PROSPECTUS SUMMARY

This prospectus summary summarizes information contained elsewhere in this prospectus. You should read the entire prospectus carefully, including the “Risk Factors” section. As used herein, “the Company,” “we,” “our” and “us” refer to Dividend Capital Total Realty Trust Inc. and its operating partnership, Dividend Capital Total Realty Operating Partnership LP and related subsidiaries, except where the context otherwise requires.

Dividend Capital Total Realty Trust Inc.

We invest in a diverse portfolio of real properties and real estate-related debt and securities. We primarily invest in real property, consisting of office, industrial, and retail, primarily located in the United States. We also may invest in multifamily, hospitality and other properties, primarily located in the United States. Additionally, we also have invested in real estate-related debt investments, including originating and participating in mortgage loans secured by real estate, junior portions of first mortgages on commercial properties (“B-notes”), mezzanine debt and other related investments and real estate-related securities, including commercial mortgage-backed securities (“CMBS”), commercial real estate collateralized debt obligations (“CRE-CDO”) and preferred equity securities. Although we may invest in certain real estate securities in the future, including debt and equity issued by public and private real estate companies, primarily to provide liquidity to our portfolio in support of our share redemption program, we do not presently intend to make any further investment in CMBS and CRE-CDO securities.

We were formed as a Maryland corporation on April 11, 2005. We commenced a “best efforts” initial public offering on January 27, 2006 for up to $2,000,000,000 in shares of our common stock. Following the termination of our initial public offering on January 21, 2008, we commenced a follow-on “best efforts” public offering of up to $2,000,000,000 in shares of our common stock. The follow-on public offering terminated on September 30, 2009. On October 23, 2009, we filed a registration statement for the sale of up to $237,500,000 in shares of our common stock pursuant to our distribution reinvestment plan. This distribution reinvestment plan offering is ongoing. As of March 31, 2012, we had 182,225,177 shares of our common stock outstanding held by a total of 32,373 stockholders. Although all of these shares are unclassified, we refer to these shares herein as “Class E” shares in order to more easily distinguish them from the Class A, Class W and Class I shares offered in this offering.

As of March 31, 2012, we owned a total of 96 operating real properties located in 30 geographic markets throughout the United States at a total gross investment amount¹ of approximately $2.9 billion (before accumulated depreciation and amortization of approximately $393.8 million) comprising approximately 19.7 million net rentable square feet. As of March 31, 2012, we had debt related investments with a total net investment amount of approximately $88.1 million.

We believe we have operated in such a manner to qualify as a real estate investment trust, or “REIT,” for federal income tax purposes, commencing with the taxable year ended December 31, 2006, when we first elected REIT status. Our office is located at 518 Seventeenth Street, 17th Floor, Denver, Colorado 80202 and our main telephone number is (303) 228-2200.

 

1	“Gross Investment Amount” as used here and throughout this document represents the investment amount reported for GAAP purposes before accumulated depreciation and amortization.

 

Class A, Class W and Class I Shares of Common Stock

In this offering, we are offering to the public three classes of shares of our common stock: Class A shares, Class W shares and Class I shares. The table below summarizes the fees payable to the Dealer Manager with respect to the Class A, Class W and Class I shares and does not include the other fees and expenses payable to the Advisor and its affiliates, which are allocable based on the respective NAV of our classes. The selling commission is a percentage of the NAV per Class A share and the dealer manager and distribution fees accrue daily in an amount equal to 1/365th of the percentage of our NAV per such share for such day set forth below on a continuous basis.

 

		Class A				Class W		Class I
Selling Commission			3.00	%		None		None
Dealer Manager Fee			0.60	%		0.60%		0.10%
Distribution Fee			0.50	%		None		None

The fees listed above will be allocated on a class-specific basis and will differ for each class, even when the NAV of each class is the same. The payment of class-specific expenses will result 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, including the Class E shares, 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. See “Net Asset Value Calculation and Valuation Procedures” and “Description of Capital Stock—Distributions” for more information.

Our four classes of common stock also have different rights upon liquidation. In the event of any voluntary or involuntary liquidation, dissolution or winding up of us, or any liquidating distribution of our assets, then such assets, or the proceeds therefrom, will be distributed among the holders of Class E shares, Class A shares, Class W shares and Class I shares ratably in proportion to the respective NAV for each class until the NAV for each class has been paid. Each holder of shares of a particular class of common stock will be entitled to receive, ratably with each other holder of shares of such class, that portion of such aggregate assets available for distribution as the number of outstanding shares of such class held by such holder bears to the total number of outstanding shares of such class then outstanding. If there are remaining assets available for distribution to our common stockholders after each class has received its NAV (which is not likely because NAV would be adjusted upward prior to the liquidating distribution), then holders of our Class E, Class A, Class W and Class I shares will be treated the same, with each such holder receiving the same per share distribution of any such excess.

Other than the differing allocable fees and expenses, the differing NAVs per share and the differing liquidation rights described above, Class E shares, Class A shares, Class W shares and Class I shares have identical rights and privileges, such as identical voting rights. See “Description of Capital Stock—Common Stock” for more details regarding our classes of common stock.

Our UPREIT Structure

An “Umbrella Partnership Real Estate Investment Trust,” which we refer to as an “UPREIT,” is a REIT that holds all or substantially all of its assets through a partnership in which the REIT holds an interest. We use this structure because a sale of property directly to the REIT in exchange for cash or REIT shares or a combination of cash and REIT shares, is generally a taxable transaction to the selling property owner. In an UPREIT structure, a seller of a property who desires to defer taxable gain on the disposition of his property may transfer the property to the partnership in exchange for units in the partnership and defer taxation of gain until the seller later sells the units in the partnership or exchanges them, normally on a one-for-one basis, for REIT shares. If the REIT shares are publicly traded, the former property or securities owner will achieve liquidity for his investment. We believe that using an UPREIT structure gives us an advantage in acquiring desired properties from persons who may not otherwise sell their properties because of unfavorable tax results.

 

Our Operating Partnership

We own all of our interests in our investments through our operating partnership, Dividend Capital Total Realty Operating Partnership LP, a Delaware limited partnership (the “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 public 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. As of March 31, 2012, we had invested approximately $1.6 billion in the Operating Partnership in exchange for a 92.0% limited partnership interest. We refer to partnership units in the Operating Partnership as “OP Units.” The Advisor invested $200,000 in the Operating Partnership in exchange for 20,000 OP Units, which were subsequently exchanged for 20,000 shares of our common stock. The Advisor may not sell these 20,000 shares while it remains our advisor, but it may transfer the shares to one of its affiliates. Dividend Capital Total Advisors Group LLC, the parent of the Advisor, also invested $1,000 in the Operating Partnership and was issued a distinct class of OP Units which constitute the Special Units. Effective upon the commencement of this offering, the Special Units will be cancelled. Additionally, as of March 31, 2012, our Operating Partnership had outstanding OP Units held by third-party investors representing approximately a 8.0% limited partnership interest. These units were issued by the Operating Partnership in connection with its exercise of options to acquire certain tenancy-in-common interests 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 held by third parties are all Class E OP Units and are economically equivalent to our Class E shares. Accordingly, for purposes of our NAV procedures described below and the calculation of certain fees to the Advisor, we sometimes consider the OP Units held by third parties as a fifth class of security issued by us. We sometimes refer to our Class E shares, Class A shares, Class W shares and Class I shares, along with the Class E 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 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. The overarching principle of these procedures is to produce an NAV that represents a fair and accurate estimate of the value of our assets or the price that would be received for our assets in an arm’s-length transaction between market participants, less our liabilities. One fundamental element of the valuation process, the valuation of our real property portfolio, will be 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. Altus Group is a multidisciplinary provider of independent, professional real estate services with a network of over 60 offices in 14 countries worldwide, including Canada, the U.K., Australia, the United States and the Middle East. Altus Group is engaged in the business of valuing commercial real estate properties and is not affiliated with us or the Advisor.

The real property portfolio valuation, which is the largest component of our NAV calculation, will be provided to us by the Independent Valuation Firm on a daily basis. The foundation for this valuation will be periodic appraisals. Our consolidated real properties will be appraised approximately once every 12 calendar months, and in no event will more than 12 full calendar months pass between appraisals of our consolidated real properties. In order to provide a smooth and orderly appraisal process, we will seek to have approximately 1/12th

 

of the portfolio appraised each month, although we may have more or less appraised in a month. However, on a daily basis, 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).

Each year our board of directors, including a majority of our independent directors, will review the appropriateness of our valuation procedures. With respect to the valuation of our properties, the Independent Valuation Firm will provide 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.

While the methodologies contained in the valuation procedures will be designed to operate reliably within a wide variety of circumstances, it is possible that in certain unanticipated situations or after the occurrence of certain extraordinary events (such as a terrorist attack or an act of nature), our ability to implement and coordinate our NAV procedures may be impaired or delayed, including in circumstances where there is a delay in accessing or receiving information from vendors or other reporting agents. We may suspend the offering and the redemption program if it determines that the calculation of NAV is materially incorrect or there is a condition that restricts the valuation of a material portion of our assets. See “Net Asset Value Calculation and Valuation Procedures” for more details regarding our valuation procedures.

NAV and NAV Per Share Calculation

We are offering to the public three classes of shares of our common stock, Class A shares, Class I shares and Class W shares. Our NAV will be calculated for each of these classes and our Class E shares after the end of each business day that the New York Stock Exchange is open for unrestricted trading by ALPS Fund Services Inc. (“ALPS” or the “NAV Accountant”), a third-party firm approved by our board of directors, including a majority of our independent directors. Our board of directors, including a majority of our independent directors, may replace ALPS with another party, including our Advisor, if it is deemed appropriate to do so.

At the end of each such trading day, before taking into consideration accrued dividends or class-specific expense accruals, any change in the Aggregate Fund NAV (whether an increase or decrease) will be allocated among each class of Fund Interest (i.e., our Class E shares, Class A shares, Class W shares and Class I shares, along with the Class E OP Units held by third parties) based on each class’s relative percentage of the previous Aggregate Fund NAV. Changes in the Aggregate Fund NAV will reflect factors including, but not limited to, unrealized/realized gains (losses) on the value of our real property portfolio and real estate-related assets, and accruals for income and liabilities.

Our most significant source of net income is property income. We will 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. For the first month following a property acquisition, we will calculate and accrue portfolio income with respect to such property based on the performance of the property before the acquisition and the contractual arrangements in place at the time of the acquisition, as identified and reviewed through our due diligence and underwriting process in connection with the acquisition. On a periodic basis, the accruals will be adjusted based on information derived from actual operating results. For the purpose of calculating our NAV, all organization and offering costs will reduce NAV when incurred.

 

The book value of our liabilities will be included as part of our NAV calculation. We expect that our liabilities will include, without limitation, property-level mortgages, accrued distributions, the fees payable to the Advisor and the Dealer Manager, accounts payable, accrued company-level operating expenses, any company or portfolio-level credit facilities and other liabilities.

Following the calculation and allocation of changes in the Aggregate Fund NAV as described above, NAV for each class will be adjusted for accrued dividends, the distribution fee and the dealer manager fee, to determine the current day’s NAV. Selling commissions, which are paid by purchasers of Class A shares in the primary offering at the time of purchase in addition to the NAV per Class A share, will have no effect on the NAV of any class.

NAV per share for each class is calculated by dividing such class’s NAV at the end of each trading day by the number of shares outstanding for that class on such day. See “Net Asset Value Calculation and Valuation Procedures” for more details regarding our NAV per share calculations.

Estimated Use of Proceeds

After paying selling commissions and organization and offering expenses, and assuming that we sell the maximum offering, we estimate net proceeds from this offering in an amount equal to $2,961,320,823, or approximately 98.71% of the gross proceeds from this offering, to be available to us. We expect to use the net proceeds of this offering to invest in real properties and real estate-related debt and securities, to potentially reduce our leverage on our existing investments, to provide liquidity to our stockholders and for general corporate purposes. We may also use the proceeds of this offering to fund stockholder distributions, although we do not currently intend to do so. The specific amounts of the net proceeds that are used for such purposes, and the priority of such uses, will depend on the amount of proceeds raised in this offering, the timing of our receipt of such proceeds and the best uses of the proceeds at such time.

Investment Strategy and Objectives

The cornerstone of our investment strategy is to provide investors seeking a general real estate allocation with a broadly diversified portfolio of real estate-related investments. Real property investments have and will generally focus on real properties in multiple sectors and geographies primarily in the United States, consisting primarily of office, industrial, and retail, although we may also invest in multifamily, hospitality and other real property types. To provide diversification to our portfolio, we have and may continue to invest in real estate-related debt, which will generally include originating and participating in mortgage loans secured by real estate, mezzanine debt and other related investments. Any investments in real estate-related securities will generally focus on debt and 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 program.

Our primary investment objectives include the following:

 

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

 

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preserving and protecting our stockholders’ capital investments;

 

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achieving appreciation of our NAV; and

 

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enabling stockholders to utilize real estate as an asset class in diversified, long-term investment portfolios.

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, which may require the approval of our stockholders.

 

There is no public trading market for our shares of common stock. On a limited basis, you may be able to redeem shares through our share redemption program. In addition, we do not intend to pursue a “Liquidity Event” with respect to our Class A, Class W or 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.

The Advisor will actively monitor and manage our portfolio to achieve diversification across multiple dimensions including (i) real property and real estate-related debt and securities, (ii) equity and debt capital structures, (iii) real estate property sectors, (iv) geographic markets and (v) tenant profiles. To the extent required by applicable law, our Advisor intends to engage BCG TRT Advisors LLC, an entity related to the Advisor and a registered investment advisor, or another registered investment advisor, to advise with respect to the acquisition, holding and disposition of our assets constituting securities. Over the long term, we intend to invest a significant majority of our total assets in real properties and the remainder of our total assets in real estate-related debt and securities.

Leverage

We intend to use financial leverage to provide additional funds to support our investment activities. As of March 31, 2012, our leverage ratio is approximately 50% of the gross book value of our assets (before accumulated depreciation and amortization), inclusive of property and entity-level debt. Our current leverage target is between 50-60%, however if we sell all of the shares offered in this offering, we may lower our targeted leverage ratio to be approximately 35-45% of the gross book value of our assets (before accumulated depreciation and amortization), inclusive of property and entity-level debt, by paying down existing debt and/or purchasing unlevered assets with the net proceeds raised in this offering. However, only a portion of the proceeds from this offering will be used to pay down existing debt and/or to purchase unlevered assets. If we fail to raise sufficient proceeds from this offering, such leverage ratio may not be achieved, and even if we sell all of the shares offered in this offering, we may not reduce our leverage to our targeted range. Although we will work to achieve the targeted leverage ratio over time, we may change our targeted leverage ratio from time to time. Even if we reach a targeted leverage ratio, we may vary from it from time to time, and there are no assurances that we will achieve the targeted range disclosed above or 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. Our charter restricts the amount of indebtedness that we may incur to 300% of our net assets, which approximates 75% of the cost of our investments, but does not restrict the amount of indebtedness we may incur with respect to any single investment. Notwithstanding the foregoing, our aggregate indebtedness may exceed the limit set forth in our charter, but only if such excess is approved by a majority of our independent directors. See “General Portfolio Diversification Objectives—Borrowing Policies” for more details regarding our borrowing policies.

Summary Risk Factors

An investment in shares of our common stock involves significant risks, including among others:

 

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There is no public trading market for shares of our common stock, and it will therefore be difficult for you to sell your shares.

 

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There are limits on the ownership, transferability and redemption of shares of our common stock which significantly limit the liquidity of an investment in shares of our common stock.

 

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Generally, our share redemption program imposes a quarterly cap on net redemptions 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 such class as of the last day of the previous calendar quarter. In addition, the vast majority of our assets will consist of properties that cannot generally be liquidated without impacting our ability to realize full value upon their disposition. Therefore, we may not have sufficient resources to satisfy redemption requests. Our board of directors has the right to modify, suspend or terminate our share redemption program if it deems such action to be in the best interest of our stockholders. As a result, our shares should be considered as having only limited liquidity and at times may be illiquid. See “Description of Capital Stock—Class A, Class W and Class I Share Redemption Program” for more information.

 

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A portion of the proceeds received in this offering of Class A, Class W and Class I shares is intended to be used to redeem Class E shares. Prior to the commencement of this offering, our share redemption program for Class E shares imposed greater restrictions on the amount of Class E shares that could be redeemed in any given quarter, and as a result of such restrictions, coupled with high demand for redemptions, we have honored Class E share redemption requests on a pro rata basis since March 2009, being unable to satisfy all requests. There is significant pent up demand from Class E holders to redeem their shares, and we plan to use a portion of the proceeds from this offering to satisfy such redemption requests. As a result, we may have fewer offering proceeds available to retire debt or acquire additional properties, which may reduce our liquidity and profitability.

 

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The purchase and redemption price for our Class A, Class W and Class I shares, and the redemption price for our Class E shares, will be determined at the end of each business day based upon the NAV for such class and will not be based on any established trading price. Each accepted purchase order and redemption request will be executed at a price equal to our NAV per share for the class of shares being purchased or redeemed, next determined after the purchase order or redemption request is received in good order (subject to commissions for the purchase of Class A shares in our primary offering and, subject to limited exceptions, a 2% discount for the redemption of Class A, Class W or Class I shares held less than 365 days). As a result, you will not know the purchase or redemption price at the time you submit your purchase order or redemption request. 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.

 

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Our NAV will not represent our enterprise value and may not accurately reflect the actual prices at which our assets could be liquidated on any given day. Further, it is possible that the annual appraisals of our properties may not be spread evenly throughout the year, and rapidly changing market conditions or material events may not be fully reflected in our daily NAV. 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.

 

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Some of our executive officers, our Chairman of the Board and other key personnel are also officers, directors, managers, key personnel and/or holders of an ownership interest in the Advisor, our Dealer Manager, our property manager and/or other entities related to the Advisor. As a result, they face conflicts of interest, including but not limited to conflicts arising from time constraints, allocation of investment opportunities and the fact that the fees the Advisor will receive for services rendered to us will be based on our NAV, the procedures for which the Advisor will assist our board of directors in developing, overseeing, implementing and coordinating.

 

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We are subject to risks generally incident to the ownership of real estate-related assets, including changes in global, national, regional or local economic, demographic and real estate market conditions, as well as other factors particular to the locations of our investments. A prolonged recession, such as the one experienced over the past few years, and a prolonged recovery period could adversely impact our investments. To the extent that the general economic slowdown is further prolonged or becomes more severe or real estate fundamentals deteriorate further, 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.

 

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Our use of leverage increases the risk of loss on our investments and places certain restrictions upon us which may limit us from realizing the most optimal value for such investments.

 

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If we fail to maintain our status as a REIT, it would adversely affect our results of operations and our ability to make distributions to our stockholders.

 

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

 

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The amount of distributions we may make is uncertain. We may pay distributions from sources other than cash flow from operations, including, without limitation, the sale of assets, borrowings or offering proceeds. The use of these sources for distributions would decrease the amount of cash we have available for new investments, repayment of debt, share redemptions and other corporate purposes, and could potentially reduce your overall return and adversely impact and dilute the value of your investment in shares of our common stock.

Compensation to the Advisor and its Affiliates

The Advisor and its affiliates receive compensation and fees and reimbursement for services related to this offering and for the investment of our assets, subject to review and approval of our independent directors. Set forth below is a summary of the fees and expenses we expect to pay these entities. The maximum amount that we may pay with respect to such fees and expenses is also set forth below, assuming the maximum gross proceeds from the primary offering and distribution reinvestment plan. See “The Advisor and the Advisory Agreement—Management Compensation” for a more detailed explanation of the fees and expenses payable to the Advisor and its affiliates.

 

SUMMARY OF COMPENSATION TO THE ADVISOR AND ITS AFFILIATES

 

Type of Compensation and Recipient		Description and Method of Computation		Maximum Amount
Selling Commission—the Dealer Manager		We will pay the Dealer Manager selling commissions of up to 3.0% of the NAV per Class A share. The actual selling commission expressed as a percentage of the total price per Class A share may be higher or lower than 3.0% due to rounding. Selling commissions may be waived at the direction of the Dealer Manager and may be reduced for volume purchases. Substantially all of the sales commissions are expected to be reallowed to third-party broker-dealers participating in the offering.   We will not pay selling commissions with respect to purchases of Class W shares, Class I shares or shares of any class sold pursuant to our distribution reinvestment plan.		The actual amount will depend on the number of Class A shares sold, the NAV per share and the type of accounts that purchase shares. Aggregate selling commissions will equal $65,533,981 if we sell the maximum offering, assuming that all shares sold are Class A shares, the maximum selling commission is paid for each primary offering share, and no reallocation of shares between our primary offering and our distribution reinvestment plan.
Dealer Manager Fee—the Dealer Manager		We will pay the Dealer Manager a dealer manager fee that accrues 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 an amount equal to 1/365th of 0.10% of our NAV per share for our Class I shares for such day on a continuous basis from year to year. We will cease paying the dealer manager fee with respect to shares sold in this 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 this offering, total underwriting compensation in this offering equaling 10% of the gross proceeds from the primary portion of this offering, or (iii) such shares no longer being outstanding.   The Dealer Manager may reallow a portion of the dealer manager fee to participating broker-dealers that meet certain thresholds of our shares under management and certain other metrics and broker-dealers servicing investors’ accounts, referred to as servicing broker-dealers. The dealer manager fee will be payable monthly in arrears. The dealer manager fee is payable with respect to all Class A, Class W and Class I shares, including Class A, Class W, and Class I shares issued under our distribution reinvestment plan. We will not pay a dealer manager fee with respect to Class E shares.		Actual amounts depend upon the number of shares of each class purchased, our daily NAV and when shares are purchased, and, therefore, cannot be determined at this time. The dealer manager fee will equal $18,000,000 per annum if we sell the maximum offering, assuming that all shares sold are Class W shares and that the NAV per Class W share remains the same as the NAV per Class W share at the commencement of this offering.

 

Distribution Fee—the Dealer Manager		We will pay the Dealer Manager a distribution fee with respect to our Class A shares only that accrues daily in an amount equal to 1/365th of 0.50% of the amount of our NAV per share for the Class A shares for such day on a continuous basis from year to year. We will cease paying the distribution fee with respect to shares sold in this 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 this offering, total underwriting compensation in this offering equaling 10% of the gross proceeds from the primary portion of this offering, or (iii) such shares no longer being outstanding. The Dealer Manager may reallow the distribution fee to participating broker-dealers and servicing broker-dealers. The distribution fee will be payable monthly in arrears. The distribution fee is payable with respect to all Class A shares, including Class A shares issued under our distribution reinvestment plan.   We will not pay a distribution fee with respect to Class E shares, Class W shares or Class I shares.		Actual amounts depend upon our daily NAV, the number of Class A shares purchased and when shares are purchased, and, therefore, cannot be determined at this time. The distribution fee will equal $14,672,330 per annum if we sell the maximum offering, assuming all shares sold are Class A shares, that the NAV per Class A share remains the same as the NAV per Class A share at the commencement of this offering and no reallocation of shares between our primary offering and our distribution reinvestment plan.
Advisory Fees—the Advisor		In consideration for asset management services it provides on our behalf, we will pay the 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 (i.e., the aggregate NAV of our Class E shares, Class A shares, Class W shares and Class I shares, along with the Class E OP Units held by third parties) for such day, which will be 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 (i.e., our Class E shares, Class A shares, Class W shares and Class I shares, along with the Class E OP Units held by third parties) in any calendar year such that the 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. However, the		Actual amounts depend upon our Aggregate Fund NAV, the distributions we pay, the changes in NAV and future development and sales of assets and, therefore, cannot be calculated at this time.

 

		performance component will not be earned on any increase in the weighted average NAV per Fund Interest up to the higher of (a) the weighted average NAV per Fund Interest as of the end of the business day on which this offering commences or (b) the highest weighted average NAV per Fund Interest on the last business day of any prior calendar year following the commencement of this offering. The foregoing NAV thresholds are subject to adjustment by our board of directors. Additionally, the Advisor will provide us with a waiver of a portion of its fees generally equal to the amount of 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 a share or unit, the benefit of which will be shared among all holders of Fund Interests. For a more comprehensive description of the performance fee and related calculations, see “The Advisor and the Advisory Agreement—Summary of Fees, Commissions and Reimbursements.”
		We will also pay our Advisor a development management fee equal to 4.0% of the cost to develop, construct or improve any real property assets.   In addition, we will pay the Advisor a fee of 1.0% of the sales price of individual real property assets upon disposition of such assets.   Further, for a substantial amount of services in connection with the sale of a property, as determined by a majority of our independent directors, we will pay the 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.

 

Organization and Offering Expense Reimbursement—the Advisor or its affiliates, including the Dealer Manager		We will pay directly, or reimburse the Advisor and the Dealer Manager if they pay on our behalf, any organization 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 the Dealer Manager in connection with this offering) as and when incurred. After the termination of the primary offering and again after termination of the offering under our distribution reinvestment plan, the 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.		We estimate our organization and offering expenses to be approximately $16,834,305 if we sell the maximum offering amount.
Expense Reimbursement—the Advisor		Subject to certain limitations, we will reimburse the 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 Advisor’s overhead, which includes but is not limited to the Advisor’s rent, utilities and personnel costs; provided, that we will not reimburse the Advisor or its affiliates for services for which the Advisor or its affiliates are entitled to compensation in the form of a separate fee, which services and fees are described in this table.		Actual amounts are dependent upon actual expenses incurred and, therefore, cannot be determined at this time.
Property Management and Leasing Fees—the Property Manager		An amount equal to a market-based percentage of the annual gross revenues of each real property owned by us and managed by our property manager, Dividend Capital Property Management LLC (the “Property Manager”), which is an affiliate of our Advisor. Such fee is expected to range from 2% to 5% of annual gross revenues.   In addition, we may pay the Property Manager a separate fee for the one-time initial lease-up of newly constructed real properties. Such fee is generally expected to range from 2% to 8% of the projected first years’ annual gross revenues of the property.		Actual amounts are dependent upon actual gross revenues of each real property owned by us and managed by the Property Manager and, therefore, cannot be determined at this time.

 

In lieu of cash, the Advisor may elect to receive the payment of its fees and the reimbursement of its expenses in Class E, Class A, Class W or Class I shares of our common stock. Any such shares will be valued at the NAV per share applicable to such shares on the issue date and will not be eligible for redemption for six months.

Conflicts of Interest

The Advisor and certain of its affiliates are subject to conflicts of interest in connection with the management of our business affairs, including the following:

 

•

The directors, officers and other employees of the Advisor must allocate their time between advising us and managing other real estate projects and business activities in which they may be involved.

 

•

The compensation payable by us to the Advisor and its affiliates may not be on terms that would result from arm’s-length negotiations, is payable whether or not our stockholders receive distributions, and is based on our NAV, the procedures for which the Advisor will assist our board of directors in developing, overseeing, implementing and coordinating.

 

•

We cannot guarantee that the terms of any joint venture proposed by the Advisor to be entered into with entities affiliated with the Advisor or entities sponsored or advised by affiliates of the Advisor will be equally beneficial to us as those that would result from arm’s-length negotiations.

 

•

We may compete with certain entities affiliated with the Advisor or entities sponsored or advised by affiliates of the Advisor for investments, including Industrial Income Trust Inc. (which we refer to herein as “IIT”), subjecting the Advisor and its affiliates to certain conflicts of interest in evaluating the suitability of investment opportunities and making or recommending acquisitions on our behalf. For example, in the event that an investment is equally suitable for IIT and us, IIT will have priority to acquire or invest industrial properties located in the United States or Mexico.

 

•

Regardless of the quality of the assets acquired, the services provided to us or whether we make distributions to our stockholders, the Advisor and its affiliates will receive certain fees and reimbursements in connection with transactions involving the management and sale of our investments.

 

•

The Property Manager and the Dealer Manager are affiliates of our Advisor. As a result, (i) we may not always have the benefit of independent property management, (ii) we do not have the benefit of an independent dealer manager and (iii) you do not have the benefit of an independent third-party review of this offering to the same extent as if we and the Dealer Manager were unaffiliated with our Advisor.

Our Board

We operate under the direction of our board of directors, the members of which are accountable to us and our stockholders as fiduciaries. The board of directors is responsible for the management and control of our affairs. We currently have four members on our board, three of whom are independent of us, the Advisor and our respective affiliates. Our directors are elected annually by the stockholders. Our board of directors has established an Audit Committee, an Investment Committee and a TRT-IIT Conflicts Resolution Committee.

The Advisor

Dividend Capital Total Advisors LLC, our Advisor, was formed as a Delaware limited liability company in April 2005. Subject to our board of directors oversight, we rely on the 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, the 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. The 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 January 9, 2013. In connection with commencement of this offering, we will enter into an amended and restated Advisory Agreement with a new one year term. Our officers and our interested director are all employees of the Advisor. The names and biographical information of our directors and officers are contained under “Management—Directors and Executive Officers.”

Our Dealer Manager

Dividend Capital Securities LLC, which we refer to as the Dealer Manager, is distributing the shares of our common stock offered hereby on a “best efforts” basis. The Dealer Manager is an entity related to the Advisor and is a member of the Financial Industry Regulatory Authority, Inc., or FINRA. The Dealer Manager will coordinate our distribution effort and manage our relationships with participating broker-dealers and financial advisors and provide assistance in connection with compliance matters relating to marketing the offering.

Other Affiliates of the Advisor and Related Entities

In addition to our Advisor and our Dealer Manager, other affiliates of the Advisor are involved in this offering and our operations. The Property Manager may perform certain property management services for us and the Operating Partnership. Dividend Capital Exchange Facilitators LLC, which we refer to as the “Exchange Facilitator,” has assisted us in the past and may in the future assist us in effecting transactions related to the Operating Partnership’s private placements of tenancy-in-common interests in real properties and beneficial interests in certain Delaware statutory trusts that own real properties.

The Advisor has entered into a strategic alliance with BCG TRT Advisors LLC, which we refer to as “BCG TRT Advisors,” in connection with securities investment management. BCG TRT Advisors is a registered investment advisor.

We refer to the Advisor, the Dealer Manager, the Property Manager, the Exchange Facilitator and other of our Advisor’s affiliates, each as a “Dividend Capital affiliated entity” and collectively, as “Dividend Capital affiliated entities.”

Our Joint Ventures

A component of our investment strategy includes entering into joint venture agreements with partners in connection with certain property acquisitions and debt related investments. With respect to these agreements, we may make varying levels of contributions in such ventures, including, without limitation, contributions of existing assets, and may take varying levels of management, control and decision rights. These agreements may allow us or our joint venture partners to be entitled to profit participation upon the sale of a property. With respect to any joint venture, we may enter into an advisory or sub-advisory agreement with an affiliate of the Advisor. We may also enter into arrangements with the Advisor in which the Advisor receives fees (directly or indirectly, including through a subsidiary of ours) from the joint venture entity or from the joint venture partner.

In certain circumstances, we may enter into a joint venture with a partner who is a product specialist with whom our Advisor has entered into a strategic alliances. Typically, such product partners are affiliated with the Advisor or third-party product specialists that have specialized expertise and dedicated resources in specific areas of real property or real estate-related debt or securities and assist the Advisor in connection with identifying, evaluating and recommending potential investments, performing due diligence, negotiating purchases and managing our assets on a day-to-day basis. These strategic alliances are intended to allow the Advisor to leverage the organizational infrastructure of experienced real estate developers, operators and investment managers, and to

 

potentially give us access to a greater number of high-quality real property and other investment opportunities. The use of product specialists or other service providers does not eliminate or reduce the Advisor’s fiduciary duty to us. The Advisor retains ultimate responsibility for the performance of all of the matters entrusted to it under the Advisory Agreement. Pursuant to the Advisory Agreement with the Advisor, we pay the Advisor certain fees. Where we may enter into a joint venture with a partner who is a product specialist of our Advisor, a portion of the Advisor’s fees are generally reallowed to the product specialists in exchange for services provided.

As of March 31, 2012, we had entered into joint venture agreements with the following joint venture partners and/or their affiliates:

 

Joint Venture Partner		Investment Type		Number of Investments				% of Gross Investment Amount (1)
DCT Industrial Trust (2)		Industrial properties			24				11.5	%
Westcore Properties AC, LLC (2)		Office properties			5				5.1	%
ProLogis		Office properties			1				1.5	%
Alliance Commercial Properties LLC (2)		Office properties			2				1.5	%
Amerimar Enterprises LLC (2)		Office properties			1				1.3	%
					33				20.9	%

 

 

(1)

Gross Investment Amount for real property (i) includes the effect of intangible lease liabilities of approximately $125.4 million as of March 31, 2012 and (ii) excludes accumulated depreciation and amortization on assets of approximately $393.8 million as of March 31, 2012. Amounts reported for debt related investments represent our net accounting basis of the debt investments, which includes (i) unpaid principal balances, (ii) unamortized discounts, premiums, and deferred charges, and (iii) allowances for loan loss of approximately $18.0 million as of March 31, 2012.

(2)	Joint venture partner additionally acts as a product specialist with regards to certain properties held in the joint venture. The role of product specialists is described above.

Our Subsidiaries

We primarily own interests in our real properties through DCTRT Real Estate Holdco LLC or wholly owned subsidiaries thereof, and all of our real estate-related debt and securities through DCTRT Securities Holdco LLC or wholly owned subsidiaries thereof. Both DCTRT Real Estate Holdco LLC and DCTRT Securities Holdco LLC are direct wholly owned subsidiaries of the Operating Partnership.

 

Structure Chart

The chart below shows the relationships among various Dividend Capital affiliated entities. Dividend Capital Total Advisors Group LLC, and the Advisor are presently each directly or indirectly majority owned, controlled and or managed by John A. Blumberg, James R. Mulvihill and Evan H. Zucker and/or their affiliates. The Dealer Manager, the Property Manager and the Exchange Facilitator are presently each directly or indirectly majority owned, controlled and/or managed by Messrs. Blumberg, Mulvihill and/or Zucker and/or their affiliates. Dividend Capital Total Advisors Group LLC has issued and may in the future issue, equity interests or derivatives thereof to certain of their employees, affiliated or other unaffiliated individuals, consultants or other parties. However, none of such transactions has or is expected to result in a change in control of Dividend Capital Total Advisors Group LLC.

 

Distribution Policy

We currently are, and expect that in the future we will continue to be, organized and operate in a manner intended to qualify as a REIT for U.S. federal income tax purposes. We first elected REIT status for our taxable year ended December 31, 2006. In order to qualify as a REIT, we are required to distribute at least 90% of our annual taxable income to our stockholders. We intend to accrue distributions daily and make distributions on a quarterly basis and 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. In connection with a distribution to our stockholders, our board of directors has historically authorized, and intends to continue to authorize, a quarterly distribution of a certain dollar amount per share of our common stock. We then calculate each stockholder’s specific distribution amount for the quarter using daily record and declaration dates and your distributions will begin to accrue on the date and time that you 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 will accrue the amount of declared distributions as our liability on a daily basis, and such liability will be accounted for in determining the NAV.

Our board of directors authorized a quarterly distribution for our stockholders equal to $0.125 per share for the second quarter of 2012. Our board of directors has also authorized a quarterly distribution for our stockholders equal to $0.125 per share for the third quarter of 2012, although it reserves the right to revisit this distribution level during the quarter with respect to record dates that have not yet passed. Distributions on our shares accrue daily, and no later than the fourth quarter of 2012, we expect that the board of directors will adjust the daily dividend accrual to a quarterly rate of $0.0875 per share.

In the prior four quarters, our board of directors authorized quarterly distributions for our stockholders equal to $0.15 per share for each of the second and third quarters of 2011, and a quarterly distribution equal to $0.125 per share for the fourth quarter of 2011 and the first quarter of 2012. We paid the distributions for the second, third and fourth quarters of 2011 on July 15, 2011, October 17, 2011 and January 17, 2012, respectively and for the first quarter of 2012 on April 16, 2012.

The following table sets forth relationships between the amounts of distributions declared for such period and the amount reported as cash flow from operations in accordance with U.S. Generally Accepted Accounting Principles (“GAAP”) for the years ended December 31, 2011, 2010, 2009, 2008 and 2007 (dollar amounts in thousands) and for the past four quarters for which distributions have been paid. Distributions funded with borrowings are reflected in the calculation of our NAV, which takes into account our liabilities.

 

		Distributions																				Source of Distributions
For the Year Ended:		Paid in Cash				% Paid in Cash				Reinvested in Shares				% Reinvested in Shares				Total				Cash Flow from Operations (1)				% Funded with Cash Flow from Operations (1)				Borrowings (2)				% Funded with Borrowings (2)				Total
December 31, 2007		$	20,683				40.4	%		$	30,492				59.6	%		$	51,175			$	31,772				62.1	%		$	19,403				37.9	%		$	51,175
December 31, 2008			36,031				42.9	%			47,992				57.1	%			84,023				60,266				71.7	%			23,757				28.3	%			84,023
December 31, 2009			50,274				48.2	%			54,092				51.8	%			104,366				51,221				49.1	%			53,145				50.9	%			104,366
December 31, 2010			59,782				54.1	%			50,648				45.9	%			110,430				50,200				45.5	%			60,230				54.5	%			110,430
December 31, 2011			62,575				59.2	%			43,129				40.8	%			105,704				94,342				89.3	%			11,362				10.7	%			105,704
Total		$	229,345				50.3	%		$	226,353				49.7	%		$	455,698			$	287,801				63.2	%		$	167,897				36.8	%		$	455,698
For the Three Months Ended:
June 30, 2011		$	16,252				58.9	%		$	11,340				41.1	%		$	27,592			$	23,402				84.8	%		$	4,190				15.2	%		$	27,592
September 30, 2011			16,474				59.7	%			11,137				40.3	%			27,611				21,490				77.8	%			6,121				22.2	%			27,611
December 31, 2011			13,909				60.6	%			9,046				39.4	%			22,955				22,817				99.4	%			138				0.6	%			22,955
March 31, 2012			14,064				61.4	%			8,845				38.6	%			22,909				19,303				84.3	%			3,606				15.7	%			22,909
Total		$	60,699				60.1	%		$	40,368				39.9	%		$	101,067			$	87,012				86.1	%		$	14,055				13.9	%		$	101,067

 

 

(1)

Commencing on January 1, 2009, expenses associated with the acquisition of real property, including acquisition fees paid to our Advisor and gains or losses related to the change in fair value of contingent consideration related to the acquisition of real property, are recorded to earnings and as a deduction to our cash from operations. We incurred such acquisition-related expenses, net of other gains, of approximately $610,000, $18.2 million, and $4.9 million, respectively, during the years ended December 31, 2011, 2010 and 2009. In addition, we incurred such acquisition-related expenses, net of other gains, of approximately $27,000, $125,000, $2,000, and $299,000 respectively, during the three months ended June 30, 2011 September 30, 2011, December 31, 2011, and March 31, 2012, respectively. See “Selected Information Regarding Our Operations—How We Measure Our Performance” for a discussion of acquisition-related expenses, net of other gains, and its impact on our cash flow from operations.

(2)	For purposes of this table, we presented the amounts funded from borrowings by subtracting the amount reported for cash flow from operations in accordance with GAAP from the total amount of distributions declared for such period.

 

NAREIT-Defined FFO and Company-Defined FFO are operating metrics and should not be used as liquidity measures. However, management believes the relationship between NAREIT-Defined FFO and Company-Defined FFO and distributions may be meaningful for investors to better understand the sustainability of our operating performance compared to distributions made. During the years ended December 31, 2011, 2010, 2009, 2008, and 2007, NAREIT-Defined FFO was approximately 62%, 76%, 8%, 0% and 78%, respectively, and 87% for the three months ended March 31, 2012, of our total distributions. During the year ended December 31, 2008, we reported a negative amount for NAREIT-Defined FFO. For a discussion of NAREIT-Defined FFO and Company-Defined FFO and their inherent limitations, see “Selected Information Regarding Our Operations—How We Measure Our Performance.”

Distribution Reinvestment Plan

You may participate in our distribution reinvestment plan and elect to have the cash distributions attributable to the class of shares owned automatically reinvested in additional shares of the same class. The cash distributions you receive will be reinvested in shares of our common stock at a price equal to our NAV per share applicable to the class of shares purchased, calculated as of the distribution date. Our board of directors may amend, suspend or terminate the distribution reinvestment plan in our discretion at any time upon 10 days’ notice to you. 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. Following any termination of the distribution reinvestment plan, all subsequent distributions to stockholders would be made in cash.

Class A, Class W and Class I Share Redemption Program

We expect that there will be no regular secondary trading market for shares of our common stock. While you should view your investment as long term with limited liquidity, in connection with this offering we are adopting a Class A, Class W and Class I share redemption program, whereby stockholders may request that we redeem all or any portion of their Class A, Class W or Class I shares. We will also have a separate share redemption program for holders of our Class E shares, described below. Unless the context otherwise requires, when we describe our share redemption program in this prospectus, we are referring to our new share redemption program for holders of Class A, Class W and Class I shares, which will commence on October 1, 2012.

Generally, our share redemption program imposes a quarterly cap on 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 such class as of the last day of the previous calendar quarter. Because these volume limitations are based, in part, on the NAV of each class as of the last day of the quarter preceding the redemption request, the availability of redemptions in any quarter will be dependent upon, among other things, the success of this offering. Subject to limited exceptions, 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. See “Description of Capital Stock—Class A, Class W and Class I Share Redemption Program” for more information.

Although the vast majority of our assets will consist of properties that cannot generally be readily liquidated without impacting our ability to realize full value upon their disposition, we will maintain a number of sources of liquidity including (i) cash equivalents (e.g. money market funds), other short-term investments, U.S. government securities, agency securities, liquid real estate-related securities and (ii) one or more borrowing facilities. In order to maintain a reasonable level of liquidity, we intend to generally maintain under normal circumstances the following aggregate allocation to the above sources of liquidity (collectively, referred to as “liquid assets”): (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. In addition, we may also fund redemptions from any available source of funds, including operating cash flows, borrowings, proceeds from this offering and/or sales of our assets.

Despite these sources of liquidity, we may not always have sufficient liquid resources to satisfy redemption requests and you may not always be able to redeem your shares under the program. If a redemption request with respect to Class A, Class W or Class I shares is made and accepted, the redemption price per share will be equal to the NAV per share on the date of redemption of the class of shares being redeemed. Our board of directors may modify, suspend or terminate our share redemption program if it deems such action to be in the best interest of our stockholders. Our board of directors will assess the overall level of liquidity available in our portfolio and the need for available funds prior to taking any action that will result in limiting our redemptions. See “Description of Capital Stock—Class A, Class W and Class I Share Redemption Program—Redemption Limitations.”

Class E Share Redemption Program

In connection with this offering, we are also adopting a revised, separate Class E share redemption program for holders of our Class E shares. The Class E share redemption program adopted in connection with this offering will replace the prior share redemption program for holders of our Class E shares. In the prospectus, we describe our Class E share redemption program as it will be revised in connection with this offering. This revised Class E share redemption program will commence prior to our Class E share redemptions for the third quarter of 2012.

Under the Class E share redemption program, we will 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 will be equal to the NAV per Class E share on the date of redemption.

Each calendar quarter we intend to make available for Class E share redemptions an amount equal to (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 in excess of such quarter’s applicable redemption cap due to qualifying death or disability requests of a stockholder during such calendar quarter. However, our board of directors may from time to time authorize funds for redemptions of Class E shares in greater or lower amounts. In particular, our board of directors intends to make an additional $20 million available for Class E share redemptions made at the end of the third quarter of 2012.

Notwithstanding the Class E liquidity level desired by our board of directors, under the program, we will generally not redeem in any consecutive 12-month period more than 5% of the number of Class E shares outstanding at the beginning of such 12-month period (excluding certain redemptions made in connection with a stockholder’s death), unless we receive no-action relief from the Commission with respect to the tender offer rules. If we wish to provide liquidity to our Class E stockholders in excess of this limit, we currently intend to conduct one or more tender offers for outstanding Class E shares.