Offering Closed on Aug 29, 2010

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Investment Policies

Our Board of Directors has established written policies on investment objectives and borrowing. Our Board is responsible for monitoring the administrative procedures, investment operations, Shopoff Properties Trust performance, and Shopoff Advisors to ensure such policies are carried out. The Independent Directors will review our investment policies at least annually to determine that our policies are in the best interests of our stockholders; and will set forth their determinations in the minutes of the Board meetings.  The investor will have no voting rights with respect to implementing our investment objectives and policies, all of which are the responsibility of our Board of Directors and the Investment Committee of our Advisor and may be changed at any time.

Shopoff Advisors will make investment recommendations and manage the daily operations of Shopoff Properties Trust, subject to oversight by our Board of Directors. Decisions relating to the purchase and sale of properties will be made by the Investment Committee of our Advisor consisting of William A. Shopoff, the President of our Advisor, the Chief Financial Officer of our Advisor, Edward Fitzpatrick, the Executive Vice President of our Advisor. See “Management” for a description of the background and experience of our Directors and Officers. The Investment Committee will be subject to oversight by our Board of Directors, but will have discretion with respect to the selection of specific properties.  Once selected, the investments must be approved by a majority of our Board of Directors, including a majority of the Independent Directors, as being fair and reasonable to us and consistent with our investment objectives. If the Board approves a given acquisition, then our Advisor will be directed to acquire the property on our behalf, if such acquisition can be completed on terms approved by the Board.

We initially plan to acquire properties primarily in California, Nevada, Arizona, Hawaii and Texas. These states would be the primary targets for acquisitions consisting of approximately 75% of our portfolio. We expect that properties located outside of these states, particularly properties not located in the Western United States, would comprise approximately 25% of our portfolio. If we invest in any properties outside of this targeted geographic area, such properties must have the potential to bring a higher return than in the states we have named in order to compensate for the lack of proximity to our headquarters. We will always seek to operate in markets in which Members of our Board of Directors and our Advisor have direct and recent experience. In the case of outlying markets, we would likely seek a local partner with whom to joint venture.

We are not specifically limited in the number or size of properties we may acquire. Assuming the maximum offering is sold, we generally do not intend to invest more than 20% of the gross proceeds of this offering in any one property, although we may do so with the approval of a majority of our Board of Directors. The number and mix of properties we acquire will depend upon real estate and market conditions and other circumstances existing at the time we are acquiring our properties and the amount of net proceeds we raise in this offering.

The sheltering from tax on income from other sources is not our objective.
We will not close the purchase of any property unless and until we obtain an environmental assessment, a minimum of Phase I review, for each property purchased and are generally satisfied with the environmental status of the property, as determined by Shopoff Advisors.
In determining whether to purchase a particular property, we may, in accordance with customary industry practice, obtain an option on such property exercisable within two to five years. The amount paid, if any, for an option, is normally forfeited if the property is not purchased, and is normally credited against the purchase price if the property is purchased. Generally, this will allow us to make a substantially higher return on our capital in exchange for bearing the risk of unexercised options. In such a case, we would record a Memorandum of Option on the title.

Other investment policies, deviations from which require our Board of Directors’ approval, are as follows:

We will not repurchase or otherwise reacquire our shares or other securities, except (i) in the case of shares issued under our 2007 equity incentive plan which are subject to the right of first refusal upon transfer by plan participants, and (ii) when and if shares of our common stock are traded on a secondary market or on a national securities exchange or national market system, if a majority of the Directors determine such purchase to be in our best interests.
We will not issue our shares on a deferred payment basis or other similar arrangement.
We will not invest in the securities of other issuers for the purpose of exercising control.
We will not engage in underwriting or the agency distribution of securities issued by others.
We do not intend to make distributions-in-kind, except for:
distributions of beneficial interests in a liquidating trust established for our dissolution and the liquidation of our assets in accordance with the terms of the Maryland General Corporations Law; or
distributions of property which meet all of the following conditions:
our Board of Directors advises each stockholder of the risks associated with direct ownership of the property;
our Board of Directors offers each stockholder the election of receiving in-kind property distributions; and
our Board of Directors distributes in-kind property only to those stockholders who accept the Directors’ offer.


We anticipate that the purchase price of properties we acquire will vary widely depending on a number of factors, including size and location. In addition, the cost to us will vary based on the amount of debt we incur in connection with financing the acquisition. If only the minimum offering amount is sold, we will not be able to purchase a significant number of properties for our portfolio and may only be able to purchase one property. If the maximum offering amount is sold, we will likely acquire a substantial number of properties; however, it is difficult to predict with precision the actual number of properties that we will actually acquire, because the purchase prices of properties vary widely and our investment in each will vary based on the amount of leverage we use.
Other than funds raised in the offering that are held in the escrow account at Wells Fargo Bank, N.A. until the minimum offering is reached, funds will be held in our own separate account at Wells Fargo, Bank, N.A., pending investment in properties in readily marketable, interest-bearing securities, which will allow us to continue to qualify as a REIT. Such investments will be highly liquid and provide for appropriate safety of principal and may include, but will not be limited to, investments such as bank money market accounts, short-term CDs issued by a bank or other short-term securities issued or guaranteed by the U.S. government.


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