Equity

Status of Offering

In September 2016, the Company's board of directors approved the close of the Primary Offering effective January 20, 2017; however, the Company continued to offer shares pursuant to the DRP. On April 6, 2017, the Company filed a Registration Statement on Form S-3 with the SEC for the registration of 3.0 million shares for sale pursuant to the DRP. The DRP Offering may be terminated at any time upon 10 days’ prior written notice to stockholders.

Share Classes

Class A shares, Class T shares and Class I shares vote together as a single class, and each share is entitled to one vote on each matter submitted to a vote at meetings of the Company's stockholders; provided that with respect to any matter that would only have a material adverse effect on the rights of a particular class of common stock, only the holders of such affected class are entitled to vote. Each class of common stock is entitled to the same distributions as other classes, and the net asset value, or NAV, per share is the same across share classes.

The following table summarizes shares issued and gross proceeds for each share class as of June 30, 2017:



	Class A		Class T		Class I		Total
Gross proceeds from Primary Offering	$	240,780	$	474,859	$	8,381	$	724,020
Gross proceeds from DRP	$	15,944	$	14,542	$	188	$	30,674
Shares issued in Primary Offering	24,199,760		47,562,870		901,225		72,663,855
DRP shares issued	1,684,990		1,543,066		19,953		3,248,009
Stock distribution shares issued	235,074		245,470		3,619		484,163
Restricted stock units issued	—		—		25,500		25,500
Total shares issued prior to redemptions	26,119,824		49,351,406		950,297		76,421,527

Offering and Organizational Costs

Pursuant to the Advisory Agreement, in no event will the Company be obligated to reimburse the Advisor for organizational and offering costs (effective November 2, 2015, only to the extent such costs exceed 1.0% of gross offering proceeds from the Company's public offering) incurred in connection with the Offering totaling in excess of (i) 3.5% (excluding sales commissions, dealer manager fees and stockholder servicing fees) of the gross proceeds raised in the Offering (excluding gross proceeds from the distribution reinvestment plan), and (ii) 15% (including selling commissions, dealer manager fees, stockholder servicing fees and non-accountable due diligence expense allowance but excluding acquisition fees and expenses) of the gross proceeds raised in the Offering (excluding gross proceeds from the DRP). If the organization and offering costs exceeded such limits discussed above, within 60 days after the end of the month in which the Offering terminated or was completed, the Advisor would have been obligated to reimburse the Company for any excess amounts. As long as the Company is subject to the Statement of Policy Regarding Real Estate Investment Trusts published by the North American Securities Administrators Association (“NASAA REIT Guidelines”), such limitations discussed above will also apply to any future public offerings. As of June 30, 2017 and December 31, 2016, organizational and offering costs were 0.8% of gross offering proceeds, for both periods presented, excluding selling commissions, dealer manager fees and stockholder servicing fees, and 10.5% and 10.6% of gross offering proceeds, respectively, including selling commissions, dealer manager fees and stockholder servicing fees. As of June 30, 2017 and December 31, 2016, organizational and offering costs did not exceed the limitations.

Organizational and offering costs incurred as of June 30, 2017 and December 31, 2016, including those incurred by the Company and due to the Advisor, for the Offering are as follows:



	June 30, 2017			December 31, 2016
Cumulative offering costs	$	74,917		$	72,009
Cumulative organizational costs	$	717		$	717
Organizational and offering costs advanced by the Advisor, excluding Contingent Advisor Payment Holdback	$	4,074		$	4,074
Less payments	(4,074		)	(4,074		)
Net organizational and offering costs advanced by the Advisor, excluding Contingent Advisor Payment Holdback⁽¹⁾	$	—		$	—
Advisor Advances:
Organizational and offering costs advanced by the Advisor	$	2,675		$	2,477
Dealer Manager fees advanced by the Advisor	2,916			2,932
Net organizational and offering costs and Dealer Manager fees advanced by the Advisor	$	5,591		$	5,409


(1)	See Note 10, Related Party Transactions, for discussion on Contingent Advisor Payment Holdback.

As of June 30, 2017, organizational and offering costs incurred by the Company related to a proposed offering exceeded the limitations set forth above by approximately $1.0 million. Therefore, if the proposed offering was terminated on June 30, 2017, the Advisor would be liable for organizational and offering costs incurred by the Company by approximately $1.0 million. Approximately $0.7 million of organizational and offering costs the Advisor is liable for as of June 30, 2017 is deducted from "Due to Affiliates" and the remaining $0.3 million is included in "Other Assets, net" on the consolidated balance sheet.

Distribution Reinvestment Plan

The Company adopted a DRP that allows stockholders to have distributions otherwise distributable to them invested in additional shares of common stock. The plan became effective on July 31, 2014, and was amended and restated effective as of May 9, 2016. No selling commission, dealer manager fee or stockholder servicing fee are paid on shares sold through the DRP.

Amendment and Restatement of Distribution Reinvestment Plan

On November 15, 2016, the Company's board of directors amended and restated the Company's DRP to state that, effective as of November 28, 2016, until the Company announces an estimated net asset value ("NAV") per share, the purchase price per share under the DRP will be $9.40 per share. The Company announced the estimated NAV per share on February 16, 2017; consequently, the purchase price per share under the DRP equals the published NAV per share, which is $9.37 per share.

Share Redemption Program

The Company adopted a share redemption program that will enable stockholders to sell their stock to the Company in limited circumstances. As long as the common stock is not listed on a national securities exchange or over-the-counter market, stockholders who have held their stock for at least one year may be able to have all or a portion consisting of at least 25% of their shares of stock redeemed by the Company. During any calendar year, the Company will not redeem more than 5.0% of the weighted average number of shares outstanding during the prior calendar year. The cash available for redemption will be limited to the proceeds from the sale of shares pursuant to the Company’s DRP. Share redemption requests must be received by the Company no later than the last business day of the calendar quarter, and shares generally will be redeemed on the last business day of the month following such calendar quarter. The redemption price per share is expected to be the redemption rate set forth in the following table which is based upon the number of years the stock is held:



Number Years Held		Redemption Price per Share
Less than 1 year		No Redemption Allowed
After one year from the purchase date		90.0% of the Redemption Amount (as defined below)
After two years from the purchase date		95.0% of the Redemption Amount
After three years from the purchase date		97.5% of the Redemption Amount
After four years from the purchase date		100.0% of the Redemption Amount

The Redemption Amount for shares purchased under the Company's share redemption program shall be the lesser of (i) the amount the stockholder paid for their shares or (ii) the NAV of the shares. The redemption price per share will be reduced by the aggregate amount of net proceeds per share, if any, distributed to the stockholders prior to the repurchase date as a result of a “special distribution.” While the board of directors does not have specific criteria for determining a special distribution, the Company expects that a special distribution will only occur upon the sale of a property and the subsequent distribution of the net sale proceeds. The redemption price per share is subject to adjustment as determined from time to time by the board of directors.

As the use of the proceeds from the DRP for redemptions is outside the Company’s control, the net proceeds from the DRP are considered to be temporary equity and are presented as common stock subject to redemption on the accompanying consolidated balance sheets. The cumulative proceeds from the DRP, net of any redemptions, will be computed at each reporting date and will be classified as temporary equity on the Company’s consolidated balance sheets. As noted above, the redemption is limited to proceeds from new permanent equity from the sale of shares pursuant to the Company’s DRP. As of June 30, 2017, $25.3 million of common stock was available for redemption and $1.3 million of common stock was reclassified from redeemable common stock to accrued expenses and other liabilities in the consolidated balance sheet as of June 30, 2017.

Share-Based Compensation

The Company’s board of directors adopted a long-term incentive plan (“Plan”), which provides for the grant of awards to the Company's directors and full-time employees (should the Company ever have employees), directors and full-time employees of the Advisor and affiliate entities that provide services to the Company, and certain consultants that provide services to the Company, the Advisor, or affiliate entities. Awards granted under the Plan may consist of stock options, restricted stock, stock appreciation rights, distribution equivalent rights and other equity-based awards. The stock-based payment will be measured at fair value and recognized as compensation expense over the vesting period. The term of the Plan is ten years and the total number of shares of common stock reserved for issuance under the Plan will be equal to 10% of the outstanding shares of stock at any time, not to exceed 10,000,000 shares in the aggregate. During the first quarter of 2017, the Company issued an aggregate of 15,000 shares of restricted stock to the Company's independent directors. These restricted shares fully vested upon issuance.

On June 14, 2017, the Company issued 7,000 shares of restricted stock to each of the Company's independent directors, subject to the independent director's continued service as a director of the Company. Half of the restricted shares vested upon issuance, and the remaining half will vest over a one year period. The Company measured and began recognizing director compensation expense for the 36,000 shares of restricted stock granted during 2017, subject to the vesting period.