What do I get when I invest in a Real Estate Investment Trust (REIT) and what will the returns be?

The StartEngine REIT is raising up to $75,000,000 in exchange for Common Shares of the trust, at $10 per share.

What do I receive when investing in The StartEngine REIT?

By submitting an investment to The StartEngine REIT, you will receive common shares of this REIT.

What returns will I receive from investments in REITs?

Until assets are purchased and cash flow is generated, investors will receive the amount equal to a 6% annual preferred return, including any accrued and unpaid amounts from prior periods.

Once an asset is acquired and there is positive net cash flow, we expect that our Administrative Manager will declare and pay distributions monthly in arrears; however, our Administrative Manager may declare other periodic distributions as circumstances dictate.

How are distributions calculated?

Each time dividends are paid, to the extent there are available funds, you will receive distributions equal to your preferred return (plus any unpaid preferred returns from prior periods). To the extent there are additional funds, the additional funds will be split evenly between you and the Managers, with each Manager being paid 25% of these excess funds. For instance, let’s say you invested $100 in the company, each year you will be entitled to $6 from the Company as your preferred return. So, in the first year the company has $10 in net cash to allocate, you would receive $8 (your preferred return and 50% of the remaining net cash flow) and each Manager would receive $1. However, if there is only $3 dollars to allocate, you would receive $3, and in the following year you would need to receive $9 as your preferred return (the $3 accrued from this year plus the $6 from next year) prior to any distributions that would be paid to either Manager.

Will I be able to sell my shares in The StartEngine REIT?

Our goal is to have the shares be listed on StartEngine Secondary, alternative trading platform, run by our affiliate, StartEngine Primary LLC. StartEngine Secondary is a new market entrant and there is no guarantee that it will gain market acceptance, or it will achieve anywhere near same liquidity available on more established trading platforms. Alternatively, you may be able to sell your shares in private transaction. However, in neither of those instances is there any guarantee that you will be able to sell shares at all, sell your shares for the value that you believe they are worth or even the current NAV of those shares. You may need to hold on to your shares indefinitely.

How will I be taxed on distributions/returns?

The returns will be taxed as a corporation and investors will receive 1099-DIV forms.

Please note even if a company is qualified to quote its securities on the Secondary trading market, there is no guarantee an active trading market for the securities will ever develop, or if developed, be maintained. You should assume that you may not be able to liquidate your investment for some time or be able to pledge these shares as collateral.

Please refer to our filings with the SEC for further details about the StartEngine REIT.