2014, and the portion of each distribution that was paid in cash and reinvested in shares (dollar amounts in thousands).  

	For the Year Ended December 31,
Distributions:	2016		% of Total Distributions		2015		% of Total Distributions		2014		% of Total Distributions
Paid in cash	$	36,418	63.8	%	$	41,723	66.3	%	$	41,381	66.5	%
Reinvested in shares	20,622		36.2	%	21,177		33.7	%	20,855		33.5	%
Total distributions	$	57,040	100.0	%	$	62,900	100.0	%	$	62,236	100.0	%

The following table sets forth the distributions that have been paid and/or authorized as of December 31, 2016, subject to class-specific adjustments.  

	Amount Declared per Share/Unit (1)
Quarter	Class E	Class A	Class W	Class I	Weighted Average	Payment Date
2015
1st Quarter 2015	0.0900	0.0705	0.0794	0.0882	0.0897	4/16/2015
2nd Quarter 2015	0.0900	0.0700	0.0791	0.0882	0.0896	7/2/2015
3rd Quarter 2015	0.0900	0.0695	0.0788	0.0881	0.0895	10/16/2015
4th Quarter 2015	0.0900	0.0694	0.0788	0.0881	0.0894	1/19/2016
2016
1st Quarter 2016	0.0900	0.0697	0.0789	0.0882	0.0894	4/18/2016
2nd Quarter 2016	0.0900	0.0699	0.0790	0.0882	0.0893	7/18/2016
3rd Quarter 2016	0.0900	0.0695	0.0788	0.0881	0.0892	10/18/2016
4th Quarter 2016	0.0900	0.0692	0.0787	0.0881	0.0892	1/17/2017
2017
1st Quarter 2017 (2)	0.0900	0.0692	0.0786	0.0881	0.0891	4/17/2017

_______________________________

(1) Assumes ownership of share or unit for the entire quarter.

(2) The distribution amount herein for the first quarter of 2017 is estimated based on the NAV per share as of December 31, 2016.

(3) Expected payment date.  

Distribution Tax Characterization

Our distributions to stockholders are characterized for federal income tax purposes as (i) ordinary income, (ii) non-taxable return of capital, or (iii) long-term capital gain. Distributions that exceed our current and accumulated tax earnings and profits constitute a return of capital for tax purposes and reduce the stockholders’ basis in the common shares. To the extent that distributions exceed both current and accumulated earnings and profits and the stockholders’ basis in the common shares, they will generally be treated as a gain or loss upon the sale or exchange of our stockholders’ common shares. For the years ended December 31, 2016, 2015 and 2014, we notified stockholders of the taxability of distributions paid during the preceding year on an annual basis. The following unaudited table summarizes the information reported to investors regarding the taxability of distributions on common shares for the years ended December 31, 2016, 2015 and 2014.

	For the Year Ended December 31,
	2016		2015		2014
Per Common Share	% of Total Distributions		% of Total Distributions		% of Total Distributions
Ordinary income	53.66	%	81.01	%	63.92	%
Non-taxable return of capital	46.34	%	18.99	%	36.08	%
Total	100.00	%	100.00	%	100.00	%

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Related Party Transactions

12 Months Ended

Dec. 31, 2016

Related Party Transactions [Abstract]

Related Party Transactions

RELATED PARTY TRANSACTIONS

Advisory Agreement

Our day-to-day activities are managed by our Advisor, a related party, under the terms and conditions of the Advisory Agreement. Our Advisor is considered to be a related party as certain indirect owners and employees of our Advisor serve as two of our directors and all of our executive officers. The responsibilities of our Advisor cover all facets of our business, and include the selection and underwriting of our real property and debt-related investments, the negotiations for these investments, the asset management and financing of these investments and the oversight of real property dispositions.

On June 23, 2016, we entered into Tenth Amended and Restated Advisory Agreement (the “Advisory Agreement”) with our Advisor, effective June 30, 2016, which modified the fees and expense reimbursements payable to our Advisor. The Advisory Agreement may be renewed for an unlimited number of successive 1-year terms. The current term of the Advisory Agreement expires on June 30, 2017. Per the Advisory Agreement, in consideration for asset management services performed, we pay our Advisor an advisory fee comprised of two separate components: (1) a fixed amount that accrues daily in an amount equal to 1/365th of 1.15% of (a) the “Aggregate Fund NAV” (i.e. the aggregate net asset value or "NAV" for our Class E shares, Class A shares, Class W shares and Class I shares, along with OP units held by third parties) for such day, and (b) the consideration received by us or our affiliate for selling Interests (defined below) in DST Properties (defined below) to third party investors, net of up-front fees and expense reimbursements payable out of gross sale proceeds from the sale of such Interests, including but not limited to sales commissions, dealer manager fees and non-accountable expense allowances, and (2) a performance component that is based on the annual non-compounded investment return provided to holders of “Fund Interests” (defined as our Class E shares, Class A shares, Class W shares, Class I shares, and OP Units held by third parties) such that our Advisor will receive 25% of the overall return in excess of 6%; provided that in no event may the performance condition exceed 10% of the overall return for such year, and subject to certain other limitations. Additionally, our Advisor has provided us with a waiver of a portion of its fees generally equal to the amount of the performance component that would have been payable with respect to the Class E shares and the Class E OP Units held by third parties until the NAV of such shares or units exceeds $10.00 per share or unit, the benefit of which will be shared among all holders of Fund Interests.

In addition, we will pay our Advisor a fee of 1% of the total consideration we receive upon the sale of real property assets (excluding DST Properties). For these purposes, a “sale” means any transaction or series of transactions whereby we or our Operating Partnership directly or indirectly (including through the sale of any interest in a joint venture or through a sale by a joint venture in which we hold an interest) sells, grants, transfers, conveys, or relinquishes its ownership of any real property or portion thereof, including the lease of any real property consisting of a building only, and including any event with respect to any real property which gives rise to a significant amount of insurance proceeds or condemnation awards.

Further, for a substantial amount of services in connection with the sale of a property (excluding DST Properties), as determined by a majority of our independent directors, we will pay our Advisor up to 50.0% of the reasonable, customary and competitive commission paid for the sale of a comparable real property, provided that such amount shall not exceed 1% of the contract price of the property sold and, when added to all other real estate commissions paid to unaffiliated parties in connection with the sale, may not exceed the lesser of a competitive real estate commission or 6% of the sales price of the property.  

In addition, pursuant to the Advisory Agreement, we will pay directly, or reimburse our Advisor and our Dealer Manager (defined below) if they pay on our behalf any organizational and offering expenses (other than selling commissions, the dealer manager fee, distribution fees and non-transaction based compensation allocated to sales-related activities of employees of our Dealer Manager in connection with the offering) relating to any public offerings as and when incurred. After the termination of the primary portion of the offering and again after termination of the distribution reinvestment plan portion of the offering, our Advisor has agreed to reimburse us to the extent that total cumulative organization and offering expenses (including selling commissions, the dealer manager fee and distribution fees) that we incur exceed 15% of our gross proceeds from the applicable offering.

Subject to certain limitations, we will reimburse our Advisor for all of the costs it incurs in connection with the services it provides to us, including, without limitation, our allocable share of the personnel (and related employment) costs and overhead (including but not limited to allocated rent paid to both third parties and an affiliate of the Advisor, equipment, utilities, insurance, travel and entertainment, and other costs) incurred by our Advisor or its affiliates, including, but not limited to, total compensation, benefits and other overhead of all employees involved in the performance of such services.

Public Offering Dealer Manager Agreement

Dividend Capital Securities LLC, a related party, which we refer to as the “Dealer Manager,” is distributing the shares of our common stock in our public offering on a “best efforts” basis. Our Dealer Manager is a member of the Financial Industry Regulatory Authority, Inc., or FINRA. Our Dealer Manager coordinates our distribution effort and manages our relationships with participating broker-dealers and financial advisors and provides assistance in connection with compliance matters relating to marketing our public offering.

On September 16, 2015, we entered into a Second Amended and Restated Dealer Manager Agreement (the “Second Amended Dealer Manager Agreement”) with our Dealer Manager. The Dealer Manager served as dealer manager for the Prior Offering and serves as dealer manager for the Follow-On Offering. The purpose of the Second Amended Dealer Manager Agreement is to engage our Dealer Manager with respect to the Follow-On Offering while still paying dealer manager fees and distribution fees with respect to the Prior Offering. As amended, the Second Amended Dealer Manager Agreement may be made to apply to future offerings by naming them in a schedule to the agreement, with the consent of the Company and our Dealer Manager. Pursuant to the Second Amended Dealer Manager Agreement, we pay (i) selling commissions on Class A shares sold in the primary offering of up to 3.0% of the public offering price per share, (ii) a dealer manager fee which accrues daily in an amount equal to 1/365th of 0.6% of our NAV per share of Class A and Class W shares outstanding and an amount equal to 1/365th of 0.1% of our NAV per share of Class I shares outstanding on such day on a continuous basis, and (iii) a distribution fee which accrues daily in an amount equal to 1/365th of 0.5% of our NAV per Class A share outstanding on such day on a continuous basis. Subject to FINRA limitations on underwriting compensation, we will continue to pay the dealer manager fee and distribution fee until the earlier to occur of the following: (i) a listing of the class of such shares on a national securities exchange or (ii) such shares no longer being outstanding.

Pursuant to the Second Amended Dealer Manager Agreement, we may pay to the Dealer Manager a primary dealer fee in the amount of up to 5.0% of the gross proceeds raised from the sale of Class I shares in the primary portion of the Follow-On Offering, provided that (i) the total gross proceeds raised with respect to which the primary dealer fee will apply may not exceed $100,000,000, subject to further increase by our board of directors, in its discretion; (ii) the primary dealer fee will only be paid with respect to sales made by participating broker-dealers specifically approved by us as being eligible; and (iii) the primary dealer fee will only be paid with respect to sales made at times approved by us. The Dealer Manager may reallow a portion of the primary dealer fee to the participating broker-dealers involved in selling such Class I shares based on the portion of the gross proceeds raised from their customers. The Dealer Manager will consider the primary dealer fee to be underwriting compensation subject to the limits described below. The primary dealer fee will be paid by us and will not be considered a class-specific expense.

The Dealer Manager monitors the aggregate amount of underwriting compensation that we and the Advisor pay in connection with the Follow-On Offering and Prior Offering in order to ensure we comply with the underwriting compensation limits of applicable FINRA rules. Accordingly, the dealer manager fee and distribution fee that are payable to our Dealer Manager with respect to an offering (i.e., pursuant to the registration statement for an offering) will cease when, following the completion of the offering, total underwriting compensation in such offering equals 10% of the gross proceeds from the primary portion of the offering. We consider the portion of the dealer manager fee and the distribution fee accruing with respect to Class A, Class W and Class I shares issued during the term of the current offering, and not issued pursuant to a prior public offering, as underwriting compensation with respect to the current offering. In addition, we will cease paying the dealer manager fee and the distribution fee on the earlier to occur of the following: (i) a listing of the class of such shares on a national securities exchange or (ii) such shares no longer being outstanding, for example (without limitation) upon their redemption or other repurchase by us, upon our dissolution, or upon a merger or other extraordinary transaction in which we are a party and in which the shares are exchanged for cash or other securities.

The sales commissions, distribution fees, and dealer manager fees may all be reallowed to participating broker dealers who are members of FINRA. Our Dealer Manager may also receive a portion of the organization and offering expense reimbursement amounts described above under “— Compensation to our Advisor”. Our Dealer Manager is presently directly or indirectly majority owned by John A. Blumberg, James R. Mulvihill, Evan H. Zucker, and/or their affiliates.

On May 11, 2016, we notified our Dealer Manager that we would pay a primary dealer fee in the amount of up to 5.0% of the gross proceeds raised from the sale of Class I shares in the primary portion of the Follow-On Offering from May 11, 2016 through June 30, 2016, but only with respect to sales made by participating broker-dealers that we specifically approved as being eligible (the "2Q Managed Offering").

On September 19, 2016, we notified our Dealer Manager that we would pay a primary dealer fee in the amount of up to 5.0% of the gross proceeds raised from the sale of Class I shares in the primary portion of the Follow-On Offering from September 19, 2016 through November 30, 2016 (the “3Q Managed Offering”), but only with respect to sales made by participating broker-dealers that we specifically approved as being eligible. On June 23, 2016, our board of directors increased the maximum amount of total gross proceeds raised with respect to which the primary dealer fee will apply to $150.0 million. The maximum primary dealer fee we will pay our Dealer Manager is now $7.5 million, although in the future we may provide for additional primary dealer fee payments. Such amount is subject to further increase by our board of directors, in its discretion. During the year ended December 31, 2016, we raised approximately $69.3 million pursuant to the 2Q Managed Offering and the 3Q Managed Offering and incurred primary dealer fees of $3.5 million, of which 347,000 was retained by our Dealer Manager.

We conducted similar "managed offerings" during the years ended December 31, 2015 and 2014. See "— Summary of Fees and Other Amounts" for further information regarding the amount of primary dealer fees paid during during the years ended December 31, 2016, 2015 and 2014.

Property Management Agreement

On June 23, 2016, we and Dividend Capital Property Management LLC (the “Property Manager”) agreed to terminate the property management agreement dated January 9, 2006, with the Property Manager (the “Property Management Agreement”) as no services were being provided by the Property Manager under the Property Management Agreement. The Property Manager waived the notice period for termination so that the Property Management Agreement terminated immediately.

Independent Director RSU Awards

On December 5, 2013, our board of directors approved revised compensation for our independent directors. In connection with the revised compensation plan, at each annual meeting of stockholders the independent directors will automatically, upon election, each receive an annual $10,000 grant of RSUs with respect to Class I shares of our common stock, with the number of RSUs based on the NAV per Class I share as of the end of the day of the annual meeting. Effective June 23, 2016 and June 25, 2015, we granted 4,055 RSUs and 4,116 RSUs to our independent directors, respectively.

Restricted Stock Unit Agreements

Pursuant to the terms of the Advisor RSU Agreements, we have granted our Advisor approximately 842,000 Company RSUs, of which approximately 412,000 Company RSUs remained unvested and unsettled as of December 31, 2016. Each Company RSU will, upon vesting, entitle our Advisor to one Class I share of our common stock. The Company RSUs are subject to specified vesting and settlement provisions and, upon settlement in Class I shares of Company common stock, require offsets of advisory fees and expenses otherwise payable from the Company to our Advisor as described further below based on the NAV per Class I share on the grant date of the applicable Company RSU (the weighted average grant-date NAV per Class I share with respect to the unsettled Company RSUs is $7.18 as of December 31, 2016). As of December 31, 2016, our Advisor had approximately 38,000 shares of Class I common stock issued upon settlement of Company RSUs that remained subject to fee offset. The Advisor is expected to redistribute a significant portion of the Company RSUs and/or shares to senior level employees of our Advisor and its affiliates that provide services to us, although the terms of such redistributions (including the timing, amount and recipients) remain solely in the discretion of our Advisor.

Vesting and Payment Offset

Following specified vesting provisions, an equal percentage of the Company RSUs vest on each of the applicable vesting dates. On each vesting date, an offset amount (each, an “Offset Amount”) is calculated and deducted on a pro rata basis over the next 12 months from the cash payments otherwise due and payable to our Advisor under our then-current Advisory Agreement for any fees or expense reimbursements. The board of directors considers the amount of granted Company RSUs when evaluating the total compensation paid to the Advisor for services provided. Each Offset Amount equals the number of Company RSUs vesting on such date multiplied by the NAV per Class I share publicly disclosed by us (“the “Class I NAV”) as of the end of the grant date (the “Grant Date NAV per Class I Share”). Each Offset Amount is always calculated based on the Grant Date NAV per Class I Share, even beyond the initial Vesting Date. At the end of each 12-month period following each vesting date, if the Offset Amount has not been fully realized by offsets from the cash payments otherwise due and payable to our Advisor under the Advisory Agreement, our Advisor shall promptly pay any shortfall to us.

The chart below shows the Grant Dates, vesting dates, number of unvested shares as of December 31, 2016, and Grant Date NAV per Class I Share (share amounts in thousands). 

Award	Grant Date	Vesting Dates	Number of Unvested Shares	Grant Date NAV per  Class I Share
Company RSU	4/7/2014	4/14/17	123	$	6.96
Company RSU	2/25/2015	4/14/17	30	7.18
Company RSU	2/25/2015	4/13/18	135	7.18
Company RSU	2/4/2016	4/15/19	124	7.41
Total/ weighted average			412	$	7.18

Termination

The Advisor RSU Agreements will automatically terminate upon termination or non-renewal of the Advisory Agreement by any party for any reason. In addition, upon a change in control of us, then either our Advisor or we may immediately terminate the Advisor RSU Agreements. Further, the Advisor may immediately terminate the Advisor RSU Agreements if we exercise certain rights under the Advisor RSU Agreements to replace the Company RSUs with another form of compensation.

Upon termination of the Advisor RSU Agreements, our Advisor will promptly pay any unused Offset Amounts to us or, at our Advisor’s election, return Class I shares in equal value based on the Class I NAV as of the date of termination of the Advisor RSU Agreements. In addition, upon termination of the Advisor RSU Agreement, all unvested Company RSUs will be forfeited except that, unless the Advisor RSU Agreements were terminated at the election of our Advisor following a change in control of us or as a result of a premature termination of the Advisory Agreement at our election for cause (as defined in the Advisory Agreement) or upon the bankruptcy of our Advisor, then following such forfeiture of Company RSUs, our Advisor will have the right to acquire from us the number of Class I shares equal to the number of Company RSUs forfeited, in return for a purchase price equal to such number of Class I shares multiplied by the Grant Date NAV per Class I Share. The Advisor must notify us of its election to exercise the foregoing acquisition right within 30 days following the termination of the Advisor RSU Agreements, and the parties will close the transaction within 60 days following the termination of the Advisor RSU Agreements.

Dividend Equivalent Payments

If our board of directors declares and we pay a cash dividend on Class I shares for any period in which the Company RSUs are outstanding (regardless of whether such Company RSUs are then vested), our Advisor will be entitled to dividend equivalents (the “Dividend Equivalents”) with respect to that cash dividend equal to the cash dividends that would have been payable on the same number of Class I shares as the number of Company RSUs subject to the Advisor RSU Agreements had such Class I shares been outstanding during the same portion of such period as the Company RSUs were outstanding. Any such Dividend Equivalents may be paid in cash or Class I shares, at our Advisor’s election.

During the years ended December 31, 2016, 2015 and 2014, we recognized approximately $1.1 million, $1.1 million and $653,000, respectively, as advisory fees expense related to the issuance of approximately 153,000 shares, 153,000 shares and 123,000 shares, respectively, of our Class I common stock, respectively. Amounts reported are based on the NAV per share at the end of each month during the Advisor RSU Agreements. As of December 31, 2016, the total value related to nonvested awards not yet recognized was approximately $3.1 million, which we expect to recognize between 2017 and 2020.

Restricted Stock Grant

Effective February 4, 2016 and February 25, 2015, we granted 49,340 restricted shares and 49,263 restricted shares of Class I common stock, respectively, to certain employees of our Advisor and its affiliates at a price of $7.41 per share and $7.18 per share, respectively, which will vest ratably over four years. During the years ended December 31, 2016, 2015 and 2014, 27,458 shares, 19,848 shares and 11,198 shares, respectively, vested at a weighted average price of $7.39, $7.23 and $6.96, respectively, based on our NAV per share as of the vesting dates. During the years ended December 31, 2016, 2015 and 2014, we recorded approximately $250,000, $188,000 and $125,000 within “general and administrative expenses” in the accompanying consolidated statements of income, respectively. Our restricted stock generally vests ratably over a period of three to four years.

Private Placements of Delaware Statutory Trust Interests

Private Placements

In March 2016, we, through our Operating Partnership, initiated a program to raise capital in private placements exempt from registration under the Securities Act of 1933, as amended (“Private Placements”), through the sale of beneficial interests (“Interests”) in specific Delaware statutory trusts holding real properties, including properties currently indirectly owned by our Operating Partnership (the “DST Program”). From 2006 through 2009, we, through our subsidiaries, conducted similar private placement offerings of fractional interests in which it raised a total of $183.1 million in gross proceeds. These fractional interests were all subsequently acquired by our Operating Partnership in exchange for an aggregate of 17.7 million OP Units. As of December 31, 2016, we had sold approximately $2.5 million in Interests, which we include in "other liabilities" in our accompanying balance sheets.

Each Private Placement will offer Interests in one or more real properties placed into one or more Delaware statutory trust(s) by our Operating Partnership or its affiliates (“DST Properties”). We anticipate that these Interests may serve as replacement properties for investors seeking to complete like-kind exchange transactions under Section 1031 of the Internal Revenue Code of 1986, as amended (the “Code”). Additionally, properties underlying Interests sold to investors pursuant to such Private Placements will be leased-back by an indirect wholly owned subsidiary of our Operating Partnership on a long term basis of up to 29 years. The lease agreements are expected to be fully guaranteed by our Operating Partnership. Additionally, our Operating Partnership will retain a fair market value purchase option (“FMV Option”) giving it the right, but not the obligation, to acquire the Interests from the investors at a later time in exchange for OP Units.

DST Program Dealer Manager Agreement

In connection with the DST Program, in March 2016, Dividend Capital Exchange LLC (“DCX”), a wholly owned subsidiary of our taxable REIT subsidiary that is wholly owned by our Operating Partnership, entered into a Dealer Manager Agreement with our Dealer Manager, pursuant to which our Dealer Manager agreed to conduct Private Placements for Interests reflecting an indirect ownership of up to $500 million of Interests. DCX will pay certain up-front fees and reimburse certain related expenses to the Dealer Manager with respect to capital raised through any such Private Placements. DCX is obligated to pay our Dealer Manager a dealer manager fee of up to 1.5% of gross equity proceeds raised and a commission of up to 5% of gross equity proceeds raised through the Private Placements. The Dealer Manager may re-allow such commissions and a portion of such dealer manager fee to participating broker dealers.

In addition, we, or our subsidiaries, are obligated to pay directly or reimburse our Advisor and our Dealer Manager if they pay on our behalf, any organization and offering expenses (other than selling commissions and the dealer manager fee) as and when incurred. These expenses may include reimbursements for the bona fide due diligence expenses of participating broker-dealers, supported by detailed and itemized invoices, and similar diligence expenses of investment advisers, legal fees of our Dealer Manager, reimbursements for customary travel, lodging, meals and reasonable entertainment expenses of registered persons associated with our Dealer Manager, the cost of educational conferences held by us, including costs reimbursement for registered persons associated with our Dealer Manager and registered representatives of participating broker-dealers to attend educational conferences sponsored by us, and attendance fees and costs reimbursement for registered persons associated with our Dealer Manager to attend seminars conducted by participating broker-dealers and promotional items.

We intend to recoup the costs of the selling commissions and dealer manager fees described above through a purchase price “mark-up” of the initial estimated fair value of the DST Properties to be sold to investors, thereby placing the economic burden of these up-front fees on the investors purchasing such Interests. In addition, to offset some or all of our organization and offering expenses associated with the Private Placements, we will add a purchase price mark-up of the estimated fair value of the DST Properties to be sold to investors in the amount of 1.5% of the gross equity proceeds. Collectively, these purchase price mark-ups total up to 8% of the gross equity proceeds raised in the Private Placements. Additionally, we will be paid, by investors purchasing Interests, a non-accountable reimbursement equal to 1.0% of gross equity proceeds for real estate transaction costs that we expect to incur in selling or buying these Interests. Also, investors purchasing Interests will be required to pay their own respective closing costs upon the initial sale of the interests.

Limited Partnership Agreement

In connection with the launch of the DST Program, the Company, on behalf of itself as general partner and on behalf of all the limited partners thereto, entered into the Fifth Amended and Restated Limited Partnership Agreement of our Operating Partnership, dated as of March 2, 2016, which was further amended on August 2, 2016 (the “Amended and Restated Operating Partnership Agreement”). The Amended and Restated Operating Partnership Agreement amends the prior operating partnership agreement by establishing two series of Class E OP Units, with different redemption and registration rights. The currently existing third-party holders of Class E OP Units will now hold Series 1 Class E OP Units, and will continue to have the same redemption and registration rights they had previously, which include the right, in certain circumstances to require our Operating Partnership to redeem the OP Units for Class E shares of the Company or cash. Any purchasers of Interests in the DST Program that ultimately acquire OP Units through the FMV Option will acquire Series 2 Class E OP Units, which will have similar redemption and registration rights to those of the holders of Series 1 Class E OP Units, except that their redemption rights will in certain circumstances require our Operating Partnership to redeem the OP Units for either Class I shares of the Company or cash (as determined by our Operating Partnership in its sole discretion). In addition, the Amended and Restated Operating Partnership Agreement provides that a redemption fee of 1.5% of the shares otherwise payable to a limited partner upon redemption of Series 2 Class E Units will be paid to an affiliate of the Manager (defined below). Holders of Series 1 or Series 2 Class E OP Units cannot require us to redeem their Series 1 or Series 2 Class E OP Units with cash.

Delaware Statutory Trust Agreement

DCX Manager LLC (the “Manager”), an affiliate of our Advisor, will be engaged to act as the manager of each Delaware statutory trust holding a DST Property. Although the intention is to sell 100% of the interests to third parties, DCX may hold an interest for a period of time and therefore could be subject to the following description of fees and reimbursements paid to the Manager. The Manager will have primary responsibility for performing administrative actions in connection with the trust and any DST Property and has the sole power to determine when it is appropriate for a trust to sell a DST Property. The Manager will be entitled to the following payments from the trust: (i) a management fee equal to a stated percentage (e.g., 1.0%) of the gross rents payable to the trust, with such amount to be set on a deal-by-deal basis, (ii) a disposition fee of 1.0% of the gross sales price of any DST Property sold to a third party, and (iii) reimbursement of certain expenses associated with the establishment, maintenance and operation of the trust and DST Properties. Additionally, the Manager or its affiliate may earn a 1.0% loan fee for any financing arrangement sourced, negotiated and executed in connection with the DST Program. This loan fee only is payable to the Manager by new investors that purchase Interests and therefore is not paid by the Company or its affiliates.

Summary of Fees and Other Amounts

The following table summarizes fees and other amounts earned by our Advisor and its related parties in connection with services performed for us during the years ended December 31, 2016, 2015 and 2014 (amounts in thousands):

	For the Year Ended December 31,
	2016		2015		2014
Advisory fees (1)	$	14,857	$	17,083	$	15,919
Other reimbursements paid to our Advisor (2)	8,368		9,008		8,287
Other reimbursements paid to our Dealer Manager	396		441		591
Advisory fees related to the disposition of real properties	2,140		4,962		2,064
Development management fee (3)	31		88		181
Primary dealer fee (4)	3,465		2,540		2,197
Selling commissions	100		114		187
Dealer manager fees	381		258		121
Distribution fees	70		50		28
Total	$	29,808	$	34,544	$	29,575

_______________________________

(1) Amounts reported for the years ended December 31, 2016, 2015 and 2014 include approximately $1.1 million, $1.1 million and $653,000 respectively, that we were not obligated to pay in consideration of the issuance of Company RSUs to our Advisor.

(2) Other reimbursements paid to our Advisor include reimbursements for a portion of compensation costs of employees of our Advisor related to activities for which our Advisor does not otherwise receive a separate fee. We reimbursed our Advisor approximately $6.8 million, $7.3 million and $6.9 million for the years ended December 31, 2016, 2015 and 2014, respectively. These reimbursements include a portion of the compensation costs for certain of our named executives. The balance of such reimbursements are made up primarily of other general overhead and administrative expenses, including, but not limited to, allocated rent paid to both third parties and affiliates of our Advisor, equipment, utilities, insurance, travel and entertainment, and other costs.

(3) Pursuant to our amended Advisory Agreement effective as of June 23, 2016, our Advisor will no longer receive a development management fee in exchange for providing development management services.

(4) Amounts reported represent primary dealer fees we paid to our Dealer Manager based on the gross proceeds raised by participating broker-dealers pursuant to certain selected dealer agreements. Of the primary dealer fee earned during the years ended December 31, 2016, 2015 and 2014, our Dealer Manager reallowed approximately $3.1 million, $2.3 million and $2.0 million, respectively, to participating third-party broker-dealers and retained approximately $347,000, $254,000 and $220,000, respectively.

See the accompanying consolidated balance sheets for the amounts we owed to our Advisor and affiliates of our Advisor for such services and reimbursement of certain expenses as of December 31, 2016 and December 31, 2015. Pursuant to the Advisory Agreement, we accrue the advisory fee on a daily basis and pay our Advisor amounts due subsequent to each month-end. In addition, we recorded a liability of approximately $3.9 million for dealer manager and distribution fees that we estimate that we may pay to our Dealer Manager in future periods for shares of our common stock sold in our Follow-On Offering as of December 31, 2016. We anticipate that our Dealer Manager will reallow a significant portion of such fees to third-party broker dealers.

Product Specialists

During the year ended December 31, 2012, our Advisor entered into a product specialist agreement with BCG Advisors LLC (“BCG”), in connection with advisory services related to our investments in real estate securities assets. Pursuant to this agreement, a portion of the asset management fee that our Advisor receives from us related to real estate securities investments is reallowed to BCG in exchange for services provided. Our Advisor incurred approximately $37,000, $24,000, and $35,000 related to services provided by BCG during the years ended December 31, 2016, 2015 and 2014, respectively.

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Net Income Per Common Share

12 Months Ended

Dec. 31, 2016

Earnings Per Share [Abstract]

Net Income Per Common Share

NET INCOME PER COMMON SHARE

Reconciliations of the numerator and denominator used to calculate basic net income per common share to the numerator and denominator used to calculate diluted net income per common share for the years ended December 31, 2016, 2015 and 2014 are described in the following table (amounts in thousands, except per share information):

	For the Year Ended December 31,
	2016			2015			2014
Numerator
Income from continuing operations	$	55,048		$	131,659		$	3,990
Income from continuing operations attributable     to noncontrolling interests	(5,072		)	(7,404		)	(340		)
Income from continuing operations     attributable to common stockholders	49,976			124,255			3,650
Dilutive noncontrolling interests share     of income from continuing operations	3,883			8,632			233
Numerator for diluted earnings     per share – adjusted income from     continuing operations	$	53,859		$	132,887		$	3,883
Income from discontinued operations	—			—			30,004
Income from discontinued operations     attributable to noncontrolling interests	—			—			(4,462		)
Income from discontinued operations     attributable to common stockholders	—			—			25,542
Dilutive noncontrolling interests share     of discontinued operations	—			—			1,915
Numerator for diluted earnings     per share – adjusted income from     discontinued operations	$	—		$	—		$	27,457
Denominator
Weighted average shares outstanding-basic	159,648			175,938			178,273
Incremental weighted average shares effect     of conversion of OP Units	12,398			12,851			12,718
Weighted average shares outstanding-diluted	172,046			188,789			190,991
INCOME PER COMMON SHARE-BASIC     AND DILUTED
Net income from continuing operations	$	0.31		$	0.70		$	0.02
Net income from discontinued operations	—			—			0.14
Net income	$	0.31		$	0.70		$	0.16

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Segment Information

12 Months Ended

Dec. 31, 2016

Segment Reporting [Abstract]

Segment Information

SEGMENT INFORMATION

We have three reportable operating segments, which include our real property operating sectors (office, industrial, and retail), and we measure our profit and loss of our operating segments based on net operating income (“NOI”). We organize and analyze the operations and results of each of these segments independently, due to inherently different considerations for each segment. Such considerations include, but are not limited to, the nature and characteristics of the investment, and investment strategies and objectives. Specifically, the physical characteristics of our buildings, the related operating characteristics, the geographic markets, and the type of tenants are inherently different for each of our segments.

The following table sets forth revenue and NOI of our segments for the years ended December 31, 2016, 2015 and 2014 (amounts in thousands).  

	For the Year Ended December 31,
	Revenue						NOI (unaudited)
	2016		2015		2014		2016		2015		2014
Real property (1)
Office	$	126,782	$	137,204	$	139,245	$	84,300	$	97,441	$	104,533
Industrial	6,073		8,672		23,307		4,323		6,755		20,780
Retail	82,372		72,402		61,649		61,017		54,492		47,891
Total	$	215,227	$	218,278	$	224,201	$	149,640	$	158,688	$	173,204

_______________________________

(1) Excludes results of operations of real properties categorized as discontinued operations.

We consider NOI to be an appropriate supplemental financial performance measure because NOI reflects the specific operating performance of our real properties, and excludes certain items that are not considered to be controllable in connection with the management of each property, such as depreciation and amortization, general and administrative expenses, advisory fees, acquisition-related expenses, interest and other income, interest expense, (gain) loss on extinguishment of debt and financing commitments, gain on the sale of real property, and noncontrolling interests. However, NOI should not be viewed as an alternative measure of our financial performance as a whole, since it excludes such items that could materially impact our results of operations. Further, our NOI may not be comparable to that of other real estate companies, as they may use different methodologies for calculating NOI. Therefore, we believe net income, as defined by GAAP, to be the most appropriate measure to evaluate our overall financial performance.

The following table is a reconciliation of our reported net income attributable to common stockholders to our unaudited NOI for the years ended December 31, 2016, 2015 and 2014 (amounts in thousands).

	For the Year Ended December 31,
	2016			2015			2014
Net income attributable to common stockholders	$	49,976		$	124,255		$	29,192
Debt-related income	(943		)	(6,922		)	(7,396		)
Real estate depreciation and amortization expense	80,105			83,114			88,994
General and administrative expenses	9,450			10,720			11,108
Advisory fees, related party	14,857			17,083			15,919
Acquisition-related expenses	667			2,644			1,205
Impairment of real estate property	2,677			8,124			9,500
Interest and other income	(2,207		)	(2,192		)	(1,168		)
Interest expense	40,782			47,508			61,903
(Gain) loss on extinguishment of debt and financing commitments	(5,136		)	1,168			63
Gain on sale of real property	(45,660		)	(134,218		)	(10,914		)
Discontinued operations	—			—			(30,004		)
Net income attributable to noncontrolling interests	5,072			7,404			4,802
Net operating income	$	149,640		$	158,688		$	173,204

The following table reflects our total assets by business segment as of December 31, 2016 and December 31, 2015 (amounts in thousands). 

	As of December 31,
	2016		2015
Segment assets:
Net investments in real property
Office	$	825,961	$	1,027,132
Industrial	57,651		61,231
Retail	827,799		785,854
Total segment assets, net	1,711,411		1,874,217
Non-segment assets:
Debt-related investments, net	15,209		15,722
Cash and cash equivalents	13,864		15,769
Other non-segment assets (1)	43,244		55,183
Total assets	$	1,783,728	$	1,960,891

_______________________________

(1) Other non-segment assets primarily consist of corporate assets including restricted cash and receivables, including straight-line rent receivable.

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Income Taxes

12 Months Ended

Dec. 31, 2016

Income Tax Disclosure [Abstract]

Income Taxes

INCOME TAXES

We operate in a manner intended to qualify for treatment as a REIT for U.S. federal income tax purposes. As a REIT, we generally will not be subject to federal income taxation at the corporate level to the extent we distribute 100% of our REIT taxable income annually, as defined in the Code, to our stockholders and satisfy other requirements. To continue to qualify as a REIT for federal tax purposes, we must distribute at least 90% of our REIT taxable income annually. No material provisions have been made for federal income taxes in the accompanying financial statements. We had a gross deferred tax asset of approximately $4.4 million as of both December 31, 2016 and 2015, which is offset by a full valuation allowance. The tax years 2013 through 2016 remain open to examination by the major taxing jurisdictions to which we are subject.

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Commitments and Contingencies

12 Months Ended

Dec. 31, 2016

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies

COMMITMENTS AND CONTINGENCIES

Environmental Matters

A majority of the properties we acquire are subjected to environmental reviews either by us or the previous owners. In addition, we may incur environmental remediation costs associated with certain land parcels we may acquire in connection with the development of the land. We have acquired certain properties in urban and industrial areas that may have been leased to or previously owned by commercial and industrial companies that discharged hazardous materials. We may purchase various environmental insurance policies to mitigate our exposure to environmental liabilities. Due to the uncertainty regarding our exposure to environmental liabilities and the timing and nature of settlement of any such liabilities, we cannot estimate the effect of such potential environmental remediation on our business, financial condition, or results of operations.

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Quarterly Financial Data (Unaudited)

12 Months Ended

Dec. 31, 2016

Quarterly Financial Information Disclosure [Abstract]

Quarterly Financial Data (Unaudited)

QUARTERLY FINANCIAL DATA (UNAUDITED)

The following tables present selected unaudited quarterly financial data for each quarter during the years ended December 31, 2016 and 2015 (amounts in thousands, except per share information). Certain reclassifications have been made to prior period results to conform to the current presentation. Certain totals and subtotals within the following table may not sum due to de minimus rounding adjustments. The following disclosures exclude the results from discontinued operations.

	For the Quarter Ended												For the Year Ended December 31, 2016
	March 31, 2016			June 30, 2016			September 30, 2016			December 31, 2016
Rental revenue	$	55,544		$	52,702		$	53,258		$	53,723		$	215,227
Debt-related income	238			237			235			233			943
Total revenue	55,782			52,939			53,493			53,956			216,170
Total operating expenses	(43,177		)	(42,313		)	(44,567		)	(43,286		)	(173,343		)
Other income (expenses)	35,633			(10,491		)	(5,608		)	(7,313		)	12,221
Net income	48,238			135			3,318			3,357			55,048
Net income attributable to noncontrolling interests	(4,456		)	(18		)	(353		)	(245		)	(5,072		)
NET INCOME ATTRIBUTABLE TO COMMON STOCKHOLDERS	$	43,782		$	117		$	2,965		$	3,112		$	49,976
NET INCOME PER BASIC AND DILUTED COMMON SHARE	$	0.27		$	—		$	0.02		$	0.02		$	0.31

	For the Quarter Ended												For the Year Ended December 31, 2015
	March 31, 2015			June 30, 2015			September 30, 2015			December 31, 2015
Rental revenue	$	59,379		$	51,075		$	52,854		$	54,970		$	218,278
Debt-related income	3,203			1,584			807			1,328			6,922
Total revenue	62,582			52,659			53,661			56,298			225,200
Total operating expenses	(44,803		)	(41,168		)	(49,406		)	(45,898		)	(181,275		)
Other income (expenses)	114,422			(11,384		)	(5,680		)	(9,624		)	87,734
Net income (loss)	132,201			107			(1,425		)	776			131,659
Net (income) loss attributable to noncontrolling interests	(8,618		)	(37		)	1,297			(46		)	(7,404		)
NET INCOME (LOSS) ATTRIBUTABLE TO COMMON STOCKHOLDERS	$	123,583		$	70		$	(128	)	$	730		$	124,255
NET INCOME (LOSS) PER BASIC AND DILUTED COMMON SHARE	$	0.69		$	—		$	—		$	0.01		$	0.70

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Subsequent Events

12 Months Ended

Dec. 31, 2016

Subsequent Events [Abstract]

Subsequent Events

SUBSEQUENT EVENTS

Mortgage Note Borrowing

On January 10, 2017, (the "Effective Date") we entered into a senior mortgage floating rate non-amortizing loan with New York Life Insurance Company (the "3 Second Street Mortgage Note"). The $146.6 million 3 Second Street Mortgage Note is secured by one office property in our Northern New Jersey market. We received proceeds of $127.0 million on the Effective Date, and we can request the remaining proceeds anytime after the Effective Date but prior to October 10, 2019 as reimbursement for certain approved capital expenditures, tenant improvement costs and leasing commissions. The 3 Second Street Mortgage Note matures in January 2020 and includes twoone-year extension options subject to certain provisions. The 3 Second Street Mortgage Note interest rate is based upon LIBOR plus a margin ranging from 2.00% to 2.25%. The 3 Second Street Mortgage Note contains certain restrictions and covenants that are customary for loans of this nature, including certain restrictions regarding change in control of the underlying collateral and/or borrowers.

The 3 Second Street Mortgage Note permits voluntary prepayment of the loan on or after August 10, 2017 subject to (i) payment of applicable LIBOR breakage fees and (ii) payment of the applicable prepayment premium if prepaid on or prior to January 10, 2018, which is between 0.0% and 2.25% of the principal amount prepaid depending on the amount of time that has lapsed between August 10, 2017 and the date of the voluntary prepayment.

On January 9, 2017, pursuant to the 3 Second Street Mortgage Note, we entered into an interest rate protection agreement with a notional amount of $146.6 million and a LIBOR strike rate of 3.0% with the Commonwealth Bank of Australia that expires on January 10, 2019.

The initial proceeds of $127.0 million from the 3 Second Street Mortgage Note will be used (i) to repay the Eastern Retail Portfolio Mortgage Note (as defined below) and (ii) for general corporate purposes.

Repayment of Mortgage Note

On January 10, 2017, we repaid a $110.0 million mortgage note borrowing secured by three retail properties (the "Eastern Retail Portfolio Mortgage Note") in full prior to its scheduled maturity within the open prepayment period using proceeds from the 3 Second Street Mortgage Note. The Eastern Retail Portfolio Mortgage Note had an interest rate of 5.51% and a maturity date of June 11, 2017.

Lease Expiration

On January 31, 2017, the Sybase lease was terminated. The Sybase lease comprised $18.7 million, or 11%, of our total annualized base rent as of December 31, 2016.

For information regarding other financing transactions that occurred subsequent to December 31, 2016, see “Subsequent Events” in “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” of this Annual Report on Form 10-K.

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Schedule III - Real Estate and Accumulated Depreciation

12 Months Ended

Dec. 31, 2016

SEC Schedule III, Real Estate and Accumulated Depreciation Disclosure [Abstract]

Schedule III - Real Estate and Accumulated Depreciation

Dividend Capital Diversified Property Fund Inc.

Schedule III — Real Estate and Accumulated Depreciation

As of December 31, 2016

(dollar amounts in thousands)

					Initial Cost to Company									Gross Amount Carried at December 31, 2016
Property	Market	No. of Buildings	Encumbrances (1)		Land		Buildings and Improvements (2)		Total Costs		Cost Capitalized or Adjustments Subsequent to Acquisition (4)			Land		Buildings and Improvements (2)		Total Costs (3, 4)		Accumulated Depreciation (4)		Acquisition Date	Depreciable Life (years)
Office Properties:
Jay Street	Silicon Valley, CA	3	$	—	$	13,859	$	21,974	$	35,833	$	6,852		$	13,859	$	28,826	$	42,685	$	10,779	6/28/2006	1-40
Bala Pointe	Philadelphia, PA	1	—		10,115		27,516		37,631		9,277			10,115		36,793		46,908		13,869		8/28/2006	1-40
1300 Connecticut	Washington, DC	1	52,500		25,177		41,250		66,427		4,058			25,177		45,308		70,485		20,999		3/10/2009	2-40
655 Montgomery	San Francisco, CA	1	—		40,327		73,961		114,288		7,538			32,632		89,194		121,826		17,567		11/7/2013	1-40
1st Avenue Plaza	Denver, CO	2	—		15,713		65,252		80,965		2,195			15,713		67,447		83,160		9,537		8/22/2014	1-40
Rialto	Austin, TX	2	—		5,094		32,652		37,746		692			5,094		33,344		38,438		4,420		1/15/2015	1-40
CityView	Austin, TX	2	—		4,606		65,250		69,856		1,994			4,606		67,244		71,850		6,063		4/24/2015	1-40
Joyce Blvd	Fayetteville, AR	1	—		2,699		8,996		11,695		(1		)	2,699		8,995		11,694		3,239		9/28/2007	10-40
Eden Prairie	Minneapolis/St Paul, MN	1	—		3,538		25,865		29,403		112			3,538		25,977		29,515		7,732		10/3/2008	5-40
Austin-Mueller Healthcare	Austin, TX	1	—		2,663		42,315		44,978		5			2,663		42,320		44,983		12,973		12/23/2008	11-40
Campus Road Office Center	Princeton, NJ	1	—		5,302		45,773		51,075		249			5,302		46,022		51,324		13,237		11/3/2009	5-40
Preston Sherry Plaza	Dallas, TX	1	33,000		7,500		22,303		29,803		7,960			7,500		30,263		37,763		11,521		12/16/2009	1-40
Harborside Plaza	Northern New Jersey	1	—		16,800		193,742		210,542		20,487			16,800		214,229		231,029		79,502		6/25/2010	3-40
Sybase Drive	East Bay, CA	1	—		8,400		136,797		145,197		179			8,400		136,976		145,376		64,638		6/25/2010	7-40
Venture Corporate Center	South Florida	3	—		12,047		34,151		46,198		611			12,048		34,761		46,809		4,862		8/6/2015	1-40
Bank of America Tower	South Florida	1	—		5,030		30,917		35,947		(614		)	5,030		30,303		35,333		2,278		12/11/2015	1-40
Total Office Properties		23	$	85,500	$	178,870	$	868,714	$	1,047,584	$	61,594		$	171,176	$	938,002	$	1,109,178	$	283,216

					Initial Cost to Company								Gross Amount Carried at December 31, 2016
Property	Market	No. of Buildings	Encumbrances (1)		Land		Buildings and Improvements (2)		Total Costs		Cost Capitalized or Adjustments Subsequent to Acquisition (4)		Land		Buildings and Improvements (2)		Total Costs (3, 4)		Accumulated Depreciation (4)		Acquisition Date	Depreciable Life (years)
Industrial Properties:
Shiloh Road	Dallas, TX	3	$	—	$	5,162	$	30,192	$	35,354	$	574	$	5,165	$	30,763	$	35,928	$	12,174	12/21/2006	6-40
7000 Riverport	Louisville, KY	1	—		1,124		6,821		7,945		1,162		1,124		7,983		9,107		2,853		9/17/2008	1-40
7050 Riverport	Louisville, KY	1	—		672		3,862		4,534		259		672		4,121		4,793		1,718		9/17/2008	5-40
7201 Riverport	Louisville, KY	1	—		1,130		6,614		7,744		716		1,130		7,330		8,460		2,659		9/17/2008	3-40
South Columbia	Central Kentucky	1	—		730		25,092		25,822		5,018		730		30,110		30,840		12,072		6/25/2010	4-40
Total Industrial Properties		7	$	—	$	8,818	$	72,581	$	81,399	$	7,729	$	8,821	$	80,307	$	89,128	$	31,476

					Initial Cost to Company									Gross Amount Carried at December 31, 2016
Property	Market	No. of Buildings	Encumbrances (1)		Land		Buildings and Improvements (2)		Total Costs		Cost Capitalized or Adjustments Subsequent to Acquisition (4)			Land		Buildings and Improvements (2)		Total Costs (3, 4)		Accumulated Depreciation (4)		Acquisition Date	Depreciable Life (years)
Retail Properties:
Bandera Road	San Antonio, TX	1	$	—	$	8,221	$	23,472	$	31,693	$	379		$	8,221	$	23,851	$	32,072	$	8,060	2/1/2007	1-40
Beaver Creek	Raleigh, NC	1	26,200		13,017		31,375		44,392		1,322			13,017		32,697		45,714		10,258		5/11/2007	1-40
Centerton Square	Philadelphia, PA	1	67,800		26,488		76,838		103,326		1,982			26,488		78,820		105,308		26,424		5/11/2007	1-40
CB Square	Jacksonville, FL	1	—		3,768		16,660		20,428		(871		)	3,768		15,789		19,557		4,387		6/27/2007	2-40
Braintree	Greater Boston	1	—		9,270		31,266		40,536		878			9,270		32,144		41,414		10,532		8/1/2007	1-40
Holbrook	Greater Boston	1	—		3,828		10,073		13,901		487			3,828		10,560		14,388		4,339		8/1/2007	1-40
Kingston	Greater Boston	1	10,574		8,580		12,494		21,074		2,345			8,580		14,839		23,419		5,180		8/1/2007	1-40
Manomet	Greater Boston	1	—		1,890		6,480		8,370		379			1,890		6,859		8,749		2,420		8/1/2007	2-40
Orleans	Greater Boston	1	—		8,780		23,683		32,463		362			8,780		24,045		32,825		7,735		8/1/2007	1-40
Sandwich	Greater Boston	1	15,825		7,380		25,778		33,158		693			7,380		26,471		33,851		7,941		8/1/2007	1-40
Wareham	Greater Boston	1	24,400		13,130		27,030		40,160		2,205			13,130		29,235		42,365		9,584		8/1/2007	1-40
Abington	Greater Boston	1	—		14,396		594		14,990		—			14,396		594		14,990		594		8/1/2007	—
Hyannis	Greater Boston	1	—		10,405		917		11,322		—			10,405		917		11,322		469		8/1/2007	18-68
Mansfield	Greater Boston	1	—		5,340		16,490		21,830		—			5,340		16,490		21,830		4,764		8/1/2007	16-86
Meriden	Greater Boston	1	—		6,560		22,014		28,574		(1		)	6,559		22,014		28,573		6,705		8/1/2007	13-43
Weymouth	Greater Boston	2	16,000		5,170		19,396		24,566		(251		)	4,913		19,402		24,315		6,248		8/1/2007	4-40
Whitman 475 Bedford Street	Greater Boston	1	—		3,610		11,682		15,292		—			3,610		11,682		15,292		3,489		8/1/2007	16-56
Brockton Eastway Plaza	Greater Boston	1	—		2,530		2,074		4,604		1,016			2,530		3,090		5,620		1,268		8/1/2007	1-40
Cohasset	Greater Boston	1	—		3,920		7,765		11,685		1,068			3,920		8,833		12,753		2,860		8/1/2007	1-40
Hanover	Greater Boston	1	—		1,490		5,084		6,574		905			1,490		5,989		7,479		1,917		8/1/2007	1-40
Brockton Westgate Plaza	Greater Boston	1	—		3,650		6,507		10,157		273			3,650		6,780		10,430		2,503		8/1/2007	2-40
Harwich	Greater Boston	1	5,035		5,290		8,814		14,104		—			5,290		8,814		14,104		2,521		10/18/2007	21-40

New Bedford	Greater Boston	1	7,221		3,790		11,152		14,942		—			3,790		11,152		14,942		3,054		10/18/2007	22-40
Norwell	Greater Boston	1	4,392		5,850		14,547		20,397		—			5,850		14,547		20,397		4,263		10/18/2007	15-65
Greater DC Retail	Washington, DC	1	70,000		19,779		42,515		62,294		573			19,781		43,086		62,867		15,583		4/6/2009	1-40
Springdale	Greater Boston	1	—		11,866		723		12,589		8			11,866		731		12,597		385		2/18/2011	6-62
Saugus	Greater Boston	1	—		3,783		9,713		13,496		120			3,783		9,833		13,616		4,529		3/17/2011	3-40
Durgin Square	Greater Boston	2	—		7,209		21,055		28,264		1,191			7,209		22,246		29,455		3,604		5/28/2014	1-40
Salt Pond	Greater Boston	2	—		8,759		40,233		48,992		(324		)	8,759		39,909		48,668		4,707		11/4/2014	1-40
South Cape	Greater Boston	6	—		9,936		27,552		37,488		(10		)	10,307		27,171		37,478		2,928		3/18/2015	1-40
Shenandoah	South Florida	3	10,523		10,501		27,397		37,898		12			10,501		27,409		37,910		2,308		8/6/2015	1-40
Chester Springs	Northern New Jersey	4	—		7,376		51,155		58,531		428			7,376		51,583		58,959		3,879		10/8/2015	1-40
Yale Village	Tulsa, OK	4	—		3,492		30,655		34,147		(109		)	3,492		30,546		34,038		1,319		12/9/2015	3-40
Suniland Shopping Center	South Florida	4	—		34,804		33,902		68,706		13			34,804		33,915		68,719		1,462		5/27/2016	1-40
Total Retail Properties		53	$	257,970	$	293,858	$	697,085	$	990,943	$	15,073		$	293,973	$	712,043	$	1,006,016	$	178,219
Grand Total		83	$	343,470	$	481,546	$	1,638,380	$	2,119,926	$	84,396		$	473,970	$	1,730,352	$	2,204,322	$	492,911

_______________________________

(1) Encumbrances represents mortgage debt principal balances encumbering each property as of December 31, 2016.

(2) Building and improvements include intangible lease assets.

(3) As of December 31, 2016, the aggregate cost for federal income tax purposes of investments in real property was approximately $1.7 billion (unaudited).

(4) Amount is presented net of impairments and other write-offs of tenant-related assets that were recorded at acquisition as part of our purchase price accounting. Such write-offs are the results of lease expirations and terminations.

The following table summarizes activity for real estate and accumulated depreciation for the years ended December 31, 2016, 2015 and 2014 (amounts in thousands). 

	For the Year Ended December 31,
	2016			2015			2014
Investments in real estate:
Balance at the beginning of the year	$	2,380,174		$	2,472,926		$	2,570,480
Acquisitions of operating properties	68,706			357,811			158,221
Improvements	30,006			25,557			12,512
Basis of operating properties disposed of	(271,887		)	(467,996		)	(258,787		)
Impairment of real property	(2,677		)	(8,124		)	(9,500		)
Balance at the end of the year (1)	$	2,204,322		$	2,380,174		$	2,472,926
Accumulated depreciation:
Balance at the beginning of the year	$	505,957		$	523,246		$	502,847
Real estate depreciation and amortization expense	80,105			83,114			88,994
Above-market lease assets amortization expenses	5,515			5,216			6,708
Accumulated depreciation and amortization written off (2)	(98,666		)	(105,619		)	(75,303		)
Balance at the end of the year	$	492,911		$	505,957		$	523,246

_______________________________

(1) Amounts for the year ended December 31, 2014 include approximately $30.1 million of investments in real estate related to properties classified as held for sale.

(2) Amounts represent accumulated depreciation and amortization written off due to real property dispositions and early lease termination.

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Summary of Significant Accounting Policies (Policy)

12 Months Ended

Dec. 31, 2016

Accounting Policies [Abstract]

Principles of Consolidation

Principles of Consolidation

Due to our control of our Operating Partnership through our sole general partnership interest and the limited rights of the limited partners, we consolidate our Operating Partnership, and limited partner interests not held by us are reflected as noncontrolling interests in the accompanying consolidated financial statements (herein referred to as “financial statements”). All significant intercompany accounts and transactions have been eliminated in consolidation.

Our financial statements also include the accounts of our consolidated subsidiaries and joint ventures through which we are the primary beneficiary, when such subsidiaries and joint ventures are variable interest entities, or through which we have a controlling interest. In determining whether we have a controlling interest in a joint venture and the requirement to consolidate the accounts of that entity, we consider factors such as ownership interest, board representation, management representation, authority to make decisions, and contractual and substantive participating rights of the partners/members as well as whether the entity is a variable interest entity in which we have the power to direct the activities that most significantly impact the entity’s economic performance and the obligation to absorb losses that could potentially be significant to the entity or the right to receive benefits that could potentially be significant to the entity.

Our Operating Partnership qualifies as a variable interest entity for accounting purposes and substantially all of the assets of the Company are held by our Operating Partnership, which, subject to certain Operating Partnership and subsidiary level financing restrictions, can be used to settle its obligations. Creditors of certain liabilities of our Operating Partnership have recourse to the Company. All joint ventures in which we have investments are variable interest entities. All of our investments in joint ventures represent our interests in real estate partnerships, formed for the purpose of acquiring, leasing, managing, holding for investment, selling and otherwise dealing with real property investments. Our involvement with our joint ventures affects our financial position, financial performance and cash flows in ways similar to direct ownership of real property investment. We own a significantly disproportionate majority of the ownership interests of our joint ventures. In each of our joint ventures, our joint venture partner performs the day-to-day management of the real properties owned by the respective joint ventures. However, in each of our joint ventures, we approve the activities that most significantly impact the joint venture’s economic performance. Due to our substantive approval rights and our exposure to the economic returns and losses of each of the joint ventures, we are the primary beneficiary of each of our joint ventures. Based on these considerations, we consolidate all of our investments in joint ventures. The accompanying consolidated balance sheets include approximately $48.2 million and $76.9 million, after accumulated depreciation and amortization, in consolidated real property variable interest entity investments as of December 31, 2016 and 2015, respectively. The accompanying consolidated balance sheets include approximately $50.1 million in consolidated mortgage notes in variable interest entity investments as of December 31, 2015. There were no mortgage notes related to variable interest entities as of December 31, 2016.

Judgments made by us with respect to our level of influence or control of an entity and whether we are the primary beneficiary of a variable interest entity involve consideration of various factors, including the form of our ownership interest, the size of our investment (including loans), our ability to direct the activities of the entity, and our obligation to absorb the losses of, or, our right to receive benefits from the entity. Our ability to correctly assess our influence or control over an entity affects the presentation of these investments in our financial statements and, consequently, our financial position and specific items in our results of operations that are used by our stockholders, lenders and others in their evaluation of us. The maximum risk of loss related to our investment in these consolidated variable interest entities is limited to our recorded investments in such entities. The creditors of the consolidated variable interest entities do not have recourse to our general credit.

Generally, we consolidate real estate partnerships and other entities that are not variable interest entities when we own, directly or indirectly, a majority voting interest in the entity.

Reclassifications

Reclassifications

Certain previously reported amounts have been reclassified to conform to the current period financial statement presentation. In April 2015, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update 2015-03 (“ASU 2015-03”), which requires that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability. The guidance is effective for all reporting periods beginning after December 15, 2015 and requires retrospective application.

Investments

Investments

Real Property

Costs associated with the acquisition of real property, including acquisition fees paid to our Advisor, are expensed as incurred. In addition, we estimate the fair value of contingent consideration and contingencies related to acquisitions of real property in determining the total cost of the property acquired. Subsequent changes in the fair value of such contingent consideration are recorded either as a gain or loss in our consolidated statements of income. Contingencies are subsequently adjusted through the consolidated statements of income when new information becomes available indicating that settlement of a contingent liability is probable and can be estimated at an amount greater than the acquisition date fair value, or the contingency is resolved, in which case the contingent asset or liability is derecognized.

Costs associated with the development and improvement of our real property assets are capitalized as incurred. Costs incurred in making repairs and maintaining real estate assets are expensed as incurred. During the land development and construction periods, we capitalize interest costs, insurance, real estate taxes and certain general and administrative costs if such costs are incremental and identifiable to a specific activity to get the asset ready for its intended use. The results of operations for acquired real property are included in our accompanying statements of income from their respective acquisition dates.

Upon acquisition, the total cost of a property is allocated to land, building, building and land improvements, tenant improvements and intangible lease assets and liabilities. The purchase price allocation of the total cost to land, building, building improvements, tenant improvements, intangible lease assets and intangible lease liabilities is based on our estimate of the property’s as-if vacant fair value. The as-if vacant fair value is calculated by using all available information such as the replacement cost of such asset, appraisals, property condition reports, market data and other related information. The difference between the fair value and the face value of debt assumed in an acquisition is recorded as an adjustment to the purchase price allocation. The allocation of the total cost of a property to an intangible lease asset includes the value associated with the in-place leases, which may include lost rent, leasing commissions, tenant improvements, legal and other costs.

We record acquired “above-market” and “below-market” leases at their fair value equal to the difference between the contractual amounts to be paid pursuant to each in-place lease and our estimate of fair market lease rates for each corresponding in-place lease, measured over a period equal to the remaining term of the lease for above-market leases and the remaining term of the lease plus the term of any below-market fixed-rate renewal option periods for below-market leases. In addition, we allocate a portion of the purchase price of an acquired property to the estimated value of customer relationships, if any. As of December 31, 2016, we had not recognized any estimated value to customer relationships.

The following table summarizes the amounts that we have incurred in amortization expense for intangible lease assets and adjustments to rental revenue for above-market lease assets and below-market lease liabilities for the years ended December 31, 2016, 2015 and 2014 (amounts in thousands). 

	For the Year Ended December 31,
	2016			2015			2014
Above-market lease assets	$	(5,515	)	$	(5,216	)	$	(6,708	)
Below-market lease liabilities	6,050			6,029			7,324
Net increase to rental revenue	$	535		$	813		$	616
Intangible lease asset amortization	$	(40,797	)	$	(44,260	)	$	(48,937	)

We expense any unamortized intangible lease asset or record an adjustment to rental revenue for any unamortized above-market lease asset or below-market lease liability when a tenant terminates a lease before the stated lease expiration date. During the year ended December 31, 2016, we recorded $1.7 million related to write-offs of unamortized intangible lease assets and liabilities due to early lease terminations. We recorded an insignificant amount of adjustments related to write-offs of unamortized intangible lease assets and liabilities due to early lease terminations during the years ended December 31, 2015 and 2014.

Real property assets, including land, building, building and land improvements, tenant improvements, lease commissions, and intangible lease assets and liabilities are stated at historical cost less accumulated depreciation and amortization. Depreciation and amortization are computed on a straight-line basis over their estimated useful lives as described in the following table.   

Description	Depreciable Life
Land	Not depreciated
Building	40 years
Building and land improvements	10-40 years
Tenant improvements	Lesser of useful life or lease term
Lease commissions	Over lease term
Intangible in-place lease assets	Over lease term
Above-market lease assets	Over lease term
Below-market lease liabilities	Over lease term, including below-market fixed-rate renewal options

The following table presents expected amortization during the next five years and thereafter related to the acquired above-market lease assets, below-market lease liabilities and acquired in-place lease intangibles, for properties owned as of December 31, 2016 (amounts in thousands).

	For the Year Ended December 31,
	2017			2018			2019			2020			2021			Thereafter			Total
Acquired above-market lease assets	$	(2,379	)	$	(727	)	$	(633	)	$	(213	)	$	(201	)	$	(456	)	$	(4,609	)
Acquired below-market lease liabilities	5,307			4,695			3,977			3,272			2,847			39,447			59,545
Net rental revenue increase	$	2,928		$	3,968		$	3,344		$	3,059		$	2,646		$	38,991		$	54,936
Acquired in-place lease intangibles	$	27,158		$	16,909		$	11,863		$	6,898		$	5,412		$	15,572		$	83,812

Discontinued Operations and Held for Sale

Beginning with the year ended December 31, 2014, a discontinued operation is defined as a component (or group of components) of the entity, the disposal of which would represent a strategic shift that has (or will have) a major effect on the entity’s operations and financial results, when such a component (or group of components) has been disposed of or classified as held for sale. Interest expense is included in discontinued operations only if it is directly attributable to these operations or properties. The results of operations of properties that have been classified as discontinued operations are reported as discontinued operations for all periods presented. We classify real property as held for sale when our management commits to a plan to sell the property, the plan has appropriate approvals, the sale of the property is probable, and certain other criteria are met. At such time, the respective assets and liabilities are presented separately on our balance sheets and depreciation is no longer recognized. Assets held for sale are reported at the lower of their carrying amount or their estimated fair value less the costs to sell the assets. We recognize an impairment loss for assets held for sale if the current net book value of the property exceeds its fair value less selling costs. As of December 31, 2014, one of our properties was classified as held for sale.

Debt-Related Investments

Debt-related investments are considered to be held for investment, as we have both the intent and ability to hold these investments until maturity. Accordingly, these assets are carried at cost, net of unamortized loan origination costs and fees, discounts, repayments and unfunded commitments unless such loans or investments are deemed to be impaired.

Revenue Recognition

Revenue Recognition

Revenue Recognition — Real Property

We record rental revenue for the full term of each lease on a straight-line basis. Certain properties have leases that offer the tenant a period of time where no rent is due or where rent payments increase during the term of the lease. Accordingly, we record a receivable from tenants for rent that we expect to collect over the remaining lease term rather than currently, which is recorded as straight-line rents receivable. When we acquire a property, the term of existing leases is considered to commence as of the acquisition date for purposes of this calculation. Tenant recovery income includes payments from tenants for real estate taxes, insurance and other property operating expenses and is recognized as rental revenue.

Impairment

Impairment

Impairment — Real Property

We review our investments in real property individually on a quarterly basis, and more frequently when such an evaluation is warranted, to determine their appropriate classification, as well as whether there are indicators of impairment. The investments in real property are either classified as held and used or held for sale.

As of December 31, 2016, all of our properties were classified as held and used. The held and used assets are reviewed for indicators of impairment, which may include, among others, vacancy, each tenant’s inability to make rent payments, operating losses or negative operating trends at the property level, notification by a tenant that it will not renew its lease, a decision to dispose of a property, including a change in estimated holding periods, or adverse changes in the fair value of any of our properties. If indicators of impairment exist on a held and used asset, we compare the future estimated undiscounted cash flows from the expected use of the property to its net book value to determine if impairment exists. If the sum of the future estimated undiscounted cash flows is greater than the current net book value, we conclude no impairment exists. If the sum of the future estimated undiscounted cash flows is less than its current net book value, we recognize an impairment loss for the difference between the net book value of the property and its estimated fair value. If a property is classified as held for sale, we recognize an impairment loss if the current net book value of the property exceeds its fair value less selling costs. If our assumptions, projections or estimates regarding a property change in the future, we may have to record an impairment charge to reduce or further reduce the net book value of the property. See Note 3 for a discussion of impairment charges relating to our real properties recorded during the years ended December 31, 2016, 2015, and 2014.

Impairment — Debt-Related Investments

We review our debt-related investments on a quarterly basis, and more frequently when such an evaluation is warranted, to determine if impairment exists. Accordingly, we do not group our debt-related investments into classes by credit quality indicator. A debt-related investment is impaired when, based on current information and events (including economic, industry and geographical factors), it is probable that we will be unable to collect all amounts due, both principal and interest, according to the contractual terms of the agreement. When an investment is deemed impaired, the impairment is measured based on the expected future cash flows discounted at the investment’s effective interest rate. As a practical expedient, the FASB issued ASC Topic 310, Receivables, which permits a creditor to measure impairment based on the fair value of the collateral of an impaired collateral-dependent debt-related investment or to measure impairment based on an observable market price for the impaired debt-related investment as an alternative to discounting expected future cash flows. Regardless of the measurement method, a creditor should measure impairment based on the fair value of the collateral when the creditor determines that foreclosure is probable. A debt-related investment is also considered impaired if its terms are modified in a troubled debt restructuring (“TDR”). A TDR occurs when we grant a concession to a borrower in financial difficulty by modifying the original terms of the loan. Impairments on TDR loans are generally measured based on the present value of expected future cash flows discounted at the effective interest rate of the original loan.

Derivative Instruments and Hedging Activities

Derivative Instruments and Hedging Activities

We record all derivative instruments in the accompanying balance sheets at fair value. Accounting for changes in the fair value of a derivative instrument depends on the intended use of the derivative instrument and the designation of the derivative instrument. Derivative instruments used to hedge exposure to changes in the fair value of an asset, liability, or firm commitments attributable to a particular risk, such as interest rate risk, are considered “fair value” hedges. Derivative instruments used to hedge exposure to variability in expected future cash flows, such as future interest payments, or other types of forecasted transactions, are considered “cash flow” hedges. We do not have any fair value hedges.

For derivative instruments designated as cash flow hedges, the changes in the fair value of the derivative instrument that represent changes in expected future cash flows, which are effectively hedged by the derivative instrument, are initially reported as other comprehensive income (loss) in the statement of equity until the derivative instrument is settled. Upon settlement, the effective portion of the hedge is recognized as other comprehensive income (loss) and amortized over the term of the designated cash flow or transaction the derivative instrument was intended to hedge. The change in value of any derivative instrument that is deemed to be ineffective is charged directly to earnings when the determination of hedge ineffectiveness is made. We assess the effectiveness of each hedging relationship by comparing the changes in fair value or cash flows of the derivative instrument with the changes in fair value or cash flows of the designated hedged item or transaction. For purposes of determining hedge ineffectiveness, management estimates the timing and potential amount of future fixed-rate debt issuances each quarter in order to estimate the cash flows of the designated hedged item or transaction. Management considers the likelihood of the timing and amount of entering into such forecasted transactions when determining the expected future fixed-rate debt issuances. We do not use derivative instruments for trading or speculative purposes. We classify cash paid to settle our forward starting swaps as financing activities in our statements of cash flows.

Cash and Cash Equivalents

Cash and Cash Equivalents

Cash and cash equivalents consist of cash on hand and highly liquid investments with original maturities of three months or less such as money market mutual funds or certificates of deposits.

Restricted Cash

Restricted Cash

Restricted cash consists primarily of lender and property-related escrow accounts.

Collectability of Receivables

Collectability of Receivables

We evaluate the collectability of our rent and other receivables on a regular basis based on factors including, among others, the age of the receivable, payment history, the financial strength of the tenant or borrower and any guarantors. Specifically with regards to our debt-related investments, we evaluate the collectability of our receivables based on factors including, among others, the value of the underlying collateral, the operations and operating trends of the underlying collateral, if any, the asset type and current economic conditions. If our evaluation of these factors indicates we may not recover the full amount of the receivable, we provide a reserve against the portion of the receivable that we estimate may not be recovered. This analysis requires us to determine whether there are factors indicating a receivable may not be fully collectible and to estimate the amount of the receivable that may not be collected.

Accumulated Other Comprehensive Loss

Accumulated Other Comprehensive Loss

Accumulated other comprehensive loss as reported in the accompanying consolidated statements of equity as of December 31, 2016 primarily consists of the cumulative loss related to our derivatives of $5.9 million, before attribution to noncontrolling interests of $1.2 million, and cumulative gain related to our real estate securities of approximately $1.1 million, before attribution of a cumulative loss to noncontrolling interests of $1.3 million.

Basic and Diluted Net Income (Loss) per Common Share

Basic and Diluted Net Income (Loss) per Common Share

Basic net income (loss) per common share is determined by dividing net income (loss) attributable to common stockholders by the weighted average number of common shares outstanding during the period. Diluted net income (loss) per common share includes the effects of potentially issuable common stock, but only if dilutive, including the presumed exchange of OP Units.

Stock-Based Compensation

Stock-Based Compensation

Independent Director RSU Awards

On December 5, 2013, our board of directors approved revised compensation for our independent directors. In connection with the revised compensation plan, at each annual meeting of stockholders the independent directors will automatically, upon election, receive an award of restricted stock units (“RSUs”) with respect to Class I shares of our common stock, with the number of RSUs based on the NAV per Class I share as of the end of the day of the annual meeting. RSUs granted under this plan are measured at fair value on the grant date and amortized to compensation expense on a straight-line basis over the service period after which the awards fully vest. Such expense is included in “general and administrative expenses” in the accompanying consolidated statements of income. The fair value of these awards is measured at our NAV per share. RSUs awarded to our independent directors vest no later than one year from the date of grant.

Advisor RSU Agreements

We have entered into Restricted Stock Unit Agreements (the “Advisor RSU Agreements”) with our Advisor. The purposes of the Advisor RSU Agreements are to promote an alignment of interests among our stockholders, our Advisor and the personnel of our Advisor and its affiliates, and to promote retention of the personnel of our Advisor and its affiliates. Each restricted stock unit granted pursuant to the Advisor RSU Agreements (the “Company RSU”) will, upon vesting, entitle our Advisor to one Class I share of our common stock. The Advisor is expected to redistribute a significant portion of the Company RSUs and/or shares to senior level employees of our Advisor and its affiliates that provide services to us, although the terms of such redistributions (including the timing, amount and recipients) remain solely in the discretion of our Advisor. The Company RSUs are subject to specified vesting and settlement provisions and, upon settlement in Class I shares of Company common stock, require offsets of advisory fees and expenses otherwise payable from the Company to our Advisor. Each offset amount equals the number of Company RSUs vesting on such date multiplied by the NAV per Class I share publicly disclosed by us as of the end of the grant date. Each offset amount is always calculated based on the grant date NAV per Class I share, even beyond the initial vesting date. At the end of each 12-month period following each vesting date, if the offset amount has not been fully realized by offsets from the cash payments otherwise due and payable to our Advisor under the Advisory Agreement, our Advisor shall promptly pay any shortfall to us.

If our board of directors declares and we pay a cash dividend on Class I shares for any period in which the Company RSUs are outstanding (regardless of whether such Company RSUs are then vested), our Advisor will be entitled to dividend equivalents (“Dividend Equivalents”) with respect to that cash dividend equal to the cash dividends that would have been payable on the same number of Class I shares as the number of Company RSUs subject to the Advisor RSU Agreements had such Class I shares been outstanding during the same portion of such period as the Company RSUs were outstanding. Any such Dividend Equivalents may be paid in cash or Class I shares, at our Advisor’s election. Accordingly, we classify Company RSUs as participating securities because participants receive dividends on unvested shares.

Restricted Stock Grants

We granted restricted shares of Class I common stock, respectively, to certain employees of our Advisor and its affiliates, none of which are our named executive officers. Restricted stock grants are measured at fair value during the service period and recorded to compensation expense over the service period after which the grants fully vest. Such expense is included in “general and administrative expenses” in the accompanying consolidated statements of income. The fair value of these awards is measured at our NAV per share as of the date the shares vest.

Dealer Manager And Distribution Fees

Dealer Manager and Distribution Fees

Dividend Capital Securities LLC, which we refer to as our “Dealer Manager,” distributes the shares of our common stock in our public offering on a “best efforts” basis. Our Dealer Manager coordinates our distribution effort and manages our relationships with participating broker-dealers and financial advisors and provides assistance in connection with compliance matters relating to marketing our public offering. Among other fees, we pay our Dealer Manager (i) a dealer manager fee which accrues daily in an amount equal to 1/365th of 0.6% of our NAV per share of Class A and Class W shares outstanding and an amount equal to 1/365th of 0.1% of our NAV per share of Class I shares outstanding on such day on a continuous basis, and (ii) a distribution fee which accrues daily in an amount equal to 1/365th of 0.5% of our NAV per share of Class A shares outstanding on such day on a continuous basis. We cease paying the dealer manager fee and distribution fee with respect to shares sold in the offering on the earlier to occur of the following: (i) a listing of the class of such shares on a national securities exchange, (ii) following the completion of an offering, total underwriting compensation in the offering equaling 10% of the gross proceeds from the primary portion of the respective offering, or (iii) such shares no longer being outstanding.

We account for these dealer manager and distribution fees as a reduction in proceeds received from the sale of common stock. We record a liability for dealer manager and distribution fees that we estimate that we may pay our Dealer Manager in future periods for shares of our common stock sold pursuant to the Prior Offering and Follow-On Offering with a corresponding reduction in proceeds received from the sale of common stock. The payment of dealer manager and distribution fees may extend several years after the sale of the related shares of common stock.

Use of Estimates

Use of Estimates

The preparation of the financial statements in conformity with accounting principles generally accepted in the United States (“GAAP”) requires management to make estimates and assumptions relating to the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ materially from those estimates. Estimates and assumptions are reviewed periodically and the effects of revisions are reflected in the periods they are determined to be necessary.

New Accounting Pronouncements

New Accounting Pronouncements

In January 2017, the FASB issued Accounting Standards Update 2017-01 ("ASU 2017-01"), which clarifies the definition of a business in order to provide additional guidance to assist entities with evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. This guidance will be effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. Earlier adoption is permitted. The guidance in ASU 2017-01 should be adopted on a prospective basis. We adopted ASU 2017-01 as of January 1, 2017 and anticipate that future acquisitions of real property will likely be accounted for as asset acquisitions rather than business combinations. Among other things, accounting for an asset acquisition requires capitalization of acquisition costs as a component of the acquired assets whereas accounting for business combinations requires acquisition costs to be expensed. For the years ended December 31, 2016, 2015 and 2014, we expensed $667,000, $2.6 million and $1.2 million of acquisition costs, respectively, under accounting for business combinations. Additionally, goodwill is not recognized and contingent consideration is recorded when probable and reasonably estimable under accounting for asset acquisitions.

In November 2016, the FASB issued Accounting Standards Update 2016-18 ("ASU 2016-18"), which requires that a statement of cash flows explain the change during the period in the total of cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents. Therefore, amounts generally described as restricted cash and restricted cash equivalents should be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the statement of cash flows. The total amount of restricted cash and restricted cash equivalents and cash and cash equivalents will be reconciled to amounts on the balance sheet and the nature of the restrictions disclosed. This guidance will be effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. Earlier adoption is permitted. The guidance in ASU 2016-18 should be adopted on a retrospective basis. We do not anticipate the adoption will have a significant impact on our financial statements.

In June 2016, the FASB issued Accounting Standards Update 2016-13, which introduces a new model for recognizing credit losses for certain financial instruments, including loans, accounts receivable and debt securities. The new model requires an estimate of expected credit losses over the life of exposure to be recorded through the establishment of an allowance account, which is presented as an offset to the related financial asset. The expected credit loss is recorded upon the initial recognition of the financial asset. The guidance will be effective for annual reporting periods (including interim reporting periods within those periods) beginning after December 15, 2019. Earlier application is permitted. The guidance will generally be adopted on a modified retrospective basis, with exceptions for certain types of financial assets. We do not anticipate the adoption will have a significant impact on our financial statements.

In March 2016, the FASB issued Accounting Standards Update 2016-05, which clarifies the effect of derivative contract novations on existing hedge accounting relationships. The guidance states that a change in the counterparty to a derivative instrument that has been designated as the hedging instrument under ASC Topic 815, Derivatives and Hedging (“ASC Topic 815”) does not, in and of itself, require dedesignation of that hedging relationship provided that all other hedge accounting criteria continue to be met. The guidance will be effective for annual reporting periods (including interim reporting periods within those periods) beginning after December 15, 2016. The guidance can be adopted on either a prospective basis or a modified retrospective basis. Earlier application is permitted. We do not anticipate the adoption will have a significant impact on our financial statements.

In February 2016, the FASB issued Accounting Standards Update 2016-02, Leases (Topic 842) (“ASU 2016-02”), which amends the accounting guidance regarding lessees accounting, leveraged leases, and sale and leaseback transactions. The accounting applied by a lessor is largely unchanged under ASU 2016-02, however, the standard requires that lessors expense certain initial direct costs that are not incremental in negotiating a lease. Under existing standards, certain of these costs are capitalizable and therefore this new standard may result in certain of these costs being expensed as incurred after adoption. Such costs are not material to the Company. This standard may also impact the timing, recognition and disclosures related to our rental recoveries from tenants earned from leasing our operating properties. The guidance will be effective for annual reporting periods (including interim reporting periods within those periods) beginning after December 15, 2018. Earlier application is permitted. We plan to early adopt ASU 2016-02 beginning January 1, 2018. The guidance should be adopted using a modified retrospective transition, which will require application of ASU 2016-02 at the beginning of the earliest comparative period presented. Our initial analysis of our lease contracts indicates that the adoption of ASU 2016-02 will not have a material impact on our consolidated financial statements; however, we are still in the process of evaluating the impact of ASU 2016-02.

In May 2014, the FASB issued Accounting Standards Update 2014-09, Revenue from Contracts with Customers (Topic 606) (“ASU 2014-09”), which provides new guidance outlining a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers that supersedes most current revenue recognition guidance. This guidance requires an entity to recognize revenue when it transfers 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. The new guidance specifically excludes revenue associated with lease contracts. Additionally, this guidance expands related disclosure requirements regarding the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers. In June 2015, the FASB agreed to defer the effective date of this guidance for a year from the original effective date outlined in ASU 2014-09, and as a result, the guidance will be effective for annual reporting periods (including interim reporting periods within those periods) beginning after December 15, 2017 and will require full or modified retrospective application. Early adoption is permitted for annual reporting periods (including interim reporting periods within those periods) beginning after December 15, 2016. We plan to adopt the standard when it becomes effective for us beginning January 1, 2018 and have not determined whether the full or modified retrospective application will be applied. Rental revenues and certain recoveries earned from leasing our operating properties will be evaluated with the adoption of the lease accounting standard (discussed above). Additionally, we do not expect the standard to significantly impact the accounting for sales of our properties. Our initial analysis of our non-lease related revenue contracts indicates that the adoption of ASU 2014-09 will not have a material effect on our consolidated financial statements; however, we are still in the process of evaluating the impact of ASU 2014-09.

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Summary of Significant Accounting Policies (Tables)

12 Months Ended

Dec. 31, 2016

Accounting Policies [Abstract]

Schedule of Adjustments to Rental Revenue Related to Amortization of Above-Market Lease Assets and Below-Market Lease Liabilities

The following table summarizes the amounts that we have incurred in amortization expense for intangible lease assets and adjustments to rental revenue for above-market lease assets and below-market lease liabilities for the years ended December 31, 2016, 2015 and 2014 (amounts in thousands). 

	For the Year Ended December 31,
	2016			2015			2014
Above-market lease assets	$	(5,515	)	$	(5,216	)	$	(6,708	)
Below-market lease liabilities	6,050			6,029			7,324
Net increase to rental revenue	$	535		$	813		$	616
Intangible lease asset amortization	$	(40,797	)	$	(44,260	)	$	(48,937	)

Depreciation and Amortization Computed on Straight-Line Basis over Estimated Useful Lives

Depreciation and amortization are computed on a straight-line basis over their estimated useful lives as described in the following table.   

Description	Depreciable Life
Land	Not depreciated
Building	40 years
Building and land improvements	10-40 years
Tenant improvements	Lesser of useful life or lease term
Lease commissions	Over lease term
Intangible in-place lease assets	Over lease term
Above-market lease assets	Over lease term
Below-market lease liabilities	Over lease term, including below-market fixed-rate renewal options

Expected Amortization During Next Five Years and Thereafter Related to Acquired Above-Market Lease Assets, Below-Market Lease Liabilities and Acquired In-Place Lease Intangibles

The following table presents expected amortization during the next five years and thereafter related to the acquired above-market lease assets, below-market lease liabilities and acquired in-place lease intangibles, for properties owned as of December 31, 2016 (amounts in thousands).

	For the Year Ended December 31,
	2017			2018			2019			2020			2021			Thereafter			Total
Acquired above-market lease assets	$	(2,379	)	$	(727	)	$	(633	)	$	(213	)	$	(201	)	$	(456	)	$	(4,609	)
Acquired below-market lease liabilities	5,307			4,695			3,977			3,272			2,847			39,447			59,545
Net rental revenue increase	$	2,928		$	3,968		$	3,344		$	3,059		$	2,646		$	38,991		$	54,936
Acquired in-place lease intangibles	$	27,158		$	16,909		$	11,863		$	6,898		$	5,412		$	15,572		$	83,812

Schedule of Straight-Line Rent Adjustments and Tenant Recovery Income

The following table summarizes straight-line rental adjustments and tenant recovery income received from tenants for real estate taxes, insurance and other property operating expenses and recognized as rental revenue for the years ended December 31, 2016, 2015, and 2014 (amounts in thousands): 

	For the Year Ended December 31,
	2016			2015			2014
Straight-line rent adjustments	$	(1,263	)	$	(976	)	$	3,037
Tenant recovery income (1)	$	41,707		$	37,526		$	31,092

_______________________________

(1) Tenant recovery income excludes real estate taxes that were paid directly by our tenants that are subject to triple net lease contracts. Such payments totaled approximately $4.3 million, $7.0 million and $12.4 million during the years ended December 31, 2016, 2015, and 2014, respectively.

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Investments in Real Property (Tables)

12 Months Ended

Dec. 31, 2016

Real Estate [Abstract]

Schedule of Consolidated Investments in Real Property

The following tables summarize our consolidated investments in real property as of December 31, 2016 and 2015 (amounts in thousands):

Real Property	Land		Building and Improvements			Intangible Lease Assets			Total Investment Amount			Intangible Lease Liabilities			Net Investment Amount
As of December 31, 2016:
Office	$	171,176	$	701,859		$	236,143		$	1,109,178		$	(15,121	)	$	1,094,057
Industrial	8,821		63,999			16,308			89,128			(344		)	88,784
Retail	293,973		599,020			113,023			1,006,016			(75,515		)	930,501
Total gross book value	473,970		1,364,878			365,474			2,204,322			(90,980		)	2,113,342
Accumulated depreciation/amortization	—		(215,858		)	(277,053		)	(492,911		)	31,435			(461,476		)
Total net book value	$	473,970	$	1,149,020		$	88,421		$	1,711,411		$	(59,545	)	$	1,651,866
As of December 31, 2015:
Office	$	203,889	$	833,655		$	310,629		$	1,348,173		$	(18,923	)	$	1,329,250
Industrial	9,572		65,307			16,436			91,315			(344		)	90,971
Retail	260,761		570,700			109,225			940,686			(74,282		)	866,404
Total gross book value	474,222		1,469,662			436,290			2,380,174			(93,549		)	2,286,625
Accumulated depreciation/amortization	—		(208,281		)	(297,676		)	(505,957		)	29,675			(476,282		)
Total net book value	$	474,222	$	1,261,381		$	138,614		$	1,874,217		$	(63,874	)	$	1,810,343

Schedule of Acquisitions of Real Property

The following table summarizes our acquisition of real property during the year ended December 31, 2016 (dollar amounts and square footage in thousands): 

Real Property	Property Type	Market	Date of Acquisition	Acquired Ownership	Contract Price		Net Rentable Square Feet	Percent Leased at Acquisition
Suniland Shopping Center	Retail	South Florida	5/27/2016	100%	$	66,500	82	93.2	%

Schedule of Allocation of the Fair Value of Acquired Real Properties

The following table summarizes the allocations of the fair value of the real property we acquired during the year ended December 31, 2016 to land, building and improvements, intangible lease assets, intangible lease liabilities, and mark-to-market adjustment on assumed debt (dollar amounts in thousands). We have not made any material adjustments related to these allocations. 

																	Weighted-Average Amortization Period (Years)
Real Property	Land		Building and Improvements		Intangible Lease Assets		Intangible Lease Liabilities			Total Fair Value		Prorations and Credits			Contract Price		Intangible Lease Assets	Intangible Lease Liabilities
Suniland Shopping Center	$	34,804	$	28,022	$	5,880	$	(2,113	)	$	66,593	$	(93	)	$	66,500	5.8	10.4

Schedule Of Disposed Properties

During 2016, 2015 and 2014 we disposed of the following properties (dollar amounts and square footage in thousands): 

Property Type	Market	Ownership		Net Rentable Square Feet	Percentage Leased		Disposition Date	Contract Sales Price		Gain (loss) on Sale
2016 Dispositions:
Office	Washington, DC	100	%	574	100	%	2/18/2016	$	158,400	$	41,241
Office	Chicago, IL	80	%	107	66	%	3/1/2016	9,850		—
Office	Chicago, IL	80	%	199	81	%	3/1/2016	18,000		159
Retail	Greater Boston	100	%	39	100	%	8/5/2016	3,625		975
Industrial	Louisville, KY	90	%	126	33	%	9/2/2016	5,400		1,120
Office	Washington, DC	100	%	178	—	%	9/30/2016	18,600		—
Retail (1)	Greater Boston	100	%	13	100	%	11/18/2016	6,200		2,165
Total 2016 real property dispositions				1,236	73	%		$	220,075	$	45,660
2015 Dispositions:
Retail	Greater Boston	100	%	11	100	%	12/18/2015	$	1,625	$	14
Office	Silicon Valley, CA	100	%	53	100	%	12/14/2015	16,750		970
Land Parcel	Denver, CO	100	%	N/A	N/A		8/12/2015	7,577		1,701
Office	Los Angeles, CA	100	%	111	—	%	7/20/2015	12,549		2,866
Retail	Pittsburgh, PA	100	%	103	93	%	5/5/2015	12,500		—
Office and Industrial     Portfolio (2)	Various (2)	100	%	2,669	100	%	3/11/2015	398,635		105,542
Office	Dallas, TX	100	%	177	88	%	1/16/2015	46,600		23,125
Total 2015 real property dispositions				3,124	95	%		$	496,236	$	134,218
2014 Dispositions:
Office	Denver, CO	100	%	138	100	%	11/7/2014	$	9,100	$	4,032
Industrial (3)	Silicon Valley, CA	100	%	177	41	%	10/15/2014	13,579		—
Office	East Bay, CA	100	%	60	0	%	6/13/2014	5,700		2,755
Land Parcel	Denver, CO	100	%	N/A	N/A		4/14/2014	780		93
Office	Little Rock, AR	100	%	102	100	%	2/25/2014	19,550		1,350
Retail	Greater Boston	100	%	110	0	%	2/18/2014	6,750		2,276
Industrial Portfolio	Various (4)	93	%	3,387	99	%	1/22/2014	175,000		29,545
Total 2014 real property dispositions				3,974	93	%		$	230,459	$	40,051

_______________________________

(1) Disposed property was a single building from a multi-building grocery-anchored retail property. We continue to operate the remaining portion of the property.

(2) The Portfolio includes (i) six office properties comprising 1.1 million net rentable square feet located in the following markets: Los Angeles, CA (three properties, of which one disposed property was a single building from a two-building office property), Northern New Jersey, Miami, FL, and Dallas, TX, and (ii) six industrial properties comprising 1.6 million net rentable square feet located in the following markets: Los Angeles, CA, Dallas, TX, Cleveland, OH, Chicago, IL, Houston, TX, and Denver, CO. We incurred closing costs and fees of approximately $7.8 million upon the closing of this transaction, including approximately $4.0 million in advisory fees related to the disposition of real property paid to our Advisor. For the years ended December 31, 2015 and 2014, our consolidated statements of income include approximately $6.2 million and $33.7 million of aggregate revenue attributable to the Portfolio, respectively.

(3) On October 15, 2014, we disposed of a wholly owned industrial property comprising approximately 177,000 net rentable square feet in three buildings located in the Silicon Valley, CA market (“Lundy”). At the time of the disposition, the property had a net investment amount of approximately $13.1 million. The property was transferred to the lender through a foreclosure sale which extinguished amounts due, including related principal of $13.6 million.

(4) Industrial portfolio included 12 properties located in the following markets: Atlanta, GA, Central Pennsylvania, Cincinnati, OH, Columbus, OH, Dallas, TX, Indianapolis, IN, and Minneapolis/St. Paul, MN.

Schedule of Amounts Recorded as Discontinued Operations

The following table summarizes amounts recorded as discontinued operations for the years ended December 31, 2014 (amounts in thousands): 

	For the Year Ended December 31, 2014
Revenues	$	969
Rental expense	(340		)
Real estate depreciation and amortization expense	—
Interest expense	(296		)
Other expenses	(8		)
Income from discontinued operations	325
Gain on disposition	29,679
Discontinued operations	30,004
Discontinued operations attributable to noncontrolling interests	(4,462		)
Discontinued operations attributable to common stockholders	$	25,542

Future Minimum Rental Receivable Under Non Cancelable Operating and Ground Leases

Future minimum rentals to be received under non-cancelable operating and ground leases in effect as of December 31, 2016, are as follows (amounts in thousands): 

For the Year Ended December 31,	Future Minimum Rentals
2017	$	144,932
2018	128,008
2019	116,595
2020	85,928
2021	68,617
Thereafter	214,531
Total	$	758,611

Schedule of Top Five Tenants as Percentage of Consolidated Annual Base Rent and Square Feet

The following is a summary of amounts related to the top five tenants based on annualized base rent, as of December 31, 2016 (dollar amounts and square feet in thousands): 

Tenant	Locations	Industry	Annualized Base Rent (1)		% of Total Annualized Base Rent		Square Feet	% of Total Portfolio Square Feet
Charles Schwab & Co., Inc. (2)	2	Securities, Commodities, Fin. Inv./Rel. Activities	$	23,645	13.9	%	602	7.4	%
Sybase (3)	1	Publishing Information (except Internet)	18,692		11.0	%	405	5.0	%
Stop & Shop	14	Food and Beverage Stores	14,125		8.3	%	853	10.4	%
Novo Nordisk	1	Chemical Manufacturing	4,627		2.7	%	167	2.0	%
Seton Health Care	1	Hospitals	4,339		2.6	%	156	1.9	%
	19		$	65,428	38.5	%	2,183	26.7	%

_______________________________

(1) Annualized base rent represents the annualized monthly base rent of executed leases as of December 31, 2016.

(2) The amount presented for Schwab reflects the total annualized base rent for our two leases in place with Schwab as of December 31, 2016. One of these leases, which expires in September 2017, entails the lease of all 594,000 square feet of our 3 Second Street (formerly known as Harborside) office property and accounts for $23.5 million or 13.8% of our annualized base rent as of December 31, 2016. We do not expect Schwab to renew this lease. Schwab has subleased 100% of 3 Second Street to 27 sub-tenants through September 2017. We have executed leases directly with nine of these subtenants that comprise 352,000 square feet or 59% of 3 Second Street that effectively extend their leases beyond the Schwab lease expiration. These direct leases will expire between September 2020 and September 2032.

(3) The Sybase lease was terminated on January 31, 2017.

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Debt-Related Investments (Tables)

12 Months Ended

Dec. 31, 2016

Receivables [Abstract]

Details of Debt Related Income

The following table describes our debt-related income for the years ended December 31, 2016, 2015, and 2014 (dollar amounts in thousands):   

	For the Year Ended December 31,						Weighted Average Yield as of December 31, 2016 (1)
Investment Type	2016		2015		2014
Mortgage notes (2)	$	943	$	5,136	$	4,521	6.1	%
Mezzanine debt (3)	—		1,786		2,875		N/A
Total	$	943	$	6,922	$	7,396	6.1	%

_______________________________

(1) Weighted average yield is calculated on an unlevered basis using the amount invested, current interest rates and accretion of premiums or discounts realized upon the initial investment for each investment type as of December 31, 2016. As of December 31, 2016, all of our debt-related investments bear interest at fixed rates.

(2) None of our debt-related investments structured as mortgage notes were repaid in full during the year ended December 31, 2016. Six and three of our debt-related investments structured as mortgage notes were repaid in full during the years ended December 31, 2015 and 2014, respectively. Amounts recorded include early repayment fees received and accelerated amortization of origination fees offset by accelerated amortization of deferred due diligence costs related to certain of these repayments.

(3) Our debt-related investment structured as a mezzanine loan was repaid in full during the year ended December 31, 2015. During the year ended December 31, 2015, amounts recorded were offset by accelerated amortization of deferred due diligence costs.

Debt Investment Activity

The following table describes our debt-related investment activity for the years ended December 31, 2016 and 2015 (amounts in thousands). 

	Year Ended December 31,
	2016			2015
Investment in Debt-Related Investments:
Balance at January 1,	$	15,722		$	94,951
Investments (1)	—			3,465
Principal repayments	(469		)	(82,417		)
Amortization of deferred fees, costs, and discounts/premiums	(44		)	(277		)
Balance at December 31,	$	15,209		$	15,722

_______________________________

(1) Investment includes approximately $2 million of accrued interest that was capitalized into the principal balance of our mezzanine debt investment during the year ended December 31, 2015.

Summary of Debt Related Investments

The following table summarizes our debt-related investments as of December 31, 2016 (dollar amounts in thousands).

Description	Region	Interest Rate Fixed or Variable	Interest Rate as of December 31, 2016		Maturity Date	Face Amount of Debt (1)		Amount of Debt Related Investments
Mortgage note	Northeast	Fixed	6.2	%	11/1/2017	$	3,609	$	3,622
Mortgage note	Southeast	Fixed	7.0	%	3/1/2019	8,483		8,551
Mortgage note	Mountain	Fixed	5.2	%	3/1/2021	3,048		3,036
Total/weighted average			6.4	%		$	15,140	$	15,209

_______________________________

(1) Reflects the principal amount of the debt investment outstanding, which is net of principal repayments.

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Debt Obligations (Tables)

12 Months Ended

Dec. 31, 2016

Debt Disclosure [Abstract]

Schedule of Borrowings

The following table describes our borrowings as of December 31, 2016 and 2015 (dollar amounts in thousands):

	Principal Balance as of December 31,						Weighted Average Interest Rate as of December 31,				Gross Investment Amount Securing Borrowings  as of December 31,(1)
	2016			2015			2016		2015		2016		2015
Fixed-rate mortgages (2)	$	290,970		$	580,959		4.9	%	5.6	%	$	462,954	$	1,016,560
Floating-rate mortgages (3)	52,500			7,890			2.3	%	3.4	%	70,485		16,618
Total mortgage notes	343,470			588,849			4.5	%	5.5	%	533,439		1,033,178
Line of credit (4)	236,000			167,000			2.3	%	1.9	%	N/A		N/A
Term loans (5)	475,000			350,000			3.2	%	2.6	%	N/A		N/A
Total unsecured borrowings	711,000			517,000			2.9	%	2.4	%	N/A		N/A
Total borrowings	$	1,054,470		$	1,105,849		3.4	%	4.1	%	N/A		N/A
Less: net debt issuance costs (6)	(6,295		)	(6,317		)
Add: mark-to-market adjustment on assumed debt	626			1,304
Less: GAAP principal amortization on restructed debt	—			(3,067		)
Total borrowings (net basis)	$	1,048,801		$	1,097,769

_______________________________

(1) “Gross Investment Amount” as used here and throughout this document represents the allocated gross basis of real property and debt-related investments, after certain adjustments. Gross Investment Amount for real property (i) excludes the effect of intangible lease liabilities, (ii) excludes accumulated depreciation and amortization, and (iii) includes the impact of impairments. 

(2) Amount as of December 31, 2016 includes a floating-rate mortgage note that was subject to an interest rate spread of 1.60% over one-month LIBOR, which we have effectively fixed using an interest rate swap at 3.051% for the term of the borrowing.

(3) As of December 31, 2016, our floating-rate mortgage note was subject to an interest rate spread of 1.65% over one-month LIBOR. As of December 31, 2015 our floating-rate mortgage note was subject to an interest rate spread of 3.00% over one-month LIBOR.

(4) As of December 31, 2016 and 2015, borrowings under our line of credit were subject to interest at a floating rate of 1.55% and 1.40% over one-month LIBOR, respectively. However, as of December 31, 2016, we had effectively fixed the interest rate of approximately $12.1 million of the total of $236.0 million in borrowings using interest rate swaps, resulting in a weighted average interest rate on the total line of credit of 2.28%. As of December 31, 2015, we had effectively fixed the interest rate of approximately $25.4 million of the total of $167.0 million in borrowings using interest rate swaps, resulting in a weighted average interest rate on the total line of credit of 1.88%.

(5) As of December 31, 2016 and 2015, borrowings under our term loans were subject to interest at weighted average floating rates of 1.60% and 1.52%, respectively, over one-month LIBOR. However, we had effectively fixed the interest rates of the borrowings using interest rate swaps at 3.17% and 2.59% as of December 31, 2016 and 2015, respectively.

(6) See Note 2 for additional information related to the reclassification of net debt issuance costs in accordance with ASU 2015-03.

Schedule Of Mortgage Note Borrowings

During the year ended December 31, 2016, we entered into two mortgage note borrowings. The following table describes the new borrowings in more detail (dollar amounts in thousands):

Borrowings	Date Borrowed	Principal Balance		Fixed or Floating Interest Rate	Stated Interest Rate		Contractual Maturity Date	Extension Options	Collateral Type	Collateral Market
Preston Sherry Plaza (1)	4/13/2016	$	33,000	Fixed	3.05	%	3/1/2023	None	Office Property	Dallas, TX
1300 Connecticut (2)	8/5/2016	52,500		Floating	2.17	%	8/5/2023	None	Office Property	Washington, DC
Total borrowings		$	85,500		2.51	%

(1) As of December 31, 2016, the Preston Sherry Plaza term loan was subject to an interest rate spread of 1.60% over one-month LIBOR, which we have effectively fixed using an interest rate swap at 3.051% for the term of the borrowing.

(2) As of December 31, 2016, the 1300 Connecticut term loan was subject to an interest rate spread of 1.65% over one-month LIBOR. However, we entered into interest rate swaps which will effectively fix the interest rate of the borrowing at 2.852% from July 1, 2018 to July 1, 2021.

Schedule of Repayment Of Debt

During the year ended December 31, 2016, we repaid nine mortgage note borrowings in full during the respective free-prepayment periods prior to their scheduled maturities using proceeds from the Facility and the disposition of real properties. The following table describes these repayments in more detail (dollar amounts in thousands):

Debt Obligation	Repayment Date	Balance Repaid/Extinguished		Interest Rate Fixed or Floating	Stated Interest Rate		Contractual Maturity Date	Collateral Type	Collateral Market
1300 Connecticut	1/12/2016	$	44,979	Fixed	6.81	%	4/10/2016	Office Property	Washington, DC
Washington Commons (1)	2/1/2016	21,300		Fixed	5.94	%	2/1/2016	Office Property	Chicago, IL
40 Boulevard (2)	3/1/2016	7,830		Floating	3.44	%	3/11/2016	Office Property	Chicago, IL
Jay Street	4/11/2016	23,500		Fixed	6.05	%	7/11/2016	Office Property	Silicon Valley, CA
655 Montgomery	4/11/2016	55,683		Fixed	6.01	%	6/11/2016	Office Property	San Francisco, CA
Bala Pointe	7/1/2016	24,000		Fixed	5.89	%	9/1/2016	Office Property	Philadelphia, PA
Harborside	9/9/2016	104,675		Fixed	5.50	%	12/10/2016	Office Property	Northern New Jersey
Bandera Road	12/8/2016	21,500		Fixed	5.46	%	2/8/2017	Retail Property	San Antonio, TX
Shiloh	12/8/2016	22,700		Fixed	5.57	%	1/8/2017	Industrial Property	Dallas, TX
Total/weighted average borrowings		$	326,167		5.82	%

(1) Amount presented includes a $5.1 million contingently payable mortgage note that was not ultimately required to be repaid. As a result of the transaction, we recognized a gain on extinguishment of debt and financing commitments of approximately $5.1 million during the year ended December 31, 2016.

(2) The mortgage note was subject to an interest rate of 3.0% over one-month LIBOR.

Schedule of Borrowings Reflects Contractual Debt Maturities

The following table reflects our contractual debt maturities as of December 31, 2016, specifically our obligations under our mortgage notes and unsecured borrowings (dollar amounts in thousands):   

	As of December 31, 2016
	Mortgage Notes				Unsecured Borrowings				Total
Year Ending December 31,	Number of Borrowings Maturing	OutstandingPrincipalBalance			Number of BorrowingsMaturing	Outstanding PrincipalBalance (1)			Outstanding Principal Balance
2017	4	$	162,460		—	$	—		$	162,460
2018	—	2,698			1	275,000			277,698
2019	—	3,698			1	236,000			239,698
2020	—	3,860			—	—			3,860
2021	1	12,764			—	—			12,764
2022	1	3,660			1	200,000			203,660
2023	2	77,899			—	—			77,899
2024	—	1,034			—	—			1,034
2025	1	71,094			—	—			71,094
2026	—	1,157			—	—			1,157
Thereafter	2	3,146			—	—			3,146
Total	11	$	343,470		3	$	711,000		$	1,054,470
Less: net debt issuance costs		(1,849		)		(4,446		)
Add: mark-to-market adjustment on assumed debt		626				—
Total borrowings (net basis)		$	342,247			$	706,554

_______________________________

(1) Unsecured borrowings presented include (i) borrowings under the Term Loan of $275.0 million, which were scheduled to mature in 2018, subject to twoone-year extension options, (ii) borrowings under the Revolving Credit Facility of $236.0 million, which were scheduled to mature in 2019, subject to a one-year extension option, and (iii) borrowings under the $200 million Term Loan of $200.0 million which are scheduled to mature in 2022 with no extension options.

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Derivatives and Hedging Activities (Tables)

12 Months Ended

Dec. 31, 2016

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Reconciliation of Accumulated Other Comprehensive Loss

The table below presents a reconciliation of the beginning and ending balances, between December 31, 2015 and December 31, 2016, of our accumulated other comprehensive loss (“OCI”), net of amounts attributable to noncontrolling interests, related to the effective portion of our cash flow hedges as presented on our financial statements, as well as amounts related to our available-for-sale securities (amounts in thousands):  

	(Losses) and Gains on Cash Flow Hedges			Unrealized (Losses) and Gains on Available-For-Sale Securities			Accumulated Other Comprehensive Loss
Beginning balance as of December 31, 2015:	$	(9,967	)	$	(1,047	)	$	(11,014	)
Other comprehensive income:
Amount of loss reclassified from OCI into interest expense (effective portion) (net of tax benefit of $0)	4,620			—			4,620
Change in fair value recognized in OCI (effective portion) (net of tax benefit of $0)	(204		)	—			(204		)
Net current-period other comprehensive income	4,416			—			4,416
Attribution of and other adjustments to OCI attributable to noncontrolling interests	(298		)	(9		)	(307		)
Ending balance as of December 31, 2016:	$	(5,849	)	$	(1,056	)	$	(6,905	)

Gross Fair Value of Derivative Financial Instruments as Well as Their Classification

The table below presents the gross fair value of our designated derivative financial instruments as well as their classification on our accompanying consolidated balance sheets as of December 31, 2016 and 2015 (amounts in thousands): 

		Fair Value of Asset Derivatives as of					Fair Value of Liability Derivatives as of
	Balance Sheet Location	December 31, 2016		December 31, 2015		Balance Sheet Location	December 31, 2016			December 31, 2015
Interest rate contracts	Other assets, net(1)	$	2,135	$	197	Other liabilities (1)	$	(2,777	)	$	(3,303	)

_______________________________ 

(1) Although our derivative contracts are subject to master netting arrangements which serve as credit mitigants to both us and our counterparties under certain situations, we do not net our derivative fair values or any existing rights or obligations to cash collateral on the accompanying consolidated balance sheets. If we did net our derivative fair values on the accompanying consolidated balance sheets, the derivative fair values would be lowered by approximately $157,000 as of December 31, 2015. This would result in net fair values of our asset derivatives of approximately $41,000 and and net fair values of our liability derivatives of approximately $3.1 million as of December 31, 2015. As of December 31, 2016, there would not be an impact if we net our derivative fair values.

Effect of Derivative Financial Instruments on Financial Statements

The table below presents the effect of our derivative financial instruments on our financial statements for the years ended December 31, 2016, 2015, and 2014 (amounts in thousands):

	For the Year Ended December 31,
	2016			2015			2014
Derivatives Designated as Hedging Instruments
Derivative type	Interest rate contracts			Interest rate contracts			Interest rate contracts
Amount of (loss) recognized in OCI (effective portion)	$	(204	)	$	(5,797	)	$	(2,370	)
Location of loss reclassified from accumulated OCI into income (effective portion)	Interest expense			Interest expense			Interest expense
Amount of loss reclassified from accumulated OCI into income (effective portion)	$	4,620		$	4,820		$	3,091
Location of gain (loss) recognized in income (ineffective portion and amount excluded from effectiveness testing)	Interest and other income			Interest and other income			Interest and other income
Amount of gain (loss) recognized in income (ineffective portion and amount excluded from effectiveness testing)	$	—		$	3		$	(1	)

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Fair Value Disclosures (Tables)

12 Months Ended

Dec. 31, 2016

Fair Value Disclosures [Abstract]

Assets and Liabilities Measured at Fair Value on Recurring Basis

The table below presents certain of our assets and liabilities measured at fair value on a recurring basis as of December 31, 2016 and 2015, aggregated by the level in the fair value hierarchy within which those measurements fall as defined above (amounts in thousands). The fair value estimates presented herein are based on information available to management as of December 31, 2016 and December 31, 2015. Please see Note 6 for a discussion of our methodology for estimating the fair value of our derivative instruments. These estimates are not necessarily indicative of the amounts we could ultimately realize. There were no changes between fair value hierarchy levels during the years ended December 31, 2016 and 2015.

	Level 1		Level 2			Level 3		Total
As of December 31, 2016:
Assets
Real estate securities	$	—	$	—		$	200	$	200
Derivative instruments	—		2,135			—		2,135
Total assets	$	—	$	2,135		$	200	$	2,335
Liabilities
Derivative instruments	$	—	$	(2,777	)	$	—	$	(2,777	)
Total liabilities	$	—	$	(2,777	)	$	—	$	(2,777	)
As of December 31, 2015:
Assets
Real estate securities	$	—	$	—		$	200	$	200
Derivative instruments	—		197			—		197
Total assets	$	—	$	197		$	200	$	397
Liabilities
Derivative instruments	$	—	$	(3,303	)	$	—	$	(3,303	)
Total liabilities	$	—	$	(3,303	)	$	—	$	(3,303	)

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Fair Value of Financial Instruments (Tables)

12 Months Ended

Dec. 31, 2016

Financial Instruments, Owned, at Fair Value [Abstract]

Schedule of Carrying Amount and Fair Values of Other Financial Instruments

The following table summarizes the carrying amounts and estimated fair values measured on a nonrecurring basis of our other financial instruments, including instruments classified as held for sale, as of December 31, 2016 and 2015 (amounts in thousands). See Note 7 for a discussion of our assets and liabilities measured at fair value on a recurring basis. 

	As of December 31, 2016				As of December 31, 2015
	Carrying Amount		Estimated Fair Value		Carrying Amount		Estimated Fair Value
Assets:
Fixed-rate debt-related investments, net	$	15,209	$	15,784	$	15,722	$	16,526
Liabilities:
Fixed-rate mortgage notes carried at amortized cost	$	290,329	$	291,624	$	577,978	$	576,432
Floating-rate mortgage notes	51,918		51,942		7,886		7,883
Floating-rate unsecured borrowings	706,554		711,000		511,905		517,000

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Noncontrolling Interests (Tables)

12 Months Ended

Dec. 31, 2016

Noncontrolling Interest [Abstract]

Schedule of Noncontrolling Interest Balances

The following table summarizes changes to noncontrolling interest balances between December 31, 2015 and December 31, 2016 in terms of cumulative contributions, distributions and cumulative allocations of net income (loss) and redemptions and buyouts of the interests (amounts in thousands). 

	OP Units			Joint Venture Partner Interests			Noncontrolling Interests
Beginning balance as of December 31, 2015	$	94,734		$	2,412		$	97,146
Comprehensive Income and Loss
Net income (loss)	3,883			1,189			5,072
Unrealized change from cash flow hedging derivatives	307			—			307
Contributions, Distributions and Redemptions
Contributions from noncontrolling interest holders	—			3,225			3,225
Distributions to noncontrolling interest holders	(4,661		)	(4,345		)	(9,006		)
Redemption and buyout of noncontrolling interests, net	(4,996		)	—			(4,996		)
Ending balance as of December 31, 2016	$	89,267		$	2,481		$	91,748

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Stockholders' Equity (Tables)

12 Months Ended

Dec. 31, 2016

Stockholders' Equity Attributable to Parent [Abstract]

Information of Share Transactions

The following table describes the changes in each class of common shares during each of the years ended December 31, 2016, 2015 and 2014 (shares and dollar amounts in thousands). 

	Class E					Class A					Class W					Class I					Total
	Shares		Amount (1)			Shares		Amount (1)			Shares		Amount (1)			Shares		Amount (1)			Shares		Amount (1)
Balances, December 31, 2013	171,254		$	1,728,146		217		$	1,534		209		$	1,437		4,327		$	29,507		176,007		$	1,760,624
Issuance of common stock:
Shares sold	—		—			955		6,879			900		6,310			9,090		63,705			10,945		76,894
Distribution reinvestment plan	2,830		19,785			15		105			10		74			123		867			2,978		20,831
Stock-based compensation	—		—			—		—			—		—			136		807			136		807
Redemptions of common stock	(11,016	)	(77,523		)	—		—			(2	)	(13		)	(648	)	(4,566		)	(11,666	)	(82,102		)
Balances, December 31, 2014	163,068		$	1,670,408		1,187		$	8,518		1,117		$	7,808		13,028		$	90,320		178,400		$	1,777,054
Issuance of common stock:
Shares sold	—		—			511		3,888			693		5,134			10,135		73,982			11,339		83,004
Distribution reinvestment plan	2,447		17,866			28		203			22		158			426		3,119			2,923		21,346
Stock-based compensation	—		—			—		—			—		—			618		1,295			618		1,295
Redemptions of common stock	(28,240	)	(206,134		)	(23	)	(171		)	(20	)	(148		)	(873	)	(6,433		)	(29,156	)	(212,886		)
Balances, December 31, 2015	137,275		$	1,482,140		1,703		$	12,438		1,812		$	12,952		23,334		$	162,283		164,124		$	1,669,813
Issuance of common stock:
Shares sold	—		—			436		3,337			782		5,799			10,960		81,479			12,178		90,615
Distribution reinvestment plan	2,004		14,859			42		311			44		331			684		5,075			2,774		20,576
Stock-based compensation	—		—			—		—			—		—			32		1,415			32		1,415
Redemptions of common stock	(26,954	)	(198,810		)	(180	)	(1,328		)	(367	)	(2,701		)	(971	)	(7,203		)	(28,472	)	(210,042		)
Balances, December 31, 2016	112,325		$	1,298,189		2,001		$	14,758		2,271		$	16,381		34,039		$	243,049		150,636		$	1,572,377

_______________________________

(1) Dollar amounts presented in this table represent the gross amount of proceeds from the sale of common shares, or the amount paid to stockholders to redeem or repurchase common shares, and do not include other costs and expenses accounted for within additional paid-in capital, such as selling commissions, dealer manager and distribution fees, offering and organizational costs, and other costs associated with our distribution reinvestment plans, share redemption programs, and self-tender offers.

Total Distributions Declared and Portion of Each Contribution Paid in Cash and Reinvested

The following table describes our total distributions declared on our common stock for the years ended December 31, 2016, 2015 and 2014, and the portion of each distribution that was paid in cash and reinvested in shares (dollar amounts in thousands).  

	For the Year Ended December 31,
Distributions:	2016		% of Total Distributions		2015		% of Total Distributions		2014		% of Total Distributions
Paid in cash	$	36,418	63.8	%	$	41,723	66.3	%	$	41,381	66.5	%
Reinvested in shares	20,622		36.2	%	21,177		33.7	%	20,855		33.5	%
Total distributions	$	57,040	100.0	%	$	62,900	100.0	%	$	62,236	100.0	%

Distributions Paid and/or Authorized

The following table sets forth the distributions that have been paid and/or authorized as of December 31, 2016, subject to class-specific adjustments.  

	Amount Declared per Share/Unit (1)
Quarter	Class E	Class A	Class W	Class I	Weighted Average	Payment Date
2015
1st Quarter 2015	0.0900	0.0705	0.0794	0.0882	0.0897	4/16/2015
2nd Quarter 2015	0.0900	0.0700	0.0791	0.0882	0.0896	7/2/2015
3rd Quarter 2015	0.0900	0.0695	0.0788	0.0881	0.0895	10/16/2015
4th Quarter 2015	0.0900	0.0694	0.0788	0.0881	0.0894	1/19/2016
2016
1st Quarter 2016	0.0900	0.0697	0.0789	0.0882	0.0894	4/18/2016
2nd Quarter 2016	0.0900	0.0699	0.0790	0.0882	0.0893	7/18/2016
3rd Quarter 2016	0.0900	0.0695	0.0788	0.0881	0.0892	10/18/2016
4th Quarter 2016	0.0900	0.0692	0.0787	0.0881	0.0892	1/17/2017
2017
1st Quarter 2017 (2)	0.0900	0.0692	0.0786	0.0881	0.0891	4/17/2017

_______________________________

(1) Assumes ownership of share or unit for the entire quarter.

(2) The distribution amount herein for the first quarter of 2017 is estimated based on the NAV per share as of December 31, 2016.

(3) Expected payment date.  

Schedule of Information Regarding Taxability of Distributions on Common Shares

The following unaudited table summarizes the information reported to investors regarding the taxability of distributions on common shares for the years ended December 31, 2016, 2015 and 2014.

	For the Year Ended December 31,
	2016		2015		2014
Per Common Share	% of Total Distributions		% of Total Distributions		% of Total Distributions
Ordinary income	53.66	%	81.01	%	63.92	%
Non-taxable return of capital	46.34	%	18.99	%	36.08	%
Total	100.00	%	100.00	%	100.00	%

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Related Party Transactions (Tables)

12 Months Ended

Dec. 31, 2016

Related Party Transactions [Abstract]

Schedule Of RSU Grants

The chart below shows the Grant Dates, vesting dates, number of unvested shares as of December 31, 2016, and Grant Date NAV per Class I Share (share amounts in thousands). 

Award	Grant Date	Vesting Dates	Number of Unvested Shares	Grant Date NAV per  Class I Share
Company RSU	4/7/2014	4/14/17	123	$	6.96
Company RSU	2/25/2015	4/14/17	30	7.18
Company RSU	2/25/2015	4/13/18	135	7.18
Company RSU	2/4/2016	4/15/19	124	7.41
Total/ weighted average			412	$	7.18

Schedule of Fees and Other Amounts Earned by Advisor

The following table summarizes fees and other amounts earned by our Advisor and its related parties in connection with services performed for us during the years ended December 31, 2016, 2015 and 2014 (amounts in thousands):

	For the Year Ended December 31,
	2016		2015		2014
Advisory fees (1)	$	14,857	$	17,083	$	15,919
Other reimbursements paid to our Advisor (2)	8,368		9,008		8,287
Other reimbursements paid to our Dealer Manager	396		441		591
Advisory fees related to the disposition of real properties	2,140		4,962		2,064
Development management fee (3)	31		88		181
Primary dealer fee (4)	3,465		2,540		2,197
Selling commissions	100		114		187
Dealer manager fees	381		258		121
Distribution fees	70		50		28
Total	$	29,808	$	34,544	$	29,575

_______________________________

(1) Amounts reported for the years ended December 31, 2016, 2015 and 2014 include approximately $1.1 million, $1.1 million and $653,000 respectively, that we were not obligated to pay in consideration of the issuance of Company RSUs to our Advisor.

(2) Other reimbursements paid to our Advisor include reimbursements for a portion of compensation costs of employees of our Advisor related to activities for which our Advisor does not otherwise receive a separate fee. We reimbursed our Advisor approximately $6.8 million, $7.3 million and $6.9 million for the years ended December 31, 2016, 2015 and 2014, respectively. These reimbursements include a portion of the compensation costs for certain of our named executives. The balance of such reimbursements are made up primarily of other general overhead and administrative expenses, including, but not limited to, allocated rent paid to both third parties and affiliates of our Advisor, equipment, utilities, insurance, travel and entertainment, and other costs.

(3) Pursuant to our amended Advisory Agreement effective as of June 23, 2016, our Advisor will no longer receive a development management fee in exchange for providing development management services.

(4) Amounts reported represent primary dealer fees we paid to our Dealer Manager based on the gross proceeds raised by participating broker-dealers pursuant to certain selected dealer agreements. Of the primary dealer fee earned during the years ended December 31, 2016, 2015 and 2014, our Dealer Manager reallowed approximately $3.1 million, $2.3 million and $2.0 million, respectively, to participating third-party broker-dealers and retained approximately $347,000, $254,000 and $220,000, respectively.

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Net Income Per Common Share (Tables)

12 Months Ended

Dec. 31, 2016

Earnings Per Share [Abstract]

Details of Numerator and Denominator Used to Calculate Diluted Net Income Per Common Share

Reconciliations of the numerator and denominator used to calculate basic net income per common share to the numerator and denominator used to calculate diluted net income per common share for the years ended December 31, 2016, 2015 and 2014 are described in the following table (amounts in thousands, except per share information):

	For the Year Ended December 31,
	2016			2015			2014
Numerator
Income from continuing operations	$	55,048		$	131,659		$	3,990
Income from continuing operations attributable     to noncontrolling interests	(5,072		)	(7,404		)	(340		)
Income from continuing operations     attributable to common stockholders	49,976			124,255			3,650
Dilutive noncontrolling interests share     of income from continuing operations	3,883			8,632			233
Numerator for diluted earnings     per share – adjusted income from     continuing operations	$	53,859		$	132,887		$	3,883
Income from discontinued operations	—			—			30,004
Income from discontinued operations     attributable to noncontrolling interests	—			—			(4,462		)
Income from discontinued operations     attributable to common stockholders	—			—			25,542
Dilutive noncontrolling interests share     of discontinued operations	—			—			1,915
Numerator for diluted earnings     per share – adjusted income from     discontinued operations	$	—		$	—		$	27,457
Denominator
Weighted average shares outstanding-basic	159,648			175,938			178,273
Incremental weighted average shares effect     of conversion of OP Units	12,398			12,851			12,718
Weighted average shares outstanding-diluted	172,046			188,789			190,991
INCOME PER COMMON SHARE-BASIC     AND DILUTED
Net income from continuing operations	$	0.31		$	0.70		$	0.02
Net income from discontinued operations	—			—			0.14
Net income	$	0.31		$	0.70		$	0.16

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Segment Information (Tables)

12 Months Ended

Dec. 31, 2016

Segment Reporting [Abstract]

Revenue and Components of Net Operating Income

The following table sets forth revenue and NOI of our segments for the years ended December 31, 2016, 2015 and 2014 (amounts in thousands).  

	For the Year Ended December 31,
	Revenue						NOI (unaudited)
	2016		2015		2014		2016		2015		2014
Real property (1)
Office	$	126,782	$	137,204	$	139,245	$	84,300	$	97,441	$	104,533
Industrial	6,073		8,672		23,307		4,323		6,755		20,780
Retail	82,372		72,402		61,649		61,017		54,492		47,891
Total	$	215,227	$	218,278	$	224,201	$	149,640	$	158,688	$	173,204

_______________________________

(1) Excludes results of operations of real properties categorized as discontinued operations.

Reconciliation of Net Operating Income to Reported Net Income

The following table is a reconciliation of our reported net income attributable to common stockholders to our unaudited NOI for the years ended December 31, 2016, 2015 and 2014 (amounts in thousands).

	For the Year Ended December 31,
	2016			2015			2014
Net income attributable to common stockholders	$	49,976		$	124,255		$	29,192
Debt-related income	(943		)	(6,922		)	(7,396		)
Real estate depreciation and amortization expense	80,105			83,114			88,994
General and administrative expenses	9,450			10,720			11,108
Advisory fees, related party	14,857			17,083			15,919
Acquisition-related expenses	667			2,644			1,205
Impairment of real estate property	2,677			8,124			9,500
Interest and other income	(2,207		)	(2,192		)	(1,168		)
Interest expense	40,782			47,508			61,903
(Gain) loss on extinguishment of debt and financing commitments	(5,136		)	1,168			63
Gain on sale of real property	(45,660		)	(134,218		)	(10,914		)
Discontinued operations	—			—			(30,004		)
Net income attributable to noncontrolling interests	5,072			7,404			4,802
Net operating income	$	149,640		$	158,688		$	173,204

Summary of Total Assets by Business Segment

The following table reflects our total assets by business segment as of December 31, 2016 and December 31, 2015 (amounts in thousands). 

	As of December 31,
	2016		2015
Segment assets:
Net investments in real property
Office	$	825,961	$	1,027,132
Industrial	57,651		61,231
Retail	827,799		785,854
Total segment assets, net	1,711,411		1,874,217
Non-segment assets:
Debt-related investments, net	15,209		15,722
Cash and cash equivalents	13,864		15,769
Other non-segment assets (1)	43,244		55,183
Total assets	$	1,783,728	$	1,960,891

_______________________________

(1) Other non-segment assets primarily consist of corporate assets including restricted cash and receivables, including straight-line rent receivable.

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Quarterly Financial Data (Unaudited) (Tables)

12 Months Ended

Dec. 31, 2016

Quarterly Financial Information Disclosure [Abstract]

Schedule of Quarterly Financial Data (Unaudited)

The following tables present selected unaudited quarterly financial data for each quarter during the years ended December 31, 2016 and 2015 (amounts in thousands, except per share information). Certain reclassifications have been made to prior period results to conform to the current presentation. Certain totals and subtotals within the following table may not sum due to de minimus rounding adjustments. The following disclosures exclude the results from discontinued operations.

	For the Quarter Ended												For the Year Ended December 31, 2016
	March 31, 2016			June 30, 2016			September 30, 2016			December 31, 2016
Rental revenue	$	55,544		$	52,702		$	53,258		$	53,723		$	215,227
Debt-related income	238			237			235			233			943
Total revenue	55,782			52,939			53,493			53,956			216,170
Total operating expenses	(43,177		)	(42,313		)	(44,567		)	(43,286		)	(173,343		)
Other income (expenses)	35,633			(10,491		)	(5,608		)	(7,313		)	12,221
Net income	48,238			135			3,318			3,357			55,048
Net income attributable to noncontrolling interests	(4,456		)	(18		)	(353		)	(245		)	(5,072		)
NET INCOME ATTRIBUTABLE TO COMMON STOCKHOLDERS	$	43,782		$	117		$	2,965		$	3,112		$	49,976
NET INCOME PER BASIC AND DILUTED COMMON SHARE	$	0.27		$	—		$	0.02		$	0.02		$	0.31

	For the Quarter Ended												For the Year Ended December 31, 2015
	March 31, 2015			June 30, 2015			September 30, 2015			December 31, 2015
Rental revenue	$	59,379		$	51,075		$	52,854		$	54,970		$	218,278
Debt-related income	3,203			1,584			807			1,328			6,922
Total revenue	62,582			52,659			53,661			56,298			225,200
Total operating expenses	(44,803		)	(41,168		)	(49,406		)	(45,898		)	(181,275		)
Other income (expenses)	114,422			(11,384		)	(5,680		)	(9,624		)	87,734
Net income (loss)	132,201			107			(1,425		)	776			131,659
Net (income) loss attributable to noncontrolling interests	(8,618		)	(37		)	1,297			(46		)	(7,404		)
NET INCOME (LOSS) ATTRIBUTABLE TO COMMON STOCKHOLDERS	$	123,583		$	70		$	(128	)	$	730		$	124,255
NET INCOME (LOSS) PER BASIC AND DILUTED COMMON SHARE	$	0.69		$	—		$	—		$	0.01		$	0.70

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Organization (Details) - USD ($) shares in Millions	12 Months Ended			38 Months Ended
	Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2014	Sep. 15, 2015	Sep. 16, 2015	Jul. 12, 2012
Organization [Line Items]
Percentage of proceeds received from public offerings of common stock contributed to our Operating Partnership	100.00%
Proceeds from issuance, DRIP	$ 20,576,000	$ 21,347,000	$ 20,831,000
NAV Offering
Organization [Line Items]
Maximum NAV share value total	890,000,000					$ 3,000,000,000
Maximum NAV share value primary offering						2,250,000,000
Maximum share value, DRIP	243,100,000					$ 750,000,000
Gross proceeds from sale of shares in the Offering	$ 293,000,000			$ 183,000,000
Shares issued	40.6			25.8
Proceeds from issuance, DRIP	$ 10,400,000			$ 3,400,000
Follow-On Offering
Organization [Line Items]
Maximum NAV share value total					$ 1,000,000,000
Maximum NAV share value primary offering					750,000,000
Maximum share value, DRIP					$ 250,000,000
Gross proceeds from sale of shares in the Offering	$ 110,000,000
Shares issued	14.8

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Summary Of Significant Accounting Policies (Narrative) (Details) - USD ($)	12 Months Ended
	Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2014
Significant Accounting Policies [Line Items]
Investment in real property	$ 1,711,411,000	$ 1,874,217,000
Net debt issuance costs	6,295,000	6,317,000
Other receivables	29,900,000	34,100,000
Allowances on receivables	1,000,000	628,000
Accumulated other comprehensive income (loss) related to derivatives	(5,900,000)
Accumulated other comprehensive income (loss) related to real estate securities	$ 1,100,000
Class A and Class W Dealer Manager fee	0.60%
Class I Dealer Manager fee	0.10%
Class A distribution fee	0.50%
Annual dealer fee from completion of an offering as percentage of gross proceeds	10.00%
Acquisition-related expenses	$ 667,000	2,644,000	$ 1,205,000
Restricted Stock Units (RSUs) | Director
Significant Accounting Policies [Line Items]
Vesting period	1 year
Restricted Stock Units (RSUs) | Company Advisor | Class I
Significant Accounting Policies [Line Items]
Offset period	12 months
Noncontrolling Interests
Significant Accounting Policies [Line Items]
Accumulated other comprehensive income (loss) related to derivatives	$ (1,200,000)
Accumulated other comprehensive income (loss) related to real estate securities	(1,300,000)
Unsecured Borrowings | Restatement Adjustment
Significant Accounting Policies [Line Items]
Net debt issuance costs	4,400,000	5,100,000
Mortgages | Restatement Adjustment
Significant Accounting Policies [Line Items]
Net debt issuance costs	1,800,000	1,200,000
Variable Interest Entity Investments
Significant Accounting Policies [Line Items]
Investment in real property	48,200,000	76,900,000
Mortgage notes	0	$ 50,100,000
Dealer Manager
Significant Accounting Policies [Line Items]
Liabilities to related parties	$ 3,900,000

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Summary of Significant Accounting Policies (Amortization Expense for Intangible Lease Assets and Adjustments to Rental Revenue for Above-Market Lease Assets and Below-Market Lease Liabilities) (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2014
Above-Market Lease Assets
Finite-Lived Intangible Assets [Line Items]
Net rental revenue adjustment	$ (5,515)	$ (5,216)	$ (6,708)
Below-Market Lease Liabilities
Finite-Lived Intangible Assets [Line Items]
Net rental revenue adjustment	6,050	6,029	7,324
Leases, Acquired-in-Place, Market Adjustment
Finite-Lived Intangible Assets [Line Items]
Net rental revenue adjustment	535	813	616
Leases, Acquired-in-Place
Finite-Lived Intangible Assets [Line Items]
Intangible lease asset amortization	(40,797)	$ (44,260)	$ (48,937)
Write-offs of unamortized intangible lease assets and liabilities due to early lease terminations	$ 1,700

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Summary Of Significant Accounting Policies (Depreciation and Amortization Computed on Straight-Line Basis over Estimated Useful Lives) (Details)	12 Months Ended
	Dec. 31, 2016
Land
Property, Plant and Equipment [Line Items]
Depreciable life description	Not depreciated
Building
Property, Plant and Equipment [Line Items]
Depreciable Life (in years)	40 years
Building and Land Improvements | Minimum
Property, Plant and Equipment [Line Items]
Depreciable Life (in years)	10 years
Building and Land Improvements | Maximum
Property, Plant and Equipment [Line Items]
Depreciable Life (in years)	40 years
Tenant Improvements
Property, Plant and Equipment [Line Items]
Depreciable life description	Lesser of useful life or lease term
Lease Commissions
Property, Plant and Equipment [Line Items]
Depreciable life description	Over lease term
Intangible In-Place Lease Assets
Property, Plant and Equipment [Line Items]
Depreciable life description	Over lease term
Above-Market Lease Assets
Property, Plant and Equipment [Line Items]
Depreciable life description	Over lease term
Below-Market Lease Liabilities
Property, Plant and Equipment [Line Items]
Depreciable life description	Over lease term, including below-market fixed-rate renewal options

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Summary Of Significant Accounting Policies (Expected Amortization During Next Five Years and Thereafter Related to Acquired Above-Market Lease Assets, Below-Market Lease Liabilities and Acquired In-Place Lease Intangibles) (Details) $ in Thousands	Dec. 31, 2016 USD ($)
Above-Market Lease Assets
Acquired Finite-Lived Intangible Assets [Line Items]
2017	$ (2,379)
2018	(727)
2019	(633)
2020	(213)
2021	(201)
Thereafter	(456)
Total	(4,609)
Below-Market Lease Liabilities
Acquired Finite-Lived Intangible Assets [Line Items]
2017	5,307
2018	4,695
2019	3,977
2020	3,272
2021	2,847
Thereafter	39,447
Total	59,545
Leases, Acquired-in-Place, Market Adjustment
Acquired Finite-Lived Intangible Assets [Line Items]
2017	2,928
2018	3,968
2019	3,344
2020	3,059
2021	2,646
Thereafter	38,991
Total	54,936
Leases, Acquired-in-Place
Acquired Finite-Lived Intangible Assets [Line Items]
2017	27,158
2018	16,909
2019	11,863
2020	6,898
2021	5,412
Thereafter	15,572
Total	$ 83,812

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Summary Of Significant Accounting Policies (Straight-Line Rental Adjustments and Tenant Recovery Income) (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2014
Accounting Policies [Abstract]
Straight-line rent adjustments	$ (1,263)	$ (976)	$ 3,037
Tenant recovery income	41,707	37,526	31,092
Real estate taxes paid directly by tenants subject to triple net lease Contracts	$ 4,300	$ 7,000	$ 12,400

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Investments in Real Property (Narrative) (Details) $ in Thousands			12 Months Ended
		Aug. 05, 2015 USD ($)	Dec. 31, 2016 USD ($)	Dec. 31, 2015 USD ($)	Dec. 31, 2014 USD ($) property
Real Estate Properties [Line Items]
Impairment charges	[1]		$ 2,677	$ 8,124	$ 9,500
Concentration risk percentage			38.50%
Rental revenue form lease			$ 65,428
New Jersey
Real Estate Properties [Line Items]
Concentration risk percentage			20.00%
Massachusetts
Real Estate Properties [Line Items]
Concentration risk percentage			20.00%
California
Real Estate Properties [Line Items]
Concentration risk percentage			14.00%
Texas
Real Estate Properties [Line Items]
Concentration risk percentage			12.00%
Charles Schwab and Company, Inc.
Real Estate Properties [Line Items]
Concentration risk percentage			13.90%
Rental revenue form lease			$ 23,645
Charles Schwab and Company, Inc. | Continuing Operations
Real Estate Properties [Line Items]
Concentration risk percentage			11.80%
Rental revenue form lease			$ 25,400
Property, Harborside | Charles Schwab and Company, Inc.
Real Estate Properties [Line Items]
Concentration risk percentage			13.80%
Rental revenue form lease			$ 23,500
Land, Buildings and Improvements | Industrial Property
Real Estate Properties [Line Items]
Number of properties classified as held for sale | property					12
Land, Buildings and Improvements | Office | Consolidated Properties
Real Estate Properties [Line Items]
Ownership interest in property			80.00%
Land, Buildings and Improvements | Office | Property, Sunset Hills, Washington, DC Market | Consolidated Properties
Real Estate Properties [Line Items]
Impairment charges			$ 2,100
Fair value of property			18,600
Land, Buildings and Improvements | Office | Property, 40 Boulevard, Chicago, IL Market | Consolidated Properties
Real Estate Properties [Line Items]
Impairment charges			587
Fair value of property			9,900
Land, Buildings and Improvements | Office | Property, Washington Commons, Chicago, IL | Consolidated Properties
Real Estate Properties [Line Items]
Impairment charges				$ 6,500
Ownership interest in property				80.00%
Fair value of property				$ 17,000
Land, Buildings and Improvements | Office | Property, Harborside
Real Estate Properties [Line Items]
Purchase option, estimated exercise price			239,400
Option termination fee		$ 12,000
Land, Buildings and Improvements | Office | Colshire, Washington, DC
Real Estate Properties [Line Items]
Purchase option, estimated exercise price			$ 158,400
Land, Buildings and Improvements | Retail | Retail Property, Pittsburgh, Pennsylvania Market | Wholly Owned Properties
Real Estate Properties [Line Items]
Impairment charges				1,600	$ 9,500
Fair value of property				$ 12,500

[1] Includes approximately $265,000 and $125,000 paid to our Advisor for advisory fees associated with the disposition of real properties during the years ended December 31, 2016 and 2015, respectively.

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Investments In Real Property (Consolidated Investments in Real Property) (Details) - USD ($) $ in Thousands	Dec. 31, 2016	Dec. 31, 2015
Real Estate Properties [Line Items]
Investment in real property, Gross book value	$ 2,204,322	$ 2,380,174
Intangible lease liabilities, Gross book value	(90,980)	(93,549)
Real estate investments, Gross book value	2,113,342	2,286,625
Accumulated depreciation and amortization	(492,911)	(505,957)
Intangible lease liabilities, accumulated amortization	31,435	29,675
Accumulated depreciation/amortization	(461,476)	(476,282)
Investment in real property	1,711,411	1,874,217
Intangible lease liabilities, Net book value	(59,545)	(63,874)
Real estate investments, Net book value	1,651,866	1,810,343
Land
Real Estate Properties [Line Items]
Land	473,970	474,222
Building and Building Improvements
Real Estate Properties [Line Items]
Building and Improvements	1,364,878	1,469,662
Accumulated depreciation and amortization	(215,858)	(208,281)
Real estate investments, Net book value	1,149,020	1,261,381
Intangible In-Place Lease Assets
Real Estate Properties [Line Items]
Intangible Lease Assets	365,474	436,290
Accumulated depreciation and amortization	(277,053)	(297,676)
Intangible lease liabilities, Net book value	(88,421)	(138,614)
Office
Real Estate Properties [Line Items]
Investment in real property, Gross book value	1,109,178	1,348,173
Intangible lease liabilities, Gross book value	(15,121)	(18,923)
Real estate investments, Gross book value	1,094,057	1,329,250
Office | Land
Real Estate Properties [Line Items]
Land	171,176	203,889
Office | Building and Building Improvements
Real Estate Properties [Line Items]
Building and Improvements	701,859	833,655
Office | Intangible In-Place Lease Assets
Real Estate Properties [Line Items]
Intangible Lease Assets	236,143	310,629
Industrial Property
Real Estate Properties [Line Items]
Investment in real property, Gross book value	89,128	91,315
Intangible lease liabilities, Gross book value	(344)	(344)
Real estate investments, Gross book value	88,784	90,971
Industrial Property | Land
Real Estate Properties [Line Items]
Land	8,821	9,572
Industrial Property | Building and Building Improvements
Real Estate Properties [Line Items]
Building and Improvements	63,999	65,307
Industrial Property | Intangible In-Place Lease Assets
Real Estate Properties [Line Items]
Intangible Lease Assets	16,308	16,436
Retail
Real Estate Properties [Line Items]
Investment in real property, Gross book value	1,006,016	940,686
Intangible lease liabilities, Gross book value	(75,515)	(74,282)
Real estate investments, Gross book value	930,501	866,404
Retail | Land
Real Estate Properties [Line Items]
Land	293,973	260,761
Retail | Building and Building Improvements
Real Estate Properties [Line Items]
Building and Improvements	599,020	570,700
Retail | Intangible In-Place Lease Assets
Real Estate Properties [Line Items]
Intangible Lease Assets	$ 113,023	$ 109,225

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Investments in Real Property (Schedule Of Acquisitions Of Real Property) (Details) - Land, Buildings and Improvements - Retail Property, Suniland Shopping Center ft² in Thousands, $ in Thousands	12 Months Ended
	Dec. 31, 2016 USD ($) ft²
Business Acquisition [Line Items]
Date of Acquisition	May 27, 2016
Acquired Ownership	100.00%
Contract Price | $	$ 66,500
Net Rentable Square Feet | ft²	82
Percent Leased at Acquisition	93.20%

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Investments in Real Property (Summary of Fair Value of Acquired Real Properties) (Details) - Land, Buildings and Improvements - Retail Property, Suniland Shopping Center $ in Thousands	12 Months Ended
	Dec. 31, 2016 USD ($)
Real Estate Properties [Line Items]
Land	$ 34,804
Building and Improvements	28,022
Intangible Lease Assets	5,880
Intangible Lease Liabilities	(2,113)
Total Fair Value	66,593
Prorations and Credits	(93)
Contract Price	$ 66,500
Weighted-Average Amortization Period, Intangible Lease Assets (Years)	5 years 9 months 18 days
Weighted-Average Amortization Period, Intangible Lease Liabilities (Years)	10 years 4 months 24 days

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Investments in Real Property (Summary of Disposed Properties) (Details) ft² in Thousands, $ in Thousands		3 Months Ended								12 Months Ended
	Oct. 15, 2014 USD ($) ft² property	Dec. 31, 2016 USD ($) ft²	Sep. 30, 2016 USD ($)	Jun. 30, 2016 USD ($)	Mar. 31, 2016 USD ($)	Dec. 31, 2015 USD ($) ft² property	Sep. 30, 2015 USD ($)	Jun. 30, 2015 USD ($)	Mar. 31, 2015 USD ($)	Dec. 31, 2016 USD ($) ft²	Dec. 31, 2015 USD ($) ft² property	Dec. 31, 2014 USD ($) ft² property
Business Acquisition [Line Items]
Rentable square feet | ft²		2,183								2,183
Investment in real property		$ 1,711,411				$ 1,874,217				$ 1,711,411	$ 1,874,217
Aggregate revenues		$ 53,956	$ 53,493	$ 52,939	$ 55,782	$ 56,298	$ 53,661	$ 52,659	$ 62,582	$ 216,170	$ 225,200	$ 231,597
Disposed Properties
Business Acquisition [Line Items]
Net Rentable Square Feet | ft²						3,124					3,124	3,974
Percentage Leased											95.00%	93.00%
Contract Sales Price											$ 496,236	$ 230,459
Gain (loss) on Sale											$ 134,218	40,051
Disposed Properties | Industrial Property Silicon Valley CA
Business Acquisition [Line Items]
Net Rentable Square Feet | ft²	177
Number of Properties | property	3
Investment in real property	$ 13,100
Real estate investments loan principal	$ 13,600
Disposed Properties | Office | Office Property, Los Angeles, CA Market
Business Acquisition [Line Items]
Net Rentable Square Feet | ft²						111					111
Percentage Leased											0.00%
Disposed Properties | Industrial Property
Business Acquisition [Line Items]
Closing costs and fees											$ 7,800
Aggregate revenues											6,200	$ 33,700
Disposed Properties | Industrial Property | Series of Individually Immaterial Business Acquisitions
Business Acquisition [Line Items]
Closing costs and fees											$ 4,000
Disposed Properties | Land, Buildings and Improvements
Business Acquisition [Line Items]
Net Rentable Square Feet | ft²		1,236								1,236
Percentage Leased										73.00%
Contract Sales Price										$ 220,075
Gain (loss) on Sale										$ 45,660
Disposed Properties | Land, Buildings and Improvements | Industrial Portfolio, Various Markets
Business Acquisition [Line Items]
Number of Properties | property												12
Disposed Properties | Land, Buildings and Improvements | Office
Business Acquisition [Line Items]
Number of Properties | property						6					6
Rentable square feet | ft²						1,100					1,100
Disposed Properties | Land, Buildings and Improvements | Office | Office Property, Washington DC Market
Business Acquisition [Line Items]
Ownership										100.00%
Net Rentable Square Feet | ft²		574								574
Percentage Leased										100.00%
Disposition Date										Feb. 18, 2016
Contract Sales Price										$ 158,400
Gain (loss) on Sale										$ 41,241
Disposed Properties | Land, Buildings and Improvements | Office | Office Property, Chicago, IL Market
Business Acquisition [Line Items]
Ownership										80.00%
Net Rentable Square Feet | ft²		107								107
Percentage Leased										66.00%
Disposition Date										Mar. 01, 2016
Contract Sales Price										$ 9,850
Gain (loss) on Sale										$ 0
Disposed Properties | Land, Buildings and Improvements | Office | Office Property, Chicago, IL Market (2)
Business Acquisition [Line Items]
Ownership										80.00%
Net Rentable Square Feet | ft²		199								199
Percentage Leased										81.00%
Disposition Date										Mar. 01, 2016
Contract Sales Price										$ 18,000
Gain (loss) on Sale										$ 159
Disposed Properties | Land, Buildings and Improvements | Office | Office Property, Washington DC Market (2)
Business Acquisition [Line Items]
Ownership										100.00%
Net Rentable Square Feet | ft²		178								178
Percentage Leased										0.00%
Disposition Date										Sep. 30, 2016
Contract Sales Price										$ 18,600
Gain (loss) on Sale										$ 0
Disposed Properties | Land, Buildings and Improvements | Office | Office Property, Silicon Valley Market
Business Acquisition [Line Items]
Ownership											100.00%
Net Rentable Square Feet | ft²						53					53
Percentage Leased											100.00%
Disposition Date											Dec. 14, 2015
Contract Sales Price											$ 16,750
Gain (loss) on Sale											$ 970
Disposed Properties | Land, Buildings and Improvements | Office | Office Property, Los Angeles, CA Market
Business Acquisition [Line Items]
Ownership											100.00%
Disposition Date											Jul. 20, 2015
Contract Sales Price											$ 12,549
Gain (loss) on Sale											$ 2,866
Disposed Properties | Land, Buildings and Improvements | Office | Office Property, Dallas, TX Market
Business Acquisition [Line Items]
Ownership											100.00%
Net Rentable Square Feet | ft²						177					177
Percentage Leased											88.00%
Disposition Date											Jan. 16, 2015
Contract Sales Price											$ 46,600
Gain (loss) on Sale											$ 23,125
Disposed Properties | Land, Buildings and Improvements | Office | Office Property; Denver, CO Market
Business Acquisition [Line Items]
Ownership												100.00%
Net Rentable Square Feet | ft²												138
Percentage Leased												100.00%
Disposition Date												Nov. 07, 2014
Contract Sales Price												$ 9,100
Gain (loss) on Sale												$ 4,032
Disposed Properties | Land, Buildings and Improvements | Office | Office Property, East Bay, CA Market
Business Acquisition [Line Items]
Ownership												100.00%
Net Rentable Square Feet | ft²												60
Percentage Leased												0.00%
Disposition Date												Jun. 13, 2014
Contract Sales Price												$ 5,700
Gain (loss) on Sale												$ 2,755
Disposed Properties | Land, Buildings and Improvements | Office | Office Property, Little Rock, AR Market
Business Acquisition [Line Items]
Ownership												100.00%
Net Rentable Square Feet | ft²												102
Percentage Leased												100.00%
Disposition Date												Feb. 25, 2014
Contract Sales Price												$ 19,550
Gain (loss) on Sale												$ 1,350
Disposed Properties | Land, Buildings and Improvements | Office | Office Property, Los Angeles, CA Included In Various Markets
Business Acquisition [Line Items]
Number of Properties | property						3					3
Disposed Properties | Land, Buildings and Improvements | Retail | Retail Property, Greater Boston Market
Business Acquisition [Line Items]
Ownership										100.00%
Net Rentable Square Feet | ft²		39								39
Percentage Leased										100.00%
Disposition Date										Aug. 05, 2016
Contract Sales Price										$ 3,625
Gain (loss) on Sale										$ 975
Disposed Properties | Land, Buildings and Improvements | Retail | Retail Property, Greater Boston Market (2)
Business Acquisition [Line Items]
Ownership										100.00%
Net Rentable Square Feet | ft²		13								13
Percentage Leased										100.00%
Disposition Date										Nov. 18, 2016
Contract Sales Price										$ 6,200
Gain (loss) on Sale										$ 2,165
Disposed Properties | Land, Buildings and Improvements | Retail | Retail Property, Greater Boston, MA Market (3)
Business Acquisition [Line Items]
Ownership											100.00%
Net Rentable Square Feet | ft²						11					11
Percentage Leased											100.00%
Disposition Date											Dec. 18, 2015
Contract Sales Price											$ 1,625
Gain (loss) on Sale											$ 14
Disposed Properties | Land, Buildings and Improvements | Retail | Retail Property, Pittsburgh, PA Market
Business Acquisition [Line Items]
Ownership											100.00%
Net Rentable Square Feet | ft²						103					103
Percentage Leased											93.00%
Disposition Date											May 05, 2015
Contract Sales Price											$ 12,500
Gain (loss) on Sale											$ 0
Disposed Properties | Land, Buildings and Improvements | Retail | Retail Property, Greater Boston Market, (4)
Business Acquisition [Line Items]
Ownership												100.00%
Net Rentable Square Feet | ft²												110
Percentage Leased												0.00%
Disposition Date												Feb. 18, 2014
Contract Sales Price												$ 6,750
Gain (loss) on Sale												$ 2,276
Disposed Properties | Land, Buildings and Improvements | Industrial Property
Business Acquisition [Line Items]
Number of Properties | property						6					6
Rentable square feet | ft²						1,600					1,600
Disposed Properties | Land, Buildings and Improvements | Industrial Property | Industrial Property, Louisville, KY Market
Business Acquisition [Line Items]
Ownership										90.00%
Net Rentable Square Feet | ft²		126								126
Percentage Leased										33.00%
Disposition Date										Sep. 02, 2016
Contract Sales Price										$ 5,400
Gain (loss) on Sale										$ 1,120
Disposed Properties | Land, Buildings and Improvements | Industrial Property | Industrial Property, Silicon Valley, CA, Second
Business Acquisition [Line Items]
Ownership												100.00%
Net Rentable Square Feet | ft²												177
Percentage Leased												41.00%
Disposition Date												Oct. 15, 2014
Contract Sales Price												$ 13,579
Gain (loss) on Sale												$ 0
Disposed Properties | Land, Buildings and Improvements | Industrial Property | Industrial Portfolio, Various Markets
Business Acquisition [Line Items]
Ownership												93.00%
Net Rentable Square Feet | ft²												3,387
Percentage Leased												99.00%
Disposition Date												Jan. 22, 2014
Contract Sales Price												$ 175,000
Gain (loss) on Sale												$ 29,545
Disposed Properties | Land, Buildings and Improvements | Office and Industrial | Office and Industrial Portfolio, Various Markets
Business Acquisition [Line Items]
Ownership											100.00%
Net Rentable Square Feet | ft²						2,669					2,669
Percentage Leased											100.00%
Disposition Date											Mar. 11, 2015
Contract Sales Price											$ 398,635
Gain (loss) on Sale											$ 105,542
Disposed Properties | Land | Land Parcel Property, Denver, CO Market
Business Acquisition [Line Items]
Ownership											100.00%
Disposition Date											Aug. 12, 2015
Contract Sales Price											$ 7,577
Gain (loss) on Sale											$ 1,701
Disposed Properties | Land | Land Parcel, Denver, CO (2)
Business Acquisition [Line Items]
Ownership												100.00%
Disposition Date												Apr. 14, 2014
Contract Sales Price												$ 780
Gain (loss) on Sale												$ 93

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Investments in Real Property (Schedule of Amounts Recorded as Discontinued Operations) (Details) - USD ($) $ in Thousands		12 Months Ended
		Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2014
Real Estate [Abstract]
Revenues				$ 969
Rental expense				(340)
Real estate depreciation and amortization expense				0
Interest expense				(296)
Other expenses				(8)
Income from discontinued operations				325
Gain on disposition				29,679
Discontinued operations	[1]	$ 0	$ 0	30,004
Discontinued operations attributable to noncontrolling interests		0	0	(4,462)
Income from discontinued operations attributable to common stockholders		$ 0	$ 0	$ 25,542

[1] Includes approximately $1.6 million paid to our Advisor for fees associated with the disposition of real properties during the year ended December 31, 2014.

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Investments in Real Property (Future Minimum Rental Receivable Under Non Cancelable Operating and Ground Leases) (Details) $ in Thousands	Dec. 31, 2016 USD ($)
Real Estate [Abstract]
2017	$ 144,932
2018	128,008
2019	116,595
2020	85,928
2021	68,617
Thereafter	214,531
Total	$ 758,611

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Investments in Real Property (Summary of Top Five Tenants as Percentage of Consolidated Annual Base Rent and Square Feet) (Details) ft² in Thousands, $ in Thousands	12 Months Ended
	Dec. 31, 2016 USD ($) ft² property tenant lease
Concentration Risk [Line Items]
Locations | property	19
Annualized Base Rent | $	$ 65,428
% of Total Annualized Base Rent	38.50%
Square Feet	2,183
% of Total Portfolio Square Feet	26.70%
Percentage of future minimum rental revenue from two former top five tenants	3.00%
Property, Harborside
Concentration Risk [Line Items]
Percentage of area of real estate property Leased	59.00%
Number of lease agreements executed | tenant	9
Area of real estate property leased	352
Charles Schwab and Company, Inc.
Concentration Risk [Line Items]
Locations | property	2
Industry	Securities, Commodities, Fin. Inv./Rel. Activities
Annualized Base Rent | $	$ 23,645
% of Total Annualized Base Rent	13.90%
Square Feet	602
% of Total Portfolio Square Feet	7.40%
Number of leases | lease	2
Charles Schwab and Company, Inc. | Property, Harborside
Concentration Risk [Line Items]
Annualized Base Rent | $	$ 23,500
% of Total Annualized Base Rent	13.80%
Net Rentable Square Feet	594
Percentage of area of real estate property subleased	100.00%
Number of sublease tenants | tenant	27
Sybase, Inc.
Concentration Risk [Line Items]
Locations | property	1
Industry	Publishing Information (except Internet)
Annualized Base Rent | $	$ 18,692
% of Total Annualized Base Rent	11.00%
Square Feet	405
% of Total Portfolio Square Feet	5.00%
Stop and Shop
Concentration Risk [Line Items]
Locations | property	14
Industry	Food and Beverage Stores
Annualized Base Rent | $	$ 14,125
% of Total Annualized Base Rent	8.30%
Square Feet	853
% of Total Portfolio Square Feet	10.40%
Novo Nordisk
Concentration Risk [Line Items]
Locations | property	1
Industry	Chemical Manufacturing
Annualized Base Rent | $	$ 4,627
% of Total Annualized Base Rent	2.70%
Square Feet	167
% of Total Portfolio Square Feet	2.00%
Seton Health Care
Concentration Risk [Line Items]
Locations | property	1
Industry	Hospitals
Annualized Base Rent | $	$ 4,339
% of Total Annualized Base Rent	2.60%
Square Feet	156
% of Total Portfolio Square Feet	1.90%
Top Two Tenants
Concentration Risk [Line Items]
% of Total Annualized Base Rent	24.90%

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Debt-Related Investments (Narrative) (Details) $ in Millions	12 Months Ended
	Dec. 31, 2016 property	Dec. 31, 2015 USD ($) property
Receivables [Abstract]
Number of debt investments | property	3	3
Weighted average maturity of our debt investments	2 years 2 months 26 days
Direct write off of allowance for loan loss | $		$ 3

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Debt-Related Investments (Schedule of Debt Related Income) (Details) $ in Thousands	3 Months Ended								12 Months Ended
	Dec. 31, 2016 USD ($)	Sep. 30, 2016 USD ($)	Jun. 30, 2016 USD ($)	Mar. 31, 2016 USD ($)	Dec. 31, 2015 USD ($)	Sep. 30, 2015 USD ($)	Jun. 30, 2015 USD ($)	Mar. 31, 2015 USD ($)	Dec. 31, 2016 USD ($) security	Dec. 31, 2015 USD ($) security	Dec. 31, 2014 USD ($) security
Investment [Line Items]
Debt-related income	$ 233	$ 235	$ 237	$ 238	$ 1,328	$ 807	$ 1,584	$ 3,203	$ 943	$ 6,922	$ 7,396
Weighted Average Yield	6.10%								6.10%
Number of debt investment repaid | security									0	6	3
Mortgage Notes
Investment [Line Items]
Debt-related income									$ 943	$ 5,136	$ 4,521
Weighted Average Yield	6.10%								6.10%
Mezzanine Debt
Investment [Line Items]
Debt-related income									$ 0	$ 1,786	$ 2,875

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Debt-Related Investments (Debt Investment Activity) (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2016	Dec. 31, 2015
Investment in debt related investments:
Beginning balance January 1	$ 15,722	$ 94,951
Investments	0	3,465
Principal repayments	(469)	(82,417)
Amortization of deferred fees, costs, and discounts/premiums	(44)	(277)
Ending balance December 31	$ 15,209	15,722
Interest capitalized		$ 2,000

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Debt-Related Investments (Summary of Debt Related Investments) (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2014
Investment [Line Items]
Mortgage loans, interest rate	6.40%
Face Amount of Debt	$ 15,140
Debt-related investments, net	$ 15,209	$ 15,722	$ 94,951
Mortgage Notes | Mountain | Fixed
Investment [Line Items]
Region	Mountain
Interest Rate Fixed or Variable	Fixed
Mortgage loans, interest rate	5.20%
Face Amount of Debt	$ 3,048
Debt-related investments, net	$ 3,036
Mortgage Notes | Southeast | Fixed
Investment [Line Items]
Region	Southeast
Interest Rate Fixed or Variable	Fixed
Mortgage loans, interest rate	7.00%
Face Amount of Debt	$ 8,483
Debt-related investments, net	$ 8,551
Mortgage Notes | Northeast | Fixed
Investment [Line Items]
Region	Northeast
Interest Rate Fixed or Variable	Fixed
Mortgage loans, interest rate	6.20%
Face Amount of Debt	$ 3,609
Debt-related investments, net	$ 3,622

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Debt Obligations (Narrative) (Details)	12 Months Ended
	Dec. 31, 2016 USD ($) entity lender loan extension	Dec. 31, 2015 USD ($)
Debt Instrument [Line Items]
Number of interest-only mortgage notes | loan	7
Number of amortizing mortgage notes | loan	4
Interest-only mortgage notes, outstanding balance	$ 316,300,000
Amortizing mortgage notes outstanding balance	27,200,000
Unsecured borrowings	$ 706,554,000	$ 511,905,000
Revolving Credit Facility
Debt Instrument [Line Items]
Number of lenders | lender	14
Credit facility, maximum borrowing capacity	$ 400,000,000
Potential maximum borrowing capacity	$ 900,000,000
Credit facility expiration date	Jan. 31, 2019
Revolving credit facility extension period	1 year
Percentage of extension fee to outstanding principal balance	0.15%
Unused portion of the Facility	$ 164,000,000	$ 230,800,000
Unsecured borrowings	$ 236,000,000
Revolving Credit Facility | Minimum
Debt Instrument [Line Items]
Outstanding borrowings interest rate spread over LIBOR	1.40%
Revolving Credit Facility | Maximum
Debt Instrument [Line Items]
Outstanding borrowings interest rate spread over LIBOR	2.30%
Term Loan
Debt Instrument [Line Items]
Credit facility, maximum borrowing capacity	$ 675,000,000
Term Loan | $275 Million Term Loan
Debt Instrument [Line Items]
Credit facility, maximum borrowing capacity	$ 275,000,000.00
Revolving credit facility extension period	1 year
Percentage of extension fee to outstanding principal balance	0.125%
Maturity date	Jan. 31, 2018
Number of one year extensions | extension	2
Length of extension option (years)	1 year
Unsecured borrowings	$ 275,000,000
Debt term	5 years
Term Loan | $275 Million Term Loan | Minimum | LIBOR
Debt Instrument [Line Items]
Outstanding borrowings interest rate spread over LIBOR	1.35%
Term Loan | $275 Million Term Loan | Maximum | LIBOR
Debt Instrument [Line Items]
Outstanding borrowings interest rate spread over LIBOR	2.20%
Term Loan | $200 Million Term Loan
Debt Instrument [Line Items]
Number of lenders | entity	6
Maturity date	Feb. 27, 2022
Number of one year extensions | extension	0
Unsecured borrowings	$ 200,000,000
Debt term	7 years
Term Loan | $200 Million Term Loan | Minimum | LIBOR
Debt Instrument [Line Items]
Outstanding borrowings interest rate spread over LIBOR	1.65%
Term Loan | $200 Million Term Loan | Maximum | LIBOR
Debt Instrument [Line Items]
Outstanding borrowings interest rate spread over LIBOR	2.55%
Letter of Credit
Debt Instrument [Line Items]
Credit facility, maximum borrowing capacity	$ 50,000,000
Swing Line Loan
Debt Instrument [Line Items]
Credit facility, maximum borrowing capacity	$ 50,000,000

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Debt Obligations (Schedule of Borrowings) (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2016	Dec. 31, 2015
Debt Instrument [Line Items]
Principal Balance	$ 1,054,470	$ 1,105,849
Less: net debt issuance costs	(6,295)	(6,317)
Add: mark-to-market adjustment on assumed debt	626	1,304
Less: GAAP principal amortization on restructed debt	0	(3,067)
Total borrowings (net basis)	$ 1,048,801	$ 1,097,769
Weighted Average Stated Interest Rate	3.40%	4.10%
Mortgages
Debt Instrument [Line Items]
Principal Balance	$ 85,500
Fixed-Rate Mortgages
Debt Instrument [Line Items]
Principal Balance	$ 290,970	$ 580,959
Weighted Average Stated Interest Rate	4.90%	5.60%
Gross Investment Amount Securing Borrowings	$ 462,954	$ 1,016,560
Floating-Rate Mortgages
Debt Instrument [Line Items]
Principal Balance	$ 52,500	$ 7,890
Weighted Average Stated Interest Rate	2.30%	3.40%
Gross Investment Amount Securing Borrowings	$ 70,485	$ 16,618
Outstanding borrowings interest rate spread over LIBOR	1.65%	3.00%
Total Mortgage Notes
Debt Instrument [Line Items]
Principal Balance	$ 343,470	$ 588,849
Weighted Average Stated Interest Rate	4.50%	5.50%
Gross Investment Amount Securing Borrowings	$ 533,439	$ 1,033,178
Line of Credit
Debt Instrument [Line Items]
Principal Balance	$ 236,000	$ 167,000
Weighted Average Stated Interest Rate	2.30%	1.90%
Weighted average interest rate	2.28%
Line of Credit | LIBOR
Debt Instrument [Line Items]
Outstanding borrowings interest rate spread over LIBOR	1.55%	1.40%
Line of Credit | Interest Rate Swap
Debt Instrument [Line Items]
Principal Balance	$ 12,100	$ 25,400
Weighted average interest rate		1.88%
Term Loans
Debt Instrument [Line Items]
Principal Balance	$ 475,000	$ 350,000
Weighted Average Stated Interest Rate	3.20%	2.60%
Effective interest rate	3.17%	2.59%
Term Loans | LIBOR
Debt Instrument [Line Items]
Outstanding borrowings interest rate spread over LIBOR	1.60%	1.52%
Unsecured Borrowings
Debt Instrument [Line Items]
Principal Balance	$ 711,000	$ 517,000
Weighted Average Stated Interest Rate	2.90%	2.40%

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Debt Obligations (Schedule of Mortgage Notes) (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2016	Dec. 31, 2015
Debt Instrument [Line Items]
Principal Balance	$ 1,054,470	$ 1,105,849
Mortgages
Debt Instrument [Line Items]
Principal Balance	$ 85,500
Stated Interest Rate	2.51%
Mortgages | Mortgage Note, Preston Sherry Plaza
Debt Instrument [Line Items]
Principal Balance	$ 33,000
Stated Interest Rate	3.05%
Outstanding borrowings interest rate spread over LIBOR	1.60%
Effective interest rate	3.051%
Mortgages | Mortgage Note, 1300 Connecticut
Debt Instrument [Line Items]
Principal Balance	$ 52,500
Stated Interest Rate	2.17%
Outstanding borrowings interest rate spread over LIBOR	1.65%
Effective interest rate	2.852%

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Debt Obligations Debt Obligations (Schedule Of Repayment Of Mortgage Notes And Repurchase Facility) (Details) $ in Thousands	12 Months Ended
	Dec. 31, 2016 USD ($) loan	Dec. 31, 2015 USD ($)	Dec. 31, 2014 USD ($)
Debt Instrument [Line Items]
Number of mortgage notes repaid | loan	9
Gain (loss) on extinguishment of debt and financing commitments	$ 5,136	$ (1,168)	$ (63)
Mortgage Note, Washington Commons
Debt Instrument [Line Items]
Contingently payable mortgage note, amount	5,100
Gain (loss) on extinguishment of debt and financing commitments	$ 5,100
Mortgage Note, 40 Boulevard
Debt Instrument [Line Items]
Outstanding borrowings interest rate spread over LIBOR	3.00%
Mortgages
Debt Instrument [Line Items]
Balance Repaid/Extinguished	$ 326,167
Stated Interest Rate	2.51%
Stated interest rate, weighted average	5.82%
Mortgages | Mortgage Note, 1300 Connecticut
Debt Instrument [Line Items]
Repayment Date	Jan. 12, 2016
Balance Repaid/Extinguished	$ 44,979
Stated Interest Rate	6.81%
Maturity date	Apr. 10, 2016
Mortgages | Mortgage Note, Washington Commons
Debt Instrument [Line Items]
Repayment Date	Feb. 01, 2016
Balance Repaid/Extinguished	$ 21,300
Stated Interest Rate	5.94%
Maturity date	Feb. 01, 2016
Mortgages | Mortgage Note, 40 Boulevard
Debt Instrument [Line Items]
Repayment Date	Mar. 01, 2016
Balance Repaid/Extinguished	$ 7,830
Stated Interest Rate	3.44%
Maturity date	Mar. 11, 2016
Mortgages | Mortgage Note, Jay Street
Debt Instrument [Line Items]
Repayment Date	Apr. 11, 2016
Balance Repaid/Extinguished	$ 23,500
Stated Interest Rate	6.05%
Maturity date	Jul. 11, 2016
Mortgages | Mortgage Note, 655 Montgomery
Debt Instrument [Line Items]
Repayment Date	Apr. 11, 2016
Balance Repaid/Extinguished	$ 55,683
Stated Interest Rate	6.01%
Maturity date	Jun. 11, 2016
Mortgages | Mortgage Note, Bala Pointe
Debt Instrument [Line Items]
Repayment Date	Jul. 01, 2016
Balance Repaid/Extinguished	$ 24,000
Stated Interest Rate	5.89%
Maturity date	Sep. 01, 2016
Mortgages | Mortgage Note, Harborside
Debt Instrument [Line Items]
Repayment Date	Sep. 09, 2016
Balance Repaid/Extinguished	$ 104,675
Stated Interest Rate	5.50%
Maturity date	Dec. 10, 2016
Mortgages | Mortgage Note, Bandera Road
Debt Instrument [Line Items]
Repayment Date	Dec. 08, 2016
Balance Repaid/Extinguished	$ 21,500
Stated Interest Rate	5.46%
Maturity date	Feb. 08, 2017
Mortgages | Mortgage Note, Shiloh
Debt Instrument [Line Items]
Repayment Date	Dec. 08, 2016
Balance Repaid/Extinguished	$ 22,700
Stated Interest Rate	5.57%
Maturity date	Jan. 08, 2017

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Debt Obligations (Summary of Borrowings Reflects Contractual Debt Maturities Footnote) (Details)	12 Months Ended
	Dec. 31, 2016 USD ($) loan extension	Dec. 31, 2015 USD ($)
Debt Instrument [Line Items]
Number of Borrowings Maturing | loan	3
Principal Balance	$ 1,054,470,000	$ 1,105,849,000
Less: net debt issuance costs	(6,295,000)	(6,317,000)
Add: mark-to-market adjustment on assumed debt	626,000	1,304,000
Total borrowings (net basis)	1,048,801,000	1,097,769,000
Unsecured borrowings	706,554,000	$ 511,905,000
2017
Debt Instrument [Line Items]
Outstanding Balance, 2017	162,460,000
2018
Debt Instrument [Line Items]
Outstanding Balance, 2018	277,698,000
2019
Debt Instrument [Line Items]
Outstanding Balance, 2019	239,698,000
2020
Debt Instrument [Line Items]
Outstanding Balance, 2020	3,860,000
2021
Debt Instrument [Line Items]
Outstanding Balance, 2021	12,764,000
2022
Debt Instrument [Line Items]
Outstanding Balance, 2022	203,660,000
2023
Debt Instrument [Line Items]
Outstanding Balance, 2023	77,899,000
2024
Debt Instrument [Line Items]
Outstanding Balance, 2024	1,034,000
2025
Debt Instrument [Line Items]
Outstanding Balance, 2025	71,094,000
2026
Debt Instrument [Line Items]
Outstanding Balance, 2026	1,157,000
Thereafter
Debt Instrument [Line Items]
Outstanding Balance, Thereafter	$ 3,146,000
Mortgage Notes
Debt Instrument [Line Items]
Number of Borrowings Maturing | loan	11
Principal Balance	$ 343,470,000
Less: net debt issuance costs	(1,849,000)
Add: mark-to-market adjustment on assumed debt	626,000
Total borrowings (net basis)	$ 342,247,000
Mortgage Notes | 2017
Debt Instrument [Line Items]
Number of Borrowings Maturing | loan	4
Outstanding Balance, 2017	$ 162,460,000
Mortgage Notes | 2018
Debt Instrument [Line Items]
Number of Borrowings Maturing | loan	0
Outstanding Balance, 2018	$ 2,698,000
Mortgage Notes | 2019
Debt Instrument [Line Items]
Number of Borrowings Maturing | loan	0
Outstanding Balance, 2019	$ 3,698,000
Mortgage Notes | 2020
Debt Instrument [Line Items]
Number of Borrowings Maturing | loan	0
Outstanding Balance, 2020	$ 3,860,000
Mortgage Notes | 2021
Debt Instrument [Line Items]
Number of Borrowings Maturing | loan	1
Outstanding Balance, 2021	$ 12,764,000
Mortgage Notes | 2022
Debt Instrument [Line Items]
Number of Borrowings Maturing | loan	1
Outstanding Balance, 2022	$ 3,660,000
Mortgage Notes | 2023
Debt Instrument [Line Items]
Number of Borrowings Maturing | loan	2
Outstanding Balance, 2023	$ 77,899,000
Mortgage Notes | 2024
Debt Instrument [Line Items]
Number of Borrowings Maturing | loan	0
Outstanding Balance, 2024	$ 1,034,000
Mortgage Notes | 2025
Debt Instrument [Line Items]
Number of Borrowings Maturing | loan	1
Outstanding Balance, 2025	$ 71,094,000
Mortgage Notes | 2026
Debt Instrument [Line Items]
Number of Borrowings Maturing | loan	0
Outstanding Balance, 2026	$ 1,157,000
Mortgage Notes | Thereafter
Debt Instrument [Line Items]
Number of Borrowings Maturing | loan	2
Outstanding Balance, Thereafter	$ 3,146,000
Unsecured Debt
Debt Instrument [Line Items]
Principal Balance	711,000,000
Less: net debt issuance costs	(4,446,000)
Total borrowings (net basis)	$ 706,554,000
Unsecured Debt | 2017
Debt Instrument [Line Items]
Number of Borrowings Maturing | loan	0
Outstanding Balance, 2017	$ 0
Unsecured Debt | 2018
Debt Instrument [Line Items]
Number of Borrowings Maturing | loan	1
Outstanding Balance, 2018	$ 275,000,000
Unsecured Debt | 2019
Debt Instrument [Line Items]
Number of Borrowings Maturing | loan	1
Outstanding Balance, 2019	$ 236,000,000
Unsecured Debt | 2020
Debt Instrument [Line Items]
Number of Borrowings Maturing | loan	0
Outstanding Balance, 2020	$ 0
Unsecured Debt | 2021
Debt Instrument [Line Items]
Number of Borrowings Maturing | loan	0
Outstanding Balance, 2021	$ 0
Unsecured Debt | 2022
Debt Instrument [Line Items]
Number of Borrowings Maturing | loan	1
Outstanding Balance, 2022	$ 200,000,000
Unsecured Debt | 2023
Debt Instrument [Line Items]
Number of Borrowings Maturing | loan	0
Outstanding Balance, 2023	$ 0
Unsecured Debt | 2024
Debt Instrument [Line Items]
Number of Borrowings Maturing | loan	0
Outstanding Balance, 2024	$ 0
Unsecured Debt | 2025
Debt Instrument [Line Items]
Number of Borrowings Maturing | loan	0
Outstanding Balance, 2025	$ 0
Unsecured Debt | 2026
Debt Instrument [Line Items]
Number of Borrowings Maturing | loan	0
Outstanding Balance, 2026	$ 0
Unsecured Debt | Thereafter
Debt Instrument [Line Items]
Number of Borrowings Maturing | loan	0
Outstanding Balance, Thereafter	$ 0
Term Loan
Debt Instrument [Line Items]
Credit facility, maximum borrowing capacity	675,000,000
Term Loan | $275 Million Term Loan
Debt Instrument [Line Items]
Unsecured borrowings	$ 275,000,000
Number of one year extensions | extension	2
Revolving credit facility extension period	1 year
Credit facility, maximum borrowing capacity	$ 275,000,000.00
Maturity date	Jan. 31, 2018
Term Loan | $200 Million Term Loan
Debt Instrument [Line Items]
Unsecured borrowings	$ 200,000,000
Number of one year extensions | extension	0
Maturity date	Feb. 27, 2022
Revolving Credit Facility
Debt Instrument [Line Items]
Unsecured borrowings	$ 236,000,000
Revolving credit facility extension period	1 year
Credit facility, maximum borrowing capacity	$ 400,000,000

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Derivatives and Hedging Activities (Narrative) (Details)	12 Months Ended
	Dec. 31, 2016 USD ($) security agreement	Dec. 31, 2015 USD ($) agreement
Derivative [Line Items]
Estimated increase to interest expense related to active effective hedges of floating rate debt	$ 3,300,000
Derivative liabilities	2,900,000
Posted collateral related to agreements	0
Designated Hedges
Derivative [Line Items]
Total notional amount	395,100,000	$ 375,400,000
Interest Rate Swap
Derivative [Line Items]
Estimated increase to interest expense related to termination of hedging instrument	$ 2,000,000
Interest Rate Swap | Designated Hedges
Derivative [Line Items]
Number of derivatives | agreement	11	12
Interest Rate Swap Maturing July 2021 | Designated Hedges
Derivative [Line Items]
Number of derivatives | security	1
Total notional amount	$ 52,500,000

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Derivatives and Hedging Activities (Reconciliation of Accumulated Other Comprehensive Loss, Net of Amounts Attributable to Noncontrolling Interests) (Details) - USD ($)	12 Months Ended
	Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2014
AOCI Including Portion Attributable to Noncontrolling Interest, Net of Tax [Roll Forward]
Beginning balance as of December 31, 2015	$ 628,805,000
Net current-period other comprehensive income	4,416,000	$ (977,000)	$ 510,000
Beginning balance as of December 31, 2016	516,343,000	628,805,000
Amounts reclassified from accumulated other comprehensive income, tax benefit	0
Change in fair value recognized in OCI, Tax	0
(Losses) and Gains on Cash Flow Hedges, Parent
AOCI Including Portion Attributable to Noncontrolling Interest, Net of Tax [Roll Forward]
Beginning balance as of December 31, 2015	(9,967,000)
Beginning balance as of December 31, 2016	(5,849,000)	(9,967,000)
Unrealized (Losses) and Gains On Available-For-Sale Securities, Parent
AOCI Including Portion Attributable to Noncontrolling Interest, Net of Tax [Roll Forward]
Beginning balance as of December 31, 2015	(1,047,000)
Beginning balance as of December 31, 2016	(1,056,000)	(1,047,000)
Accumulated Other Comprehensive Loss, Parent
AOCI Including Portion Attributable to Noncontrolling Interest, Net of Tax [Roll Forward]
Beginning balance as of December 31, 2015	(11,014,000)
Beginning balance as of December 31, 2016	(6,905,000)	$ (11,014,000)
(Losses) and Gains on Cash Flow Hedges, including noncontrolling interest
AOCI Including Portion Attributable to Noncontrolling Interest, Net of Tax [Roll Forward]
Amount of loss reclassified from OCI into interest expense (effective portion) (net of tax benefit of $0)	4,620,000
Change in fair value recognized in OCI (effective portion) (net of tax benefit of $0)	(204,000)
Net current-period other comprehensive income	4,416,000
Accumulated Other Comprehensive Loss, including noncontrolling interest
AOCI Including Portion Attributable to Noncontrolling Interest, Net of Tax [Roll Forward]
Amount of loss reclassified from OCI into interest expense (effective portion) (net of tax benefit of $0)	4,620,000
Change in fair value recognized in OCI (effective portion) (net of tax benefit of $0)	(204,000)
Net current-period other comprehensive income	4,416,000
(Losses) and Gains on Cash Flow Hedges, Noncontrolling interest
AOCI Including Portion Attributable to Noncontrolling Interest, Net of Tax [Roll Forward]
Attribution of and other adjustments to OCI attributable to noncontrolling interests	(298,000)
Unrealized (Losses) and Gains On Available-For-Sale Securities, Noncontrolling interest
AOCI Including Portion Attributable to Noncontrolling Interest, Net of Tax [Roll Forward]
Attribution of and other adjustments to OCI attributable to noncontrolling interests	(9,000)
Accumulated Other Comprehensive Loss, including Noncontrolling interest
AOCI Including Portion Attributable to Noncontrolling Interest, Net of Tax [Roll Forward]
Attribution of and other adjustments to OCI attributable to noncontrolling interests	$ (307,000)

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Derivatives and Hedging Activities (Gross Fair Value of Derivative Financial Instruments as Well as Their Classification) (Details) - USD ($) $ in Thousands	Dec. 31, 2016	Dec. 31, 2015
Derivatives, Fair Value [Line Items]
Derivative fair values, net		$ 157
Derivative Liability	$ 2,900
Other Assets
Derivatives, Fair Value [Line Items]
Derivative Asset		41
Other Liabilities
Derivatives, Fair Value [Line Items]
Derivative Liability		3,100
Designated Hedges | Interest Rate Contract | Other Assets
Derivatives, Fair Value [Line Items]
Asset Derivatives, Fair value, Gross asset	2,135	197
Designated Hedges | Interest Rate Contract | Other Liabilities
Derivatives, Fair Value [Line Items]
Derivative instruments	$ 2,777	$ 3,303

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Derivatives and Hedging Activities (Effect of Derivative Financial Instruments on Financial Statements) (Details) - Designated Hedges - Interest Rate Contract - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2014
Derivative Instruments, Gain (Loss) [Line Items]
Amount of (loss) gain recognized in OCI (effective portion)	$ 204	$ 5,797	$ 2,370
Interest Expense
Derivative Instruments, Gain (Loss) [Line Items]
Amount of loss reclassified from accumulated OCI into income (effective portion)	(4,620)	(4,820)	(3,091)
Interest and Other Income (Expense)
Derivative Instruments, Gain (Loss) [Line Items]
Amount of gain (loss) recognized in income (ineffective portion and amount excluded from effectiveness testing)	$ 0	$ (3)	$ 1

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Fair Value Disclosures (Assets and Liabilities Measured at Fair Value on Recurring Basis) (Details) - Fair Value, Measurements, Recurring - USD ($) $ in Thousands	Dec. 31, 2016	Dec. 31, 2015
Assets
Real estate securities	$ 200	$ 200
Derivative instruments	2,135	197
Total assets	2,335	397
Liabilities
Derivative instruments	(2,777)	(3,303)
Total liabilities	(2,777)	(3,303)
Fair Value, Inputs, Level 1
Assets
Derivative instruments	2,135	197
Fair Value, Inputs, Level 2
Assets
Total assets	2,135	197
Liabilities
Derivative instruments	(2,777)	(3,303)
Total liabilities	(2,777)	(3,303)
Fair Value, Inputs, Level 3
Assets
Real estate securities	200
Total assets	$ 200	$ 200

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Fair Value of Financial Instruments (Details) - USD ($) $ in Thousands	Dec. 31, 2016	Dec. 31, 2015
Carrying Amount, Fair Value Disclosure | Fixed-rate debt related investments, net
Assets:
Fixed-rate debt related investments, net	$ 15,209	$ 15,722
Carrying Amount, Fair Value Disclosure | Fixed-Rate Mortgages
Liabilities:
Fixed-rate mortgage notes carried at amortized cost	290,329	577,978
Carrying Amount, Fair Value Disclosure | Floating-Rate Mortgages
Liabilities:
Floating-rate mortgage notes	51,918	7,886
Carrying Amount, Fair Value Disclosure | Floating-Rate Unsecured Borrowings
Liabilities:
Floating-rate unsecured borrowings	706,554	511,905
Estimated Fair Value, Fair Value Disclosure | Fixed-rate debt related investments, net
Assets:
Fixed-rate debt related investments, net	15,784	16,526
Estimated Fair Value, Fair Value Disclosure | Fixed-Rate Mortgages
Liabilities:
Fixed-rate mortgage notes carried at amortized cost	291,624	576,432
Estimated Fair Value, Fair Value Disclosure | Floating-Rate Mortgages
Liabilities:
Floating-rate mortgage notes	51,942	7,883
Estimated Fair Value, Fair Value Disclosure | Floating-Rate Unsecured Borrowings
Liabilities:
Floating-rate unsecured borrowings	$ 711,000	$ 517,000

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Noncontrolling Interests (Narrative) (Details)	12 Months Ended
	Dec. 31, 2016 USD ($) property component class_of_stock $ / shares shares	Dec. 31, 2015 USD ($) shares	Dec. 31, 2014 shares	Dec. 23, 2015 $ / shares	Aug. 12, 2015 $ / shares
Noncontrolling Interest [Line Items]
Number of components in noncontrolling interests | component	2
Number of common stock classes | class_of_stock	4
Number of real estate properties sold | property	2
Class E
Noncontrolling Interest [Line Items]
Shares OP Units redeemed | shares	26,954,000	28,240,000	11,016,000
Shares redeemed | shares	1,800,000	8,400,000
Operating Partnership share price | $ / shares	$ 7.37			$ 7.39	$ 7.25
Class E | Retail Property, Jacksonville, FL Market
Noncontrolling Interest [Line Items]
Operating Partnership units issued | shares	1,000,000
Operating Partnership share price | $ / shares	$ 7.18
Aggregate purchase price | $	$ 7,300,000
Cash payment | $	783,000
Decrease in financial obligation | $	17,900,000
Increase in noncontrolling interests | $	$ 16,200,000
Operating Partnership Units
Noncontrolling Interest [Line Items]
Partnership unit conversion rate to shares of common stock	1
Number of Operating Partnership Units held by the general partner | shares	200
Contribution for OP Units | $	$ 2,000
Percentage of proceeds received contributed to our Operating Partnership	100.00%
Limited partnership interest owned in Operating Partnership	92.59%	92.80%
Operating Partnership Units | Class E
Noncontrolling Interest [Line Items]
Partnership unit conversion rate to shares of common stock	1
Period following issuance, operating units may be redeemed	1 year
Shares redeemed | shares	760,000	360,000
OP Units redemption value maximum | $	$ 5,600,000	$ 2,700,000
Operating Partnership units issued | shares	12,000,000	12,800,000
Operating Partnership units outstanding | shares	12,000,000	12,800,000
Operating Partnership Units | Class E | Maximum
Noncontrolling Interest [Line Items]
OP Units redemption value maximum | $	$ 91,200,000	$ 95,600,000

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Noncontrolling Interests (Summary of Noncontrolling Interest Balances) (Details) - USD ($) $ in Thousands	3 Months Ended								12 Months Ended
	Dec. 31, 2016	Sep. 30, 2016	Jun. 30, 2016	Mar. 31, 2016	Dec. 31, 2015	Sep. 30, 2015	Jun. 30, 2015	Mar. 31, 2015	Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2014
Stockholders' Equity Attributable to Noncontrolling Interest [Roll Forward]
Beginning Balance				$ 97,146					$ 97,146
Net income (loss)	$ 245	$ 353	$ 18	4,456	$ 46	$ (1,297)	$ 37	$ 8,618	5,072	$ 7,404	$ 4,802
Contributions from noncontrolling interest									3,225	17,337	104
Distributions to noncontrolling interest holders									(9,006)	(4,689)	(9,390)
Ending Balance	91,748				97,146				91,748	97,146
Operating Partnership Units
Stockholders' Equity Attributable to Noncontrolling Interest [Roll Forward]
Beginning Balance				94,734					94,734
Net income (loss)									3,883
Unrealized change from cash flow hedging derivatives									307
Contributions from noncontrolling interest									0
Distributions to noncontrolling interest holders									(4,661)
Redemption and buyout of noncontrolling interests, net									(4,996)
Ending Balance	89,267				94,734				89,267	94,734
Joint Venture Partner Interests
Stockholders' Equity Attributable to Noncontrolling Interest [Roll Forward]
Beginning Balance				2,412					2,412
Net income (loss)									1,189
Contributions from noncontrolling interest									3,225
Distributions to noncontrolling interest holders									(4,345)
Ending Balance	2,481				2,412				2,481	2,412
Noncontrolling Interests
Stockholders' Equity Attributable to Noncontrolling Interest [Roll Forward]
Beginning Balance				$ 97,146					97,146
Net income (loss)									5,072
Unrealized change from cash flow hedging derivatives									307
Contributions from noncontrolling interest									3,225	17,337	104
Distributions to noncontrolling interest holders									(9,006)	(4,689)	$ (9,390)
Redemption and buyout of noncontrolling interests, net									(4,996)
Ending Balance	$ 91,748				$ 97,146				$ 91,748	$ 97,146

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Stockholders' Equity (Narrative) (Details) $ / shares in Units, shares in Thousands			12 Months Ended
	Dec. 23, 2015 USD ($) $ / shares shares	Aug. 12, 2015 USD ($) $ / shares shares	Dec. 31, 2016 USD ($) tender_offer $ / shares shares	Dec. 31, 2015 USD ($) shares	Dec. 31, 2014 USD ($) shares	Oct. 23, 2009 USD ($)
Stockholders Equity Note Disclosure [Line Items]
Number of self-tender offers | tender_offer			4
Class E
Stockholders Equity Note Disclosure [Line Items]
Common stock, shares authorized value						$ 237,500,000
Shares repurchased through tender offer, shares | shares	2,700	17,200	25,100
Share price | $ / shares	$ 7.39	$ 7.25	$ 7.37
Shares repurchased through tender offer, value	$ 20,100,000	$ 124,400,000	$ 185,300,000
Shares redeemed | shares			1,800	8,400
Value of common stock shares redeemed			$ 13,500,000	$ 61,700,000
Stock redemption additional authorized amount				$ 28,000,000
Class I Shares, Class A Shares, And Class W Shares
Stockholders Equity Note Disclosure [Line Items]
Shares redeemed | shares			1,500	916
Value of common stock shares redeemed			$ 11,200,000	$ 6,800,000
Class I And Class W Shares
Stockholders Equity Note Disclosure [Line Items]
Shares redeemed | shares					650
Value of common stock shares redeemed					$ 4,600,000

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Stockholders' Equity (Information of Share Transactions) (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2014
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Beginning balance, shares	164,124,057
Ending balance, shares	150,636,393	164,124,057
Class E
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Beginning balance, shares	137,275,396	163,068,000	171,254,000
Beginning balance, amount	$ 1,482,140	$ 1,670,408	$ 1,728,146
Distribution reinvestment plan, shares	2,004,000	2,447,000	2,830,000
Distribution reinvestment plan	$ 14,859	$ 17,866	$ 19,785
Redemptions of common stock (in shares)	(26,954,000)	(28,240,000)	(11,016,000)
Redemptions of common stock	$ (198,810)	$ (206,134)	$ (77,523)
Ending balance, amount	$ 1,298,189	$ 1,482,140	$ 1,670,408
Ending balance, shares	112,325,127	137,275,396	163,068,000
Class A
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Beginning balance, shares	1,703,109	1,187,000	217,000
Beginning balance, amount	$ 12,438	$ 8,518	$ 1,534
Shares sold, shares	436,000	511,000	955,000
Shares sold	$ 3,337	$ 3,888	$ 6,879
Distribution reinvestment plan, shares	42,000	28,000	15,000
Distribution reinvestment plan	$ 311	$ 203	$ 105
Redemptions of common stock (in shares)	(180,000)	(23,000)	0
Redemptions of common stock	$ (1,328)	$ (171)	$ 0
Ending balance, amount	$ 14,758	$ 12,438	$ 8,518
Ending balance, shares	2,001,359	1,703,109	1,187,000
Class W
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Beginning balance, shares	1,812,277	1,117,000	209,000
Beginning balance, amount	$ 12,952	$ 7,808	$ 1,437
Shares sold, shares	782,000	693,000	900,000
Shares sold	$ 5,799	$ 5,134	$ 6,310
Distribution reinvestment plan, shares	44,000	22,000	10,000
Distribution reinvestment plan	$ 331	$ 158	$ 74
Redemptions of common stock (in shares)	(367,000)	(20,000)	(2,000)
Redemptions of common stock	$ (2,701)	$ (148)	$ (13)
Ending balance, amount	$ 16,381	$ 12,952	$ 7,808
Ending balance, shares	2,271,361	1,812,277	1,117,000
Class I
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Beginning balance, shares	23,334,275	13,028,000	4,327,000
Beginning balance, amount	$ 162,283	$ 90,320	$ 29,507
Shares sold, shares	10,960,000	10,135,000	9,090,000
Shares sold	$ 81,479	$ 73,982	$ 63,705
Distribution reinvestment plan, shares	684,000	426,000	123,000
Distribution reinvestment plan	$ 5,075	$ 3,119	$ 867
Stock-based compensation, shares	32,000	618,000	136,000
Stock-based compensation	$ 1,415	$ 1,295	$ 807
Redemptions of common stock (in shares)	(971,000)	(873,000)	(648,000)
Redemptions of common stock	$ (7,203)	$ (6,433)	$ (4,566)
Ending balance, amount	$ 243,049	$ 162,283	$ 90,320
Ending balance, shares	34,038,546	23,334,275	13,028,000
Common Stock
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Beginning balance, shares	164,124,000	178,400,000	176,007,000
Beginning balance, amount	$ 1,669,813	$ 1,777,054	$ 1,760,624
Shares sold, shares	12,178,000	11,339,000	10,945,000
Shares sold	$ 90,615	$ 83,004	$ 76,894
Distribution reinvestment plan, shares	2,774,000	2,923,000	2,978,000
Distribution reinvestment plan	$ 20,576	$ 21,346	$ 20,831
Stock-based compensation, shares	32,000	618,000	136,000
Stock-based compensation	$ 1,415	$ 1,295	$ 807
Redemptions of common stock (in shares)	(28,472,000)	(29,156,000)	(11,666,000)
Redemptions of common stock	$ (210,042)	$ (212,886)	$ (82,102)
Ending balance, amount	$ 1,572,377	$ 1,669,813	$ 1,777,054
Ending balance, shares	150,636,000	164,124,000	178,400,000

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Stockholders' Equity (Total Distributions Declared and Portion of Each Contribution Paid in Cash and Reinvested) (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2014
Stockholders' Equity Attributable to Parent [Abstract]
Paid in cash	$ 36,418	$ 41,723	$ 41,381
Reinvested in shares	20,622	21,177	20,855
Total distributions	$ 57,040	$ 62,900	$ 62,236
Paid in cash	63.80%	66.30%	66.50%
Reinvested in shares	36.20%	33.70%	33.50%
Total	100.00%	100.00%	100.00%

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Stockholders' Equity (Distributions Paid and/or Authorized) (Details) - $ / shares	3 Months Ended
	Mar. 31, 2017	Dec. 31, 2016	Sep. 30, 2016	Jun. 30, 2016	Mar. 31, 2016	Dec. 31, 2015	Sep. 30, 2015	Jun. 30, 2015	Mar. 31, 2015
Dividends [Line Items]
Distributions declared per common share		$ 0.0892	$ 0.0892	$ 0.0893	$ 0.0894	$ 0.0894379087533894	$ 0.0895098011053535	$ 0.0896107744282998	$ 0.0896693054852961
Subsequent Event
Dividends [Line Items]
Distributions declared per common share	$ 0.0891056029657037
Class E
Dividends [Line Items]
Distributions declared per common share		0.0900	0.0900	0.0900	0.0900	0.09	0.09	0.09	0.09
Class E | Subsequent Event
Dividends [Line Items]
Distributions declared per common share	0.09
Class A
Dividends [Line Items]
Distributions declared per common share		0.0692	0.0695	0.0699	0.0697	0.069394694520548	0.0694694945205479	0.0699937936986301	0.0705321246575342
Class A | Subsequent Event
Dividends [Line Items]
Distributions declared per common share	0.0691799383561644
Class W
Dividends [Line Items]
Distributions declared per common share		0.0787	0.0788	0.0790	0.0789	0.0787607424657534	0.0788015424657534	0.0790875238356164	0.0793811589041096
Class W | Subsequent Event
Dividends [Line Items]
Distributions declared per common share	0.078643602739726
Class I
Dividends [Line Items]
Distributions declared per common share		$ 0.0881	$ 0.0881	$ 0.0882	$ 0.0882	$ 0.0881267904109589	$ 0.0881335904109589	$ 0.0881812539726027	$ 0.0882301931506849
Class I | Subsequent Event
Dividends [Line Items]
Distributions declared per common share	$ 0.0881072671232877

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Stockholders' Equity (Summary of Information Regarding Taxability of Distributions on Common Shares) (Details)	12 Months Ended
	Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2014
Stockholders' Equity Attributable to Parent [Abstract]
Ordinary income	53.66%	81.01%	63.92%
Non-taxable return of capital	46.34%	18.99%	36.08%
Total	100.00%	100.00%	100.00%

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Related Party Transactions (Narrative) (Details)									1 Months Ended	12 Months Ended			48 Months Ended
	Sep. 19, 2016	Jun. 23, 2016	May 11, 2016	Feb. 04, 2016 $ / shares shares	Sep. 16, 2015	Jun. 25, 2015 shares	Feb. 25, 2015 $ / shares shares	Jun. 25, 2014 shares	Mar. 31, 2016 USD ($)	Dec. 31, 2016 USD ($) employee $ / shares shares	Dec. 31, 2015 USD ($) $ / shares shares	Dec. 31, 2014 USD ($) $ / shares shares	Dec. 31, 2009 USD ($) shares	Dec. 31, 2013 shares	Dec. 05, 2013 USD ($)
Related Party Transaction [Line Items]
Number of advisor employees serving as directors and officers | employee										2
Advisory Agreement Contract Renewal Term										1 year
Component of Advisory fee as a percent of the overall return										25.00%
Percentage of return not payable to the Advisor										6.00%
Maximum annual Advisory fee performance condition as a percentage of the overall return										10.00%
Class E Dealer Manager fee portion waived under NAV per share threshold | $ / shares										$ 10.00
Maximum Advisor real property disposition fee as a percentage of the sales price of real property assets										1.00%
Maximum percentage of reasonable customary and commission payable to Advisor upon disposition of a property										50.00%
Fee payable to the Advisor as a percentage of the sales price of real property assets										1.00%
Maximum commissions payable as a percent of the sales price of the property sold										6.00%
Maximum Advisor reimbursement of cumulative organization and offering costs as a percentage of gross proceeds from the Offering										15.00%
Maximum primary dealer fee as percentage of gross proceeds from sale of class I shares										5.00%
Total gross proceeds raised from sale of class I shares										$ 88,206,000	$ 80,609,000	$ 74,916,000
Maximum Dealer Manager and Distribution fees as a percent of gross proceeds from NAV Offering										10.00%
Related party transaction expense										$ 29,808,000	$ 34,544,000	$ 29,575,000
Common stock, shares issued | shares										150,636,393	164,124,057
Private Placement
Related Party Transaction [Line Items]
Lease-back Private Placement Terms									29 years
Class I
Related Party Transaction [Line Items]
Common stock, shares issued | shares										34,038,546	23,334,275	13,028,000		4,327,000
Class I | Restricted Stock
Related Party Transaction [Line Items]
Restricted stock units granted | shares				49,340			49,263
Weighted average grant date fair value for grants in period (usd per share) | $ / shares				$ 7.41			$ 7.18
Vesting period										4 years
Number of shares vested in period | shares										27,458	19,848	11,198
Weighted average value of vested shares (usd per share) | $ / shares										$ 7.39	$ 7.23	$ 6.96
Amount recorded in general and administrative expenses for restricted stock grants										$ 250,000	$ 188,000	$ 125,000
Class A
Related Party Transaction [Line Items]
Common stock, shares issued | shares										2,001,359	1,703,109	1,187,000		217,000
Follow-On Offering
Related Party Transaction [Line Items]
Maximum primary dealer fee as percentage of gross proceeds from sale of class I shares	5.00%		5.00%
Total gross proceeds raised from sale of class I shares										$ 100,000,000
Maximum | Class I | Restricted Stock
Related Party Transaction [Line Items]
Vesting period										4 years
Minimum | Class I | Restricted Stock
Related Party Transaction [Line Items]
Vesting period										3 years
Amended Advisory Agreement
Related Party Transaction [Line Items]
Dealer management fee daily accrual, percentage		0.315%
DST Properties
Related Party Transaction [Line Items]
Percent Of Interests Intended To Sell To Third Parties										100.00%
Management fee upon disposition, percent of gross sale price										1.00%
Management loan fee, percent of financing arranged										1.00%
DST Properties | Private Placement
Related Party Transaction [Line Items]
Private placement, offering expense mark-up, percent of gross equity proceeds									1.50%
Private placement, purchase price mark-up, percent of gross equity proceeds									8.00%
Non-accountable Reimbursement By Investors, Percent Of Gross Equity Proceeds For Real Estate Transaction Costs									1.00%
Operating Partnership DST Program | Private Placement
Related Party Transaction [Line Items]
Total gross proceeds raised from sale of class I shares										$ 2,500,000			$ 183,100,000
Sale of Stock, Number of Shares Issued in Transaction | shares													17,700,000
Follow-On Offering | Common Class A and Class W
Related Party Transaction [Line Items]
Dealer management fee daily accrual, percentage					0.164%
Follow-On Offering | Class I
Related Party Transaction [Line Items]
Dealer management fee daily accrual, percentage					0.274%
Follow-On Offering | Class A
Related Party Transaction [Line Items]
Distribution Fee Daily Accrual, Percentage					0.137%
Director | Restricted Stock Units (RSUs)
Related Party Transaction [Line Items]
Vesting period										1 year
Director | Class I | Restricted Stock Units (RSUs)
Related Party Transaction [Line Items]
Board approved amount of annual grant															$ 10,000
Restricted stock units granted | shares						4,116		4,055
Company Advisor | Class I
Related Party Transaction [Line Items]
Advisor agreement termination, notification period										30 days
Advisor agreement termination, transaction close period										60 days
Company Advisor | Class I | Restricted Stock Units (RSUs)
Related Party Transaction [Line Items]
Restricted stock units granted | shares										842,000
Restricted stock units unvested and unsettled | shares										412,000
Weighted average grant-date NAV | $ / shares										$ 7.18
Common stock, shares issued | shares										38,000
Offset period										12 months
Nonvested awards not yet recognized										$ 3,100,000
Primary Dealer Fee
Related Party Transaction [Line Items]
Total gross proceeds raised from sale of class I shares										69,300,000
Related party transaction expense										3,465,000	$ 2,540,000	$ 2,197,000
Primary Dealer Fee | Maximum
Related Party Transaction [Line Items]
Related party transaction expense										7,500,000
Dealer Manager
Related Party Transaction [Line Items]
Related party transaction expense										381,000	258,000	121,000
Retained Amount To Third Party Brokers										347,000	254,000	220,000
Liabilities to related parties										3,900,000
Dealer Manager | Maximum
Related Party Transaction [Line Items]
Related party transaction expense										150,000,000
Advisory Fees
Related Party Transaction [Line Items]
Related party transaction expense										14,857,000	17,083,000	15,919,000
Advisory Fees | Company Advisor | Class I | Restricted Stock Units (RSUs)
Related Party Transaction [Line Items]
Related party transaction expense										$ 1,100,000	$ 1,100,000	$ 653,000
Common stock, shares issued | shares										153,000	153,000	123,000
Dividend Capital Exchange LLC | Dealer Manager Agreement | Private Placement
Related Party Transaction [Line Items]
Private placement, amount of interests placed with dealer									$ 500,000,000
Private Placement, Commission, Percent Of Gross Equity Proceeds									5.00%
Private placement, dealer fee, percent of gross equity proceeds									1.50%
BCG TRT Advisors LLC
Related Party Transaction [Line Items]
Asset management fee										$ 37,000	$ 24,000	$ 35,000

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Related Party Transactions (Schedule Of RSU Grants) (Details) - Class I - Restricted Stock Units (RSUs) - Company Advisor shares in Thousands	Dec. 31, 2016 $ / shares shares
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of Unvested Shares | shares	412
Grant date NAV per share | $ / shares	$ 7.18
April 7, 2014 Grant
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of Unvested Shares | shares	123
Grant date NAV per share | $ / shares	$ 6.96
February 25, 2015 Grant
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of Unvested Shares | shares	30
Grant date NAV per share | $ / shares	$ 7.18
February 25, 2015 Grant
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of Unvested Shares | shares	135
Grant date NAV per share | $ / shares	$ 7.18
February 4, 2016
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of Unvested Shares | shares	124
Grant date NAV per share | $ / shares	$ 7.41

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Related Party Transactions (Summary of Fees and Other Amounts Earned by Advisor and Its Related Parties) (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2014
Related Party Transaction [Line Items]
Related party transaction expense	$ 29,808	$ 34,544	$ 29,575
Advisory Fees
Related Party Transaction [Line Items]
Related party transaction expense	14,857	17,083	15,919
Other Reimbursements Paid to our Advisor
Related Party Transaction [Line Items]
Related party transaction expense	8,368	9,008	8,287
Other Reimbursements Paid to our Dealer Manager
Related Party Transaction [Line Items]
Related party transaction expense	396	441	591
Advisory Fees Related to the Disposition Of Real Properties
Related Party Transaction [Line Items]
Related party transaction expense	2,140	4,962	2,064
Development Management Fee
Related Party Transaction [Line Items]
Related party transaction expense	31	88	181
Primary Dealer Fee
Related Party Transaction [Line Items]
Related party transaction expense	3,465	2,540	2,197
Selling Commissions
Related Party Transaction [Line Items]
Related party transaction expense	100	114	187
Dealer Manager
Related Party Transaction [Line Items]
Related party transaction expense	381	258	121
Reallowed amount to third-party brokers	3,100	2,300	2,000
Retained Amount To Third Party Brokers	347	254	220
Distribution Fees
Related Party Transaction [Line Items]
Related party transaction expense	70	50	28
Advisor Fees, Reimbursements For Portion Of Compensation Costs
Related Party Transaction [Line Items]
Related party transaction expense	6,800	7,300	6,900
Maximum | Primary Dealer Fee
Related Party Transaction [Line Items]
Related party transaction expense	7,500
Maximum | Dealer Manager
Related Party Transaction [Line Items]
Related party transaction expense	150,000
Company Advisor | Restricted Stock Units (RSUs) | Class I | Advisory Fees
Related Party Transaction [Line Items]
Related party transaction expense	$ 1,100	$ 1,100	$ 653

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Net Income Per Common Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands		3 Months Ended								12 Months Ended
		Dec. 31, 2016	Sep. 30, 2016	Jun. 30, 2016	Mar. 31, 2016	Dec. 31, 2015	Sep. 30, 2015	Jun. 30, 2015	Mar. 31, 2015	Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2014
Numerator
Income (loss) from continuing operations										$ 55,048	$ 131,659	$ 3,990
(Income) loss from continuing operations attributable to noncontrolling interests										(5,072)	(7,404)	(340)
Income (loss) from continuing operations attributable to common stockholders										49,976	124,255	3,650
Dilutive noncontrolling interests share of income (loss) from continuing operations										3,883	8,632	233
Numerator for diluted earnings per share - adjusted income (loss) from continuing operations										53,859	132,887	3,883
Income from discontinued operations	[1]									0	0	30,004
Income from discontinued operations attributable to noncontrolling interests										0	0	(4,462)
Income from discontinued operations attributable to common stockholders										0	0	25,542
Dilutive noncontrolling interests share of discontinued operations										0	0	1,915
Numerator for diluted earnings per share - adjusted income from discontinued operations										$ 0	$ 0	$ 27,457
Denominator
Weighted average shares outstanding-basic (in shares)										159,648	175,938	178,273
Incremental weighted average shares effect of conversion of OP Units										12,398	12,851	12,718
Weighted average shares outstanding-diluted (in shares)										172,046	188,789	190,991
INCOME (LOSS) PER COMMON SHARE-BASIC AND DILUTED
Net income (loss) from continuing operations (usd per share)										$ 0.31	$ 0.70	$ 0.02
Net income from discontinued operations (usd per share)										0.00	0.00	0.14
NET INCOME PER BASIC AND DILUTED COMMON SHARE (usd per share)		$ 0.02	$ 0.02	$ 0.00	$ 0.27	$ 0.01	$ 0.00	$ 0.00	$ 0.69	$ 0.31	$ 0.70	$ 0.16

[1] Includes approximately $1.6 million paid to our Advisor for fees associated with the disposition of real properties during the year ended December 31, 2014.

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Segment Information (Revenue and Components of Net Operating Income) (Details) $ in Thousands	3 Months Ended								12 Months Ended
	Dec. 31, 2016 USD ($)	Sep. 30, 2016 USD ($)	Jun. 30, 2016 USD ($)	Mar. 31, 2016 USD ($)	Dec. 31, 2015 USD ($)	Sep. 30, 2015 USD ($)	Jun. 30, 2015 USD ($)	Mar. 31, 2015 USD ($)	Dec. 31, 2016 USD ($) segment	Dec. 31, 2015 USD ($)	Dec. 31, 2014 USD ($)
Segment Reporting Information [Line Items]
Number of operating segments | segment									3
Rental revenue	$ 53,723	$ 53,258	$ 52,702	$ 55,544	$ 54,970	$ 52,854	$ 51,075	$ 59,379	$ 215,227	$ 218,278	$ 224,201
NOI									149,640	158,688	173,204
Office Segment
Segment Reporting Information [Line Items]
Rental revenue									126,782	137,204	139,245
NOI									84,300	97,441	104,533
Industrial Segment
Segment Reporting Information [Line Items]
Rental revenue									6,073	8,672	23,307
NOI									4,323	6,755	20,780
Retail Segment
Segment Reporting Information [Line Items]
Rental revenue									82,372	72,402	61,649
NOI									$ 61,017	$ 54,492	$ 47,891

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Segment Information (Reconciliation of Net Operating Income to Reported Net Income) (Details) - USD ($) $ in Thousands		3 Months Ended								12 Months Ended
		Dec. 31, 2016	Sep. 30, 2016	Jun. 30, 2016	Mar. 31, 2016	Dec. 31, 2015	Sep. 30, 2015	Jun. 30, 2015	Mar. 31, 2015	Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2014
Reconciliation of net operating income attributable to common shareholders
Net income attributable to common stockholders		$ 3,112	$ 2,965	$ 117	$ 43,782	$ 730	$ (128)	$ 70	$ 123,583	$ 49,976	$ 124,255	$ 29,192
Debt-related income		(233)	(235)	(237)	(238)	(1,328)	(807)	(1,584)	(3,203)	(943)	(6,922)	(7,396)
Real estate depreciation and amortization expense										(80,105)	(83,114)	(88,994)
General and administrative expenses	[1]									(9,450)	(10,720)	(11,108)
Advisory fees, related party										14,857	17,083	15,919
Acquisition-related expenses										(667)	(2,644)	(1,205)
Impairment of real estate property	[2]									2,677	8,124	9,500
Interest and other income (expense)										(2,207)	(2,192)	(1,168)
Interest expense										(40,782)	(47,508)	(61,903)
Loss on extinguishment of debt and financing commitments										(5,136)	1,168	63
Gain on sale of real property	[3]									(45,660)	(134,218)	(10,914)
Discontinued operations	[4]									0	0	(30,004)
Net income attributable to noncontrolling interests		$ 245	$ 353	$ 18	$ 4,456	$ 46	$ (1,297)	$ 37	$ 8,618	5,072	7,404	4,802
Net operating income										$ 149,640	$ 158,688	$ 173,204

[1] Includes approximately $6.4 million, $7.1 million and $6.8 million incurred by our Advisor and its affiliates for reimbursable expenses during the years ended December 31, 2016, 2015, and 2014, respectively.

[2] Includes approximately $265,000 and $125,000 paid to our Advisor for advisory fees associated with the disposition of real properties during the years ended December 31, 2016 and 2015, respectively.

[3] Includes approximately $1.9 million, $4.8 million, and $419,000 paid to our Advisor for advisory fees associated with the disposition of real properties during the years ended December 31, 2016, 2015 and 2014, respectively.

[4] Includes approximately $1.6 million paid to our Advisor for fees associated with the disposition of real properties during the year ended December 31, 2014.

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Segment Information (Schedule of Total Assets by Business Segment) (Details) - USD ($) $ in Thousands	Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2013
Segment assets:
Net investments in real property	$ 1,711,411	$ 1,874,217
Non-segment assets:
Debt-related investments, net	15,209	15,722	$ 94,951
Cash and cash equivalents	13,864	15,769	$ 14,461	$ 24,778
Total Assets	1,783,728	1,960,891
Non-Segments
Non-segment assets:
Debt-related investments, net	15,209	15,722
Cash and cash equivalents	13,864	15,769
Other non-segment assets	43,244	55,183
Office Segment | Operating Segments
Segment assets:
Net investments in real property	825,961	1,027,132
Industrial Segment | Operating Segments
Segment assets:
Net investments in real property	57,651	61,231
Retail Segment | Operating Segments
Segment assets:
Net investments in real property	$ 827,799	$ 785,854

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Income Taxes (Details) - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2016	Dec. 31, 2015
Income Tax Contingency [Line Items]
Percentage of REIT taxable income distributed annually	100.00%
Gross deferred tax assets	$ 4.4	$ 4.4
Earliest Tax Year
Income Tax Contingency [Line Items]
Tax years open to examination	2013
Latest Tax Year
Income Tax Contingency [Line Items]
Tax years open to examination	2016
Minimum
Income Tax Contingency [Line Items]
Percentage of REIT taxable income distributed annually	90.00%

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Quarterly Financial Data (Unaudited) (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended								12 Months Ended
	Dec. 31, 2016	Sep. 30, 2016	Jun. 30, 2016	Mar. 31, 2016	Dec. 31, 2015	Sep. 30, 2015	Jun. 30, 2015	Mar. 31, 2015	Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2014
Quarterly Financial Information Disclosure [Abstract]
Rental revenue	$ 53,723	$ 53,258	$ 52,702	$ 55,544	$ 54,970	$ 52,854	$ 51,075	$ 59,379	$ 215,227	$ 218,278	$ 224,201
Debt-related income	233	235	237	238	1,328	807	1,584	3,203	943	6,922	7,396
Total Revenue	53,956	53,493	52,939	55,782	56,298	53,661	52,659	62,582	216,170	225,200	231,597
Total operating expenses	(43,286)	(44,567)	(42,313)	(43,177)	(45,898)	(49,406)	(41,168)	(44,803)	(173,343)	(181,275)	(177,723)
Other income (expenses)	(7,313)	(5,608)	(10,491)	35,633	(9,624)	(5,680)	(11,384)	114,422	12,221	87,734
Net income	3,357	3,318	135	48,238	776	(1,425)	107	132,201	55,048	131,659	33,994
Net (income) loss attributable to noncontrolling interests	(245)	(353)	(18)	(4,456)	(46)	1,297	(37)	(8,618)	(5,072)	(7,404)	(4,802)
NET INCOME ATTRIBUTABLE TO COMMON STOCKHOLDERS	$ 3,112	$ 2,965	$ 117	$ 43,782	$ 730	$ (128)	$ 70	$ 123,583	$ 49,976	$ 124,255	$ 29,192
NET INCOME (LOSS) PER BASIC AND DILUTED COMMON SHARE (usd per share)	$ 0.02	$ 0.02	$ 0.00	$ 0.27	$ 0.01	$ 0.00	$ 0.00	$ 0.69	$ 0.31	$ 0.70	$ 0.16

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Subsequent Events (Narrative) (Details) $ in Thousands		12 Months Ended
	Jan. 10, 2017 USD ($) property extension	Dec. 31, 2016 USD ($)	Dec. 31, 2015 USD ($)	Dec. 31, 2014 USD ($)	Jan. 31, 2017 USD ($)	Jan. 09, 2017 USD ($)
Subsequent Event [Line Items]
Principal Balance		$ 1,054,470	$ 1,105,849
Mortgage note proceeds		84,045	$ 70,626	$ 0
Mortgages
Subsequent Event [Line Items]
Principal Balance		85,500
Amount repaid on mortgage note		$ 326,167
Interest rate bearing on mortgage note		2.51%
Subsequent Event | Sybase, Inc.
Subsequent Event [Line Items]
Amount of lease terminated					$ 18,700
Percentage of terminated lease to total base rent					11.00%
Subsequent Event | Mortgages | Mortgage Note, 3 Second Street
Subsequent Event [Line Items]
Principal Balance	$ 146,600
Mortgage note proceeds	$ 127,000
Length of extension option (years)	1 year
Interest rate bearing on mortgage note	5.51%
Subsequent Event | Mortgages | Mortgage Note, 3 Second Street | Minimum
Subsequent Event [Line Items]
Number of one year extensions | extension	2
Prepayment premium, percentage	0.00%
Subsequent Event | Mortgages | Mortgage Note, 3 Second Street | Maximum
Subsequent Event [Line Items]
Prepayment premium, percentage	2.25%
Subsequent Event | Mortgages | Mortgage Note, 3 Second Street | LIBOR | Minimum
Subsequent Event [Line Items]
Outstanding borrowings interest rate spread over LIBOR	2.00%
Subsequent Event | Mortgages | Mortgage Note, 3 Second Street | LIBOR | Maximum
Subsequent Event [Line Items]
Outstanding borrowings interest rate spread over LIBOR	2.25%
Subsequent Event | Mortgages | Mortgage Note, Eastern Retail Portfolio
Subsequent Event [Line Items]
Amount repaid on mortgage note	$ 110,000
Number of properties securing mortgage note | property	3
Subsequent Event | Interest rate cap
Subsequent Event [Line Items]
Total notional amount						$ 146,600
Derivative, Cap Interest Rate						3.00%

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Schedule III - Real Estate and Accumulated Depreciation (Details) $ in Thousands	12 Months Ended
	Dec. 31, 2016 USD ($) property	Dec. 31, 2015 USD ($)	Dec. 31, 2014 USD ($)	Dec. 31, 2013 USD ($)
Real Estate and Accumulated Depreciation [Line Items]
Number of Buildings | property	83
Encumbrances	$ 343,470
Initial Cost to Company, Land	481,546
Initial Cost to Company, Building & Improvements	1,638,380
Initial Cost to Company, Total	2,119,926
Cost Capitalized or Adjustments Subsequent to Acquisition	84,396
Gross Amount Carried, Land	473,970
Gross Amount Carried, Building and Improvements	1,730,352
Real Estate, Gross, Total Cost	2,204,322	$ 2,380,174	$ 2,472,926	$ 2,570,480
Accumulated Depreciation	492,911	$ 505,957	$ 523,246	$ 502,847
Aggregate cost of investments in real property for federal income tax purposes	$ 1,700,000
Office
Real Estate and Accumulated Depreciation [Line Items]
Number of Buildings | property	23
Encumbrances	$ 85,500
Initial Cost to Company, Land	178,870
Initial Cost to Company, Building & Improvements	868,714
Initial Cost to Company, Total	1,047,584
Cost Capitalized or Adjustments Subsequent to Acquisition	61,594
Gross Amount Carried, Land	171,176
Gross Amount Carried, Building and Improvements	938,002
Real Estate, Gross, Total Cost	1,109,178
Accumulated Depreciation	$ 283,216
Office | Real Estate Property One
Real Estate and Accumulated Depreciation [Line Items]
Market	Silicon Valley, CA
Number of Buildings | property	3
Encumbrances	$ 0
Initial Cost to Company, Land	13,859
Initial Cost to Company, Building & Improvements	21,974
Initial Cost to Company, Total	35,833
Cost Capitalized or Adjustments Subsequent to Acquisition	6,852
Gross Amount Carried, Land	13,859
Gross Amount Carried, Building and Improvements	28,826
Real Estate, Gross, Total Cost	42,685
Accumulated Depreciation	$ 10,779
Acquisition Date	Jun. 28, 2006
Office | Real Estate Property Two
Real Estate and Accumulated Depreciation [Line Items]
Market	Philadelphia, PA
Number of Buildings | property	1
Encumbrances	$ 0
Initial Cost to Company, Land	10,115
Initial Cost to Company, Building & Improvements	27,516
Initial Cost to Company, Total	37,631
Cost Capitalized or Adjustments Subsequent to Acquisition	9,277
Gross Amount Carried, Land	10,115
Gross Amount Carried, Building and Improvements	36,793
Real Estate, Gross, Total Cost	46,908
Accumulated Depreciation	$ 13,869
Acquisition Date	Aug. 28, 2006
Office | Real Estate Property Three
Real Estate and Accumulated Depreciation [Line Items]
Market	Washington, DC
Number of Buildings | property	1
Encumbrances	$ 52,500
Initial Cost to Company, Land	25,177
Initial Cost to Company, Building & Improvements	41,250
Initial Cost to Company, Total	66,427
Cost Capitalized or Adjustments Subsequent to Acquisition	4,058
Gross Amount Carried, Land	25,177
Gross Amount Carried, Building and Improvements	45,308
Real Estate, Gross, Total Cost	70,485
Accumulated Depreciation	$ 20,999
Acquisition Date	Mar. 10, 2009
Office | Real Estate Property Four
Real Estate and Accumulated Depreciation [Line Items]
Market	San Francisco, CA
Number of Buildings | property	1
Encumbrances	$ 0
Initial Cost to Company, Land	40,327
Initial Cost to Company, Building & Improvements	73,961
Initial Cost to Company, Total	114,288
Cost Capitalized or Adjustments Subsequent to Acquisition	7,538
Gross Amount Carried, Land	32,632
Gross Amount Carried, Building and Improvements	89,194
Real Estate, Gross, Total Cost	121,826
Accumulated Depreciation	$ 17,567
Acquisition Date	Nov. 07, 2013
Office | Real Estate Property Five
Real Estate and Accumulated Depreciation [Line Items]
Market	Denver, CO
Number of Buildings | property	2
Initial Cost to Company, Land	$ 15,713
Initial Cost to Company, Building & Improvements	65,252
Initial Cost to Company, Total	80,965
Cost Capitalized or Adjustments Subsequent to Acquisition	2,195
Gross Amount Carried, Land	15,713
Gross Amount Carried, Building and Improvements	67,447
Real Estate, Gross, Total Cost	83,160
Accumulated Depreciation	$ 9,537
Acquisition Date	Aug. 22, 2014
Office | Real Estate Property Six
Real Estate and Accumulated Depreciation [Line Items]
Market	Austin, TX
Number of Buildings | property	2
Initial Cost to Company, Land	$ 5,094
Initial Cost to Company, Building & Improvements	32,652
Initial Cost to Company, Total	37,746
Cost Capitalized or Adjustments Subsequent to Acquisition	692
Gross Amount Carried, Land	5,094
Gross Amount Carried, Building and Improvements	33,344
Real Estate, Gross, Total Cost	38,438
Accumulated Depreciation	$ 4,420
Acquisition Date	Jan. 15, 2015
Office | Real Estate Property Seven
Real Estate and Accumulated Depreciation [Line Items]
Market	Austin, TX
Number of Buildings | property	2
Initial Cost to Company, Land	$ 4,606
Initial Cost to Company, Building & Improvements	65,250
Initial Cost to Company, Total	69,856
Cost Capitalized or Adjustments Subsequent to Acquisition	1,994
Gross Amount Carried, Land	4,606
Gross Amount Carried, Building and Improvements	67,244
Real Estate, Gross, Total Cost	71,850
Accumulated Depreciation	$ 6,063
Acquisition Date	Apr. 24, 2015
Office | Real Estate Property Eight
Real Estate and Accumulated Depreciation [Line Items]
Market	Fayetteville, AR
Number of Buildings | property	1
Encumbrances	$ 0
Initial Cost to Company, Land	2,699
Initial Cost to Company, Building & Improvements	8,996
Initial Cost to Company, Total	11,695
Cost Capitalized or Adjustments Subsequent to Acquisition	(1)
Gross Amount Carried, Land	2,699
Gross Amount Carried, Building and Improvements	8,995
Real Estate, Gross, Total Cost	11,694
Accumulated Depreciation	$ 3,239
Acquisition Date	Sep. 28, 2007
Office | Real Estate Property Nine
Real Estate and Accumulated Depreciation [Line Items]
Market	Minneapolis/St Paul, MN
Number of Buildings | property	1
Initial Cost to Company, Land	$ 3,538
Initial Cost to Company, Building & Improvements	25,865
Initial Cost to Company, Total	29,403
Cost Capitalized or Adjustments Subsequent to Acquisition	112
Gross Amount Carried, Land	3,538
Gross Amount Carried, Building and Improvements	25,977
Real Estate, Gross, Total Cost	29,515
Accumulated Depreciation	$ 7,732
Acquisition Date	Oct. 03, 2008
Office | Real Estate Property Ten
Real Estate and Accumulated Depreciation [Line Items]
Market	Austin, TX
Number of Buildings | property	1
Initial Cost to Company, Land	$ 2,663
Initial Cost to Company, Building & Improvements	42,315
Initial Cost to Company, Total	44,978
Cost Capitalized or Adjustments Subsequent to Acquisition	5
Gross Amount Carried, Land	2,663
Gross Amount Carried, Building and Improvements	42,320
Real Estate, Gross, Total Cost	44,983
Accumulated Depreciation	$ 12,973
Acquisition Date	Dec. 23, 2008
Office | Real Estate Property Eleven
Real Estate and Accumulated Depreciation [Line Items]
Market	Princeton, NJ
Number of Buildings | property	1
Encumbrances	$ 0
Initial Cost to Company, Land	5,302
Initial Cost to Company, Building & Improvements	45,773
Initial Cost to Company, Total	51,075
Cost Capitalized or Adjustments Subsequent to Acquisition	249
Gross Amount Carried, Land	5,302
Gross Amount Carried, Building and Improvements	46,022
Real Estate, Gross, Total Cost	51,324
Accumulated Depreciation	$ 13,237
Acquisition Date	Nov. 03, 2009
Office | Real Estate Property Twelve
Real Estate and Accumulated Depreciation [Line Items]
Market	Dallas, TX
Number of Buildings | property	1
Encumbrances	$ 33,000
Initial Cost to Company, Land	7,500
Initial Cost to Company, Building & Improvements	22,303
Initial Cost to Company, Total	29,803
Cost Capitalized or Adjustments Subsequent to Acquisition	7,960
Gross Amount Carried, Land	7,500
Gross Amount Carried, Building and Improvements	30,263
Real Estate, Gross, Total Cost	37,763
Accumulated Depreciation	$ 11,521
Acquisition Date	Dec. 16, 2009
Office | Real Estate Property Thirteen
Real Estate and Accumulated Depreciation [Line Items]
Market	Northern New Jersey
Number of Buildings | property	1
Initial Cost to Company, Land	$ 16,800
Initial Cost to Company, Building & Improvements	193,742
Initial Cost to Company, Total	210,542
Cost Capitalized or Adjustments Subsequent to Acquisition	20,487
Gross Amount Carried, Land	16,800
Gross Amount Carried, Building and Improvements	214,229
Real Estate, Gross, Total Cost	231,029
Accumulated Depreciation	$ 79,502
Acquisition Date	Jun. 25, 2010
Office | Real Estate Property Fourteen
Real Estate and Accumulated Depreciation [Line Items]
Market	East Bay, CA
Number of Buildings | property	1
Initial Cost to Company, Land	$ 8,400
Initial Cost to Company, Building & Improvements	136,797
Initial Cost to Company, Total	145,197
Cost Capitalized or Adjustments Subsequent to Acquisition	179
Gross Amount Carried, Land	8,400
Gross Amount Carried, Building and Improvements	136,976
Real Estate, Gross, Total Cost	145,376
Accumulated Depreciation	$ 64,638
Acquisition Date	Jun. 25, 2010
Office | Real Estate Property Fifteen
Real Estate and Accumulated Depreciation [Line Items]
Market	South Florida
Number of Buildings | property	3
Encumbrances	$ 0
Initial Cost to Company, Land	12,047
Initial Cost to Company, Building & Improvements	34,151
Initial Cost to Company, Total	46,198
Cost Capitalized or Adjustments Subsequent to Acquisition	611
Gross Amount Carried, Land	12,048
Gross Amount Carried, Building and Improvements	34,761
Real Estate, Gross, Total Cost	46,809
Accumulated Depreciation	$ 4,862
Acquisition Date	Aug. 06, 2015
Office | Real Estate Property Sixteen
Real Estate and Accumulated Depreciation [Line Items]
Market	South Florida
Number of Buildings | property	1
Initial Cost to Company, Land	$ 5,030
Initial Cost to Company, Building & Improvements	30,917
Initial Cost to Company, Total	35,947
Cost Capitalized or Adjustments Subsequent to Acquisition	(614)
Gross Amount Carried, Land	5,030
Gross Amount Carried, Building and Improvements	30,303
Real Estate, Gross, Total Cost	35,333
Accumulated Depreciation	$ 2,278
Acquisition Date	Dec. 11, 2015
Office | Minimum | Real Estate Property One
Real Estate and Accumulated Depreciation [Line Items]
Depreciable Life (years)	1 year
Office | Minimum | Real Estate Property Two
Real Estate and Accumulated Depreciation [Line Items]
Depreciable Life (years)	1 year
Office | Minimum | Real Estate Property Three
Real Estate and Accumulated Depreciation [Line Items]
Depreciable Life (years)	2 years
Office | Minimum | Real Estate Property Four
Real Estate and Accumulated Depreciation [Line Items]
Depreciable Life (years)	1 year
Office | Minimum | Real Estate Property Five
Real Estate and Accumulated Depreciation [Line Items]
Depreciable Life (years)	1 year
Office | Minimum | Real Estate Property Six
Real Estate and Accumulated Depreciation [Line Items]
Depreciable Life (years)	1 year
Office | Minimum | Real Estate Property Seven
Real Estate and Accumulated Depreciation [Line Items]
Depreciable Life (years)	1 year
Office | Minimum | Real Estate Property Eight
Real Estate and Accumulated Depreciation [Line Items]
Depreciable Life (years)	10 years
Office | Minimum | Real Estate Property Nine
Real Estate and Accumulated Depreciation [Line Items]
Depreciable Life (years)	5 years
Office | Minimum | Real Estate Property Ten
Real Estate and Accumulated Depreciation [Line Items]
Depreciable Life (years)	11 years
Office | Minimum | Real Estate Property Eleven
Real Estate and Accumulated Depreciation [Line Items]
Depreciable Life (years)	5 years
Office | Minimum | Real Estate Property Twelve
Real Estate and Accumulated Depreciation [Line Items]
Depreciable Life (years)	1 year
Office | Minimum | Real Estate Property Thirteen
Real Estate and Accumulated Depreciation [Line Items]
Depreciable Life (years)	3 years
Office | Minimum | Real Estate Property Fourteen
Real Estate and Accumulated Depreciation [Line Items]
Depreciable Life (years)	7 years
Office | Minimum | Real Estate Property Fifteen
Real Estate and Accumulated Depreciation [Line Items]
Depreciable Life (years)	1 year
Office | Minimum | Real Estate Property Sixteen
Real Estate and Accumulated Depreciation [Line Items]
Depreciable Life (years)	1 year
Office | Maximum | Real Estate Property One
Real Estate and Accumulated Depreciation [Line Items]
Depreciable Life (years)	40 years
Office | Maximum | Real Estate Property Two
Real Estate and Accumulated Depreciation [Line Items]
Depreciable Life (years)	40 years
Office | Maximum | Real Estate Property Three
Real Estate and Accumulated Depreciation [Line Items]
Depreciable Life (years)	40 years
Office | Maximum | Real Estate Property Four
Real Estate and Accumulated Depreciation [Line Items]
Depreciable Life (years)	40 years
Office | Maximum | Real Estate Property Five
Real Estate and Accumulated Depreciation [Line Items]
Depreciable Life (years)	40 years
Office | Maximum | Real Estate Property Six
Real Estate and Accumulated Depreciation [Line Items]
Depreciable Life (years)	40 years
Office | Maximum | Real Estate Property Seven
Real Estate and Accumulated Depreciation [Line Items]
Depreciable Life (years)	40 years
Office | Maximum | Real Estate Property Eight
Real Estate and Accumulated Depreciation [Line Items]
Depreciable Life (years)	40 years
Office | Maximum | Real Estate Property Nine
Real Estate and Accumulated Depreciation [Line Items]
Depreciable Life (years)	40 years
Office | Maximum | Real Estate Property Ten
Real Estate and Accumulated Depreciation [Line Items]
Depreciable Life (years)	40 years
Office | Maximum | Real Estate Property Eleven
Real Estate and Accumulated Depreciation [Line Items]
Depreciable Life (years)	40 years
Office | Maximum | Real Estate Property Twelve
Real Estate and Accumulated Depreciation [Line Items]
Depreciable Life (years)	40 years
Office | Maximum | Real Estate Property Thirteen
Real Estate and Accumulated Depreciation [Line Items]
Depreciable Life (years)	40 years
Office | Maximum | Real Estate Property Fourteen
Real Estate and Accumulated Depreciation [Line Items]
Depreciable Life (years)	40 years
Office | Maximum | Real Estate Property Fifteen
Real Estate and Accumulated Depreciation [Line Items]
Depreciable Life (years)	40 years
Office | Maximum | Real Estate Property Sixteen
Real Estate and Accumulated Depreciation [Line Items]
Depreciable Life (years)	40 years
Industrial Property
Real Estate and Accumulated Depreciation [Line Items]
Number of Buildings | property	7,000
Encumbrances	$ 0
Initial Cost to Company, Land	8,818
Initial Cost to Company, Building & Improvements	72,581
Initial Cost to Company, Total	81,399
Cost Capitalized or Adjustments Subsequent to Acquisition	7,729
Gross Amount Carried, Land	8,821
Gross Amount Carried, Building and Improvements	80,307
Real Estate, Gross, Total Cost	89,128
Accumulated Depreciation	$ 31,476
Industrial Property | Real Estate Property Twenty One
Real Estate and Accumulated Depreciation [Line Items]
Market	Dallas, TX
Number of Buildings | property	3,000
Encumbrances	$ 0
Initial Cost to Company, Land	5,162
Initial Cost to Company, Building & Improvements	30,192
Initial Cost to Company, Total	35,354
Cost Capitalized or Adjustments Subsequent to Acquisition	574
Gross Amount Carried, Land	5,165
Gross Amount Carried, Building and Improvements	30,763
Real Estate, Gross, Total Cost	35,928
Accumulated Depreciation	$ 12,174
Acquisition Date	Dec. 21, 2006
Industrial Property | Real Estate Property Twenty Two
Real Estate and Accumulated Depreciation [Line Items]
Market	Louisville, KY
Number of Buildings | property	1,000
Initial Cost to Company, Land	$ 1,124
Initial Cost to Company, Building & Improvements	6,821
Initial Cost to Company, Total	7,945
Cost Capitalized or Adjustments Subsequent to Acquisition	1,162
Gross Amount Carried, Land	1,124
Gross Amount Carried, Building and Improvements	7,983
Real Estate, Gross, Total Cost	9,107
Accumulated Depreciation	$ 2,853
Acquisition Date	Sep. 17, 2008
Industrial Property | Real Estate Property Twenty Three
Real Estate and Accumulated Depreciation [Line Items]
Market	Louisville, KY
Number of Buildings | property	1,000
Initial Cost to Company, Land	$ 672
Initial Cost to Company, Building & Improvements	3,862
Initial Cost to Company, Total	4,534
Cost Capitalized or Adjustments Subsequent to Acquisition	259
Gross Amount Carried, Land	672
Gross Amount Carried, Building and Improvements	4,121
Real Estate, Gross, Total Cost	4,793
Accumulated Depreciation	$ 1,718
Acquisition Date	Sep. 17, 2008
Industrial Property | Real Estate Property Twenty Four
Real Estate and Accumulated Depreciation [Line Items]
Market	Louisville, KY
Number of Buildings | property	1,000
Initial Cost to Company, Land	$ 1,130
Initial Cost to Company, Building & Improvements	6,614
Initial Cost to Company, Total	7,744
Cost Capitalized or Adjustments Subsequent to Acquisition	716
Gross Amount Carried, Land	1,130
Gross Amount Carried, Building and Improvements	7,330
Real Estate, Gross, Total Cost	8,460
Accumulated Depreciation	$ 2,659
Acquisition Date	Sep. 17, 2008
Industrial Property | Real Estate Property Twenty Five
Real Estate and Accumulated Depreciation [Line Items]
Market	Central Kentucky
Number of Buildings | property	1,000
Initial Cost to Company, Land	$ 730
Initial Cost to Company, Building & Improvements	25,092
Initial Cost to Company, Total	25,822
Cost Capitalized or Adjustments Subsequent to Acquisition	5,018
Gross Amount Carried, Land	730
Gross Amount Carried, Building and Improvements	30,110
Real Estate, Gross, Total Cost	30,840
Accumulated Depreciation	$ 12,072
Acquisition Date	Jun. 25, 2010
Industrial Property | Minimum | Real Estate Property Twenty One
Real Estate and Accumulated Depreciation [Line Items]
Depreciable Life (years)	6 years
Industrial Property | Minimum | Real Estate Property Twenty Two
Real Estate and Accumulated Depreciation [Line Items]
Depreciable Life (years)	1 year
Industrial Property | Minimum | Real Estate Property Twenty Three
Real Estate and Accumulated Depreciation [Line Items]
Depreciable Life (years)	5 years
Industrial Property | Minimum | Real Estate Property Twenty Four
Real Estate and Accumulated Depreciation [Line Items]
Depreciable Life (years)	3 years
Industrial Property | Minimum | Real Estate Property Twenty Five
Real Estate and Accumulated Depreciation [Line Items]
Depreciable Life (years)	4 years
Industrial Property | Maximum | Real Estate Property Twenty One
Real Estate and Accumulated Depreciation [Line Items]
Depreciable Life (years)	40 years
Industrial Property | Maximum | Real Estate Property Twenty Two
Real Estate and Accumulated Depreciation [Line Items]
Depreciable Life (years)	40 years
Industrial Property | Maximum | Real Estate Property Twenty Three
Real Estate and Accumulated Depreciation [Line Items]
Depreciable Life (years)	40 years
Industrial Property | Maximum | Real Estate Property Twenty Four
Real Estate and Accumulated Depreciation [Line Items]
Depreciable Life (years)	40 years
Industrial Property | Maximum | Real Estate Property Twenty Five
Real Estate and Accumulated Depreciation [Line Items]
Depreciable Life (years)	40 years
Retail
Real Estate and Accumulated Depreciation [Line Items]
Number of Buildings | property	53
Encumbrances	$ 257,970
Initial Cost to Company, Land	293,858
Initial Cost to Company, Building & Improvements	697,085
Initial Cost to Company, Total	990,943
Cost Capitalized or Adjustments Subsequent to Acquisition	15,073
Gross Amount Carried, Land	293,973
Gross Amount Carried, Building and Improvements	712,043
Real Estate, Gross, Total Cost	1,006,016
Accumulated Depreciation	$ 178,219
Retail | Real Estate Property Twenty Seven
Real Estate and Accumulated Depreciation [Line Items]
Market	San Antonio, TX
Number of Buildings | property	1
Encumbrances	$ 0
Initial Cost to Company, Land	8,221
Initial Cost to Company, Building & Improvements	23,472
Initial Cost to Company, Total	31,693
Cost Capitalized or Adjustments Subsequent to Acquisition	379
Gross Amount Carried, Land	8,221
Gross Amount Carried, Building and Improvements	23,851
Real Estate, Gross, Total Cost	32,072
Accumulated Depreciation	$ 8,060
Acquisition Date	Feb. 01, 2007
Retail | Real Estate Property Twenty Eight
Real Estate and Accumulated Depreciation [Line Items]
Market	Raleigh, NC
Number of Buildings | property	1
Encumbrances	$ 26,200
Initial Cost to Company, Land	13,017
Initial Cost to Company, Building & Improvements	31,375
Initial Cost to Company, Total	44,392
Cost Capitalized or Adjustments Subsequent to Acquisition	1,322
Gross Amount Carried, Land	13,017
Gross Amount Carried, Building and Improvements	32,697
Real Estate, Gross, Total Cost	45,714
Accumulated Depreciation	$ 10,258
Acquisition Date	May 11, 2007
Retail | Real Estate Property Twenty Nine
Real Estate and Accumulated Depreciation [Line Items]
Market	Philadelphia, PA
Number of Buildings | property	1
Encumbrances	$ 67,800
Initial Cost to Company, Land	26,488
Initial Cost to Company, Building & Improvements	76,838
Initial Cost to Company, Total	103,326
Cost Capitalized or Adjustments Subsequent to Acquisition	1,982
Gross Amount Carried, Land	26,488
Gross Amount Carried, Building and Improvements	78,820
Real Estate, Gross, Total Cost	105,308
Accumulated Depreciation	$ 26,424
Acquisition Date	May 11, 2007
Retail | Real Estate Property Thirty
Real Estate and Accumulated Depreciation [Line Items]
Market	Jacksonville, FL
Number of Buildings | property	1
Initial Cost to Company, Land	$ 3,768
Initial Cost to Company, Building & Improvements	16,660
Initial Cost to Company, Total	20,428
Cost Capitalized or Adjustments Subsequent to Acquisition	(871)
Gross Amount Carried, Land	3,768
Gross Amount Carried, Building and Improvements	15,789
Real Estate, Gross, Total Cost	19,557
Accumulated Depreciation	$ 4,387
Acquisition Date	Jun. 27, 2007
Retail | Real Estate Property Thirty One
Real Estate and Accumulated Depreciation [Line Items]
Market	Greater Boston
Number of Buildings | property	1
Initial Cost to Company, Land	$ 9,270
Initial Cost to Company, Building & Improvements	31,266
Initial Cost to Company, Total	40,536
Cost Capitalized or Adjustments Subsequent to Acquisition	878
Gross Amount Carried, Land	9,270
Gross Amount Carried, Building and Improvements	32,144
Real Estate, Gross, Total Cost	41,414
Accumulated Depreciation	$ 10,532
Acquisition Date	Aug. 01, 2007
Retail | Real Estate Property Thirty Two
Real Estate and Accumulated Depreciation [Line Items]
Market	Greater Boston
Number of Buildings | property	1
Initial Cost to Company, Land	$ 3,828
Initial Cost to Company, Building & Improvements	10,073
Initial Cost to Company, Total	13,901
Cost Capitalized or Adjustments Subsequent to Acquisition	487
Gross Amount Carried, Land	3,828
Gross Amount Carried, Building and Improvements	10,560
Real Estate, Gross, Total Cost	14,388
Accumulated Depreciation	$ 4,339
Acquisition Date	Aug. 01, 2007
Retail | Real Estate Property Thirty Three
Real Estate and Accumulated Depreciation [Line Items]
Market	Greater Boston
Number of Buildings | property	1
Encumbrances	$ 10,574
Initial Cost to Company, Land	8,580
Initial Cost to Company, Building & Improvements	12,494
Initial Cost to Company, Total	21,074
Cost Capitalized or Adjustments Subsequent to Acquisition	2,345
Gross Amount Carried, Land	8,580
Gross Amount Carried, Building and Improvements	14,839
Real Estate, Gross, Total Cost	23,419
Accumulated Depreciation	$ 5,180
Acquisition Date	Aug. 01, 2007
Retail | Real Estate Property Thirty Four
Real Estate and Accumulated Depreciation [Line Items]
Market	Greater Boston
Number of Buildings | property	1
Initial Cost to Company, Land	$ 1,890
Initial Cost to Company, Building & Improvements	6,480
Initial Cost to Company, Total	8,370
Cost Capitalized or Adjustments Subsequent to Acquisition	379
Gross Amount Carried, Land	1,890
Gross Amount Carried, Building and Improvements	6,859
Real Estate, Gross, Total Cost	8,749
Accumulated Depreciation	$ 2,420
Acquisition Date	Aug. 01, 2007
Retail | Real Estate Property Thirty Five
Real Estate and Accumulated Depreciation [Line Items]
Market	Greater Boston
Number of Buildings | property	1
Initial Cost to Company, Land	$ 8,780
Initial Cost to Company, Building & Improvements	23,683
Initial Cost to Company, Total	32,463
Cost Capitalized or Adjustments Subsequent to Acquisition	362
Gross Amount Carried, Land	8,780
Gross Amount Carried, Building and Improvements	24,045
Real Estate, Gross, Total Cost	32,825
Accumulated Depreciation	$ 7,735
Acquisition Date	Aug. 01, 2007
Retail | Real Estate Property Thirty Six
Real Estate and Accumulated Depreciation [Line Items]
Market	Greater Boston
Number of Buildings | property	1
Encumbrances	$ 15,825
Initial Cost to Company, Land	7,380
Initial Cost to Company, Building & Improvements	25,778
Initial Cost to Company, Total	33,158
Cost Capitalized or Adjustments Subsequent to Acquisition	693
Gross Amount Carried, Land	7,380
Gross Amount Carried, Building and Improvements	26,471
Real Estate, Gross, Total Cost	33,851
Accumulated Depreciation	$ 7,941
Acquisition Date	Aug. 01, 2007
Retail | Real Estate Property Thirty Seven
Real Estate and Accumulated Depreciation [Line Items]
Market	Greater Boston
Number of Buildings | property	1
Encumbrances	$ 24,400
Initial Cost to Company, Land	13,130
Initial Cost to Company, Building & Improvements	27,030
Initial Cost to Company, Total	40,160
Cost Capitalized or Adjustments Subsequent to Acquisition	2,205
Gross Amount Carried, Land	13,130
Gross Amount Carried, Building and Improvements	29,235
Real Estate, Gross, Total Cost	42,365
Accumulated Depreciation	$ 9,584
Acquisition Date	Aug. 01, 2007
Retail | Real Estate Property Thirty Eight
Real Estate and Accumulated Depreciation [Line Items]
Market	Greater Boston
Number of Buildings | property	1
Initial Cost to Company, Land	$ 14,396
Initial Cost to Company, Building & Improvements	594
Initial Cost to Company, Total	14,990
Gross Amount Carried, Land	14,396
Gross Amount Carried, Building and Improvements	594
Real Estate, Gross, Total Cost	14,990
Accumulated Depreciation	$ 594
Acquisition Date	Aug. 01, 2007
Retail | Real Estate Property Thirty Nine
Real Estate and Accumulated Depreciation [Line Items]
Market	Greater Boston
Number of Buildings | property	1
Initial Cost to Company, Land	$ 10,405
Initial Cost to Company, Building & Improvements	917
Initial Cost to Company, Total	11,322
Gross Amount Carried, Land	10,405
Gross Amount Carried, Building and Improvements	917
Real Estate, Gross, Total Cost	11,322
Accumulated Depreciation	$ 469
Acquisition Date	Aug. 01, 2007
Retail | Real Estate Property Forty
Real Estate and Accumulated Depreciation [Line Items]
Market	Greater Boston
Number of Buildings | property	1
Initial Cost to Company, Land	$ 5,340
Initial Cost to Company, Building & Improvements	16,490
Initial Cost to Company, Total	21,830
Gross Amount Carried, Land	5,340
Gross Amount Carried, Building and Improvements	16,490
Real Estate, Gross, Total Cost	21,830
Accumulated Depreciation	$ 4,764
Acquisition Date	Aug. 01, 2007
Retail | Real Estate Property Forty One
Real Estate and Accumulated Depreciation [Line Items]
Market	Greater Boston
Number of Buildings | property	1
Initial Cost to Company, Land	$ 6,560
Initial Cost to Company, Building & Improvements	22,014
Initial Cost to Company, Total	28,574
Cost Capitalized or Adjustments Subsequent to Acquisition	(1)
Gross Amount Carried, Land	6,559
Gross Amount Carried, Building and Improvements	22,014
Real Estate, Gross, Total Cost	28,573
Accumulated Depreciation	$ 6,705
Acquisition Date	Aug. 01, 2007
Retail | Real Estate Property Forty Two
Real Estate and Accumulated Depreciation [Line Items]
Market	Greater Boston
Number of Buildings | property	2
Encumbrances	$ 16,000
Initial Cost to Company, Land	5,170
Initial Cost to Company, Building & Improvements	19,396
Initial Cost to Company, Total	24,566
Cost Capitalized or Adjustments Subsequent to Acquisition	(251)
Gross Amount Carried, Land	4,913
Gross Amount Carried, Building and Improvements	19,402
Real Estate, Gross, Total Cost	24,315
Accumulated Depreciation	$ 6,248
Acquisition Date	Aug. 01, 2007
Retail | Real Estate Property Forty Three
Real Estate and Accumulated Depreciation [Line Items]
Market	Greater Boston
Number of Buildings | property	1
Initial Cost to Company, Land	$ 3,610
Initial Cost to Company, Building & Improvements	11,682
Initial Cost to Company, Total	15,292
Gross Amount Carried, Land	3,610
Gross Amount Carried, Building and Improvements	11,682
Real Estate, Gross, Total Cost	15,292
Accumulated Depreciation	$ 3,489
Acquisition Date	Aug. 01, 2007
Retail | Real Estate Property Forty Four
Real Estate and Accumulated Depreciation [Line Items]
Market	Greater Boston
Number of Buildings | property	1
Initial Cost to Company, Land	$ 2,530
Initial Cost to Company, Building & Improvements	2,074
Initial Cost to Company, Total	4,604
Cost Capitalized or Adjustments Subsequent to Acquisition	1,016
Gross Amount Carried, Land	2,530
Gross Amount Carried, Building and Improvements	3,090
Real Estate, Gross, Total Cost	5,620
Accumulated Depreciation	$ 1,268
Acquisition Date	Aug. 01, 2007
Retail | Real Estate Property Forty Five
Real Estate and Accumulated Depreciation [Line Items]
Market	Greater Boston
Number of Buildings | property	1
Initial Cost to Company, Land	$ 3,920
Initial Cost to Company, Building & Improvements	7,765
Initial Cost to Company, Total	11,685
Cost Capitalized or Adjustments Subsequent to Acquisition	1,068
Gross Amount Carried, Land	3,920
Gross Amount Carried, Building and Improvements	8,833
Real Estate, Gross, Total Cost	12,753
Accumulated Depreciation	$ 2,860
Acquisition Date	Aug. 01, 2007
Retail | Real Estate Property Forty Six
Real Estate and Accumulated Depreciation [Line Items]
Market	Greater Boston
Number of Buildings | property	1
Initial Cost to Company, Land	$ 1,490
Initial Cost to Company, Building & Improvements	5,084
Initial Cost to Company, Total	6,574
Cost Capitalized or Adjustments Subsequent to Acquisition	905
Gross Amount Carried, Land	1,490
Gross Amount Carried, Building and Improvements	5,989
Real Estate, Gross, Total Cost	7,479
Accumulated Depreciation	$ 1,917
Acquisition Date	Aug. 01, 2007
Retail | Real Estate Property Forty Seven
Real Estate and Accumulated Depreciation [Line Items]
Market	Greater Boston
Number of Buildings | property	1
Initial Cost to Company, Land	$ 3,650
Initial Cost to Company, Building & Improvements	6,507
Initial Cost to Company, Total	10,157
Cost Capitalized or Adjustments Subsequent to Acquisition	273
Gross Amount Carried, Land	3,650
Gross Amount Carried, Building and Improvements	6,780
Real Estate, Gross, Total Cost	10,430
Accumulated Depreciation	$ 2,503
Acquisition Date	Aug. 01, 2007
Retail | Real Estate Property Forty Eight
Real Estate and Accumulated Depreciation [Line Items]
Market	Greater Boston
Number of Buildings | property	1
Encumbrances	$ 5,035
Initial Cost to Company, Land	5,290
Initial Cost to Company, Building & Improvements	8,814
Initial Cost to Company, Total	14,104
Cost Capitalized or Adjustments Subsequent to Acquisition	0
Gross Amount Carried, Land	5,290
Gross Amount Carried, Building and Improvements	8,814
Real Estate, Gross, Total Cost	14,104
Accumulated Depreciation	$ 2,521
Acquisition Date	Oct. 18, 2007
Retail | Real Estate Property Forty Nine
Real Estate and Accumulated Depreciation [Line Items]
Market	Greater Boston
Number of Buildings | property	1
Encumbrances	$ 7,221
Initial Cost to Company, Land	3,790
Initial Cost to Company, Building & Improvements	11,152
Initial Cost to Company, Total	14,942
Gross Amount Carried, Land	3,790
Gross Amount Carried, Building and Improvements	11,152
Real Estate, Gross, Total Cost	14,942
Accumulated Depreciation	$ 3,054
Acquisition Date	Oct. 18, 2007
Retail | Real Estate Property Fifty
Real Estate and Accumulated Depreciation [Line Items]
Market	Greater Boston
Number of Buildings | property	1
Encumbrances	$ 4,392
Initial Cost to Company, Land	5,850
Initial Cost to Company, Building & Improvements	14,547
Initial Cost to Company, Total	20,397
Gross Amount Carried, Land	5,850
Gross Amount Carried, Building and Improvements	14,547
Real Estate, Gross, Total Cost	20,397
Accumulated Depreciation	$ 4,263
Acquisition Date	Oct. 18, 2007
Retail | Real Estate Property Fifty One
Real Estate and Accumulated Depreciation [Line Items]
Market	Washington, DC
Number of Buildings | property	1
Encumbrances	$ 70,000
Initial Cost to Company, Land	19,779
Initial Cost to Company, Building & Improvements	42,515
Initial Cost to Company, Total	62,294
Cost Capitalized or Adjustments Subsequent to Acquisition	573
Gross Amount Carried, Land	19,781
Gross Amount Carried, Building and Improvements	43,086
Real Estate, Gross, Total Cost	62,867
Accumulated Depreciation	$ 15,583
Acquisition Date	Apr. 06, 2009
Retail | Real Estate Property Fifty Two
Real Estate and Accumulated Depreciation [Line Items]
Market	Greater Boston
Number of Buildings | property	1
Encumbrances	$ 0
Initial Cost to Company, Land	11,866
Initial Cost to Company, Building & Improvements	723
Initial Cost to Company, Total	12,589
Cost Capitalized or Adjustments Subsequent to Acquisition	8
Gross Amount Carried, Land	11,866
Gross Amount Carried, Building and Improvements	731
Real Estate, Gross, Total Cost	12,597
Accumulated Depreciation	$ 385
Acquisition Date	Feb. 18, 2011
Retail | Real Estate Property Fifty Three
Real Estate and Accumulated Depreciation [Line Items]
Market	Greater Boston
Number of Buildings | property	1
Initial Cost to Company, Land	$ 3,783
Initial Cost to Company, Building & Improvements	9,713
Initial Cost to Company, Total	13,496
Cost Capitalized or Adjustments Subsequent to Acquisition	120
Gross Amount Carried, Land	3,783
Gross Amount Carried, Building and Improvements	9,833
Real Estate, Gross, Total Cost	13,616
Accumulated Depreciation	$ 4,529
Acquisition Date	Mar. 17, 2011
Retail | Real Estate Property Fifty Four
Real Estate and Accumulated Depreciation [Line Items]
Market	Greater Boston
Number of Buildings | property	2
Initial Cost to Company, Land	$ 7,209
Initial Cost to Company, Building & Improvements	21,055
Initial Cost to Company, Total	28,264
Cost Capitalized or Adjustments Subsequent to Acquisition	1,191
Gross Amount Carried, Land	7,209
Gross Amount Carried, Building and Improvements	22,246
Real Estate, Gross, Total Cost	29,455
Accumulated Depreciation	$ 3,604
Acquisition Date	May 28, 2014
Retail | Real Estate Property Fifty Five
Real Estate and Accumulated Depreciation [Line Items]
Market	Greater Boston
Number of Buildings | property	2
Initial Cost to Company, Land	$ 8,759
Initial Cost to Company, Building & Improvements	40,233
Initial Cost to Company, Total	48,992
Cost Capitalized or Adjustments Subsequent to Acquisition	(324)
Gross Amount Carried, Land	8,759
Gross Amount Carried, Building and Improvements	39,909
Real Estate, Gross, Total Cost	48,668
Accumulated Depreciation	$ 4,707
Acquisition Date	Nov. 04, 2014
Retail | Real Estate Property Fifty Six
Real Estate and Accumulated Depreciation [Line Items]
Market	Greater Boston
Number of Buildings | property	6
Initial Cost to Company, Land	$ 9,936
Initial Cost to Company, Building & Improvements	27,552
Initial Cost to Company, Total	37,488
Cost Capitalized or Adjustments Subsequent to Acquisition	(10)
Gross Amount Carried, Land	10,307
Gross Amount Carried, Building and Improvements	27,171
Real Estate, Gross, Total Cost	37,478
Accumulated Depreciation	$ 2,928
Acquisition Date	Mar. 18, 2015
Retail | Real Estate Property Fifty Seven
Real Estate and Accumulated Depreciation [Line Items]
Market	South Florida
Number of Buildings | property	3
Encumbrances	$ 10,523
Initial Cost to Company, Land	10,501
Initial Cost to Company, Building & Improvements	27,397
Initial Cost to Company, Total	37,898
Cost Capitalized or Adjustments Subsequent to Acquisition	12
Gross Amount Carried, Land	10,501
Gross Amount Carried, Building and Improvements	27,409
Real Estate, Gross, Total Cost	37,910
Accumulated Depreciation	$ 2,308
Acquisition Date	Aug. 06, 2015
Retail | Real Estate Property Fifty Eight
Real Estate and Accumulated Depreciation [Line Items]
Market	Northern New Jersey
Number of Buildings | property	4
Encumbrances	$ 0
Initial Cost to Company, Land	7,376
Initial Cost to Company, Building & Improvements	51,155
Initial Cost to Company, Total	58,531
Cost Capitalized or Adjustments Subsequent to Acquisition	428
Gross Amount Carried, Land	7,376
Gross Amount Carried, Building and Improvements	51,583
Real Estate, Gross, Total Cost	58,959
Accumulated Depreciation	$ 3,879
Acquisition Date	Oct. 08, 2015
Retail | Real Estate Property Fifty Nine
Real Estate and Accumulated Depreciation [Line Items]
Market	Tulsa, OK
Number of Buildings | property	4
Initial Cost to Company, Land	$ 3,492
Initial Cost to Company, Building & Improvements	30,655
Initial Cost to Company, Total	34,147
Cost Capitalized or Adjustments Subsequent to Acquisition	(109)
Gross Amount Carried, Land	3,492
Gross Amount Carried, Building and Improvements	30,546
Real Estate, Gross, Total Cost	34,038
Accumulated Depreciation	$ 1,319
Acquisition Date	Dec. 09, 2015
Retail | Real Estate Property Sixty
Real Estate and Accumulated Depreciation [Line Items]
Market	South Florida
Number of Buildings | property	4
Initial Cost to Company, Land	$ 34,804
Initial Cost to Company, Building & Improvements	33,902
Initial Cost to Company, Total	68,706
Cost Capitalized or Adjustments Subsequent to Acquisition	13
Gross Amount Carried, Land	34,804
Gross Amount Carried, Building and Improvements	33,915
Real Estate, Gross, Total Cost	68,719
Accumulated Depreciation	$ 1,462
Acquisition Date	May 27, 2016
Retail | Minimum | Real Estate Property Twenty Seven
Real Estate and Accumulated Depreciation [Line Items]
Depreciable Life (years)	1 year
Retail | Minimum | Real Estate Property Twenty Eight
Real Estate and Accumulated Depreciation [Line Items]
Depreciable Life (years)	1 year
Retail | Minimum | Real Estate Property Twenty Nine
Real Estate and Accumulated Depreciation [Line Items]
Depreciable Life (years)	1 year
Retail | Minimum | Real Estate Property Thirty
Real Estate and Accumulated Depreciation [Line Items]
Depreciable Life (years)	2 years
Retail | Minimum | Real Estate Property Thirty One
Real Estate and Accumulated Depreciation [Line Items]
Depreciable Life (years)	1 year
Retail | Minimum | Real Estate Property Thirty Two
Real Estate and Accumulated Depreciation [Line Items]
Depreciable Life (years)	1 year
Retail | Minimum | Real Estate Property Thirty Three
Real Estate and Accumulated Depreciation [Line Items]
Depreciable Life (years)	1 year
Retail | Minimum | Real Estate Property Thirty Four
Real Estate and Accumulated Depreciation [Line Items]
Depreciable Life (years)	2 years
Retail | Minimum | Real Estate Property Thirty Five
Real Estate and Accumulated Depreciation [Line Items]
Depreciable Life (years)	1 year
Retail | Minimum | Real Estate Property Thirty Six
Real Estate and Accumulated Depreciation [Line Items]
Depreciable Life (years)	1 year
Retail | Minimum | Real Estate Property Thirty Seven
Real Estate and Accumulated Depreciation [Line Items]
Depreciable Life (years)	1 year
Retail | Minimum | Real Estate Property Thirty Nine
Real Estate and Accumulated Depreciation [Line Items]
Depreciable Life (years)	18 years
Retail | Minimum | Real Estate Property Forty
Real Estate and Accumulated Depreciation [Line Items]
Depreciable Life (years)	16 years
Retail | Minimum | Real Estate Property Forty One
Real Estate and Accumulated Depreciation [Line Items]
Depreciable Life (years)	13 years
Retail | Minimum | Real Estate Property Forty Two
Real Estate and Accumulated Depreciation [Line Items]
Depreciable Life (years)	4 years
Retail | Minimum | Real Estate Property Forty Three
Real Estate and Accumulated Depreciation [Line Items]
Depreciable Life (years)	16 years
Retail | Minimum | Real Estate Property Forty Four
Real Estate and Accumulated Depreciation [Line Items]
Depreciable Life (years)	1 year
Retail | Minimum | Real Estate Property Forty Five
Real Estate and Accumulated Depreciation [Line Items]
Depreciable Life (years)	1 year
Retail | Minimum | Real Estate Property Forty Six
Real Estate and Accumulated Depreciation [Line Items]
Depreciable Life (years)	1 year
Retail | Minimum | Real Estate Property Forty Seven
Real Estate and Accumulated Depreciation [Line Items]
Depreciable Life (years)	2 years
Retail | Minimum | Real Estate Property Forty Eight
Real Estate and Accumulated Depreciation [Line Items]
Depreciable Life (years)	21 years
Retail | Minimum | Real Estate Property Forty Nine
Real Estate and Accumulated Depreciation [Line Items]
Depreciable Life (years)	22 years
Retail | Minimum | Real Estate Property Fifty
Real Estate and Accumulated Depreciation [Line Items]
Depreciable Life (years)	15 years
Retail | Minimum | Real Estate Property Fifty One
Real Estate and Accumulated Depreciation [Line Items]
Depreciable Life (years)	1 year
Retail | Minimum | Real Estate Property Fifty Two
Real Estate and Accumulated Depreciation [Line Items]
Depreciable Life (years)	6 years
Retail | Minimum | Real Estate Property Fifty Three
Real Estate and Accumulated Depreciation [Line Items]
Depreciable Life (years)	3 years
Retail | Minimum | Real Estate Property Fifty Four
Real Estate and Accumulated Depreciation [Line Items]
Depreciable Life (years)	1 year
Retail | Minimum | Real Estate Property Fifty Five
Real Estate and Accumulated Depreciation [Line Items]
Depreciable Life (years)	1 year
Retail | Minimum | Real Estate Property Fifty Six
Real Estate and Accumulated Depreciation [Line Items]
Depreciable Life (years)	1 year
Retail | Minimum | Real Estate Property Fifty Seven
Real Estate and Accumulated Depreciation [Line Items]
Depreciable Life (years)	1 year
Retail | Minimum | Real Estate Property Fifty Eight
Real Estate and Accumulated Depreciation [Line Items]
Depreciable Life (years)	1 year
Retail | Minimum | Real Estate Property Fifty Nine
Real Estate and Accumulated Depreciation [Line Items]
Depreciable Life (years)	3 years
Retail | Minimum | Real Estate Property Sixty
Real Estate and Accumulated Depreciation [Line Items]
Depreciable Life (years)	1 year
Retail | Maximum | Real Estate Property Twenty Seven
Real Estate and Accumulated Depreciation [Line Items]
Depreciable Life (years)	40 years
Retail | Maximum | Real Estate Property Twenty Eight
Real Estate and Accumulated Depreciation [Line Items]
Depreciable Life (years)	40 years
Retail | Maximum | Real Estate Property Twenty Nine
Real Estate and Accumulated Depreciation [Line Items]
Depreciable Life (years)	40 years
Retail | Maximum | Real Estate Property Thirty
Real Estate and Accumulated Depreciation [Line Items]
Depreciable Life (years)	40 years
Retail | Maximum | Real Estate Property Thirty One
Real Estate and Accumulated Depreciation [Line Items]
Depreciable Life (years)	40 years
Retail | Maximum | Real Estate Property Thirty Two
Real Estate and Accumulated Depreciation [Line Items]
Depreciable Life (years)	40 years
Retail | Maximum | Real Estate Property Thirty Three
Real Estate and Accumulated Depreciation [Line Items]
Depreciable Life (years)	40 years
Retail | Maximum | Real Estate Property Thirty Four
Real Estate and Accumulated Depreciation [Line Items]
Depreciable Life (years)	40 years
Retail | Maximum | Real Estate Property Thirty Five
Real Estate and Accumulated Depreciation [Line Items]
Depreciable Life (years)	40 years
Retail | Maximum | Real Estate Property Thirty Six
Real Estate and Accumulated Depreciation [Line Items]
Depreciable Life (years)	40 years
Retail | Maximum | Real Estate Property Thirty Seven
Real Estate and Accumulated Depreciation [Line Items]
Depreciable Life (years)	40 years
Retail | Maximum | Real Estate Property Thirty Nine
Real Estate and Accumulated Depreciation [Line Items]
Depreciable Life (years)	68 years
Retail | Maximum | Real Estate Property Forty
Real Estate and Accumulated Depreciation [Line Items]
Depreciable Life (years)	86 years
Retail | Maximum | Real Estate Property Forty One
Real Estate and Accumulated Depreciation [Line Items]
Depreciable Life (years)	43 years
Retail | Maximum | Real Estate Property Forty Two
Real Estate and Accumulated Depreciation [Line Items]
Depreciable Life (years)	40 years
Retail | Maximum | Real Estate Property Forty Three
Real Estate and Accumulated Depreciation [Line Items]
Depreciable Life (years)	56 years
Retail | Maximum | Real Estate Property Forty Four
Real Estate and Accumulated Depreciation [Line Items]
Depreciable Life (years)	40 years
Retail | Maximum | Real Estate Property Forty Five
Real Estate and Accumulated Depreciation [Line Items]
Depreciable Life (years)	40 years
Retail | Maximum | Real Estate Property Forty Six
Real Estate and Accumulated Depreciation [Line Items]
Depreciable Life (years)	40 years
Retail | Maximum | Real Estate Property Forty Seven
Real Estate and Accumulated Depreciation [Line Items]
Depreciable Life (years)	40 years
Retail | Maximum | Real Estate Property Forty Eight
Real Estate and Accumulated Depreciation [Line Items]
Depreciable Life (years)	40 years
Retail | Maximum | Real Estate Property Forty Nine
Real Estate and Accumulated Depreciation [Line Items]
Depreciable Life (years)	40 years
Retail | Maximum | Real Estate Property Fifty
Real Estate and Accumulated Depreciation [Line Items]
Depreciable Life (years)	65 years
Retail | Maximum | Real Estate Property Fifty One
Real Estate and Accumulated Depreciation [Line Items]
Depreciable Life (years)	40 years
Retail | Maximum | Real Estate Property Fifty Two
Real Estate and Accumulated Depreciation [Line Items]
Depreciable Life (years)	62 years
Retail | Maximum | Real Estate Property Fifty Three
Real Estate and Accumulated Depreciation [Line Items]
Depreciable Life (years)	40 years
Retail | Maximum | Real Estate Property Fifty Four
Real Estate and Accumulated Depreciation [Line Items]
Depreciable Life (years)	40 years
Retail | Maximum | Real Estate Property Fifty Five
Real Estate and Accumulated Depreciation [Line Items]
Depreciable Life (years)	40 years
Retail | Maximum | Real Estate Property Fifty Six
Real Estate and Accumulated Depreciation [Line Items]
Depreciable Life (years)	40 years
Retail | Maximum | Real Estate Property Fifty Seven
Real Estate and Accumulated Depreciation [Line Items]
Depreciable Life (years)	40 years
Retail | Maximum | Real Estate Property Fifty Eight
Real Estate and Accumulated Depreciation [Line Items]
Depreciable Life (years)	40 years
Retail | Maximum | Real Estate Property Fifty Nine
Real Estate and Accumulated Depreciation [Line Items]
Depreciable Life (years)	40 years
Retail | Maximum | Real Estate Property Sixty
Real Estate and Accumulated Depreciation [Line Items]
Depreciable Life (years)	40 years

XML

Schedule III - Real Estate and Accumulated Depreciation (Activity of Real Estate and Accumulated Depreciation) (Details) - USD ($) $ in Thousands		12 Months Ended
		Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2014
Investments in real estate:
Balance at the beginning of the year		$ 2,380,174	$ 2,472,926	$ 2,570,480
Acquisitions of operating properties		68,706	357,811	158,221
Improvements		30,006	25,557	12,512
Basis of operating properties disposed of		(271,887)	(467,996)	(258,787)
Impairment of real property	[1]	(2,677)	(8,124)	(9,500)
Balance at the end of the year		2,204,322	2,380,174	2,472,926
Accumulated depreciation:
Balance at the beginning of the year		505,957	523,246	502,847
Real estate depreciation and amortization expense		80,105	83,114	88,994
Above-market lease assets amortization expenses		5,515	5,216	6,708
Accumulated depreciation and amortization written off		(98,666)	(105,619)	(75,303)
Balance at the end of the year		$ 492,911	$ 505,957	523,246
Held For Sale
Accumulated depreciation:
Real Estate Held-for-sale				$ 30,100

[1] Includes approximately $265,000 and $125,000 paid to our Advisor for advisory fees associated with the disposition of real properties during the years ended December 31, 2016 and 2015, respectively.