Freehold Properties DRS Draft registration statement

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The registrant is submitting this draft registration statement confidentially as an “emerging growth company”
pursuant to Section 6(e) of the Securities Act of 1933, as amended, on October 26, 2020.
As filed with the Securities and Exchange Commission on , 2020.

Registration Statement No. 333-

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM S-11

FOR REGISTRATION
UNDER THE SECURITIES ACT OF 1933
OF SECURITIES OF CERTAIN REAL ESTATE COMPANIES

Freehold Properties, Inc.

(Exact name of registrant as specified in governing instruments)

232 3rd Avenue N.
Franklin, TN 37064
(877) 981-0900

(Address, including zip code, and telephone number, including area code, of registrant’s principal executive offices)

	Donald C. Brain Chairman & Chief Executive Officer Freehold Properties, Inc. 6543 S. Las Vegas Blvd. Las Vegas, Nevada 89119			Jeffery C. Walraven Chief Operating Officer Freehold Properties, Inc. 232 3rd Avenue N. Franklin, TN 37064
	(Name, address, including zip code, and telephone number, including area code, of agent for service)

Copies to:

Andrew P. Campbell
David P. Slotkin
Morrison & Foerster LLP
2000 Pennsylvania Avenue NW
Washington, DC 20006-1888
(202) 887-1500

Approximate date of commencement of proposed sale to the public:
As soon as practicable after this registration statement becomes effective.

If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box: ☐

If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐

If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐

If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐

If delivery of the prospectus is expected to be made pursuant to Rule 434, please check the following box. ☐

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

	Large accelerated filer ☐			Accelerated filer ☐			Non-accelerated filer ☒			Smaller reporting company ☒
										Emerging growth company ☒

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 7(a)(2)(B) of the Securities Act. ☒

CALCULATION OF REGISTRATION FEE

Title of Each Class of Securities to be Registered

Proposed Maximum
Aggregate Offering Price(1)(2)

Amount of
Registration Fee

Common stock, $0.0001 par value per share

(1)

Estimated solely for purposes of computing the amount of the registration fee pursuant to Rule 457(o) under the Securities Act of 1933, as amended.

(2)

Includes shares of common stock that may be purchased by the underwriters pursuant to the underwriters’ option to purchase additional shares.

The Registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the registration statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine.

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The information in this prospectus is not complete and may be changed. Neither we nor the selling stockholders may sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any state where the offer or sale thereof is not permitted.

SUBJECT TO COMPLETION
PRELIMINARY PROSPECTUS DATED OCTOBER 26, 2020

Freehold Properties, Inc.

Common Stock

Freehold Properties, Inc. is an internally managed real estate investment trust focused on the acquisition, ownership and leasing of specialized industrial cultivation/processing and retail/dispensary cannabis properties. We have elected to be taxed as a real estate investment trust, or REIT, for U.S. federal income tax purposes commencing with our short taxable year ended December 31, 2019.

This is our initial public offering, and no public market currently exists for our common stock. We are offering shares of our common stock, and the selling stockholders named in this prospectus are selling shares of our common stock. We will not receive any proceeds from the sale of our common stock by the selling stockholders. We intend to apply to list on common stock on the under the symbol “ .” In addition, we intend to apply to have our common stock quoted on the OTCQX Best Market, or the OTCQX, and the underwriters intend to file an application with the Financial Industry Regulatory Authority related to the quoting of our common stock on the OTCQX. There can be no assurance that such applications will be approved, that an active trading market for our common stock will develop, or, if developed, that it will be sustained. We expect our common stock to be quoted on the OTCQX under the symbol “FHP.”

We expect the initial public offering price of our common stock to be between $ and $ per share.

To assist us in complying with the limitations on the concentration of ownership of a REIT imposed by the Internal Revenue Code of 1986, as amended, among other purposes, our charter prohibits, with certain exceptions, ownership by any person of more than 9.8% in value or in number of shares, whichever is more restrictive, of the outstanding shares of our common stock, the outstanding shares of any class or series of our preferred stock or the aggregate outstanding shares of all classes and series of our capital stock. See “Description of Capital Stock — Restrictions on Ownership and Transfer.”

We are an “emerging growth company” under the federal securities laws and will be subject to reduced public company reporting requirements. Investing in our common stock involves a high degree of risk. See “Risk Factors” beginning on page 18 of this prospectus for a discussion of certain risk factors that you should consider before investing in our common stock.

Per Share

Total

Public offering price

Underwriting discounts and commissions(1)

Proceeds, before expenses, to us

Proceeds, expenses, to the selling stockholders

(1)

See “Underwriting” for a detailed description of the compensation payable to the underwriters.

We have granted the underwriters an option to purchase up to an additional shares of our common stock at the public offering price, less the underwriting discount, within 30 days after the date of this prospectus, solely to cover overallotments, if any.

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or passed upon the adequacy or accuracy of this prospectus. Any representation to the contrary is a criminal offense.

The underwriters expect to deliver the common stock on or about , 2020.

The date of this prospectus is , 2020.

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	Page
PROSPECTUS SUMMARY		1
RISK FACTORS		18
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS		48
USE OF PROCEEDS		50
DISTRIBUTION POLICY		51
CAPITALIZATION		52
DILUTION		53
SELECTED HISTORICAL AND PRO FORMA FINANCIAL INFORMATION		54
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS		56
OUR BUSINESS		67
MANAGEMENT		90
PRINCIPAL STOCKHOLDERS		107
SELLING STOCKHOLDERS		109
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS		110
DESCRIPTION OF CAPITAL STOCK		111
CERTAIN PROVISIONS OF MARYLAND LAW AND OF OUR CHARTER AND BYLAWS		116
POLICIES WITH RESPECT TO CERTAIN ACTIVITIES		123
SHARES ELIGIBLE FOR FUTURE SALE		127
OUR OPERATING PARTNERSHIP AND OUR PARTNERSHIP AGREEMENT		129
MATERIAL U.S. FEDERAL INCOME TAX CONSIDERATIONS		136
UNDERWRITING		157
LEGAL MATTERS		160
EXPERTS		160
CHANGE IN INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM		160
WHERE YOU CAN FIND ADDITIONAL INFORMATION		160
INDEX TO FINANCIAL STATEMENTS		F-1

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You should rely only on the information contained in this prospectus, any free writing prospectus prepared by us or information to which we have referred you. None of us, the selling stockholders or the underwriters have authorized any dealer, salesperson or other person to provide you with different or additional information. If anyone provides you with different or inconsistent information, you should not rely on it. We, the selling stockholders and the underwriters are not making an offer to sell shares of our common stock in any jurisdiction where the offer or sale is not permitted. You should assume that the information contained in this prospectus and any free writing prospectus prepared by us is accurate only as of their respective dates or on the date or dates which are specified in these documents. Our business, financial condition, liquidity, results of operations and prospects may have changed since those dates.

MARKET DATA

Industry data pertaining to our business contained in this prospectus consists of estimates based on data and reports compiled by industry professional organizations and analysts and our knowledge of our industry. Although we believe the industry and market data to be reliable, this information could prove to be inaccurate. Industry and market data could be wrong because of the method by which sources obtained their data and because information cannot always be verified with complete certainty due to the limits on the availability and reliability of raw data, the voluntary nature of the data gathering process and other limitations and uncertainties. You should carefully consider the inherent risks and uncertainties associated with the market and other industry data contained in this prospectus. Forward-looking information obtained from these sources is subject to the same qualifications and the additional uncertainties as the other forward-looking statements in this prospectus.

CURALEAF INFORMATION

Each lease in our portfolio is guaranteed by Curaleaf, Inc., which is a wholly owned direct subsidiary of Curaleaf Holdings, Inc., or Curaleaf. Curaleaf is a holding company for Curaleaf, Inc. and all of Curaleaf’s assets are held by, and its operations are conducted through, Curaleaf, Inc. and subsidiaries of Curaleaf, Inc. Curaleaf is subject to the reporting requirements of the U.S. Securities and Exchange Commission, or the SEC, applicable to “foreign private issuers” (as defined in Rule 405 under the Securities Act of 1933, as amended, or the Securities Act, and Rule 3b-4 under the Securities Exchange Act of 1934, as amended, or the Exchange Act) and is required to file with the SEC annual reports containing audited financial information and other reports required for foreign private issuers. Curaleaf’s financial statements included in its SEC filings have been prepared in accordance with International Financial Reporting Standards, or IFRS, as issued by the International Accounting Standards Board and Interpretations of the IFRS Interpretations Committee, and Curaleaf’s audited financial statements have been audited in accordance with Canadian generally accepted audited standards. As a result, Curaleaf’s financial statements may not be comparable to financial statements of U.S. companies that are prepared in accordance with U.S. generally accepted accounting principles, or GAAP, and audited in accordance with U.S. generally accepted audited standards. The information related to Curaleaf contained or referred to in this prospectus has been derived from SEC filings made by Curaleaf or other publicly available information, or was provided to us by Curaleaf, and we have not verified this information through an independent investigation or otherwise. We have no reason to believe that this information is inaccurate in any material respect, but we cannot provide any assurance of its accuracy. We are providing this data for informational purposes only, and you are encouraged to obtain Curaleaf’s publicly available filings, which can be found at the SEC’s website at www.sec.gov.

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PROSPECTUS SUMMARY

The following summary highlights some of the information contained elsewhere in this prospectus. It is not complete and does not contain all of the information you should consider before making a decision to invest in our common stock. You should read carefully the more detailed information set forth under the heading “Risk Factors” and the other information included in this prospectus, including our historical consolidated financial statements and related notes and our unaudited pro forma consolidated financial statements and related notes. Unless indicated otherwise, the information in this prospectus assumes (1) the common stock to be sold in this offering is sold at $ per share, which is the midpoint of the price range for the common stock to be sold in this offering set forth on the front cover page of this prospectus, and (2) the underwriters do not exercise their overallotment option to purchase additional shares of our common stock.

In this prospectus, unless the context suggests otherwise, references to “the Company,” “we,” “us” and “our” refer to Freehold Properties, Inc., a Maryland corporation, together with its consolidated subsidiaries, including Freehold Properties Operating Partnership, LP, a Nevada limited partnership, or our operating partnership, of which Freehold OP GP, LLC, a Nevada limited liability company, or the general partner, a wholly owned subsidiary of our company, is the sole general partner.

Our Company

We are an internally managed real estate investment trust focused on the acquisition, ownership and leasing of specialized industrial cultivation/processing and retail/dispensary cannabis properties. As of the date of this prospectus, our portfolio is comprised of six cannabis properties and one mortgage note receivable with an aggregate investment value of $40.1 million. Our six properties are leased to subsidiaries of Curaleaf Holdings, Inc. (CSE: CURA; OTCQX: CURLF), or Curaleaf, a vertically integrated multi-state operator, pursuant to separate triple-net leases that provide for aggregate annualized base rent of $3.6 million as of October 1, 2020. Our properties include two specialized industrial cultivation/processing properties and four retail/dispensary properties located in Florida, Massachusetts and New Jersey.

Our strategy is to focus on the highest quality operators and their real estate assets, which we believe will maximize long-term income generation and appreciation of the market value of our real estate portfolio. Our goal is to become an integral real estate capital partner with high-quality established state-licensed cannabis operators, primarily through ownership of specialized industrial cultivation/processing and retail/dispensary properties, subject to long-term triple-net leases, in the regulated adult- and medical-use cannabis markets. We believe such properties leased to high-quality operators have the potential to provide higher returns as compared to other forms of traditional net-leased retail and industrial real estate assets. We believe there are a variety of factors that could drive these higher returns, including our ability to identify management teams with the relevant experience and operational expertise to execute sustainable business models, our rigorous asset-level underwriting allowing us to acquire properties that are well positioned to support long-term triple-net leases, and a current regulatory backdrop that limits traditional debt and equity capital availability for cannabis operators.

The cannabis industry is nascent and still in a phase of rapid growth. It is an industry that is both real estate dependent and capital-intensive. We believe this creates opportunities for us to provide flexible solutions to cannabis operators as they seek the real estate capital required to grow their businesses. We believe there is both a near-term opportunity to take advantage of a dislocation in pricing in the cannabis real estate market and a long-term opportunity to establish the company as a market leader in a specialized sector with significant growth potential. We intend to capitalize on what we expect will be a need for significantly higher levels of investment in cannabis properties resulting from the continuing trend of additional states legalizing or changing laws related to adult- and medical-use cannabis in their respective states.

We intend to primarily lease our properties pursuant to triple-net leases, where the tenant is responsible for all aspects of and costs related to the property and its operation during the lease term, including maintenance, taxes and insurance. While our primary and preferred form of investment is sole fee simple ownership of a property subject to a long-term triple-net lease with the cannabis operator, we may also provide debt capital as a pathway to our ultimate acquisition of assets, which may include financing the development of properties that have been pre-leased or providing mortgage loans for existing properties

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with purchase options or rights of first offer for the underlying properties. Our target properties include specialized industrial cultivation/processing and retail/dispensary properties in the regulated adult- and medical-use cannabis markets.

Specialized industrial cultivation/processing cannabis properties are required to be operated by businesses that have completed rigorous state-licensing processes. The number of licenses granted in a particular state is typically restricted, which creates a barrier to entry for competing properties that tends to favor well-capitalized, experienced and sophisticated operators. We target cannabis properties that generally are improved with state-of-the-art infrastructure and equipment to facilitate optimal growing conditions, including enhanced HVAC systems for climate and humidity control, high capacity fertigation systems, specialized lighting systems and sophisticated building management, cultivation monitoring and security systems. These facilities result in improved yields from optimized and automated environmental conditions such as lighting, temperature and watering with no need for pesticides or herbicides.

We intend to acquire retail/dispensary cannabis properties that have already been qualified and licensed for retail cannabis sales, which we believe gives strategic defensibility to the operators’ business and the real estate. Finding locations for retail/dispensary cannabis properties can be difficult because they not only need to be in highly desirable locations but also need to satisfy local zoning requirements and overcome any local objections. Each city and state has its own requirements and specifications for an entitlement process, but generally these conditional-use permitting processes are complex. For example, in contrast to the initial markets that legalized cannabis (Colorado, Washington, Oregon), the new markets are typically more oligopolistic with cities implementing very strict ordinances that require dispensaries to be located a certain distance away from certain properties, such as schools, parks and churches. Cities also seek to avoid “clustering” of retail stores and cannabis dispensaries and, therefore, require a minimum distance between them, resulting in less competition for a retail location once it is established. Local regulations also vary widely, are subject to exceptions and grandfathering, and can be enormously complex to navigate.

Our Management Team

Our management team has extensive real estate finance and diverse corporate operating experience. We believe that our management team’s depth of experience in real estate, operations, risk management, accounting, finance and facility construction positions us favorably to take advantage of cannabis investment opportunities. Our management team is led by the individuals listed below. See “Management” for more information about our management team.

•

Donald C. Brain, Co-Founder, Chief Executive Officer and Chairman of our Board of Directors. Mr. Brain has over 40 years of experience, including the last 15 years as a founder, investor, executive, partner and entrepreneur in a diverse set of companies in regulated wine and spirits production, regulated alcohol distribution, and real estate in a variety of sectors.

•

Jeffery C. Walraven, Co-Founder, Chief Operating Officer and a Member of our Board of Directors. Mr. Walraven has more than 28 years of experience, including five years as the executive vice president and chief financial officer of MedEquities Realty Trust, Inc. (formerly NYSE: MRT), and 22 years of public accounting experience, most recently as an assurance managing partner of the Memphis office of BDO USA, LLP.

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Louis S. Yi, Chief Financial Officer. Mr. Yi has approximately 20 years of experience in investment banking, including over ten years at FBR Capital Markets, most recently as a managing director in real estate investment banking and head of equity-linked securities across all sectors.

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Benjamin H. Hendren, Senior Vice President and Chief Accounting Officer. Mr. Hendren has over 18 years of experience, including 15 years with BDO USA, LLP, with three years as an assurance partner, and most recently as the chief financial officer of Salus Workers’ Compensation, a managing general agent and third party administrator specializing in workers’ compensation insurance.

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John A. Travis, Senior Vice President and Chief of Acquisitions and Asset Management. Mr. Travis has over 25 years of experience, including in business development, marketing, technology utilization, process development, project management and specialized engineering that enables him to assess the highly engineered, capital-intensive, controlled environment for specialized industrial cultivation/processing properties.

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Market Opportunity

We believe the convergence of changing public attitudes, increased legalization momentum in various states and a more relaxed federal enforcement posture toward regulated cannabis use creates an attractive opportunity to invest in regulated specialized industrial cultivation/processing and retail/dispensary cannabis properties. Further, the increased sophistication of the regulated cannabis industry and the development of strong business, operational and compliance practices have made the sector more attractive for investment. Increasingly, stated-licensed, regulated cannabis facilities are becoming sophisticated business enterprises that use state-of-the-art technologies and well-honed business and operational processes to maximize product yield and revenues. Furthermore, growers and dispensaries have developed an increasing portfolio of products into which they are able to incorporate legal cannabis in a safe and appealing manner, including a variety of edibles, drinks and topicals.

We believe the following conditions create a favorable environment for investing in real estate assets that support the regulated adult- and medical-use cannabis industry:

•

significant industry growth in recent years and expected continued growth;

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continued state-level legalization of adult- and medical-use cannabis, which we believe is driven in part by states’ desire to generate incremental tax revenue;

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a shift in public opinion, especially with respect to adult- and medical-use cannabis;

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the real estate-dependent and capital-intensive nature of the cannabis industry with operators needing access to each of these assets on an ongoing basis; and

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limited access to capital for cannabis operators resulting in pricing dislocation and favorable demand environment for REITs.

U.S. Cannabis Market — A $60 billion+ Market Opportunity

The United States, which accounts for more than 80% of the global legal cannabis market, according to New Frontier Data, is expected to maintain its leadership position for the foreseeable future, driven by growing consumption in states where cannabis already is legal and by future legalization in additional states. According to New Frontier Data, cannabis’ total addressable U.S. market is expected to double from $30 billion in 2015 to more than $60 billion in 2025, driven by favorable regulatory changes, gradual growth in population and rising prevalence rate, both in availability and usage. The key underlying trend in this growth is the rising share of the legal market from just 23% in 2017 to 42% in 2025, driven by states that legalize cannabis use.

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Continued State-Level Legalization

The United States’ dominance of the global legal cannabis market is a result of favorable regulatory conditions at the state level. Cannabis legalization at the state level began with California’s adoption of the Compassionate Use Act of 1996. As of the date of this prospectus, 36 states allow medical-use of cannabis, 16 states allow the use of cannabidiol (CBD, the non-psychoactive cannabinoid found in cannabis), and 11 states and the District of Columbia allow for adult-use cannabis.

Another factor driving the state-level legalization trend is the tax revenue that cannabis can contribute. While most states tax based on price (ad valorem), several states also tax cannabis based on weight or, in the case of Illinois, by THC content. In addition to levying excise taxes, most states also levy the state general sales tax on adult-use cannabis. Tax generated from cannabis sales is growing rapidly in many states. For example, excise tax collected by Colorado authorities on the sale of adult-use cannabis grew from just over $80 million in 2015 to more than $250 million in 2019 and Alaska’s cannabis tax collections grew more than 10 times from 2017 to 2019, based on data reported by the respective state departments.

Shifting Public Attitudes Support Legalization

The growing support for cannabis legalization among U.S. consumers is also a key growth driver. According to a 2019 survey by Pew Research, 67% of Americans are in favor of legalizing cannabis, compared to 31% in 2000, while the percentage of Americans opposing legalization has almost halved from 63% in 2000 to 32% in 2019. The support is highest among millennials (76%), but also has strong support from Generation Xers (65%) and baby boomers (63%). There also is support across the political spectrum, with 76% of Democrats and 68% of Independents supporting legalization, as well as 51% of Republicans, according to an October 2019 Gallup survey.

Prospects of Federal Legalization

While state-level legalization is expected to act as a growth driver in the short-to-medium term, the passage of one or more of the following three acts at the federal level would drive additional growth: (1) Secure and Fair Enforcement Banking Act, or the SAFE Banking Act, which would amend federal law so that commercial banking and other financial institutions could legally offer services to state-compliant cannabis businesses; (2) Strengthening the Tenth Amendment Through Entrusting States Act, or the STATES Act, which would allow states that have legalized cannabis through their legislatures or citizen initiatives to regulate cannabis in a manner they deem best; and (3) Marijuana Opportunity, Reinvestment and Expungement Act, or the MORE Act, which would decriminalize cannabis at the federal level by removing it from the list of Schedule I controlled substances.

Real Estate-Dependent and Capital-Intensive Business

According to a survey published in the 2019 Marijuana Business Factbook, among cannabis producers/processors, the most expensive startup costs are equipment and real estate. Producers/processors must purchase not only extraction equipment but also cultivation equipment. They must find a physical location suited for processing and manufacturing cannabis as well as growing it ― or consider separate locations and the increased real estate costs that go with such an approach.

The situation is similar for cannabis retailers. Among vertically integrated retailers, more than half of the businesses surveyed in the 2019 Marijuana Business Factbook cite real estate and renovations as their highest startup expenses, accounting for an average of 66% of their total costs. Approximately one-third of stand-alone retailers cited real estate and renovations as their most significant startup costs, accounting for an average of 56% of their total costs. Vertically integrated retailers typically require separate buildings for

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their cultivation and retail operations, which contributes to the higher cited costs for those businesses. Real estate that is suitable for cultivation may come at significant cost as well, depending on the location and state.

Limited Access to Capital by Cannabis Operators Resulting in Pricing Dislocation and Favorable Demand Environment for REITs

The licensed specialized industrial cultivation/processing and retail/dispensary sale of cannabis are each real estate dependent and capital-intensive. However, despite their state licenses, cannabis operators’ access to both real estate and capital has been constrained due to the current federal regulatory environment. This has resulted in a significant opportunity for cannabis REITs. The status of state-licensed cannabis under U.S. federal law and current U.S. federal regulations have significantly limited the ability of state-licensed cannabis operators to access the U.S. banking system and traditional sources of capital. In addition, for those operators that can access banking services, the cost of such access is extremely high due to regulatory guidelines and reporting requirements for offering banking services to cannabis-related businesses. While pending legislation could improve banking access for cannabis businesses, the current nature of the industry creates a significant opportunity for REITs like Freehold to provide funding to cannabis operators through sale-leaseback and other similar transactions and provide favorable returns on such investments.

In addition, cannabis operators’ difficulty in raising equity capital is creating growth opportunities and pricing power for those cannabis REITs that are well capitalized and have the underwriting capabilities to fill the funding gap. With the current federal regulatory environment presently unchanged and equity capital remaining expensive, we believe that cannabis operators will continue to use their real estate to acquire growth capital, acting as a key growth driver for REITs that have the capital and the underwriting capabilities to identify high-quality operators and thus emerge as beneficiaries of this environment.

Our Competitive Strengths

We believe that the following competitive strengths will support the accretive growth of our business and the implementation of our business plan:

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Experienced Management Team with Extensive Relationships. Our management team is experienced investing in and managing commercial real estate businesses, building diverse, high-growth businesses and operating in highly regulated industries, including alcohol and healthcare. In addition, we have experience underwriting non-traditional real estate and corporate credit and managing all aspects of a public company. Our management team and members of our board of directors have long-standing relationships with owners, operators and developers of cannabis properties, who we believe value their industry knowledge and commitment to working in a cooperative and supportive manner. We believe these relationships will provide us access to an ongoing pipeline of attractive asset acquisition and other investment opportunities that may not be available to our competitors.

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Scalable Platform. We believe our team is skilled at internally deploying and customizing the process platforms such as accounting, finance and asset management, which makes us capable of substantially decreasing relative administrative overhead as we grow the size of portfolio. In addition to our existing and growing network of relationships, we employ technology to substantially increase our throughput of opportunities well beyond the capacity of traditional relationship and deal development methods. We believe these factors, along with the nature of our triple-net leasing structure, will enable us to support a significant increase in the size of our portfolio without a proportionate increase in administrative or management costs.

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Operator-First Investment Philosophy and Experience-Driven Underwriting. Our operator-first investment philosophy and underwriting process focuses on a number of factors, including the following aspects:

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Management Team — Consider the management team’s track record of success in the cannabis industry and other industries. Do they tell a story of interest to investors, drive strong brand strategy, and/or have well defined industry objectives on which they are executing?

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Financial Strength — Analyze the operator’s corporate-level financial information to gain understanding of overall financial strength. Does the operator have profitable assets in good

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markets, and is there a sightline to profitability? Is it capitalized sufficiently to fund working capital and capital expenditure needs?

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Access to Capital — Review the operator’s historical ability to raise capital. Has it been able to successfully raise capital at a reasonable cost? Are there capital structure matters that may have long-term impact to its successful operations and our ability to transact future deals with it? Can it continue to raise capital outside of transactions with us?

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Operational Culture — Conduct site visits and in person meetings with key management members to gain an understanding of their operational conditions, processes and asset quality. Is there a strong culture and goal driven successful attitude that permeates all levels of the operation? Are the assets built with considered engineering design, and quality of construction intended to be operated for the long term? Or are they patched together by learn as you go methods?

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Regulatory Compliance — Assess the operator’s regulatory capability and history of compliance. Are there or have there been any compliance issues throughout its locations of operation? Is it successfully able to navigate the regulatory application process to gain or acquire new licenses?

We believe our underwriting process will support our ability to identify high-quality operators and deliver attractive risk-adjusted returns to our stockholders.

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High-Quality Portfolio. As of the date of this prospectus, our portfolio is comprised six cannabis properties and one mortgage note receivable with an aggregate investment value of $40.1 million. Our properties include two specialized industrial cultivation/processing properties and four retail/dispensary properties located in Florida, Massachusetts and New Jersey. Our six properties are leased to subsidiaries of Curaleaf (CSE: CURA; OTCQX: CURLF), a vertically integrated, multi-state operator, pursuant to separate triple-net leases that are cross-defaulted with each other and are fully guaranteed by Curaleaf, Inc. As of August 27, 2020, Curaleaf operated in 23 states with 89 dispensaries, 22 cultivation sites with more than 2.2 million square feet of cultivation capacity and over 30 processing sites. Our current properties are, and we expect to continue to seek to acquire properties that are, (i) specifically suited to operate within the regulatory environments and market conditions in which they are located, (ii) built, renovated or converted with quality in both facility design and physical construction, and (iii) have historical and projected financial performance that contributes beneficially to the operator’s overall corporate performance.

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Early-Mover Advantage in a Rapidly Growing and Undercapitalized Industry. The licensed cultivation, processing and retail sale of cannabis are both real estate dependent and capital-intensive. Despite the growth of the U.S. cannabis industry, cannabis operators’ access to both real estate and capital has been constrained due to the current federal regulatory environment. We believe cannabis operators’ need for capital to fund the growth of their businesses will result in significant opportunities for us to acquire specialized industrial cultivation/processing and retail/dispensary cannabis properties that can provide stable and increasing rental revenue along with the potential for long-term value appreciation. We believe our enhanced ability to access the capital markets as a public company will allow us to secure an early-mover advantage in the industry and take advantage of the barriers to entry in the cannabis operator industry created by state licensing and other regulations to become integral real estate capital partners with high-quality cannabis operators.

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Strong Alignment of Economic and Incentive Interests. We believe the interests of our management team, our board of directors and our stockholders are strongly aligned. Upon completion of this offering, our management team and directors will collectively own approximately % of our company on a fully diluted basis, which we believe aligns their interests with those of our stockholders. In addition, we issued 311,991 shares of our common stock to Curaleaf as partial consideration for our acquisition of six properties from them, and we intend to use our equity to fund a portion of future acquisitions, which aligns the interests of sellers with our stockholders and provides further incentive for future collaborative efforts in acquisitions.

Our Business and Growth Strategies

Our strategy is to acquire and own a portfolio of specialized industrial cultivation/processing and retail/dispensary properties in the regulated adult- and medical-use cannabis markets that are net leased to high-quality tenant operators, thereby generating attractive returns for our stockholders.

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Our business and growth strategies includes the following:

•

Partner with and Grow Alongside High-Quality Operators while Utilizing a Flexible Investment Strategy. We believe it is critical to partner with the highest quality operators with strong financial foundations and operational expertise to navigate the dynamic changes in the cannabis industry, including expansion of the cannabis market due to new states adopting medical-use laws or existing states with only medical-use expanding their laws to include adult-use. We do not believe the market has been efficient in pricing the difference between lower- and higher-tier operators. We believe our existing tenant, Curaleaf (CSE: CURA; OTCQX: CURLF), is a market leader with a demonstrated track record of executing on its business plan, and we have a right of first offer through August 2021 to act as purchaser or landlord with respect to any cultivation/processing or retail/dispensary cannabis properties that Curaleaf intends to offer to third parties. See “Our Business — Our Portfolio — Right of First Offer.” Given the real estate-dependent and capital-intensive business of cannabis operators, we will endeavor to grow alongside operators like Curaleaf and others as they identify new locations and markets to expand their businesses. As such, we believe the composition of our portfolio should be dynamic given the evolving cannabis market. We will evaluate the composition of our portfolio in terms of retail versus cultivation, adult-use versus medical-use and geography in the context of a number of factors, including the needs of our operator partners, industry trends and regulatory changes. We will maintain a flexible investment strategy and continuously monitor these factors in order to optimally position our portfolio both offensively and defensively in the market.

•

Focus on Acquiring Cannabis Real Estate for Income and Appreciation. We acquire real property that will be leased via well-structured triple-net leases to licensed cannabis operators, and we believe our acquisition opportunities will continue to expand as additional states legalize adult- and medical-use cannabis. We primarily lease our acquired properties under long-term (10 to 20 years) triple-net leases with an initial fixed base rent and annual escalators. Our lease structures also are designed to provide us with key credit support for our rents, including lease deposits, and in certain cases, various provisions for cross-default, cross-collateralization and corporate or parent guarantees, when appropriate. We expect these features to help insulate us from variability in operator cash flows at individual properties and enable us to minimize our expenses while we build our portfolio. In addition to generating a high, stable long-term yield as compared to traditional retail and industrial assets, we believe there are several factors that could drive an appreciation in cannabis real estate values from, including regulatory changes, continued maturation of the industry, changes in investor sentiment and operator-specific performance.

•

Adherence to Rigorous Investment Criteria. Our operator-first investment philosophy focuses primarily on the quality and credit worthiness of the operator and the quality and design of its assets. In executing that philosophy, we have developed a set of decision making criteria for evaluating our potential operator relationships and approaching acquisition opportunities through our rigorous underwriting and acquisition process. See “— Our Underwriting Process.” We believe the cannabis industry continues to grow substantially and has many desirable operators with an addressable market of existing and needed assets allowing us to forgo distressed and speculative acquisitions and instead focus on high-quality operators and assets that provide sustainable long-term lease income and value appreciation for our stockholders.

•

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with leading indicators to proactively evaluate when to sell assets and reinvest the proceeds into new acquisition and investment opportunities.

Our Portfolio

Our portfolio includes six operating cannabis properties, consisting of two specialized industrial cultivation/processing properties and four retail/dispensary properties, and one mortgage note receivable with an aggregate investment value of $40.1 million. The six properties in our portfolio were acquired through a series of sale-leaseback transactions with subsidiaries of Curaleaf on August 29, 2019 for a total consideration of $28.3 million, including $25.5 million in cash and $2.8 million in shares of our common stock.

The following table contains information regarding the cannabis properties in our portfolio as of the date of this prospectus (dollars in thousands):

		Property Type		Land		Bldg.		Total Investment(2)			% of Total Investment		Annualized Base Rent(3)			Lease Expiration
Property Address	Tenant(1)	Property Type		Acres		Sq. Ft.		Total Investment(2)			% of Total Investment		Annualized Base Rent(3)			Lease Expiration
30 Worcester Road Webster, MA	Curaleaf Massachusetts, Inc.		Cultivation/Processing		31.00		105,000(4)		$	15,068(5)		43.4%		$	1,630		09/2029
111 Coolidge Avenue Bellmawr, NJ	Curaleaf NJ II, Inc.		Cultivation/Processing		1.96		42,433		$	13,255		38.2%		$	1,352		09/2029
3218 US Highway 1 Fort Pierce, FL	Curaleaf Florida, LLC		Retail/Dispensary		0.67		10,311		$	1,862		5.4%		$	190		09/2029
640 Creek Road Bellmawr, NJ	Curaleaf NJ II, Inc.		Retail/Dispensary		0.61		9,571		$	1,772		5.1%		$	181		09/2029
910 W. International Speedway Blvd. Daytona Beach, FL	Curaleaf Florida, LLC		Retail/Dispensary		0.64		5,620		$	1,578		4.5%		$	161		09/2029
170 Commercial Street, Unit 3 Provincetown, MA	Curaleaf Massachusetts, Inc.		Retail/Dispensary		0.34		2,700		$	1,178		3.4%		$	119		09/2029
Total									$	34,713		100%		$	3,633

(1)

Each lease in our portfolio is guaranteed by Curaleaf, Inc., the indirect parent of each tenant, and direct subsidiary of Curaleaf.

(2)

Total investment is as of October 1, 2020 and includes our purchase price for the asset and all non-reimbursed transactional closing costs that are capitalized under GAAP.

(3)

Annualized base rent does not represent historical rental amounts. Rather, annualized base rent represents the actual aggregate monthly base rent for in-place leases as of October 1, 2020, multiplied by 12.

(4)

Curaleaf currently operates in one section of the building, which is approximately 51,000 square feet. Renovations to the other section of the building are underway and are expected to be completed during the fourth quarter of 2020.

(5)

Total investment includes $5.4 million that we have funded for the renovation of this facility. See “Our Business — Our Portfolio — Description of Leases” for additional information regarding this renovation.

Description of Our Tenant

Curaleaf is a vertically integrated U.S. multi-state cannabis operator. Curaleaf is positioned in highly populated, limited-license states, and as of August 27, 2020, operates in 23 states with 89 dispensaries, 22 cultivation sites and over 30 processing sites. Curaleaf has the executive expertise and research and development capabilities to provide service, selection, and accessibility across the adult- and medical-use markets, as well as in the CBD category through its Curaleaf Hemp brand.

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Curaleaf had $123 million of cash and working capital of $210 million (current assets minus current liabilities) as of June 30, 2020, compared with $42 million of cash and $43 million of working capital as of December 31, 2019. Curaleaf also has achieved five consecutive quarters of positive adjusted EBITDA through the quarter ended June 30, 2020, growing from $3.3 million in the second quarter of 2019 to $27.9 million in the second quarter of 2020.

Curaleaf is publicly listed on both the Canadian Securities Exchange (CURA) and OTCQX (CURLF).

Mortgage Note Receivable

On October 4, 2019, we entered into a leasehold mortgage agreement with ICC Holdings, LLC d/b/a Revolution Enterprises, or Revolution, to provide up to $28.8 million to fund the development of a 75,000 square-foot indoor cultivation facility and greenhouse space in Delavan, Illinois. The mortgage note receivable is secured by certain property rights, including a leasehold mortgage. We have funded $5.4 million under this commitment as of the date of this prospectus.

Our Acquisition and Investment Pipeline

In addition to the six properties in our portfolio, we are actively seeking and evaluating additional specialized industrial cultivation/processing and retail/dispensary cannabis properties to purchase with the net proceeds of this offering. We have identified and are in various stages of reviewing additional potential cannabis properties for total investment of approximately $ million. There can be no assurance that we will consummate the acquisition of any of the properties in our current acquisition pipeline on the terms anticipated, or at all.

Our Underwriting Process

We believe our management team’s depth of experience in a diverse set of industries, including cannabis, real estate, the regulated alcohol market, insurance, investment banking and specialty engineering, as well as operational expertise in creating and managing businesses provides us with a unique set of skills to underwrite potential acquisitions, investments and operators. Key factors that we consider in the underwriting process include the following:

•

Operator First: We seek to partner with high-quality operators by focusing on the following:

•

Management Team — Evaluate the qualifications, experience and track record of the operator’s executive management team;

•

Financial Strength — Analyze the operator’s historical and projected financial information to gain an understanding of the operator’s overall financial strength and history of, or pathway to, profitability;

•

Access to Capital — Evaluate the operator’s capital raising history and ability to access affordable and sustainable capital via traditional or alternative financing solutions;

•

Operational Efficiency — Conduct site visits (targeted assets and others in operator’s system) and other due diligence to gain an understanding of the operational conditions, processes and level of efficiency, including cultivation and extraction capacities, potencies, yield, harvests/crop cycles per year and product testing results; and

•

Regulatory Compliance — Review the operator’s licensure, policies and procedures, relationships with local and state regulators and history of regulatory compliance to assess the operator’s regulatory compliance capabilities;

•

Asset Location and Market Environment Second: We seek operators and assets that are specifically suited to operate within the regulatory environments and market conditions in which they are located.

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We evaluate the asset location within the market, local economic and demographic data, barriers to entry, cannabis-related demand drivers, state and local regulatory environment and the overall competitive landscape of the market. We balance these factors with the experience of the operator and will acquire assets in more mature markets, such as Colorado or California, as long as the operator has a proven track record of market loyalty and penetration.

•

Asset Quality, Design and Operation Third: We evaluate the asset’s construction quality, condition, design, projected capital needs and property condition assessments. In addition, we utilize traditional net lease real estate operating metrics, such as rent coverage, to quantitatively assess the historical and projected financial performance of the asset and its contribution to the operator’s overall corporate performance.

•

Asset Type Fourth: We believe the composition of our portfolio should be dynamic given the evolving cannabis market. We will evaluate the composition of our portfolio in terms of retail versus cultivation, adult-use versus medical-use and geography in the context of a number of factors, including the needs of our operator partners, industry trends and regulatory changes. We will maintain a flexible investment strategy and continuously monitor these factors in order to optimally position our portfolio both offensively and defensively in the market.

We believe our underwriting process enables us to acquire highly desirable properties with strong performing tenants that will support our ability to deliver attractive risk-adjusted returns to our stockholders.

Summary Risk Factors

Investing in our common stock involves a high degree of risk. Prospective investors are urged to carefully consider the matters discussed under “Risk Factors” prior to making an investment in our common stock. Such risks include, but are not limited to:

•

We were recently formed and have a limited operating history, and we may not be able to operate our business successfully or generate sufficient revenue to make or sustain distributions to our stockholders.

•

Our growth will depend upon future acquisitions of cannabis real estate assets, and we may be unable to consummate acquisitions on advantageous terms or at all.

•

Our growth depends on external sources of capital, which may not be available on favorable terms or at all.

•

There may only be a limited number of cannabis-related properties and high-quality operators that meet our underwriting and investment criteria, which could adversely affect the growth of our business.

•

We are dependent on Curaleaf until we acquire additional properties, and an event that has a material adverse effect on Curaleaf’s business, financial position or results of operations would have a material adverse effect on our business, financial condition and results of operations.

•

Our real estate portfolio is and will be concentrated in a limited number of properties, which subjects us to increased risks due to the unfavorable performance of any tenant, the decline in value of any property or our inability to lease or re-lease a property.

•

Due to the nature of specialized industrial cultivation/processing cannabis properties and the potentially limited number of high-quality operators for such properties, as well as for retail/dispensary cannabis properties, we may have difficulty re-leasing our properties upon a tenant default, early lease termination or non-renewal.

•

Failure to succeed in new markets may have an adverse impact on our results of operations and ability to make distributions to our stockholders.

•

We depend on key personnel whose continued service is not guaranteed and each of whom would be difficult to replace.

•

The ongoing COVID-19 pandemic and measures intended to prevent its spread could have a material adverse effect on our business, results of operations, cash flows and financial condition.

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•

Some of our tenants may be start-up businesses and may be unable to pay rent with funds from operations or at all, which could adversely affect our business, financial condition, results of operations and ability to make distributions to our stockholders and the market value of our common stock.

•

Cannabis remains illegal under federal law and, therefore, strict enforcement of federal laws regarding cannabis would likely result in our inability and the inability of our tenants to execute our respective business plans.

•

Certain of our tenants engage in operations for the adult-use cannabis industry, and as a result, we and our tenants and properties may be subject to additional risks associated with such adult-use cannabis operations.

•

Our ability to grow our business depends on state laws pertaining to the cannabis industry.

•

We and our tenants may have difficulty accessing the service of banks, which could have a material adverse effect on our business and growth prospects.

•

Laws and regulations affecting the regulated cannabis industry are frequently changing, which could materially adversely affect our business, and we cannot predict the impact that future regulations may have on us or our tenants.

•

An affiliate of Tilden Park Capital Management LP owns a significant percentage of our common stock and has the ability to exercise substantial influence over us.

•

Failure to qualify as a REIT would cause us to be taxed as a regular corporation, which could adversely affect the value of our stock and substantially reduce funds available for distributions to stockholders.

•

There has been no public market for our common stock prior to this offering and an active trading market for our common stock may not develop and be sustained following this offering.

Structure and Formation of Our Company

We were incorporated in the state of Maryland on June 24, 2019 and commenced operations upon the closing of our initial private placement on August 28, 2019. We were formed as a holding company for our operating partnership, Freehold Properties Operating Partnership, LP, which was formed on April 23, 2019. We conduct our business through an umbrella partnership REIT, or UPREIT, structure, consisting of our operating partnership and subsidiaries of our operating partnership. Through our wholly owned subsidiary, Freehold OP GP, LLC, we are the sole general partner of our operating partnership, and we presently own all of the units of limited partnership interest in of our operating partnership, or OP units. In the future, we may issue OP units to third parties in connection with cannabis property acquisitions, as compensation or otherwise.

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The following chart illustrates our organizational structure after giving effect to this offering.

[MISSING IMAGE: tm2030694d1-fc_organbw.jpg]

Our Tax Status

We have elected to be taxed as a REIT for U.S. federal income tax purposes commencing with our short taxable year ending December 31, 2019. Our qualification as a REIT will depend upon our ability to meet, on a continuing basis, various complex requirements under the Internal Revenue Code of 1986, as amended, or the Code, relating to, among other things, the sources of our gross income, the composition and values of our assets, our distribution levels and the diversity of ownership of our stock. We believe that, commencing with such short taxable year, we were organized and have operated in conformity with the requirements for qualification as a REIT under the Code and we intend to continue to operate in such a manner.

As a REIT, generally we will not be subject to U.S. federal income tax on the REIT taxable income that we currently distribute to our stockholders. Under the Code, REITs are subject to numerous organizational and operational requirements, including a requirement that they distribute annually at least 90% of their REIT taxable income, determined without regard to the deduction for dividends paid and excluding net capital gains, to their stockholders. If we fail to qualify as a REIT in any calendar year and we do not qualify for certain statutory relief provisions, our income would be subject to U.S. federal income tax at regular corporate rates, and we would be precluded from qualifying for treatment as a REIT until the fifth calendar year following the year in which we failed to qualify. Even if we qualify as a REIT for U.S. federal income tax purposes, we may still be subject to some federal, state and local taxes on our income and properties and to federal income and excise taxes on our undistributed income. In addition, taxable income generated by any taxable REIT subsidiaries, or TRSs, of ours will be subject to federal, state and local income tax.

Restrictions on Ownership and Transfer

To assist us in complying with the limitations on the concentration of ownership of a REIT imposed by the Code, among other purposes, our charter prohibits, with certain exceptions, ownership by any person of more than 9.8% in value or in number of shares, whichever is more restrictive, of the outstanding shares of our common stock, the outstanding shares of any class or series of our preferred stock or the aggregate

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outstanding shares of all classes and series of our capital stock. See “Description of Capital Stock — Restrictions on Ownership and Transfer.”

Distribution Policy

We intend to make regular quarterly distributions to holders of shares of our common stock. Distributions declared by us will be authorized by our board of directors in its sole discretion out of funds legally available therefor and will depend upon a number of factors, including restrictions under applicable law, the capital requirements of our company and the distribution requirements necessary to qualify and maintain our qualification as a REIT. We may be required to fund distributions from working capital or with a portion of the net proceeds from this offering or borrow to provide funds for such distributions, or we may choose to make a portion of the required distributions in the form of a taxable stock dividend to preserve our cash balance. However, we currently have no intention to use the net proceeds from this offering to make distributions nor do we currently intend to make distributions using shares of our common stock. See “Distribution Policy.”

Prior Private Placements

On August 28, 2019 and September 13, 2019, we sold an aggregate of 3,223,320 shares of our common stock to certain institutional and individual investors at a price per share of $9.09. On August 29, 2019, we issued an additional 311,991 shares of our common stock to an affiliate of Curaleaf in exchange for contribution of certain real property at a price per share of $9.09. On September 27, 2019 and January 13, 2020, we sold an aggregate of 1,150,000 shares of our common stock to certain institutional and individual investors at a price per share of $10.00. We refer to the foregoing offerings collectively as our prior private placements. Each of our prior private placements was made in reliance upon exemptions from registration provided by Section 4(a)(2) of the Securities Act and Regulation D thereunder. The aggregate net proceeds to us from our prior private placements, after deducting offering expenses and fees payable by us, were approximately $41 million.

Registration Rights Agreement and Selling Stockholders

In connection with our prior private placements, we entered into a registration rights agreement for the benefit of the purchasers in those offerings. Pursuant to the registration rights agreement, the purchasers in our prior private placements have a right to participate in this offering as selling stockholders, subject to certain conditions, and holders of shares of our common stock have exercised their rights to sell in this offering. In addition, under this registration rights agreement, we have agreed to use our commercially reasonable efforts to cause a resale shelf registration statement to become effective under the Securities Act as promptly as practicable after the filing of such registration statement, and in any event, subject to certain exceptions, no later than March 31, 2021, and to maintain such registration statement continuously effective under the Securities Act for a specified period. See “Description of Capital Stock — Registration Rights.”

Implications of Being an Emerging Growth Company

We qualify as an “emerging growth company,” as defined in the Jumpstart Our Business Startups Act of 2012, or the JOBS Act. An emerging growth company may take advantage of specified reduced reporting requirements and is relieved of certain other significant requirements that are otherwise generally applicable to public companies. For so long as we are an emerging growth company, among other things:

•

we are exempt from the requirement to obtain an attestation report from our auditors on our internal control over financial reporting pursuant to the Sarbanes-Oxley Act;

•

we may elect to defer compliance with new or revised accounting standards until such standards would apply to private companies;

•

we are permitted to provide less extensive disclosure about our executive compensation arrangements; and

•

we are not required to give our stockholders non-binding advisory votes on executive compensation or golden parachute arrangements.

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We will remain an emerging growth company until the earliest to occur of (i) the last day of the fiscal year following the fifth anniversary of this offering, (ii) the last day of the fiscal year during which our total annual revenue equals or exceeds $1.07 billion (subject to adjustment for inflation), (iii) the date on which we have, during the previous three year period, issued more than $1.0 billion in non-convertible debt or (iv) the date on which we are deemed to be a “large accelerated filer” under the Exchange Act. We have irrevocably elected not to take advantage of the extension of time to comply with new or revised financial accounting standards under Section 102(b) of the JOBS Act. As a result, we will comply with new or revised accounting standards on the relevant dates on or before which adoption of such standards is required for all public companies that are not emerging growth companies.

Corporate Information

Our principal executive office is located at 232 3rd Avenue N., Franklin, Tennessee 37064. Our telephone number is (877) 981-0900. Our website is located at www.freeholdprop.com. The information contained on, or accessible through, our website is not incorporated by reference into, and does not form a part of, this prospectus.

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THE OFFERING

Common stock offered by us

shares (plus up to an additional shares that we may issue and sell upon exercise of the underwriters’ overallotment option)

Common stock offered by the selling stockholders

Common stock to be outstanding after this offering

shares(1)

Use of proceeds

We estimate that the net proceeds we will receive from this offering, after deducting the underwriting discounts and commissions and estimated offering expenses payable by us, will be approximately $ million (approximately $ million if the underwriters exercise their overallotment option in full).

We will contribute the net proceeds from this offering to our operating partnership in exchange for a number of OP units equal to the number of shares of our common stock issued and sold by us in this offering. Our operating partnership intends to use the net proceeds as follows: (i) approximately $ million to fund the acquisition properties from the sellers as described under “Our Business — Our Acquisition and Investment Pipeline;” (ii) approximately $ million to fund commitments related to our existing properties; (iii) approximately $0.1 million to redeem our 12.5% Series A Redeemable Cumulative Preferred Stock, or our Series A Preferred Stock; and (iv) the remaining net proceeds, if any, in cannabis properties in accordance with our investment strategy and for working capital and general corporate purposes.

We will not receive any proceeds from the sale of shares of our common stock by the selling stockholders.

Proposed symbol

Proposed OTCQX symbol

FHP

Risk factors

Investing in our common stock involves a high degree of risk. You should carefully read and consider the information set forth under the heading “Risk Factors” beginning on page 18 of this prospectus and all other information in this prospectus before making a decision to invest in our common stock.

Restrictions on ownership of our common stock

Our charter prohibits, with certain exceptions, ownership by any person of more than 9.8% in value or in number of shares, whichever is more restrictive, of the outstanding shares of our common stock, the outstanding shares of any class or series of our preferred stock or the aggregate outstanding shares of all classes and series of our capital stock. See “Description of Capital Stock — Restrictions on Ownership and Transfer.”

(1)

Includes (i) an aggregate of 444,145 restricted shares of our common stock granted to our executive officers, non-employee directors and certain other employees prior to this offering and (ii) restricted shares of our common stock to be granted upon completion of this offering. Excludes (i) shares of our common stock issuable upon exercise of the underwriters’ overallotment option in full, (ii) an aggregate of 170,234 performance-vesting restricted stock units granted to our executive officers and certain other employees prior to this offering, (iii) an aggregate of performance-vesting restricted stock units to be granted to our executive officers and certain other employees upon the completion of this offering, and (iv) 1,875,122 shares of common stock reserved for future issuance under our Equity Incentive Plan.

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Summary Selected Historical and Pro Forma Financial Data

The following tables set forth summary selected financial and operating data based on (i) our historical consolidated balance sheets as of June 30, 2020 and December 31, 2019, (ii) our unaudited pro forma consolidated balance sheet as of June 30, 2020, (iii) our historical consolidated statements of operations for the six months ended June 30, 2020 and the period from April 23, 2019 (inception) to December 31, 2019 and (iv) our unaudited pro forma consolidated statements of operations for the six months ended June 30, 2020 and the year ended December 31, 2019. We have not presented any other historical financial data because, prior to the completion of our initial private placement on August 28, 2019, we did not have any corporate activity since our formation other than the issuance of 5,000,000 shares of our common stock in connection with the initial capitalization of the company on August 23, 2019.

The unaudited pro forma financial and operating data have been derived from our historical consolidated financial statements. The unaudited pro forma consolidated balance sheet as of June 30, 2020 is presented to reflect adjustments to our historical balance sheet as if this offering and certain other transactions described herein were completed on June 30, 2020. The unaudited pro forma consolidated statements of operations for the six months ended June 30, 2020 and the year ended December 31, 2019 are presented as if this offering, our prior private placements and certain real estate property acquisitions and other transactions described herein were completed on January 1, 2019.

You should read the following summary selected financial and operating data in conjunction with: (i) our historical consolidated balance sheets as of June 30, 2020 and December 31, 2019 and our historical consolidated statements of operations for the six months ended June 30, 2020 and the period from April 23, 2019 (inception) to December 31, 2019; (ii) our unaudited pro forma consolidated financial statements; and (iii) the “Risk Factors,” “Cautionary Note Regarding Forward-Looking Statements” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” sections in this prospectus. We have based the unaudited pro forma adjustments on available information and assumptions that we believe are reasonable. The following unaudited pro forma financial and operating data are presented for informational purposes only and are not necessarily indicative of what our actual financial position would have been as of June 30, 2020 assuming this offering and certain other transactions described herein had been completed on June 30, 2020, what our actual results of operations would have been for the six months ended June 30, 2020 and the year ended December 31, 2019 assuming this offering, our prior private placements and certain real estate property acquisitions and other transactions described herein were completed on the first day of the annual period presented, and are not, and should not be viewed as, indicative of our future results of operations or financial condition.

Consolidated Balance Sheet Data
(In thousands)

	As of June 30, 2020					Historical as of December 31, 2019
	Pro Forma		Historical			Historical as of December 31, 2019
	(unaudited)		(unaudited)
Assets
Total real estate, net		$		$	33,313		$	34,333
Mortgage note receivable					5,399			3,876
Total assets				$	41,072		$	40,491
Liabilities and Stockholders’ Equity
Total liabilities					1,150			3,105
Total Stockholders’ Equity					39,922			37,386
Total Liabilities and Stockholders’ Equity		$		$	41,072		$	40,491

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Consolidated Statement of Operations Data
(In thousands, except per share data)

	Six months ended June 30, 2020					Pro Forma for year ended December 31, 2019		For the period from April 23, 2019 (inception) through December 31, 2019
	Pro Forma		Historical			Pro Forma for year ended December 31, 2019
	(unaudited)		(unaudited)			(unaudited)
Revenues
Rental income		$		$	1,732		$		$	1,115
Interest on mortgage note receivable					345					90
Total revenues					2,077					1,205
Expenses
General and administrative					2,086					1,455
Depreciation and amortization					1,024					663
Transaction costs					272					59
Total operating expenses					3,382					2,177
Net loss		$		$	(1,305)		$		$	(972)
Less: preferred stock dividends					(7)					(1)
Net loss attributable to common stockholders		$		$	(1,312)		$		$	(973)
Net loss per common share
Basic and diluted		$		$	(0.28)		$		$	(0.21)
Weighted average common shares outstanding
Basic and diluted					4,718					4,592

Other Data
(in thousands, unaudited)

	Six months ended June 30, 2020					Pro Forma for year ended December 31, 2019		For the period from April 23, 2019 (inception) through December 31, 2019
	Pro Forma		Historical			Pro Forma for year ended December 31, 2019
	(unaudited)		(unaudited)			(unaudited)
FFO attributable to common stockholders(1)		$		$	(291)		$		$	(312)
AFFO attributable to common stockholders(1)					171					45

(1)

Funds from operations, or FFO, attributable to common stockholders and adjusted funds from operations, or AFFO, attributable to common stockholders are non-GAAP financial measures. For definitions of FFO and AFFO and reconciliations of net loss attributable to common stockholders to FFO and AFFO, as well as a statement disclosing the reasons why our management believes that FFO and AFFO provide useful information to investors and, to the extent material, any additional purposes for which our management uses FFO and AFFO, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Non-GAAP Financial Measures.”

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RISK FACTORS

An investment in our common stock involves a high degree of risk and should be considered highly speculative. Before making an investment decision, you should carefully consider the following risk factors, which address the material risks concerning our business and an investment in our common stock. If any of the risks discussed below occur, our business, prospects, liquidity, funds from operations, adjusted funds from operations, financial condition, results of operations and cash flows, and our ability to make distributions to our stockholders could be materially and adversely affected, in which case the value of our common stock could decline significantly and you could lose all or part of your investment. Some statements in the following risk factors, constitute forward-looking statements. See “Cautionary Note Regarding Forward-Looking Statements.”

Risks Related to Our Business and Growth Strategy

We were incorporated on June 24, 2019 to act as a holding company for our operating partnership, which was formed on April 23, 2019, and we commenced operations on August 28, 2019. As of the date of this prospectus, our assets consist of (i) six properties we acquired in 2019 from subsidiaries of Curaleaf and (ii) a leasehold mortgage note receivable on a property located in Delavan, Illinois that is currently leased to Revolution. Further, as of the date of this prospectus, we have seven employees, including our executive officers. We are subject to all of the business risks and uncertainties associated with any new business, including the risk that we will not achieve our investment objectives and that the value of your investment could decline substantially. We cannot assure you that we will be able to operate our business successfully or profitably or in the manner described under “Our Business — Our Business and Growth Strategies.” Our business and growth prospects are dependent on our ability both to generate sufficient cash flow to pay our investors distributions and to achieve capital appreciation, and we cannot assure you that we will be able to do either. There can be no assurance that we will be able to generate sufficient revenue from operations to pay our operating expenses and make or sustain distributions to stockholders at attractive levels or at all. Our limited resources may also materially and adversely impact our ability to successfully implement our business plan. The results of our operations and the implementation of our business plan depend on several factors, including, among other things, our ability to source and complete property acquisitions, demand for cannabis and cannabis-related related real estate, our ability to access the capital markets in order to obtain adequate equity and debt financing, the regulatory environment relating to the cannabis industry at the federal, state and local levels, conditions in the financial markets, and general economic conditions.

Furthermore, we have no operating history as a public company. We cannot assure you that the past experience of our senior management team will be sufficient to successfully operate our company as a public company.

Our growth will depend upon future acquisitions of cannabis real estate assets, and we may be unable to consummate acquisitions on advantageous terms or at all.

Our growth strategy is focused on the acquisition of specialized industrial cultivation/processing and retail/dispensary cannabis properties on favorable terms as opportunities arise. Our ability to expand through acquisitions is integral to our business strategy and requires that we identify and consummate suitable acquisition or investment opportunities that meet our investment criteria and are compatible with our growth strategy. We may be unable to acquire any of the properties in our pipeline as described under “Our Business — Our Acquisition and Investment Pipeline.” In addition, we may not be successful in identifying and consummating additional acquisitions or investments in specialized industrial cultivation/processing and retail/dispensary cannabis properties that meet our investment criteria, which would impede our growth.

Our ability to acquire real estate assets on favorable terms is subject to the following risks, among others:

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competition from other real estate investors, including public and private REITs, private equity investors and institutional investment funds, many of which may have greater financial and operational

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resources and lower costs of capital than we have and may be able to accept more risk than we can prudently manage, which may significantly increase the purchase price of a desired property;

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we may not successfully identify and purchase properties and lease them to operators that meet our underwriting and investment criteria;

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we may be unable to obtain the necessary equity or debt financing to consummate an acquisition on satisfactory terms, or at all;

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we may incur significant costs and divert management attention in connection with evaluating and negotiating potential acquisitions, including ones that we are subsequently unable to complete;

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we may acquire a property and lease it to an operator that does not perform as expected;

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we may acquire properties without any recourse, or with only limited recourse, for liabilities, whether known or unknown, against the former owners of the properties; and

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agreements for the acquisition of properties are typically subject to closing conditions, including satisfactory completion of due diligence investigations, and we may spend significant time and money on potential acquisitions that we do not consummate.

Our failure to identify and consummate attractive acquisitions or take advantage of other investment opportunities without substantial expense, delay or other operational or financial problems, would impede our growth and negatively affect our results of operations and cash available for distribution to our stockholders.

Our growth depends on external sources of capital, which may not be available on favorable terms or at all.

We intend to grow by acquiring cannabis real estate assets, which we intend to finance primarily through newly issued equity or debt. We may not be in a position to take advantage of attractive investment opportunities for growth if we are unable, due to global or regional economic uncertainty, changes in the state or federal regulatory environment relating to the cannabis industry, our own operating or financial performance or otherwise, to access capital markets on a timely basis and on favorable terms or at all. In addition, U.S. federal income tax law generally requires that a REIT distribute annually at least 90% of its REIT taxable income, without regard to the deduction for dividends paid and excluding net capital gain and certain non-cash income, and that it pay U.S. federal income tax at regular corporate rates to the extent that it annually distributes less than 100% of its taxable income. Because we intend to grow our business, this limitation may require us to raise additional equity or incur debt at a time when it may be disadvantageous to do so.

Our access to capital will depend upon a number of factors over which we have little or no control, including the local, state or federal regulatory environment relating to the cannabis industry, general market conditions and the market’s perception of our current and potential future earnings. If general economic instability or downturn leads to an inability to borrow at attractive rates or at all, our ability to obtain capital to finance the purchase of real estate assets could be negatively impacted. In addition, while we do not consider our company to be engaged in the cannabis industry, banks and other financial institutions may be reluctant to enter into lending transactions with us, particularly secured lending, because we own and intend to acquire properties used in the adult- and medical-use cannabis industry. To date, we have been unable to obtain debt financing on terms and conditions that we find acceptable. If debt financing continues to be unavailable to us on acceptable terms, our growth may be limited and the market price of our common stock may be adversely impacted. See “— Risks Related to Regulation and Our Industry — We and our tenants may have difficulty accessing the service of banks, which could have a material adverse effect on our business and growth prospects.”

If we are unable to obtain capital on terms and conditions that we find acceptable, it will reduce our ability to acquire additional properties when opportunities exist, meet the capital and operating needs of our existing properties or make cash distributions to our stockholders. In addition, our ability to refinance all or any debt we may incur in the future, on acceptable terms or at all, is subject to all of the above factors, and will also be affected by our future financial position, results of operations and cash flows, which additional factors are also subject to significant uncertainties. Therefore, we may be unable to refinance any

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debt we may incur in the future, as it matures, on acceptable terms or at all. Any of these factors could have a material adverse effect on our business, financial condition, liquidity and results of operations.

We intend to acquire additional specialized industrial cultivation/processing and retail/dispensary cannabis properties from licensed operators and lease them to high-quality, established state-licensed cannabis operators under triple-net lease agreements. However, the number of properties and operators that meet our underwriting and investment criteria could be limited in light of the financial condition and performance of cannabis operators and the current regulatory landscape regarding adult- and medical-use cannabis, including but not limited to, the rigorous state licensing processes, limits on the number of licenses granted in certain states and local jurisdictions within such states, zoning regulations related to specialized industrial cannabis cultivation/processing and retail/dispensary properties, the inability of potential tenants to open bank accounts necessary to pay rent and other expenses, and the evolving federal and state regulatory landscape. Our inability to source suitable acquisitions and tenants would have a material and adverse effect on the growth of our business and our results of operations and cash available for distribution to our stockholders.

We are dependent on Curaleaf until we acquire additional properties, and an event that has an adverse effect on Curaleaf’s business, financial position or results of operations could have a material adverse effect on our business, financial condition and results of operations.

All of the properties in our existing portfolio were acquired from and leased back to subsidiaries of Curaleaf, and over time, we expect to acquire additional properties from Curaleaf or its affiliates, with certain affiliates of Curaleaf guaranteeing the obligations under the respective lease agreements. There can be no assurance that Curaleaf or its subsidiaries will have sufficient assets, income and/or access to financing to enable them to satisfy their payment and other obligations to us under their lease agreements.

We anticipate that the operating expenses and capital expenditures of Curaleaf will increase substantially in the foreseeable future as they continue to invest to increase their customer base, expand their marketing channels, hire additional employees and build-out and enhance their infrastructure. The expansion efforts of Curaleaf may prove more expensive than it anticipates, and it may not succeed in increasing its revenues and operating margins sufficiently to offset the anticipated higher expenses. Accordingly, Curaleaf may not be able to achieve or sustain profitability, and it may incur significant losses for the foreseeable future.

The inability of the Curaleaf tenants to meet their rent obligations to us, or the inability of Cureleaf to satisfy its obligations as a guarantor, would materially adversely affect our business, financial position and results of operations, including our ability to pay dividends to our stockholders. In addition, the inability of the Curaleaf tenants to satisfy their other obligations under their lease agreements, such as the payment of taxes, insurance and utilities, could have a material adverse effect on the condition of the leased properties as well as on our business and financial position. In the event of a default by a tenant, we may also experience delays in enforcing our rights as landlord and may incur substantial costs in protecting our investment and re-leasing our property as operators of specialized industrial cultivation/processing and retail/dispensary cannabis properties are generally subject to extensive state licensing requirements. For these reasons, if Curaleaf were to experience an adverse change in its business, financial position or results of operations or file for bankruptcy, our business, financial position and results of operations could also be materially and adversely affected. Moreover, Curaleaf and its subsidiaries may have difficulty accessing bankruptcy courts because the federal bankruptcy courts may not provide relief for parties who engage in the cannabis industry or cannabis related businesses. See “— We and our tenants may have difficulty accessing bankruptcy courts” below.

Although Curaleaf guarantees the obligations of the Curaleaf tenants under their lease agreements, Curaleaf’s operations are conducted primarily through multiple subsidiaries, and Curaleaf has no material direct operations as a stand-alone entity. The assets of Curaleaf are comprised primarily of the equity interests it directly or indirectly holds in its subsidiaries, with such subsidiaries directly holding retail, dispensary or cultivation and processing operations and related cannabis operating assets. As result, Curaleaf is dependent on equity and debt financings, loans and dividends, distributions and other payments from its subsidiaries

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to generate the funds necessary to meet any future financial obligations as a guarantor of our leases with subsidiaries of Curaleaf. Subsidiaries of Curaleaf are legally distinct from Curaleaf and may be prohibited or restricted from paying dividends or distributions, or otherwise making funds available to Curaleaf under certain conditions. For example, future debt obligations of Curaleaf or its subsidiaries may limit the ability of all or certain of those subsidiaries to pay dividends or distributions, or make loans, to Curaleaf. If Curaleaf is unable to obtain funds from its subsidiaries, Curaleaf may be unable to meet future obligations, if any, as guarantor of our leases with its subsidiaries.

All six of the properties in our initial portfolio were acquired from and leased back to subsidiaries of Curaleaf. One consequence of owning a limited number of assets is that our results of operations, financial condition and cash flows may be substantially adversely affected by the unfavorable performance of a small number of leases or a significant decline in the value of any single property. Lack of diversification will increase the potential that a single underperforming investment or tenant could have a material adverse effect on our cash flows and the price we could realize from the sale of such property. Because our properties are geographically concentrated, we also will be subject to any adverse change in the political or regulatory climate in those states or specific counties where our properties are located that could adversely affect our properties and our ability to lease properties.

Our existing properties are located in in Florida, Massachusetts and New Jersey and our mortgage note receivable is secured by a leasehold mortgage on a property in Illinois. Circumstances and developments related to operations in these markets that could negatively affect our business, financial condition, liquidity and results of operations including, but not limited to, the following factors:

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the responsibility of complying with, and monitoring our tenants’ compliance with, multiple and often conflicting state and local laws;

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unexpected changes in regulatory requirements and other laws, including with respect to retail sale, distribution, cultivation and processing of cannabis, licensing, banking and insurance;

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changes in tax laws in these states; and

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the impact of regional or state specific business cycles and economic instability.

Specialized industrial cultivation/processing cannabis properties are highly specialized and require substantial investment to make them suitable for such uses. In addition, there may be a limited number of high-quality operators of specialized industrial cultivation/processing and retail/dispensary cannabis properties or a limited number of operators in a particular market that have completed the state-licensing process. As a result, we may have difficulty re-leasing our properties upon a tenant default, early lease termination or non-renewal at the end of a lease term, and we may be forced to lease a property to a lower quality operator. We may also be required to make rent concessions and significant capital expenditures to meet the specifications of a new tenant. To the extent there is a change in law or we are unable to find a suitable cannabis operator, we may be forced to lease to a tenant outside of the cannabis industry on less favorable terms or we may be forced to sell the property at a loss. Any of the foregoing could materially and adversely affect the value of our assets and our results of operations, financial condition and ability to pay dividends to our stockholders.

Failure to succeed in new markets may have an adverse impact on our results of operations and ability to make distributions to our stockholders.

Our existing portfolio is comprised of properties located in Florida, Massachusetts and New Jersey and our mortgage note receivable is secured by a leasehold mortgage on a property in Illinois. We intend to

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acquire properties and make investments in markets where we do not currently own properties or have investments. When we acquire properties located in new markets, we may face risks associated with a lack of market knowledge, including the applicable state and local laws with respect to the cannabis industry, the availability and identity of quality tenants, forging new business relationships in the area and unfamiliarity with local government requirements and procedures. Furthermore, the negotiation of a potential expansion into new markets would divert management time and other resources. As a result, we may have difficulties executing our business strategy in these new markets, which could have a negative impact on our results of operations and ability to make distributions to our stockholders.

We depend on key personnel whose continued service is not guaranteed and each of whom would be difficult to replace.

We depend on the efforts and expertise of Mr. Brain, the our Chief Executive Officer and the Chairman of our Board of Directors, Mr. Walraven, our Chief Operating Officer and a member of our Board of Directors, Mr. Yi, our Chief Financial Officer, and our other officers to execute our business strategy. If one or more of these individuals were to no longer be employed by us, we may be unable to find suitable replacements. If we were to lose the services of one or more of these individuals and were unable to find suitable replacements, our business, financial condition, results of operations and ability to make distributions to our stockholders at expected levels or at all could be materially and adversely affected.

The ongoing COVID-19 pandemic and measures intended to prevent its spread could have a material adverse effect on our business, results of operations, cash flows and financial condition.

Since being first reported in December 2019, COVID-19 has spread globally, including to every state in the United States. On March 11, 2020, the World Health Organization declared COVID-19 a pandemic, and on March 13, 2020, the United States declared a national emergency with respect to COVID-19. The pandemic has led governments and other authorities around the world, including federal, state and local authorities in the United States, to impose measures intended to control its spread, including restrictions on freedom of movement and business operations such as travel bans, border closings, business closures, quarantines and shelter-in-place orders. While operations in certain areas have been allowed to fully or partially re-open, many areas are experiencing new closures subsequent to re-opening and no assurance can be given that such closures will not continue to occur.

The impact of the COVID-19 pandemic and measures to prevent its spread could materially and adversely affect our business in a number of ways. While many states have designated cannabis businesses as “essential” and allowed them to remain open, our tenants’ sales may be adversely impacted by changes in consumer behavior resulting from the pandemic. Any negative impact on our tenants’ sales could have a material and adverse impact on our tenants’ ability to pay rent. Additionally, because of the federal regulatory uncertainty related to the regulated cannabis industry, our tenants may not be eligible for financial relief from federal and state governments available to other businesses, including recently introduced federal assistance programs. The deterioration of economic conditions as a result of the pandemic may ultimately materially decrease rent collections across our portfolio or result in early lease terminations, which could adversely affect our financial condition, results of operations and cash available for distribution to our stockholders.

State, local and federal governments have increased, and may in the future increase, property taxes or other taxes or fees, or may enact new taxes or fees, in order to increase revenue, which has in the past, and may in the future, increase our and our tenants’ expenses. In addition, any development or redevelopment projects that we finance, including the development project by Revolution, has and could be adversely affected, including as a result of disruptions in supply chains and government restrictions on the types of projects that may continue during the pandemic or as a result of delayed construction schedules due to social distancing efforts or occurrences of the virus at the property.

The COVID-19 pandemic also has caused, and may continue to cause, severe economic, market and other disruptions worldwide. Disruptions in the financial markets could adversely impact our access to equity and debt financing on favorable terms or at all, which could adversely affect our ability to consummate acquisitions and other investment opportunities.

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The extent of the COVID-19 pandemic’s effect on our operational and financial performance will depend on future developments, including the duration, spread and intensity of the pandemic and the duration of government measures to mitigate the pandemic or address its effects, all of which are uncertain and difficult to predict. Due to the speed with which the situation is developing, we are not able at this time to estimate the effect of these factors on our business, but the adverse impact on our business, results of operations, financial condition and cash flows could be material.

We are currently subject to, and may in the future be subject to, litigation or threatened litigation, which may divert management time and attention, require us to pay damages and expenses or restrict the operation of our business.

We are currently subject, and may be subject in the future, to litigation or threatened litigation. In particular, as described under “Our Business — Legal Proceedings,” on October 22, 2020, Revolution filed an action against us for breach of contract under our tenant improvement funding agreement related to the Delavan, Illinois property. We can provide no assurances as to the outcome of such litigation. Furthermore, we are subject to the risk of complaints by our tenants involving premises liability claims and alleged violations of landlord-tenant laws, which may give rise to litigation or governmental investigations, as well as claims and litigation relating to real estate rights or uses of our properties. We are also subject to a risk of stockholder litigation in the future. The pending and potential future claims against the company may result in significant defense costs and potentially significant judgments against us, some of which are not, may not be, or cannot be, insured against. Additionally, whether or not any dispute actually proceeds to litigation, we may be required to devote significant management time and attention to its successful resolution (through litigation, settlement or otherwise), which would detract from our management’s ability to focus on our business. Any such resolution could involve the payment of damages or expenses by us, which may be significant, or involve our agreement with terms that restrict the operation of our business. We generally intend to vigorously defend ourselves; however, we cannot be certain of the ultimate outcomes of pending claims against the Company or of those claims that may arise in the future. Resolution of these types of matters against us may result in our having to pay significant fines, judgments, or settlements, which, if uninsured, or if the fines, judgments, and settlements exceed insured levels, could adversely impact our earnings and cash flows, thereby having an adverse effect on our financial condition, results of operations, cash flows and our ability to pay dividends on, and the per share trading price of, our common stock. Certain litigation or the resolution of certain litigation may affect the availability or cost of some of our insurance coverage and could expose us to increased risks that would be uninsured, and/or adversely impact our ability to attract officers and directors, which could adversely impact our results of operations, cash flows and our ability to pay dividends on, and the value of, our common stock.

Competition for the acquisition of properties suitable for the cultivation and processing or retail sale of adult- or medical-use cannabis may impede our ability to make acquisitions or increase the cost of these acquisitions, which could adversely affect our operating results and financial condition.

We will compete for the acquisition of properties suitable for the cultivation and processing and retail sale of adult- or medical-use cannabis with other entities engaged in retail, agricultural and real estate investment activities, including corporate agriculture companies, cultivators, distributors and producers of cannabis, public and private REITs, other real estate or finance companies, and private real estate investors. Several competitors have recently entered the marketplace and these competitors may prevent us from acquiring desirable properties or may cause an increase in the price we must pay for properties or reduce the rental rates for our leases of such properties. Our competitors may have greater resources than we do and may be willing to pay more for certain assets, or may be willing to accept more risk than we believe can be prudently managed. In particular, larger companies may enjoy significant competitive advantages that result from, among other things, a lower cost of capital and enhanced operating efficiencies. Our competitors may also adopt transaction structures similar to ours, which would decrease our competitive advantage in offering flexible transaction terms. In addition, due to a number of factors, including but not limited to potential greater clarity of the laws and regulations governing cannabis by state and federal governments, the number of entities and the amount of funds competing for suitable investment properties may increase, resulting in increased demand and increased prices paid for these properties and reduced rental rates for leases of these properties. If we pay higher prices for properties or receive lower rent under our leases for such

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properties, it would adversely affect our financial condition, results of operations, cash available for distributions to our stockholders and the market price of our common stock.

By way of example, Congress has introduced several proposed bills focused on the regulated cannabis industry, including the Marijuana Opportunity Reinvestment and Expungement Act, or the MORE Act, the Strengthening the Tenth Amendment Through Entrusting States Act, or the STATES Act, and the Secure and Fair Enforcement Banking Act of 2019, or the SAFE Banking Act. If it became law, the MORE Act would, among other things, remove cannabis as a Schedule I controlled substance under the U.S. Controlled Substances Act of 1970, as amended, or the CSA, and make available U.S. Small Business Administration funding for regulated cannabis operators. If it became law, the STATES Act would, among other things, exempt the application of the CSA to any person engaging in cannabis-related conduct and activities that are authorized by state or tribal law, subject to specified exceptions. If it became law, the SAFE Banking Act would, among other things, prohibit a federal banking regulator from (1) terminating or limiting the deposit insurance or share insurance of a depository institution solely because the institution provides financial services to a legitimate cannabis-related business; (2) prohibiting or otherwise discouraging a depository institution from offering financial services to such a business; (3) recommending, incentivizing, or encouraging a depository institution not to offer financial services to an account holder solely because the account holder is affiliated with such a business; (4) taking any adverse or corrective supervisory action on a loan made to a person solely because the person either owns such a business or owns real estate or equipment leased or sold to such a business; or (5) penalizing a depository institution for engaging in a financial service for such a business. As a result, there may be further increased competition for the acquisition of properties that can be leased to licensed adult- and medical-use cannabis operators, and such operators may have greater access to alternative financing sources with lower costs of capital. These factors may reduce the number of operators that wish to enter into lease transactions with us or renew leases with us, or may result in us having to enter into leases on less favorable terms with tenants, each of which may significantly adversely impact our profitability and ability to generate cash flow and make distributions to our stockholders.

The success of our investments will be materially dependent on the financial stability of our tenants. Due to the limited number of high-quality cannabis operators with successful track records, some of our future tenants may be independent or start-up cannabis operators about which there may be no or limited historical operating and financial information. As a result of this limited information, it is possible that we could lease properties to tenants that do not perform as expected and are ultimately are unable to pay rent to us, which could adversely impact our business, financial condition, results of operations, cash flows and ability to make distributions to our stockholders and the market value of our common stock.

In addition, some of our tenants may be start-up businesses that have little or no revenue when they enter into triple-net leasing arrangements with us and, therefore, may be unable to pay rent with funds from operations. As a result, we expect that these tenants will make initial rent payments to us from proceeds from the sale of the property to us, in the case of sale-leaseback transactions, or other cash on hand. In addition, we expect that such start-up businesses generally will be more vulnerable to adverse conditions resulting from federal and state regulations affecting their businesses or industries and will have more limited access to traditional forms of financing.

Some of our tenants may be subject to significant debt obligations and may rely on debt financing to make rent payments to us. Tenants that are subject to significant debt obligations may be unable to make their rent payments if there are adverse changes in their business plans or prospects, the regulatory environment in which they operate or in general economic conditions. In addition, the payment of rent and debt service may reduce the working capital available to such entities and prevent them from devoting the resources necessary to develop and grown operations and profitability. Furthermore, we may be unable to accurately assess, monitor and evaluate tenant credit quality on an on-going basis.

Any lease payment defaults by a tenant could adversely affect our business, financial condition, results of operations, cash flows and ability to make distributions to our stockholders and the market value of our common stock. In the event of a default by a tenant, we may also experience delays in enforcing our

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rights as landlord and may incur substantial costs in protecting our investment and re-leasing our property as operators of specialized industrial cultivation/processing and retail/dispensary properties are generally subject to extensive state licensing requirements.

The illiquidity of cannabis-related real estate investments could significantly impede our ability to respond to changing economic, financial or regulatory conditions, which could materially and adversely affect our financial condition, results of operations and ability to pay dividends to our stockholders.

While our business objectives primarily consist of acquiring and deriving rental income from specialized industrial cultivation/processing and retail/dispensary cannabis properties, we may periodically attempt to sell or otherwise dispose of certain of our properties. Cannabis-related real estate properties are relatively illiquid and, as a result, we will have a limited ability to quickly dispose of properties in response to changes in economic, financial, regulatory or other conditions. Due to the uncertainty of regulatory and market conditions that may affect specialized industrial cultivation/processing and retail/dispensary cannabis properties, we cannot assure you that we will be able to sell these assets in the future on favorable terms. In particular, specialized cannabis cultivation/processing properties are highly specialized properties and require substantial investment to make them suitable for such uses. To the extent such properties could not be used for cannabis cultivation and processing due to changes in laws or regulations or otherwise, we may be forced to sell the properties at a loss. We also may be required to make expenditures to correct defects or to make improvements before a property can be sold and we cannot assure you that we will have funds available to correct such defects or to make such improvements. Furthermore, real estate companies may be reluctant to acquire our properties in light of the risk profile of the cannabis industry.

Moreover, the Code imposes restrictions on a REIT’s ability to dispose of properties that are not applicable to other types of real estate companies. In particular, the tax laws applicable to REITs require that we hold our properties for investment, rather than primarily for sale in the ordinary course of business, which may cause us to forego or defer sales of properties that otherwise would be in our best interests. The result of any of the foregoing risks could materially and adversely affect our financial condition, results of operations and ability to pay dividends to our stockholders.

We face possible liability for environmental cleanup costs and damages for contamination related to properties we acquire, which could materially and adversely affect our business, financial condition, results of operations and ability to make distributions to our stockholders.

Because we own real estate, we are subject to various federal, state and local environmental laws, ordinances and regulations. Under these laws, ordinances and regulations, a current or previous owner or operator of real estate may be liable for the cost of removal or remediation of hazardous or toxic substances on, under or in such property. The costs of removal or remediation could be substantial. 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. Environmental laws also may impose restrictions on the manner in which property may be used or businesses may be operated, and these restrictions may require substantial expenditures. Environmental laws provide for sanctions in the event of noncompliance and may be enforced by governmental agencies or, in certain circumstances, by private parties. Certain environmental laws and common law principles could be used to impose liability for release of and exposure to hazardous substances, including the release of asbestos-containing materials into the air, and third parties may seek recovery from owners or operators of real estate for personal injury or property damage associated with exposure to released hazardous substances. In addition, new or more stringent laws or stricter interpretations of existing laws could change the cost of compliance or liabilities and restrictions arising out of such laws. The cost of defending against these claims, complying with environmental regulatory requirements, conducting remediation of any contaminated property, or of paying personal injury claims could be substantial, which could materially and adversely affect our business, financial condition, results of operations and ability to make distributions to our stockholders. In addition, the presence of hazardous substances on a property or the failure to meet environmental regulatory requirements may materially impair our ability to use, lease or sell a property, or to use the property as collateral for borrowing.

We generally include provisions in our leases making tenants responsible for all environmental liabilities and for compliance with environmental regulations, and we will seek to require tenants to reimburse us for

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damages or costs for which we have been found liable. However, these provisions will not eliminate our statutory liability or preclude third-party claims against us. Even if we were to have a legal claim against a tenant to enable us to recover any amounts we are required to pay, there are no assurances that we would be able to collect any money from the tenant.

If access to adequate water and power supplies to specialized industrial cannabis cultivation/processing properties is interrupted, it could harm our ability to lease such properties for cannabis cultivation and processing, which could materially and adversely affect the values of our assets, our business, financial condition, results of operations, cash flows and ability to make distributions to our stockholders.

Specialized industrial cannabis cultivation/processing properties require access to sufficient water and power to make them suitable for the cultivation and processing of cannabis. Although we expect to acquire properties with sufficient access to water, should the need arise for additional wells from which to obtain water, we would be required to obtain permits prior to drilling such wells. Permits for drilling water wells are required by state and county regulations, and such permits may be difficult to obtain due to the limited supply of water in areas where we may acquire properties. Similarly, these properties may be subject to governmental regulations relating to the quality and disposition of rainwater runoff or other water to be used for irrigation. In such case, we could incur costs necessary in order to retain this water. If we are unable to obtain or maintain sufficient water supply for these properties, our ability to lease them for the cultivation and processing of cannabis would be seriously impaired, which would have a material adverse impact on the values of our assets, our business, financial condition, results of operations, cash flows and ability to make distributions to our stockholders.

Historically, states that have legalized cannabis cultivation have typically required that such cultivation take place indoors. Indoor cultivation of cannabis requires significant power for growing lights and heating, ventilation and air conditioning to remove the hot air generated by the growing lights. While outdoor and greenhouse cultivation is gaining acceptance in many states with favorable climates for such growth, we expect that a significant number of our properties will continue to utilize indoor cultivation methods. Any extended interruption of the power supply to our specialized industrial cannabis cultivation/processing properties, particularly those using indoor cultivation methods, would likely harm our tenants’ crops, which could result in their inability to make lease payments to us for these properties. Any lease payment defaults by a tenant could adversely affect our business, financial condition, results of operations, cash flows and ability to make distributions to our stockholders.

Due to our involvement in the regulated cannabis industry, we may have a difficult time obtaining or maintaining the various insurances that are desired to operate our business, which may expose us to additional risk and financial liabilities.

Insurance that is otherwise readily available, such as workers’ compensation, general liability, title insurance and directors’ and officers’ insurance, is more difficult and expensive for us to obtain, because we lease our properties to companies in the regulated cannabis industry. We can provide no assurances that we will be able to continue to carry adequate insurance, or that the cost of such insurance will be affordable to us. If we are unable to maintain sufficient insurance coverage, it could inhibit our growth, expose us to additional risk and financial liabilities and may have a material adverse impact on our business, financial condition, results of operations, cash flows and ability to make distributions to our stockholders.

Uninsured losses relating to real estate could be significant, and increasing premiums and lender requirements to obtain insurance may result in significant costs and materially and adversely affect our business, financial condition, results of operations and ability to make distributions to our stockholders.

There are certain types of losses relating to real estate, generally catastrophic in nature, such as losses due to wars, acts of terrorism, pollution or environmental matters, for which our leases do not require our tenants to acquire insurance. Furthermore, insurers are unlikely to cover losses related to government imposed closures of retail stores like the closures that have occurred due to the ongoing COVID-19 pandemic. If any of our 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, other than any reserves we may establish, we may not have sufficient funds to repair or reconstruct any uninsured damaged property, and we cannot assure you that

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any sources of funding will be available to us for such purposes in the future. Also, uninsured losses could result in expenses that significantly exceed our expectations and internal budgets. In cases where we are required by mortgage lenders to obtain casualty loss insurance for catastrophic events or terrorism, such insurance may not be available, or may not be available at a reasonable cost, which could inhibit our ability to finance or refinance our properties. Increases in property insurances costs would increase the overall costs associated with owning a property. If any one of the events described above were to occur, it could have a material adverse effect on our business, financial condition, results of operations, cash flows and ability to make distributions to our stockholders.

We face potential adverse consequences of bankruptcy or insolvency by our tenants, operators, borrowers, managers and other obligors.

We are exposed to the risk that our tenants, borrowers, guarantors or other obligors could become bankrupt or insolvent. Although our lease and loan agreements will provide us with the right to exercise certain remedies in the event of default on the obligations owing to us or upon the occurrence of certain insolvency events, the bankruptcy and insolvency laws afford certain rights to a party that has filed for bankruptcy or reorganization. For example, a debtor-lessee may reject its lease with us in a bankruptcy proceeding. In such a case, our claim against the debtor-lessee for unpaid and future rents would be limited by the statutory cap of the U.S. Bankruptcy Code. This statutory cap could be substantially less than the remaining rent actually owed under the lease, and any claim we have for unpaid rent might not be paid in full. In addition, a debtor-lessee may assert in a bankruptcy proceeding that its lease should be re-characterized as a financing agreement. If such a claim is successful, our rights and remedies as a lender, compared to a landlord, are generally more limited. In the event of an obligor bankruptcy, we may also be required to fund certain expenses and obligations (e.g., real estate taxes, debt costs and maintenance expenses) to preserve the value of our properties, avoid the imposition of liens on our properties or transition our properties to a new tenant or operator. As a result, our business, financial condition, results of operations and ability to make distributions to our stockholders could be adversely affected if an obligor becomes bankrupt or insolvent.

Moreover, our tenants may have difficulty accessing bankruptcy courts under the theory that, since cannabis is illegal under federal law, the federal bankruptcy courts cannot provide relief for parties who engage in the cannabis industry or cannabis-related businesses, thereby further increasing the uncertainty and risk of loss to us in the case of the bankruptcy or insolvency of one of our tenants, borrowers or guarantors. See “— Risks Related to Regulation and Our Industry — We and our tenants may have difficulty accessing bankruptcy courts.”

We rely on information technology in our operations and security breaches and other disruptions in our systems could compromise our and our tenants’ information and expose us to liability, which would cause our business and reputation to suffer.

In the ordinary course of our business, we collect and store sensitive data, including intellectual property, our proprietary business information and that of our tenants and business partners, including personally identifiable information of our tenants and employees, on our networks. Despite our security measures, our information technology and infrastructure may be vulnerable to attacks by hackers or breached due to employee error, malfeasance or other disruptions. Any such breach could compromise our networks and the information stored there could be accessed, publicly disclosed, lost or stolen. We also may incur costs to remedy any damage caused by such disruptions. Further, as we pursue our strategy to grow through acquisitions and to pursue new initiatives to improve our operations, we are also expanding our information technologies, resulting in a larger technological presence and corresponding exposure to cybersecurity risk. If we fail to assess and identify cybersecurity risks associated with our operations, we may become increasingly vulnerable to such risks. Additionally, the measures we have implemented to prevent security breaches and cyber incidents may not be effective. The theft, destruction, loss, misappropriation or release of sensitive or confidential information, or both, and intellectual property, or interference with our information technology systems or the technology systems of third parties on which we rely, could result in business disruption, negative publicity, brand damage, violation of privacy laws, potential liability and competitive disadvantage, any of which could result in a material adverse effect on our financial condition, results of operations and the market price of our common stock.

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Acquired properties may expose us to unknown liabilities, which could materially and adversely affect us.

We may acquire properties subject to liabilities and without any recourse, or with only limited recourse, against the prior owners or other third parties with respect to unknown liabilities. In addition, purchase and sale agreements may contain only limited warranties, representations and indemnifications that will only survive for a limited period after the closing. Unknown liabilities with respect to acquired properties may include, but are not limited to, liabilities for cleanup of undisclosed environmental contamination, liabilities for failure to comply with the applicable cannabis-related laws, liabilities for failure to comply with fire, health, life-safety and similar regulations, claims by tenants, vendors or other persons against the former owners of the properties, liabilities incurred in the ordinary course of business and claims for indemnification by general partners, directors, officers and others indemnified by the former owners of the properties. If a liability were asserted against us based upon ownership of those properties, we might have to pay substantial sums to settle or contest it and may lose some or all of our invested capital in the property, as well as the loss of rental income from that property, which could materially and adversely affect us.

We face significant risks associated with the development and redevelopment of properties that we acquire or finance.

We may, from time to time, engage in development or redevelopment of properties that we acquire or finance the development or redevelopment of properties owned by other parties. Development and redevelopment activities entail risks that could adversely impact our financial condition and results of operations, including:

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permitting or construction delays, which may result in increased project costs, as well as deferred revenue;

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rental rates at a property may fail to meet our expectations for a number of reasons, including changes in market and economic conditions beyond our control and the development of competing properties;

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poor performance or nonperformance by, or disputes with, any of our contractors, subcontractors or other third parties on whom we rely;

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abandonment of opportunities that we have already begun to explore for a number of reasons, including changes in local market conditions or increases in construction or financing costs, and, as a result, we may fail to recover expenses already incurred in pursuing those opportunities;

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labor stoppages, slowdowns or interruptions;

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liabilities, expenses or project delays, stoppages or interruptions as a result of challenges by third parties in legal proceedings; and

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weather-related and geological interference, including landslides, earthquakes, floods, drought, wildfires and other events, which may result in delays or increased costs.

Our properties may be subject to impairment charges.

We will periodically evaluate our real estate investments and other assets for impairment indicators. The judgment regarding the existence of impairment indicators is based upon factors such as market conditions, tenant performance and legal structure. For example, the termination of a lease by a tenant may lead to an impairment charge. If we determine that an impairment has occurred, we would be required to make an adjustment to the net carrying value of the asset, which could have an adverse effect on our financial condition and our results of operations in the period in which the impairment charge is recorded.

We may incur significant debt, which may subject us to restrictive covenants and increased risk of loss and may reduce cash available for distributions to our stockholders.

Although to date we have been unable to obtain debt financing on terms and conditions that we find acceptable, subject to market conditions and availability, we may incur significant debt through bank credit facilities (including term loans and revolving facilities), public and private debt issuances and derivative instruments, in addition to transaction or asset-specific funding arrangements. The percentage of leverage

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we employ will vary depending on our available capital, our ability to obtain and access financing arrangements with lenders, debt restrictions contained in those financing arrangements and the lenders’ and rating agencies’ estimate of the stability of our investment portfolio’s cash flow. Our board of directors may significantly increase the amount of leverage we utilize at any time. Incurring substantial debt could subject us to many risks, including the following:

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our cash flows from operations may be insufficient to make required payments of principal of and interest on the debt or we may fail to comply with all of the other covenants contained in the debt, which is likely to result in (i) acceleration of such debt (and any other debt containing a cross-default or cross-acceleration provision) that we may be unable to repay from internal funds or to refinance on favorable terms, or at all, (ii) our inability to borrow unused amounts under our financing arrangements, even if we are current in payments on borrowings under those arrangements, and/or (iii) the loss of some or all of our assets to foreclosure or sale;

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we may be unable to borrow additional funds as needed or on favorable terms, or at all;

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to the extent we borrow debt that bears interest at variable rates, increases in interest rates could materially increase our interest expense;

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our default under any loan with cross-default provisions could result in a default on other debt;

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our debt may increase our vulnerability to adverse economic and industry conditions;

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we may be required to dedicate a substantial portion of our cash flow from operations to payments on our debt, thereby reducing funds available for operations, future business opportunities, stockholder distributions (including distributions necessary to maintain our REIT qualification) and other purposes;

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our flexibility in planning for or responding to changing business, industry or economic conditions may be reduced; and

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our assets serving as collateral for any secured debt could be foreclosed upon.

If any one of these events were to occur, our financial condition, results of operations, cash flow and ability to make distributions to our stockholders could be materially and adversely affected.

Any future debt instruments may impose restrictive covenants.

Any debt instruments that we may enter into in the future may contain customary negative covenants and other financial and operating covenants that, among other things, may affect our ability to incur additional debt, make certain investments or acquisitions, reduce liquidity below certain levels, make distributions to our stockholders, redeem debt or equity securities and impact our flexibility to determine our operating policies and investment strategies. If we were to fail to meet or satisfy any such covenants, we would likely be in default under these agreements, and the lenders could elect to declare outstanding amounts due and payable, terminate their commitments, require the posting of additional collateral and enforce their interests against existing collateral. We could also become subject to cross-default and acceleration rights and, with respect to collateralized debt, the posting of additional collateral and foreclosure rights upon default. Further, such restrictions could also make it difficult for us to satisfy the qualification requirements necessary to maintain our status as a REIT.

Higher interest rates and other factors may make it more difficult for us to finance or refinance properties, which could reduce the number of properties we can acquire or require us to sell properties on terms that are not advantageous to us, which could materially and adversely affect our business, financial condition, results of operations and ability to make distributions to our stockholders.

If debt is unavailable on reasonable terms or at all as a result of increased interest rates or other factors, we may not be able to finance the purchase of properties. In addition, if we place mortgage debt on properties, we run the risk of being unable to refinance such debt when the loans come due, or of being unable to refinance on favorable terms. If interest rates are higher when we refinance debt, our income could be reduced. We may be unable to refinance debt at appropriate times, which may require us to sell properties on terms that are not advantageous to us, or could result in the foreclosure of such properties. If any of

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these events occur, our business, financial condition, results of operations and ability to make distributions to our stockholders may be materially adversely affected.

The terms of joint venture agreements or other joint ownership arrangements into which we may enter could impair our operating flexibility and subject us to risks not present in investments that do not involve co-ownership.

We may enter into joint ventures with affiliates or third parties, or both, to acquire, develop or redevelop properties. We may also purchase properties in partnerships, co-tenancies or other co-ownership arrangements. Such investments may involve risks not otherwise present when acquiring real estate directly, including the following:

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a co-venturer, co-owner or partner may have certain approval rights over major decisions, which may prevent us from taking actions that are in our best interests but opposed by our co-venturers, co-owners or partners;

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a co-venturer, co-owner or partner may at any time have economic or business interests or goals, which are, or become, inconsistent with our business interests or goals, including inconsistent goals relating to the sale of properties held in the joint venture or the timing of termination or liquidation of the joint venture;

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a co-venturer, co-owner or partner in an investment may become insolvent or bankrupt (in which event we and any other remaining partners or members would generally remain liable for the liabilities of the partnership or joint venture);

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we may incur liabilities as a result of an action taken by our co-venturer, co-owner or partner;

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a co-venturer, co-owner or partner may be in a position to take actions contrary to our instructions or requests or contrary to our policies or objectives, including our policy with respect to maintaining our qualification as a REIT;

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agreements governing joint ventures, limited liability companies and partnerships often contain restrictions on the transfer of a member’s or partner’s interest or “buy-sell” or other provisions that may result in a purchase or sale of the interest at a disadvantageous time or on disadvantageous terms;

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disputes between us and our joint venture partners may result in litigation or arbitration that would increase our expenses and prevent our officers and directors from focusing their time and effort on our business and result in subjecting the properties owned by the applicable joint venture to additional risk; and

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under certain joint venture arrangements, neither joint venture partner may have the power to control the venture, and an impasse could be reached, which might have adverse effects on the joint venture and our relationship with our joint venture partners.

If any of the foregoing were to occur, our financial condition, results of operations and cash available for distribution to our stockholders could be materially and adversely affected.

Risks Related to Regulation and Our Industry

Cannabis is a Schedule I controlled substance under the CSA. Even in those jurisdictions in which the manufacture and use of cannabis has been legalized at the state level, the possession, use and cultivation all remain violations of federal law that are punishable by imprisonment, substantial fines and forfeiture. Moreover, individuals and entities (including investors in such entities) may violate federal law if they intentionally aid and abet another in violating these federal controlled substance laws, or conspire with another to violate them. The U.S. Supreme Court has ruled in United States v. Oakland Cannabis Buyers’ Coop. and Gonzales v. Raich that it is the federal government that has the right to regulate and criminalize the

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sale, possession and use of cannabis, even for medical purposes. We and our tenants would likely be unable to execute our respective business plans if the federal government were to strictly enforce federal law regarding cannabis.

In January 2018, the U.S. Department of Justice, or the DOJ, rescinded certain memoranda, including the DOJ memorandum by former Deputy Attorney General James Michael Cole (the “Cole Memo”) issued on August 29, 2013 under the Obama Administration, which had characterized the use of federal law enforcement resources to prosecute those complying with state regulatory systems allowing the use, manufacture and distribution of medical-use cannabis as an inefficient use of federal investigative and prosecutorial resources when state regulatory and enforcement efforts are effective with respect to enumerated federal enforcement priorities under the CSA. The continuing impact of the DOJ’s rescission of the Cole Memo and related memoranda remains unclear, but may result in the DOJ increasing its enforcement actions against the regulated cannabis industry generally, including our tenants and us.

Congress previously enacted an omnibus spending bill that includes a provision prohibiting the DOJ (which includes the U.S. Drug Enforcement Administration) from using funds appropriated by that bill to prevent certain states from implementing their medical-use cannabis laws. The prohibition extends to the District of Columbia, all states except Idaho, Kansas, Nebraska, and South Dakota, and all territories except American Samoa. This provision expires on September 30, 2020, and must be renewed by Congress. There can be no assurances that Congress will renew this provision. In USA v. McIntosh, the U.S. Court of Appeals for the Ninth Circuit held that this provision prohibits the DOJ from spending funds from relevant appropriations acts to prosecute individuals who engage in conduct permitted by state medical-use cannabis laws and who strictly comply with such laws. However, the Ninth Circuit’s opinion, which only applies to the states of Alaska, Arizona, California, Hawaii, and Idaho, also held that persons who do not strictly comply with all state laws and regulations regarding the distribution, possession and cultivation of medical-use cannabis have engaged in conduct that is unauthorized, and in such instances the DOJ may prosecute those individuals. The court also noted that, if the provision were not continued, prosecutors could enforce against conduct occurring during the statute of limitations even while the provision was previously in force. Furthermore, while properties where cannabis is cultivated or processed exclusively for medical use has received protection from Congress, properties where cannabis is cultivated for adult-use do not have the same protection. Consequently, we and our tenants that cultivate, process or sell adult-use cannabis on our properties may be subject to greater or different federal legal and other risks as compared to properties where cannabis is cultivated, processed or sold exclusively for medical use, including not providing protection under the Congressional spending bill provision described above.

Additionally, financial transactions involving proceeds generated by cannabis-related conduct can form the basis for prosecution under the federal money laundering statutes, unlicensed money transmitter statutes and the Bank Secrecy Act of 1970, as amended, or the Bank Secrecy Act. The penalties for violation of these laws include imprisonment, substantial fines and forfeiture. Prior to the DOJ’s rescission of the Cole Memo, supplemental guidance from the DOJ issued under the Obama administration directed federal prosecutors to consider the federal enforcement priorities enumerated in the Cole Memo when determining whether to charge institutions or individuals with any of the financial crimes described above based upon cannabis-related activity. With the rescission of the Cole Memo, there is increased uncertainty and added risk that federal law enforcement authorities could seek to pursue money laundering charges against entities or individuals engaged in supporting the cannabis industry, as well as individuals and entities that intentionally aid and abet another in violating these laws.

Federal prosecutors have significant discretion and no assurance can be given that the federal prosecutor in each judicial district where we purchase a property will not choose to strictly enforce the federal laws governing the processing, sale or distribution of cannabis. For example, federal prosecutors could argue that by receiving rental payments from our tenants we could be deemed to be aiding and abetting our tenants violation of relevant federal law. Any change in the federal government’s enforcement posture with respect to state-licensed cultivation or sale of cannabis, including the enforcement postures of individual federal prosecutors in judicial districts where we purchase properties, would result in our inability to execute our business plan and would have a material and adverse impact on our financial condition, results of operations, cash flows, ability to make distributions to our stockholders and the trading price of our common stock.

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Furthermore, following any such change in the federal government’s enforcement position, we could be subject to criminal prosecution, which could lead to imprisonment and/or the imposition of penalties, fines, or forfeiture.

The leases at certain of our existing properties do not, and certain leases that we enter into in the future will not, prohibit retail cultivation, production or sales of cannabis for adult-use that is permissible under state and local laws where our properties are located (for example, Massachusetts), which may subject us and our tenants and properties to different and greater risks, including greater risk of prosecution for aiding and abetting violations of the CSA and federal laws governing money laundering. For example, the prohibition in the current omnibus spending bill that prohibits the DOJ from using funds appropriated by Congress to prevent states from implementing their medical-use cannabis laws does not extend to adult-use cannabis laws. In addition, while we may purchase properties in states that only permit medical-use cannabis at the time of acquisition, such states may in the future authorize by state legislation or popular vote the legalization of adult-use cannabis, thus permitting our tenants to engage in adult-use cannabis operations at our properties.

Our ability to grow our business depends on state laws pertaining to the cannabis industry.

Continued development of the cannabis industry and our ability to grow depend upon continued legislative authorization of cannabis at the state level and any number of factors could slow or halt further progress in this area. While there may be ample public support for legislative action permitting the manufacture and use of cannabis, numerous factors impact the legislative process. For example, many states that voted to legalize adult- and/or medical-use cannabis have seen significant delays in drafting and implementing industry regulations and issuing licenses. In addition, burdensome regulation at the state level could slow or stop further development of the adult- and/or medical-use cannabis industry, such as limiting the number of licenses issued to cannabis operators, limiting the medical conditions for which medical cannabis can be recommended by physicians for treatment, restricting the form in which adult- or medical-use cannabis can be consumed, imposing significant registration requirements on physicians and patients, limiting the types of strains that can be grown, limiting the products that may be sold, or imposing significant taxes on growing, processing and/or selling cannabis, which could have the impact of dampening growth of the cannabis industry and making it difficult for cannabis businesses, including our tenants, to operate profitably in those states. Any of these factors, or the slowing or halting of additional legislative authorization of cannabis, would adversely affect our business and growth prospects.

FDA regulation of cannabis and the possible registration of properties where cannabis is grown could negatively affect the cannabis industry, which would directly affect our financial condition.

If the federal government legalized cannabis for adult- and/or medical-use, it is possible that the U.S. Food and Drug Administration, or the FDA, would seek to regulate it under the Food, Drug and Cosmetics Act of 1938. The FDA could then require approval of cannabis products marketed as drugs and may issue rules and regulations including certified good manufacturing practices related to the growth, cultivation, harvesting and processing of cannabis. Clinical trials may then be needed to verify efficacy and safety. It is also possible that the FDA would require that properties where cannabis is grown register with the FDA and comply with certain federally prescribed regulations. In the event that some or all of these regulations are imposed, we do not know what the impact would be on the cannabis industry, including what costs, requirements and possible prohibitions may be enforced. If we or our tenants are unable to comply with the regulations or registration as prescribed by the FDA, we and or our tenants may be unable to continue to operate our and their businesses in their current forms or at all.

We and our tenants may have difficulty accessing the service of banks, which could have a material adverse effect on our business and growth prospects.

Financial transactions involving proceeds generated by cannabis-related conduct can form the basis for prosecution under the federal money laundering statutes, unlicensed money transmitter statute and the Bank

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Secrecy Act. Previous guidance issued by Financial Crimes Enforcement Network, a division of the U.S. Department of the Treasury, clarifies how financial institutions can provide services to cannabis-related businesses consistent with their obligations under the Bank Secrecy Act. Prior to the DOJ’s announcement in January 2018 of the rescission of the Cole Memo and related memoranda, supplemental guidance from the DOJ directed federal prosecutors to consider the federal enforcement priorities enumerated in the Cole Memo when determining whether to charge institutions or individuals with any of the financial crimes described above based upon cannabis-related activity. It is unclear what impact the rescission of the Cole Memo will have, but federal prosecutors may increase enforcement activities against institutions or individuals that are conducting financial transactions related to cannabis activities. The increased uncertainty surrounding financial transactions related to cannabis activities may also result in financial institutions discontinuing services to the cannabis industry. Consequently, those businesses involved in the regulated adult- or medical-use cannabis industry continue to encounter difficulty establishing banking relationships. In addition, banks and other financial institutions may be reluctant to enter into lending transactions with us, particularly secured lending, because we own and intend to acquire properties used in the adult- and medical-use cannabis industry. To date, we have been unable to obtain debt financing on terms and conditions that we find acceptable. If debt financing continues to be unavailable to us on acceptable terms, our growth may be limited and the market price of our common stock may be adversely impacted.

The terms of our leases do and will require that our tenants make rental payments via check or wire transfer. The inability of our tenants to open accounts and continue using the services of banks may make it difficult for them to enter into triple-net lease arrangements with us or may result in their default under our lease agreements, either of which could materially harm our business. Although we currently have a bank account, our or our tenants’ inability to open additional bank accounts or maintain current accounts would have a material adverse effect on our business and growth prospects.

Local, state and federal cannabis laws and regulations are broad in scope and subject to evolving interpretations, which could require us or our tenants to incur substantial costs associated with compliance or alter our business plan. In addition, violations of these laws, or allegations of such violations, could disrupt our or our tenants’ businesses and result in a material adverse effect on our or our tenants’ operations. It is also possible that additional regulations may be enacted in the future that will be directly applicable to our business. We cannot predict the nature of any future laws, regulations, interpretations or applications, nor can we determine what effect additional governmental regulations or administrative policies and procedures, when and if promulgated, could have on our business. Accordingly, any change in these laws or regulations, changes in their interpretation, or newly enacted laws or regulations and any failure by us or our tenants to comply with these laws or regulations, could require changes to certain of our or our tenants’ business practices and cause us or our tenants to incur additional costs, which could materially and adversely impact our business, results of operations, financial condition, cash flows and ability to make distributions to our stockholders.

Assets leased to cannabis businesses may be forfeited to the federal government.

Any assets used in conjunction with the violation of federal law are potentially subject to federal forfeiture, even in states where cannabis is legal. In July 2017, the DOJ issued a new policy directive regarding asset forfeiture, referred to as the “equitable sharing program.” Under this policy directive, federal authorities may adopt state and local forfeiture cases and prosecute them at the federal level, allowing for state and local agencies to keep up to 80% of any forfeiture revenue. This policy directive represents a reversal of DOJ’s policy under the Obama administration, and allows for forfeitures to proceed that are not in accord with the limitations imposed by state-specific forfeiture laws. This policy directive may lead to increased use of asset forfeitures by local, state and federal enforcement agencies. If the federal government decides to initiate forfeiture proceedings against cannabis businesses such as the cannabis-related properties that we own and intend to acquire, our investment in those properties may be lost, which would materially and adversely impact our business, results of operations, financial condition, cash flows and ability to make distributions to our stockholders.

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We and our tenants may have difficulty accessing bankruptcy courts.

Because cannabis is illegal under federal law, the federal bankruptcy courts may not provide relief for parties who engage in the cannabis industry or cannabis related businesses. Recent bankruptcy rulings have denied bankruptcies for cannabis dispensaries upon the justification that businesses cannot violate federal law and then claim the benefits of federal bankruptcy for the same activity upon the justification that courts cannot ask a bankruptcy trustee to take possession of, and distribute, cannabis assets as such action would violate the CSA. Therefore, we or our tenants may not be able to seek the protection of the bankruptcy courts and this could materially affect our business or our ability to obtain credit or collect amounts from tenants in the event of their insolvency.

The properties that we currently own, and expect to acquire, are, and will be, subject to extensive regulations, which may result in significant costs and materially and adversely affect our business, financial condition, liquidity and results of operations.

The properties that we currently own, and expect to acquire, are, and will be, subject to various local laws and regulatory requirements. Local property regulations may restrict the use of properties we acquire and may require us to obtain approval from local authorities with respect to the properties that we expect to acquire, including prior to acquiring a property or when developing or undertaking renovations. Among other things, these restrictions may relate to cultivation of cannabis, the use of water and the discharge of waste water, fire and safety, seismic conditions, asbestos-cleanup or hazardous material abatement requirements. We cannot assure you that existing regulatory policies will not materially and adversely affect us or the timing or cost of any future acquisitions, developments or renovations, or that additional regulations will not be adopted that would increase such delays or result in additional costs. Our failure to obtain such regulatory approvals could have a material adverse effect on our business, financial condition, liquidity and results of operations.

Risks Related to Our Organization and Structure

An affiliate of Tilden Park Capital Management LP owns a significant percentage of our common stock and has the ability to exercise substantial influence over us.

As of the date of this prospectus, an affiliate of Tilden Park Capital Management LP, or Tilden Park, owns approximately 53% of the outstanding shares of our common stock, and upon completion of this offering, Tilden Park will own % of the outstanding shares of our common stock. Pursuant to an investor rights agreement between us and Tilden Park, or the Investor Rights Agreement, for so long as Tilden Park owns at least 20% of the outstanding shares of our outstanding common stock, it is entitled to appoint a non-voting observer to our board of directors, and has the right to have such observer elected as a voting board member at Tilden Park’s discretion. The concentration of ownership by Tilden Park in us may influence the outcome of any matters submitted to our stockholders for approval, and it is possible that the interests of Tilden Park may in some circumstances conflict with our interests and the interests of our other stockholders.

The stock ownership limits imposed by the Code on REITs and our charter may restrict stock transfers or business combination opportunities, or both, particularly if our management and board of directors do not favor a combination proposal.

In order for us to qualify and maintain our qualification as a REIT under the Code, not more than 50% of the value of the outstanding shares of our capital stock may be owned, directly or indirectly, including through the application of certain attribution rules, by five or fewer individuals (as defined in the Code to include certain entities such as qualified pension plans) at any time during the last half of a taxable year. Our charter, with certain exceptions, authorizes our board of directors to take the actions that are necessary and desirable to allow us to qualify and preserve our qualification as a REIT. Unless exempted by our board of directors, no person or entity may actually or beneficially own, or be deemed to own by virtue of the applicable constructive ownership provisions of the Code, more than 9.8% in value or in number, whichever is more restrictive, of the outstanding shares of our common stock, the outstanding shares of any class or series of our preferred stock or the aggregate outstanding shares of all classes and series of our

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capital stock, in each case excluding any shares of our capital stock that are not treated as outstanding for U.S. federal income tax purposes. Our board of directors may, in its sole discretion, grant an exemption to the stock ownership limits, subject to certain conditions and the receipt by our board of directors of certain representations and undertakings.

Our charter also prohibits any person from (1) beneficially or constructively owning shares of our capital stock that would result in our being “closely held” under Section 856(h) of the Code or otherwise cause us to fail to qualify as a REIT or (2) transferring shares of our capital stock if such transfer would result in us being owned by fewer than 100 persons (determined without regard to any rules of attribution). The stock ownership limits contained in our charter key off the ownership at any time by any “person,” which term includes entities, and take into account direct and indirect ownership as determined under various ownership attribution rules in the Code. The stock ownership limits also might 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.

Certain provisions of Maryland law, as well as certain provisions in our charter and bylaws, could inhibit changes in control, which may discourage third parties from seeking change in control transactions that could involve a premium price for our common stock or otherwise be in the best interest of our stockholders.

There are provisions in our charter and bylaws that may discourage a third party from making a proposal to acquire us, even if some of our stockholders might consider the proposal to be in their best interests. These provisions include the following:

Our charter authorizes our board of directors to amend our charter to increase or decrease the aggregate number of authorized shares of stock, to authorize us to issue additional shares of our common stock or preferred stock and to classify or reclassify unissued shares of our common stock or preferred stock and thereafter to authorize us to issue such classified or reclassified shares of stock. The additional classes or series, as well as the additional authorized shares of our common stock, will be available for issuance without further action by our stockholders, unless such action is required by applicable law or the rules of any stock exchange or automated quotation system on which our securities may be listed or traded. Although our board of directors does not currently intend to do so, it could authorize us to issue a class or series of stock that could, depending upon the terms of the particular class or series, delay, defer or prevent a transaction or a change in control of our company that might involve a premium price for holders of our common stock or that our common stockholders otherwise believe to be in their best interests.

In addition, certain provisions of the Maryland General Corporation Law, or the MGCL, may have the effect of inhibiting a third party from making a proposal to acquire us or of impeding a change in control under circumstances that otherwise could provide the holders of shares of our common stock with the opportunity to realize a premium over the then-prevailing market price of such shares, including:

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“business combination” provisions that, subject to limitations, prohibit certain business combinations between us and an “interested stockholder” (defined generally as any person who beneficially owns 10% or more of the voting power of our outstanding voting stock or any affiliate or associate of ours who, at any time within the two-year period immediately prior to the date in question, was the beneficial owner of 10% or more of the voting power of our then outstanding stock) or an affiliate thereof for five years after the most recent date on which the stockholder becomes an interested stockholder and thereafter impose fair price and/or supermajority voting requirements on these combinations; and

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“control share” provisions that provide that “control shares” of our company (defined as shares which, when aggregated with other shares controlled by the stockholder, except solely by virtue of a revocable proxy, entitle the stockholder to exercise one of three increasing ranges of voting power in electing directors) acquired in a “control share acquisition” (defined as the direct or indirect acquisition of ownership or control of issued and outstanding “control shares”) have no voting rights with respect to their control shares except to the extent approved by our stockholders by the affirmative vote of at least two-thirds of all the votes entitled to be cast on the matter, excluding all interested shares.

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As permitted by the MGCL, our bylaws contain provisions exempting any business combination between us and any person from the business combination provisions of the MGCL and exempting any acquisition of our stock from the control share provisions of the MGCL. However, our board of directors may by amendment to our bylaws repeal the exemption from the business combination provisions of the MGCL or opt in to the control share provisions of the MGCL at any time in the future.

We have elected by a provision in our charter, at such time as we are eligible, to be subject to the provisions of Subtitle 8 relating to the filling of vacancies on our board of directors. We have not elected, however, to be subject to any of the other provisions of Subtitle 8, including the provisions that would permit us to classify our board of directors without stockholder approval. Our board of directors is not classified. Moreover, our charter provides that, without the affirmative vote of a majority of the votes cast on the matter by our stockholders entitled to vote generally in the election of directors, we may not elect to be subject to the classified board provisions of Subtitle 8. See “Certain Provisions of Maryland Law and of Our Charter and Bylaws.”

Such takeover defenses may have the effect of inhibiting a third party from making an acquisition proposal for us or of delaying, deferring or preventing a change in control of us under the circumstances that otherwise could provide our common stockholders with the opportunity to realize a premium over the then current market price. In addition, the provisions of our charter on the removal of directors and the advance notice provisions of our bylaws, among others, could delay, defer or prevent a transaction or a change in control of our company that might involve a premium price for holders of our common stock or otherwise be in their best interest.

Each item discussed above may delay, deter or prevent a change in control of our company, even if a proposed transaction is at a premium over the then-current market price for our common stock. Further, these provisions may apply in instances where some stockholders consider a transaction beneficial to them. As a result, our stock price may be negatively affected by these provisions. See “Certain Provisions of Maryland Law and of Our Charter and Bylaws.”

We are a holding company with no direct operations and, as such, we will rely on funds received from our operating partnership to pay any distributions to our stockholders, and the interests of our stockholders will be structurally subordinated to all liabilities and obligations of our operating partnership and its subsidiaries.

We are a holding company and conduct substantially all of our operations through our operating partnership. Apart from interests in our operating partnership, we do not have any material assets. As a result, we will rely on cash distributions from our operating partnership to pay any distributions our board of directors may declare on shares of our common stock. We will also rely on distributions from our operating partnership to meet any of our obligations, including any tax liability on taxable income allocated to us from our operating partnership. In addition, because we are a holding company, your claims as a stockholder will be structurally subordinated to all existing and future liabilities and obligations (whether or not for borrowed money) of our operating partnership and its subsidiaries. Therefore, in the event of our bankruptcy, liquidation or reorganization, our assets and those of our operating partnership and its subsidiaries will be available to satisfy the claims of our stockholders only after all of our and our operating partnership’s and its subsidiaries’ liabilities and obligations have been paid in full.

Our board of directors may change our business, investment and financing strategies without stockholder approval and we may become highly leveraged, which may increase our risk of default under our debt obligations.

Our investment and financing policies are exclusively determined by our board of directors. Accordingly, our stockholders do not control these policies. As the market evolves, we may change our business, investment and financing strategies without a vote of, or notice to, our stockholders, which could result in our making investments and engaging in business activities that are different from, and possibly riskier than, the investments and businesses described in this prospectus. In particular, a change in our investment strategy, including the manner in which we allocate our resources across our properties or the types of assets in which we seek to invest, may increase our exposure to real estate market fluctuations. In addition, our organizational documents do not limit the amount or percentage of indebtedness, funded or otherwise, that we may incur. Our board of directors may alter or eliminate our current policy on borrowing at any time without stockholder approval. If this policy is changed, we may in the future become highly leveraged, which

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could result in an increase in our debt service. Higher leverage also increases the risk of default on our obligations. Furthermore, as the market evolves, our board may determine that cannabis properties do not offer the potential for attractive risk-adjusted returns for an investment strategy. In addition, a change in our investment policies, including the manner in which we allocate our resources across our portfolio or the types of assets in which we seek to invest, may increase our exposure to interest rate risk, real estate market fluctuations and liquidity risk. Changes to our strategies with regard to the foregoing could materially and adversely affect our business, financial condition, results of operations and ability to make distributions to our stockholders and the market price of our common stock.

Our operating partnership may issue OP units to third parties without the consent of our stockholders, which would reduce our ownership percentage in our operating partnership and would have a dilutive effect on the amount of distributions made to us by our operating partnership and, therefore, the amount of distributions we can make to our stockholders.

We are the sole member of the general partner of our operating partnership and currently own all of the outstanding OP units in our operating partnership. We may, in connection with our acquisition of properties, as compensation or otherwise, issue additional OP units. Such issuances would reduce our ownership percentage in our operating partnership and could affect the amount of distributions made to us by our operating partnership and, therefore, the amount of distributions we can make to our stockholders. Because you will not directly own OP units, you will not have any voting rights with respect to any such issuances or other partnership level activities of our operating partnership.

Conflicts of interest could arise between the interests of our stockholders and the interests of holders of OP units, which may impede business decisions that could benefit our stockholders.

If we issue OP units to third parties, conflicts of interest could arise as a result of the relationships between us, on the one hand, and our operating partnership or any limited partner thereof, on the other. Our directors and officers have duties to us and our stockholders under applicable Maryland law in connection with their management of our company. At the same time, we, as the sole member of the general partner of our operating partnership, have fiduciary duties and obligations to our operating partnership and its limited partners under Nevada law and the partnership agreement of our operating partnership in connection with the management of our operating partnership. Our duties as the sole member of the general partner to our operating partnership and its partners may come into conflict with the duties of our directors and officers to our company and our stockholders. These conflicts may be resolved in a manner that is not in the best interests of our stockholders.

If we issue OP units in connection with our acquisition of properties, the value placed on such partnership interests may not accurately reflect their market value, which may dilute your interest in us.

If we issue OP units in connection with our acquisition of properties, the per unit value attributable to such interests will be determined based on negotiations with the property seller and, therefore, may not reflect the fair market value of such OP units if a public market for such OP units existed. If the value of such OP units is greater than the value of the applicable acquired property, your interest in us may be diluted.

Our rights and the rights of our stockholders to recover on claims against our directors and officers are limited, which could reduce your and our recovery against them if they negligently cause us to incur losses.

Maryland law provides that a director or officer has no liability in that capacity if he or she performs his or her duties in good faith, in a manner that 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. Under the MGCL, directors are presumed to have acted in accordance with this standard of care. As permitted by Maryland law, our charter eliminates the liability of our directors and officers to us and our stockholders for money damages, except for liability resulting from:

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actual receipt of an improper benefit or profit in money, property or services; or

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active and deliberate dishonesty by the director or officer that was established by a final judgment as being material to the cause of action adjudicated.

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Our charter and bylaws obligate us to indemnify each present and former director or officer, to the maximum extent permitted by Maryland law, in the defense of any proceeding to which he or she is made, or threatened to be made, a party by reason of his or her service to us. In addition, we may be obligated to advance the defense costs incurred by our directors and officers. We also have entered into indemnification agreements with our executive officers and directors granting them express indemnification rights. As a result, we and our stockholders may have more limited rights against our directors and officers than might otherwise exist absent the current provisions in our charter, bylaws and indemnification agreements or that might exist for other public companies.

Our charter contains provisions that could make it difficult for our stockholders to effect changes to our management.

Our charter contains provisions that could make it difficult for our stockholders to effect changes to our management and may prevent a change in control of our company that is in the best interests of our stockholders. Our charter provides that a director may be removed with or without cause upon the affirmative vote of holders of a majority of all the votes entitled to be cast generally in the election of directors. However, vacancies may be filled only by a majority of the remaining directors in office, even if less than a quorum, which may make it more difficult to change our management by replacing directors and may prevent a change in control of our company that is in the best interests of our stockholders.

We will incur new costs as a result of becoming a public company, and such costs may increase if and when we cease to be an “emerging growth company,” which could materially and adversely affect our results of operations.

As a public company, we will incur significant legal, accounting, insurance and other expenses that we have not incurred as a private company, including costs associated with public company reporting requirements of the Exchange Act, the Sarbanes-Oxley Act, the Dodd-Frank Act and other applicable securities rules and regulations. Compliance with these rules and regulations will increase our legal and financial compliance costs, make some activities more difficult, time-consuming or costly and increase demand on our systems and resources. As a result, our executive officers’ attention may be diverted from other business concerns, which could adversely affect our business and results of operations. In addition, the expenses incurred by public companies generally for reporting and corporate governance purposes have been increasing. We expect compliance with these public reporting requirements and associated rules and regulations to increase expenses, particularly after we are no longer an emerging growth company. We could be an emerging growth company until December 31, 2025, although circumstances could cause us to lose that status earlier, which could result in our incurring additional costs applicable to public companies that are not emerging growth companies earlier than anticipated.

In addition, changing laws, regulations and standards relating to corporate governance and public disclosure are creating uncertainty for public companies, increasing legal and financial compliance costs and making some activities more time consuming. These laws, regulations and standards are subject to varying interpretations, in many cases due to their lack of specificity, and, as a result, their application in practice may evolve over time as new guidance is provided by regulatory and governing bodies. This could result in continuing uncertainty regarding compliance matters and higher costs necessitated by ongoing revisions to disclosure and governance practices. We intend to invest resources to comply with evolving laws, regulations and standards, and this investment may result in increased general and administrative expenses and a diversion of our executive officers’ time and attention from revenue generating activities to compliance activities. If our efforts to comply with new laws, regulations and standards differ from the activities intended by regulatory or governing bodies due to ambiguities related to their application and practice, regulatory authorities may initiate legal proceedings against us and our business may be adversely affected.

As a result of disclosure of information in this prospectus and in filings required of a public company, our business and financial condition will become more visible, which we believe may result in threatened or actual litigation, including by competitors and other third parties. If such claims are successful, our business and results of operations could be adversely affected, and even if the claims do not result in litigation or are resolved in our favor, these claims, and the time and resources necessary to resolve them, could divert the resources of our executive officers and materially and adversely affect our business and results of operations.

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As a result of becoming a public company, management will be required to report periodically on the effectiveness of our system of internal control over financial reporting. We may not complete our analysis of our internal control over financial reporting in a timely manner, or our system of internal control over financial reporting may not be determined to be appropriately designed or operating effectively, which may materially and adversely affect investor confidence in our company and, as a result, the value of our common stock.

We will be required, pursuant to Section 404 of the Sarbanes-Oxley Act, to furnish a report by management on, among other things, the effectiveness of our internal control over financial reporting for the first full fiscal year after the completion of this offering. In addition, after we are no longer an emerging growth company under the JOBS Act and no longer a non-accelerated filer, Section 404 of the Sarbanes-Oxley Act will require our auditors to deliver an attestation report on the effectiveness of our internal control over financial reporting in conjunction with their opinion on our audited financial statements. Substantial work on our part is required to implement appropriate processes, document the system of internal control over key processes, assess their design, remediate any deficiencies identified and test their operation. This process is expected to be both costly and challenging. The existence of any material weakness would preclude a conclusion by management and our independent auditors that we maintained effective internal control over financial reporting. Our management may be required to devote significant time and expense to remediate any material weaknesses that may be discovered and may not be able to remediate any material weakness in a timely manner. The existence of any material weakness in our internal control over financial reporting could also result in errors in our financial statements that could require us to restate our financial statements, cause us to fail to meet our reporting obligations and cause investors to lose confidence in our reported financial information, all of which could lead to a decline in the market price of our common stock.

Our bylaws designate the Circuit Court for Baltimore City, Maryland as the sole and exclusive forum for certain actions and proceedings that may be initiated by our stockholders, subject to certain exceptions, which may limit a stockholder’s ability to bring certain claims against us or our directors, officers or other employees in a judicial forum that the stockholder believes is favorable.

Our bylaws provide that, unless we consent in writing to the selection of an alternative forum, the Circuit Court for Baltimore City, Maryland, or, if that Court does not have jurisdiction, the United States District Court for the District of Maryland, Baltimore Division, shall be the sole and exclusive forum for the following: (i) any derivative action or proceeding brought on our behalf; (ii) any action asserting a claim of breach of any duty owed by us or by any of our directors, officers or other employees to us or our stockholders; (iii) any action asserting a claim against us or any of our directors, officers or other employees arising pursuant to any provision of the MGCL or our charter or bylaws; or (iv) any action asserting a claim against us or any of our directors, officers or other employees that is governed by the internal affairs doctrine. This choice of forum provision will not apply to claims arising under the Securities Act or the Exchange Act. These choice of forum provisions may limit a stockholder’s ability to bring a claim in a judicial forum that the stockholder believes is favorable for disputes with us or our directors, officers or other employees, which may discourage lawsuits with respect to such claims.

Termination of the employment agreements with our executive officers could be costly and prevent a change in our control.

The employment agreements with each of our executive officers provide that, if their employment with us terminates under certain circumstances (including upon a change in our control), we may be required to pay them significant amounts of severance compensation, including accelerated vesting of equity awards, thereby making it costly to terminate their employment. Furthermore, these provisions could delay or prevent a transaction or a change in our control that might involve a premium paid for our common stock or otherwise be in the best interests of our stockholders.

Risks Related to Our Taxation as a REIT

We elected to be taxed as a REIT for U.S. federal income tax purposes. We believe that our organization and current and proposed method of operation will enable us to meet the requirements for qualification and

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taxation as a REIT. However, we cannot assure you that we will qualify as such. This is because qualification as a REIT involves the application of highly technical and complex provisions of the Code for which there are limited judicial and administrative interpretations and which involve the determination of facts and circumstances not entirely within our control. Future legislation, new regulations, administrative interpretations or court decisions may significantly change the U.S. tax laws applicable to the qualification as a REIT for U.S. federal income tax purposes or the U.S. federal income tax consequences of such qualification.

If we fail to qualify as a REIT in any taxable year we will face serious tax consequences that could substantially reduce the funds available for distributions to our stockholders because:

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we would not be allowed a deduction for distributions paid to stockholders in computing our taxable income and would be subject to U.S. federal income tax at regular corporate rates;

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we could be subject to increased state and local taxes; and

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unless we are entitled to relief under statutory provisions, we could not elect to be taxed as a REIT for four taxable years following the year during which we were disqualified.

In addition, if we fail to qualify as a REIT, we will no longer be required to make distributions to remain qualified as a REIT for U.S. federal income tax purposes. As a result of all these factors, our failure to qualify as a REIT could impair our ability to expand our business and raise capital, and it would adversely affect the value of our stock.

Even if we qualify as a REIT, we may face other tax liabilities that reduce our cash flows.

Even if we qualify for taxation as a REIT, we may be subject to certain federal, state and local taxes on our income and assets, including taxes on any undistributed income, a 100% “prohibited transaction” tax (described below), tax on income from some activities conducted as a result of a foreclosure, and state or local income, property and transfer taxes. In addition, in order to meet the REIT qualification requirements or to avoid the imposition of the 100% prohibited transaction tax, we may hold certain assets through one or more TRSs that will be subject to corporate-level income tax at regular rates. Any of these taxes would decrease cash available for distribution to our stockholders.

We are subject to a 100% tax on our gain or income from “prohibited transactions,” and we may forego certain otherwise attractive transactions to avoid such tax.

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, held primarily for sale to customers in the ordinary course of business. Although we do not intend to hold a significant amount of assets as inventory or primarily for sale to customers in the ordinary course of our business, the characterization of an asset sale as a prohibited transaction depends on the particular facts and circumstances. The Code provides a safe harbor that, if met, allows a REIT to avoid being treated as engaged in a prohibited transaction. We may sell certain properties in transactions that do not meet all of the requirements of such safe harbor if we believe the transaction nevertheless would not be a prohibited transaction based on an analysis of all of the relevant facts and circumstances. If the IRS were to successfully argue such a sale was in fact a prohibited transaction, we would be subject to a 100% penalty tax with respect to such sale. In addition, in order to avoid the prohibited transactions tax, we may choose not to engage in certain sales, even though the sales might otherwise be beneficial to us. Alternatively, we may choose to structure such sales in a less tax efficient manner to avoid such tax, including through the use of a TRS that would be subject to regular corporate income tax on any income or gain from such sales.

REIT distribution requirements could adversely affect our liquidity and may force us to borrow funds during unfavorable market conditions.

To qualify as a REIT, generally we must distribute to our stockholders at least 90% of our net taxable income each year, without regard to the deduction for dividends paid and excluding capital gains and certain non-cash income. In addition, we will be subject to corporate income tax to the extent we distribute less than 100% of our taxable income, including any net capital gain, and a 4% nondeductible excise tax on the

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amount, if any, by which distributions paid by us 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 prior years. We intend to make distributions to our stockholders to comply with the requirements of the Code for REITs and to minimize or eliminate our corporate income tax obligations to the extent consistent with our business objectives. However, our cash flows from operations may be insufficient to fund required distributions as a result of differences in timing between the actual receipt of income and the recognition of income for U.S. federal income tax purposes, the effect of non-deductible capital expenditures, the creation of reserves or required debt service or amortization payments, the possibility of non-deductible fines imposed on cannabis-related businesses and the application of various other income tax provisions of the Code, including Section 280E and Section 163(j), each of which are described below. In order to meet the REIT distribution requirement, we may need to borrow funds on a short-term basis or sell assets, even if the then-prevailing market conditions are not favorable for these borrowings or sales. In addition, we may need to reserve cash (including proceeds from this offering) to satisfy our REIT distribution requirements, even though there are attractive investment opportunities that may be available. To address and/or mitigate some of these issues, we may make taxable distributions that are in part paid in cash and in part paid in our common stock. In such cases our stockholders may have tax liabilities from such distributions in excess of the cash they receive.

If we are subject to Section 280E of the Code because of the business activities of our tenants, the resulting disallowance of income tax deductions could cause us to incur U.S. federal income tax and jeopardize our REIT status.

Section 280E of the Code provides that, with respect to any taxpayer, no deduction or credit is allowed for expenses incurred during a taxable year “in carrying on any trade or business if such trade or business (or the activities which comprise such trade or business) consists of trafficking in controlled substances (within the meaning of Schedule I and II of the CSA) which is prohibited by federal law or the law of any State in which such trade or business is conducted.” Because cannabis is a Schedule I controlled substance under the CSA, Section 280E by its terms applies to the purchase and sale of cannabis products. Although we will not be engaged in the purchase, sale, cultivation, harvesting, or processing of cannabis products, we will lease our properties to tenants who will engage in such activities, and therefore our tenants likely will be subject to Section 280E. If the IRS asserted that, through our rental agreements with our state-licensed cannabis tenants, we are primarily or vicariously liable under federal law for “trafficking” a Schedule I substance (cannabis) under Section 280E of the Code or for any other violations of the CSA, the IRS may seek to apply the provisions of Section 280E to us and disallow certain tax deductions, including for management fees, depreciation or interest expense. If such tax deductions are disallowed, we could be unable to meet the distribution requirements applicable to REITs under the Code, which could cause us to incur U.S. federal income tax and fail to qualify as a REIT. Because we will not be engaged in the purchase, sale, cultivation, harvesting or processing of a controlled substance, we do not believe that we will be subject to the disallowance provisions of Section 280E, and neither we nor our tax advisors are aware of any tax court cases or guidance from the IRS in which a taxpayer not engaged in such activities with respect to a controlled substance was disallowed deductions under Section 280E. However, there is no assurance that the IRS will not take such a position either currently or in the future.

To the extent our business interest deductions are deferred or disallowed, our taxable income may exceed our cash available for distributions to stockholders.

Section 163(j) of the Code limits the deductibility of “business interest” for both individuals and corporations. Real property trades or businesses are permitted to elect out of this limitation, but as a consequence are required to use longer depreciation periods for their assets. Such election, once made, is irrevocable. We generally expect to make the real property trade or business election for us and our subsidiaries. To the extent our or our subsidiaries’ interest deductions are deferred or disallowed under Section 163(j) of the Code or any other provision of law, our taxable income may exceed our cash available for distribution to our stockholders. As a result, there is a risk that we may have taxable income in excess of cash available for distributions. In that event, we may need to borrow funds or take other actions to satisfy the REIT distribution requirements for the taxable year in which this “phantom income” is recognized.

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Complying with the REIT requirements may cause us to forego otherwise attractive opportunities or to liquidate otherwise attractive investments.

To qualify as a REIT for U.S. federal income tax purposes, we must continually satisfy tests concerning, among other things, the sources of our income, the nature and diversification of our assets and the amounts we distribute to our stockholders. In order to meet these tests, we may be required to forego investments that we might otherwise make. In addition, we may be required to liquidate attractive investments that do not or no longer comply with the REIT income or asset requirements or for the purpose of generating cash to distribute to stockholders. Thus, compliance with the REIT requirements may hinder our performance by limiting our ability to make or maintain ownership of certain otherwise attractive investments.

Temporary investment of the net offering proceeds of this offering in short-term securities and income from such investment generally will allow us to satisfy various REIT income and asset requirements, but only during the one-year period beginning on the date we receive such net offering proceeds. If we are unable to invest a sufficient amount of the net proceeds of this offering in qualifying real estate assets within such one-year period, we could fail to satisfy one of the gross income tests or we could be limited to investing all or a portion of any remaining funds in cash or cash equivalents. If we fail to satisfy such requirements, unless we are entitled to relief under certain provisions of the Code, we could fail to qualify as a REIT.

Dividends payable by REITs generally do not qualify for reduced U.S. federal income tax rates applicable to qualified dividend income.

The maximum U.S. federal income tax rate for qualified dividends payable to individual U.S. stockholders is 20% plus, to the extent applicable, a 3.8% healthcare tax. Dividends payable by REITs generally are not qualified dividends and therefore are not eligible for taxation at the reduced rates. However, to the extent such dividends are attributable to certain dividends that we receive from a TRS or to income from a prior year that was retained by us and subject to corporate tax, such dividends generally will be eligible for the reduced rates that apply to qualified dividend income. The more favorable rates applicable to regular corporate dividends 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 dividends, which could adversely affect the value of the stock of REITs, including our common stock. However, through the 2025 tax year, individual U.S. stockholders may be entitled to claim a deduction in determining their taxable income of 20% of ordinary REIT dividends (dividends other than capital gain dividends and dividends attributable to qualified dividend income received by us, if any), which temporarily reduces the effective income tax rate on these dividends to a maximum tax rate of 29.6% (excluding any applicable healthcare tax) for those years. If we fail to qualify as a REIT, such stockholders may not claim this deduction with respect to dividends paid by us. Stockholders are urged to consult tax advisers regarding the effect of this change on the effective tax rate with respect to REIT dividends.

Complying with REIT requirements may limit our ability to hedge our operational risks effectively and may cause us to incur tax liabilities.

The REIT provisions of the Code may limit our ability to hedge risks relating to our operations. Any income from a hedging transaction we enter into to manage risk of interest rate changes, price changes or currency fluctuations with respect to borrowings made or to be made to acquire or carry real estate assets, if properly identified under applicable Treasury Regulations, does not constitute “gross income” for purposes of the 75% or 95% gross income tests. To the extent that we enter into other types of hedging transactions, the income from those transactions will likely be treated as non-qualifying income for purposes of both of the gross income tests.

Legislative or regulatory tax changes related to REITs could materially and adversely affect our business.

At any time, the U.S. federal income tax laws or regulations promulgated by the U.S. Treasury Department (the “Treasury Regulations”) governing REITs, or the administrative interpretations of those laws or regulations, may be changed, possibly with retroactive effect. We cannot predict if or when any new U.S. federal income tax law, regulation or administrative interpretation, or any amendment to any existing U.S. federal income tax law, regulation or administrative interpretation, will be adopted, promulgated or become effective or whether any such law, regulation or interpretation may take effect retroactively. We

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and our stockholders could be adversely affected by any such change in, or any new, U.S. federal income tax law, regulation or administrative interpretation

Risks Related to This Offering and Ownership of Our Common Stock

There has been no public market for our common stock prior to this offering and an active trading market for our common stock may not develop and be sustained following this offering.

Prior to this offering, there has been no public market for our common stock, and there can be no assurance that an active trading market will develop or be sustained or that shares of our common stock will trade at or above the initial public offering price. We intend to apply to list our common stock on the . We also expect that our common stock will be quoted on the OTXQX following the completion of this offering. In order to be quoted on the OTCQX, a market maker must file an application on our behalf in order to make a market for our common stock. The underwriters intend to file applications with the Financial Industry Regulatory Authority, or FINRA, to have our common stock quoted on the OTCQX. FINRA, generally speaking, must approve the first quotation of a security by a market maker on the OTCQX, and there can be no assurance that such an application for quotation will be approved. Additionally there is no guarantee an active trading market will develop or be sustained. If no market develops, the holders of our common stock may find it difficult or impossible to sell their shares. Further, even if a market develops, our common stock will be subject to fluctuations and volatility and the stock may be quoted or traded only to the extent that there is interest by broker-dealers in acting as a market maker in our common stock.

The initial public offering price of our common stock was determined by agreement among us and the representatives of the underwriters, but there can be no assurance that our common stock will not trade below the initial public offering price following the completion of this offering. See “Underwriting.” The market price of our common stock could be substantially affected by many factors, including general market conditions; the extent to which a secondary market develops for our common stock following the completion of this offering; the extent of institutional investor interest in us; the level of demand for securities issued by owners of specialized industrial cultivation/processing and retail/dispensary cannabis properties; the general reputation of REITs and the attractiveness of their equity securities in comparison to other equity securities (including securities issued by other real estate-based companies); and our financial performance.

We have not identified any specific properties that we will acquire with the net proceeds from this offering and, therefore, you will not have the opportunity to evaluate the acquisitions to be funded with the net proceeds from this offering before we make them.

We have not yet identified any specific property acquisitions that we may make in the future and we will not provide you with information to evaluate our investments prior to our acquisition of additional properties, other than through our disclosures required by the rules of the SEC. For a discussion of our business and growth strategies, see “Our Business — Our Business and Growth Strategies,” and for a discussion of our acquisition pipeline, see “Our Business — Our Acquisition and Investment Pipeline.” We have not entered into binding commitments with respect to any of the potential acquisition opportunities described in this prospectus and there can be no assurance that we will complete any of them on favorable terms, or at all. See “— Risks Related to Our Business and Growth Strategy — Our growth will depend upon future acquisitions of cannabis real estate assets, and we may be unable to consummate acquisitions on advantageous terms or at all.”

The trading volume and market price of our common stock may be volatile and could decline substantially following this offering.

Even if an active trading market develops and is sustained for our common stock, the market price of our common stock may be volatile. In addition, the trading volume in our common stock may fluctuate s and cause significant price variations to occur. There may be light volume in the trading of our common stock on the or the OTCQX, which could result in relatively small trades having a significant impact on the market price of our common stock. If the market price of our common stock declines significantly, you may be unable to resell your shares at or above the price at which you purchase them in this offering. We cannot assure you that the market price of our common stock will not fluctuate or decline significantly in

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the future, including as a result of factors unrelated to our operating performance or prospects. In particular, the market price of our common stock could be subject to wide fluctuations in response to a number of factors, including, among others, the following:

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actual or anticipated differences in our operating results, liquidity, or financial condition;

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the passage of legislation or other regulatory developments that adversely affect us or our industry;

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changes in the perception of our industry;

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changes in our revenues or earnings estimates;

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the impact of the ongoing COVID-19 pandemic and actions taken to reduce its spread;

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publication of research reports about us, our properties or the overall real estate market;

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increases in market interest rates that lead purchasers of our common stock to demand a higher yield;

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additions and departures of key personnel;

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the performance and market valuations of other similar companies;

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adverse market reaction to any additional debt we incur in the future;

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actions by institutional stockholders;

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the realization of any of the other risk factors disclosed in this prospectus;

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speculation in the press or investment community;

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the extent of investor interest in our securities;

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the general reputation of REITs and the attractiveness of our equity securities in comparison to other equity securities, including securities issued by other real estate-based companies;

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our underlying asset value;

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changes in accounting principles;

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investor confidence in the capital markets generally;

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future equity issuances;

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failure to maintain our REIT qualification;

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low trading volume of our stock;

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terrorist acts; and

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general market and economic conditions, including factors unrelated to our operating performance.

In the past, securities class action litigation has often been instituted against companies following periods of volatility in the market price of their common stock. If the market price of our common stock is volatile and this type of litigation is brought against us, it could result in substantial costs and divert our management’s attention and resources, which could have a material adverse effect on us.

Since our common stock will be listed on the and quoted on the OTCQX and not listed on a U.S. national securities exchange, our stockholders may face significant restrictions on the resale of shares of our common stock due to state “Blue Sky” laws.

Each state has its own securities laws, commonly referred to as “Blue Sky” laws, which (i) limit sales of securities to the state’s residents unless the securities are registered in that state or qualify for an exemption from registration, and (ii) govern the practices of individuals and entities that engage in the offer and sale of securities to the state’s residents from within or outside the state. Before a security is sold in a state, there must be an effective registration in place to cover the transaction, or the transaction must be exempt from registration. The applicable broker-dealer must be registered in that state, unless the broker-dealer qualifies for an exemption from registration. We do not presently intend to register our common stock for secondary

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trading in any state and, although there are exemptions available in many states for the secondary trading of stocks quoted on the OTCQX, the exemptions are subject to state-specific conditions and we do not know whether our common stock will qualify for an exemption from registration under the laws of any state. Since our common stock will be quoted on the OTCQX, a determination regarding registration will be made by those broker-dealers, if any, that agree to serve as the market-makers for our common stock. There can be no assurances that a secondary market for shares of our common stock will develop and there may be significant state Blue Sky law restrictions on the ability of investors to sell, and on purchasers to buy, our common stock. Therefore, you should consider the resale market for our common stock to be limited, as you may be unable to resell your shares of our common stock without the significant expense of state registration.

If our shares become subject to the penny stock rules, this may make it more difficult to sell our shares.

The SEC has adopted rules that regulate broker-dealer practices in connection with transactions in penny stocks. Penny stocks are generally equity securities with a price of less than $5.00 (other than securities registered on certain national securities exchanges or authorized for quotation on certain automated quotation systems, provided that current price and volume information with respect to transactions in such securities is provided by the exchange or system). Neither the nor the OTCQX meets such requirements and if the price of our common stock is less than $5.00, our common stock will be deemed a penny stock. The penny stock rules require a broker-dealer, prior to a transaction in a penny stock not otherwise exempt from those rules, to deliver a standardized risk disclosure document containing specified information. In addition, the penny stock rules require that prior to effecting any transaction in a penny stock not otherwise exempt from those rules, a broker-dealer must make a special written determination that the penny stock is a suitable investment for the purchaser and receive: (i) the purchaser’s written acknowledgment of the receipt of a risk disclosure statement; (ii) a written agreement to transactions involving penny stocks; and (iii) a signed and dated copy of a written suitability statement. If our shares become subject to the penny stock rules, these disclosure requirements may have the effect of reducing the trading activity in the secondary market for our common stock and stockholders may have difficulty selling their shares of our common stock.

If you purchase common stock in this offering, you will experience immediate dilution.

As of , 2020, our aggregate historical combined net tangible book value of was approximately $ million, or $ per share of our common stock. As a result, the pro forma net tangible book value per share of our common stock after the completion of this will be less than the initial public offering price. The purchasers of shares of our common stock offered hereby will experience immediate and substantial dilution of $ per share in the pro forma net tangible book value per share of our common stock, based on the midpoint of the price range set forth on the front cover of this prospectus. See “Dilution.”

Common stock eligible for future sale could have an adverse effect on the value of our common stock.

In connection with the our prior private placements, we entered into a registration rights agreement requiring us to use commercially reasonable efforts to cause a resale shelf registration statement with respect to the shares sold in our prior private placements to become effective under the Securities Act as soon as practicable after filing, and in any event, subject to certain exceptions, no later than March 31, 2021. As a result, holders of shares of our common stock acquired in our prior private placements have registration rights that obligate us to register their shares under the Securities Act. Once we register the shares, they can be freely sold in the public market, subject to any applicable lock-up agreements. See “Shares Eligible for Future Sale.” Future sales by these holders of our common stock, or the perception that such sales could occur in the future, could have a material adverse effect on the market price of our common stock. In particular, after the completion of this offering, Tilden Park will own % of the outstanding shares of our common stock. If Tilden Park sells all or a substantial portion of its shares, it could have a material adverse impact on the market price of our common stock.

From time to time, we also intend to issue additional shares of common stock or OP units, which, at our option, may be redeemed for shares of our common stock, in connection with the acquisition of investments, as compensation or otherwise, and we may grant additional registration rights in connection with such issuances.

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We cannot predict the effect, if any, of future sales of our common stock, or the availability of shares for future sales, on the market price of the common stock. Sales of substantial amounts of our common stock, or the perception that such sales could occur, may adversely affect prevailing market price of our common stock.

We have not established a minimum dividend payment level and we cannot assure you of our ability to pay dividends in the future or the amount of any dividends.

We have not established a minimum distribution payment level, and our ability to make distributions to our stockholders may be adversely affected by the risk factors described in this prospectus. Until our portfolio of assets generates sufficient income and cash flow, we could be required to fund distributions from working capital, sell assets or borrow funds. To the extent that we are required to sell assets in adverse market conditions or borrow funds at unfavorable rates, our results of operations could be materially and adversely affected.

All distributions will be made at the discretion of our board of directors and will be based upon, among other factors, our historical and projected results of operations, financial condition, cash flows and liquidity, maintenance of our REIT qualification and other tax considerations, capital expenditure and other expense obligations, debt covenants, contractual prohibitions or other limitations and applicable law and such other matters as our board of directors may deem relevant from time to time. We may not be able to make distributions in the future, and our inability to make distributions, or to make distributions at expected levels, could result in a decrease in the market price of our common stock.

Future sales of our common stock, other securities convertible into our common stock or preferred stock could cause the value of our common stock to decline and could result in dilution of your shares.

Our board of directors is authorized, without your approval, to cause us to issue additional shares of our common stock or to raise capital through the creation and issuance of preferred stock, other debt securities convertible into common stock, options, warrants and other rights, on terms and for consideration as our board of directors in its sole discretion may determine. Sales of substantial amounts of our common stock or of preferred stock could cause the valuation of our common stock to decrease significantly. We cannot predict the effect, if any, of future sales of our common stock, or the availability of our common stock for future sales, on the value of our common stock. Sales of substantial amounts of our common stock by any large stockholder, or the perception that such sales could occur, may adversely affect the valuation of our common stock.

Future issuances of debt securities or preferred stock, which would rank senior to our common stock upon liquidation, or future issuances of equity securities (including OP units), which would dilute our existing stockholders and may be senior to our common stock for purposes of making distributions, may materially and adversely affect the market price of our common stock.

In the future, we may issue debt or equity securities or incur other borrowings. Upon our liquidation, holders of our debt securities and other loans and preferred stock will receive a distribution of our available assets before common stockholders. If we incur debt in the future, our future interest costs could increase and adversely affect our liquidity and results of operations. We are not required to offer any additional equity securities to existing common stockholders on a preemptive basis. Therefore, additional common stock issuances, directly or through convertible or exchangeable securities (including OP units), warrants or options, will dilute the holdings of our existing common stockholders and such issuances or the perception of such issuances may reduce the market price of our common stock. Our preferred stock, if issued, would likely have a preference on distribution payments, periodically or upon liquidation, which could eliminate or otherwise limit our ability to make distributions to common stockholders. Because our decision to issue debt or equity securities or incur other borrowings in the future will depend on market conditions and other factors beyond our control, we cannot predict or estimate the amount, timing, nature or success of our future capital raising efforts. Thus, common stockholders bear the risk that our future issuances of debt or equity securities or our incurrence of other borrowings will negatively affect the market price of our common stock.

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An increase in market interest rates may have an adverse effect on the market price of our common stock.

One of the factors that investors may consider in deciding whether to buy or sell our common stock is our distribution yield, which is our distribution rate as a percentage of our share price, relative to market interest rates. If market interest rates increase, prospective investors may desire a higher distribution yield on our common stock or may seek securities paying higher dividends or interest. The market price of our common stock likely will be based primarily on the earnings that we derive from rental income with respect to our properties and our related distributions to stockholders, and not from the underlying appraised value of the properties themselves. As a result, interest rate fluctuations and capital market conditions are likely to affect the market price of our common stock, and such effects could be significant. For instance, if interest rates rise without an increase in our distribution rate, the market price of our common stock could decrease because potential investors may require a higher distribution yield on our common stock as market rates on interest-bearing securities, such as bonds, rise.

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CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This prospectus contains forward-looking statements. This prospectus also contains forward-looking statements by third parties relating to market and industry data and forecasts; forecasts and other forward-looking information obtained from these sources are subject to the same qualifications and uncertainties as the other forward-looking statements contained in this prospectus. These forward-looking statements include information about possible or assumed future events, including, among other things, discussion and analysis of our future financial condition, results of operations, our strategic plans and objectives, cost management, potential property acquisitions, anticipated capital expenditures (and access to capital), our ability to make cash distributions to our stockholders in the future and other matters. Words such as “expects,” “anticipates,” “intends,” “plans,” “likely,” “will,” “believes,” “seeks,” “estimates,” and variations of such words and similar expressions are intended to identify such forward-looking statements. Such statements involve known and unknown risks, uncertainties and other factors which may cause our actual results, performance or achievements to be materially different from the results of operations or plans expressed or implied by such forward-looking statements.

The following factors, among others, could cause our future results to differ materially from those expressed in the forward-looking statements:

•

general economic conditions;

•

our limited operating history;

•

the impact of the COVID-19 pandemic and measures intended to prevent its spread or address its effects;

•

unfavorable changes in adult- and medical-use cannabis markets and economic conditions that could adversely affect occupancy levels and rental rates, including as a result of COVID-19;

•

the failure of acquisitions to achieve anticipated results;

•

availability of suitable investment opportunities in the adult- and medical-use cannabis industry;

•

our ability to access sufficient capital from third parties in order to execute our business strategy;

•

concentration of our portfolio of assets and limited number of tenants;

•

our failure to succeed in new markets;

•

competitive factors that may limit our ability to lease industrial cultivation/processing and retail/dispensary properties or increase or maintain rents;

•

insufficient cash flow that could affect our debt financing and create refinancing risk;

•

failure to generate sufficient revenue, which could impair our distributions to stockholders;

•

actions and initiatives of the U.S. or state governments and changes to government policies and the execution and impact of these actions, initiatives and policies;

•

shifts in public opinion regarding adult- and medical-use cannabis;

•

our possible failure to maintain our qualification as a REIT and the risk of changes in laws governing REITs;

•

our dependence upon key personnel whose continued service is not guaranteed;

•

risks from extraordinary losses for which we may not have insurance or adequate reserves;

•

risks from cybersecurity breaches of our information technology systems and the information technology systems of our third party vendors and other third parties;

•

uninsured losses due to insurance deductibles, self-insurance retention, uninsured claims or casualties, or losses in excess of applicable coverage;

•

changing interest rates, which could increase interest costs and affect the market price of our securities;

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•

potential liability for environmental contamination, which could result in substantial costs to us;

•

the imposition of federal taxes if we fail to qualify as a REIT under the Code in any taxable year;

•

our internal control over financial reporting may not be considered effective which could result in a loss of investor confidence in our financial reports, and in turn have an adverse effect on our stock price; and

•

changes in real estate laws, tax laws, state cannabis laws or other laws affecting our business.

A discussion of these and other factors affecting our business and prospects is set forth in the “Risk Factors.”

Although we believe that the assumptions underlying the forward-looking statements contained herein are reasonable, any of the assumptions could be inaccurate, and therefore such statements included in this prospectus may not prove to be accurate. In light of the significant uncertainties inherent in the forward-looking statements included herein, the inclusion of such information should not be regarded as a representation by us or any other person that the results or conditions described in such statements or our objectives and plans will be achieved.

Forward-looking statements and such risks, uncertainties and other factors speak only as of the date of this prospectus, and we expressly disclaim any obligation or undertaking to update or revise any forward-looking statement contained herein, to reflect any change in our expectations with regard thereto, or any other change in events, conditions or circumstances on which any such statement is based, except to the extent otherwise required by law.

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USE OF PROCEEDS

We estimate that the net proceeds that we receive from this offering, after deducting underwriting discounts and commissions and estimated offering expenses payable by us, will be approximately $ million (or $ million if the underwriters exercise their overallotment option in full).

We will contribute the net proceeds from this offering to our operating partnership in exchange for OP units. Our operating partnership intends to use the net proceeds as follows:

•

approximately $ million to fund the acquisition properties from the sellers as described under “Our Business — Our Acquisition and Investment Pipeline;”

•

approximately $ million to fund commitments related to our existing properties;

•

approximately $0.1 million to redeem our 12.5% Series A Redeemable Cumulative Preferred Stock, or our Series A Preferred Stock; and

•

the remaining net proceeds, if any, in cannabis properties in accordance with our investment strategy and for working capital and general corporate purposes.

Prior to the full investment of the net proceeds as described above, we intend to invest the net proceeds in interest-bearing, short-term investment-grade securities, money market accounts or other investments that are consistent with our intention to elect and qualify to be taxed as a REIT. Such investments may include, for example, government and government agency certificates, government bonds, certificates of deposit, interest-bearing bank deposits, and money market accounts. These initial investments are expected to provide a lower net return than we will seek to achieve from investments in cannabis properties.

We will not receive any of the proceeds from the sale of shares of our common stock by the selling stockholders. However, we have agreed to pay all expenses relating to the registration of the shares sold by the selling stockholders, other than any brokers’ or underwriters’ discounts and commissions.

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DISTRIBUTION POLICY

We intend to make regular quarterly distributions to holders of shares of our common stock.

Our ability to make distributions in the future at our initial distribution rate will depend upon our actual results of operations and earnings, economic conditions and other factors that could differ materially from our current expectations. Our actual results of operations will be affected by a number of factors, including the revenue we receive from our properties, our operating expenses, interest expense, the ability of our tenants to meet their obligations and unanticipated expenditures. For more information regarding risk factors that could materially adversely affect our actual results of operations, see “Risk Factors.” Distributions declared by us will be authorized by our board of directors in its sole discretion out of funds legally available therefor and will be dependent upon a number of factors, including restrictions under applicable law, the capital requirements of our company and the distribution requirements necessary to qualify and maintain our qualification as a REIT. We may be required to fund distributions from working capital or with a portion of the net proceeds from this offering or borrow to provide funds for such distributions, or we may choose to make a portion of the required distributions in the form of a taxable stock dividend to preserve our cash balance or reduce our distribution. However, we currently have no intention to use the net proceeds from this offering to make distributions nor do we currently intend to make distributions using shares of our common stock.

In order to qualify as a REIT, we must distribute to our stockholders, on an annual basis, at least 90% of our REIT taxable income, determined without regard to the deduction for dividends paid and excluding net capital gains. In addition, we will be subject to U.S. federal income tax at regular corporate rates to the extent that we distribute less than 100% of our net taxable income (including net capital gains) and will be subject to a 4% nondeductible excise tax on the amount by which our distributions in any calendar year are less than a minimum amount specified under U.S. federal income tax laws. We intend to distribute our net income to our stockholders in a manner intended to satisfy the REIT 90% distribution requirement and to avoid U.S. federal income tax liability on our income and the 4% nondeductible excise tax. We anticipate that our estimated cash available for distribution will exceed the annual distribution requirements applicable to REITs. However, under some circumstances, we may be required to use cash reserves, incur debt or liquidate assets at rates or times that we regard as unfavorable or make a taxable distribution of our shares in order to satisfy the REIT 90% distribution requirement and to avoid U.S. federal income tax and the 4% nondeductible excise tax in that year. For more information, see “Material U.S. Federal Income Tax Considerations.”

Furthermore, we anticipate that, at least initially, our distributions will exceed our then current and then accumulated earnings and profits for the relevant taxable year, as determined for U.S. federal income tax purposes, due to non-cash expenses, primarily depreciation and amortization charges that we expect to incur. Therefore, all or a portion of these distributions may represent a return of capital for U.S. federal income tax purposes. The extent to which our distributions exceed our current and accumulated earnings and profits may vary substantially from year to year. To the extent that a distribution is treated as a return of capital for U.S. federal income tax purposes, it will reduce a holder’s adjusted tax basis in the holder’s shares, and to the extent that it exceeds the holder’s adjusted tax basis will be treated as gain resulting from a sale or exchange of such shares. As a result, the gain (or loss) recognized on the sale of that common stock or upon our liquidation will be decreased (or increased) accordingly. For a more complete discussion of the tax treatment of distributions to holders of our common stock, see “Material U.S. Federal Income Tax Considerations.”

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CAPITALIZATION

The following table sets forth:

•

our actual capitalization as of June 30, 2020; and

•

our pro forma capitalization as of June 30, 2020, giving effect to this offering and the application of the net proceeds therefrom as described in “Use of Proceeds”.

You should read this table in conjunction with “Use of Proceeds” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our consolidated balance sheet and related notes included elsewhere in this prospectus.

	As of June 30, 2020
	Actual(1)			Pro Forma(1)(2)
	(unaudited, amounts in thousands, except share and per share amounts)
Stockholders’ equity:
Common stock, par value $0.0001 per share, 450,000,000 shares authorized, 5,192,755 shares issued and outstanding, actual; and 500,000,000 authorized, shares issued and outstanding, as adjusted		$	1
Preferred stock, par value $0.0001 per share, 50,000,000 shares authorized, 125 shares issued and outstanding, actual; and 50,000,000 shares authorized and no shares issued and outstanding, as adjusted			—			—
Additional paid-in capital			42,206
Accumulated deficit			(2,277)
Dividends declared			(8)
Total stockholders’ equity		$	39,922		$

(1)

Includes (i) an aggregate of 444,145 restricted shares of our common stock outstanding as of June 30, 2020, which are held by our executive officers, non-employee directors and certain other employees. Excludes (i) an aggregate of 170,234 performance-vesting restricted stock units outstanding as of June 30, 2020, which are held by our executive officers and certain other employees, and (ii) 1,875,122 shares of our common stock reserved for future issuance under our Equity Incentive Plan.

(2)

Includes restricted shares of our common stock to be granted to our executive officers and certain other employees upon completion of this offering. Excludes an aggregate of performance-vesting restricted stock units to be granted to our executive officers and certain other employees upon the completion of this offering.

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DILUTION

Dilution is the amount by which the offering price paid by the purchasers of the shares of our common stock sold in this offering exceeds the pro forma net tangible book value per share of our common stock after completion of this offering and the formation transactions. Net tangible book value per share is determined at any date by subtracting our total liabilities from the total book value of our tangible assets and dividing the difference by the number of shares of common stock deemed to be outstanding at that date.

At June 30, 2020, our net tangible book value was $ million, or $ per share of our common stock. After giving effect to the sale of the shares of our common stock in this offering, including the use of proceeds as described under “Use of Proceeds,” and the deduction of underwriting discounts and estimated offering expenses, our pro forma net tangible book value as of June 30, 2020 would have been $ million, or $ per share. This represents an immediate increase in net tangible book value of $ per share to existing investors and an immediate dilution in pro forma net tangible book value of $ per share to new investors purchasing shares of our common stock in this offering. The following table illustrates this per share dilution to new investors.

Assumed initial public offering price per share

Net tangible book value per share at June 30, 2020

Net increase in pro forma net tangible book value per share attributable to this offering

Pro forma net tangible book value per share after this offering

Dilution per share to new investors

If the underwriters exercise their overallotment option in full, the pro forma net tangible book value after this offering would be $ per share, the increase in the net tangible book value to existing investors would be $ per share and the dilution in pro forma net tangible book value per share to new investors purchasing shares of our common stock in this offering would be $ per share.

The following table summarizes, as of June 30, 2020:

•

the total number of shares of our common stock issued to existing investors and the number of shares of our common stock purchased from us by new investors in this offering;

•

the total consideration paid to us by existing investors and by new investors purchasing shares in this offering, assuming an initial public offering price of $ per share (the midpoint of the price range set forth on the front cover of this prospectus), before deducting the estimated underwriting discount and estimated offering expenses payable by us in connection with this offering; and

•

the average price per share paid by existing investors and by new investors purchasing shares in this offering.

Shares Purchased

Total Consideration

Average Price
per Share

Number

Percent

Amount

Percent

Restricted shares of common stock previously granted to
officers and directors

Existing stockholders

New investors

Total

100.0%

N/A

The foregoing table does not reflect the sales by existing stockholders in connection with sales made by them in this offering. Sales by the selling stockholders in this offering will reduce the number of shares held by existing stockholders to shares, or % of the total number of shares of our common stock outstanding after this offering, and will increase the number of shares held by new investors to shares, or % of the total number of shares of our common stock outstanding after this offering.

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SELECTED HISTORICAL AND PRO FORMA FINANCIAL INFORMATION

The following tables set forth selected financial and operating data based on (i) our historical consolidated balance sheets as of June 30, 2020 and December 31, 2019, (ii) our unaudited pro forma consolidated balance sheet as of June 30, 2020, (iii) our historical consolidated statements of operations for the six months ended June 30, 2020 and the period from April 23, 2019 (inception) to December 31, 2019 and (iv) our unaudited pro forma consolidated statements of operations for the six months ended June 30, 2020 and the year ended December 31, 2019. We have not presented any other historical financial data because, prior to the completion of our initial private placement on August 28, 2019, we did not have any corporate activity since our formation other than the issuance of 5,000,000 shares of our common stock in connection with the initial capitalization of the company on August 23, 2019.

The unaudited pro forma financial and operating data have been derived from our historical consolidated financial statements. The unaudited pro forma consolidated balance sheet as of June 30, 2020 is presented to reflect adjustments to our historical balance sheet as if this offering and certain transactions described herein were completed on June 30, 2020. The unaudited pro forma consolidated statements of operations for the six months ended June 30, 2020 and the year ended December 31, 2019 are presented as if this offering, our prior private placements and certain real estate property acquisitions and other transactions described herein were completed on January 1, 2019.

You should read the following selected financial and operating data in conjunction with: (i) our historical consolidated balance sheets as of June 30, 2020 and December 31, 2019 and our historical consolidated statements of operations for the six months ended June 30, 2020 and the period from April 23, 2019 (inception) to December 31, 2019; (ii) our unaudited pro forma consolidated financial statements; and (iii) the “Risk Factors,” “Cautionary Note Regarding Forward-Looking Statements” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” sections in this prospectus. We have based the unaudited pro forma adjustments on available information and assumptions that we believe are reasonable. The following unaudited pro forma financial and operating data are presented for informational purposes only and are not necessarily indicative of what our actual financial position would have been as of June 30, 2020 assuming this offering and certain other transactions described herein had all been completed on June 30, 2020, what our actual results of operations would have been for the six months ended June 30, 2020 and the year ended December 31, 2019 assuming this offering, our prior private placements and certain real estate property acquisitions and certain other transactions described herein were completed on the first day of the annual period presented, and are not, and should not be viewed as, indicative of our future results of operations or financial condition.

Consolidated Balance Sheet Data
(In thousands)

	As of June 30, 2020					Historical as of December 31, 2019
	Pro Forma		Historical			Historical as of December 31, 2019
	(unaudited)		(unaudited)
Assets
Total real estate, net		$			33,313			34,333
Mortgage note receivable					5,399			3,876
Total assets				$	41,072		$	40,491
Liabilities and Stockholders’ Equity
Total liabilities					1,150			3,105
Total Stockholders’ Equity					39,922			37,386
Total Liabilities and Stockholders’ Equity		$		$	41,072		$	40,491

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Consolidated Statement of Operations Data
(In thousands, except per share data)

	Six months ended June 30, 2020					Pro Forma for year ended December 31, 2019		For the period from April 23, 2019 (inception) through December 31, 2019
	Pro Forma		Historical			Pro Forma for year ended December 31, 2019
	(unaudited)		(unaudited)			(unaudited)
Revenues
Rental income		$		$	1,732		$		$	1,115
Interest on mortgage note receivable					345					90
Total revenues					2,077					1,205
Expenses
General and administrative					2,086					1,455
Depreciation and amortization					1,024					663
Transaction costs					272					59
Total operating expenses					3,382					2,177
Net loss		$		$	(1,305)		$		$	(972)
Less: preferred stock dividends					(7)					(1)
Net loss attributable to common stockholders		$		$	(1,312)		$		$	(973)
Net loss per common share
Basic and diluted		$		$	(0.28)		$		$	(0.21)
Weighted average common shares outstanding
Basic and diluted					4,718					4,592

Other Data
(in thousands, unaudited)

	Six months ended June 30, 2020					Pro Forma for year ended December 31, 2019		For the period from April 23, 2019 (inception) through December 31, 2019
	Pro Forma		Historical			Pro Forma for year ended December 31, 2019
	(unaudited)		(unaudited)			(unaudited)
FFO attributable to common stockholders(1)		$		$	(291)		$		$	(312)
AFFO attributable to common stockholders(1)					171					45

(1)

For definitions and reconciliations of net loss attributable to common stockholders to FFO and AFFO, as well as a statement disclosing the reasons why our management believes that FFO and AFFO provide useful information to investors and, to the extent material, any additional purposes for which our management uses FFO and AFFO, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Non-GAAP Financial Measures.”

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

We were incorporated on June 24, 2019 to act as a holding company for our operating partnership, which was formed on April 23, 2019, and we did not commence revenue generating operations until August 28, 2019. Therefore, we do not have any historical operations to discuss other than for the period from April 23, 2019 (inception) to December 31, 2019 and the three and six months ended June 30, 2020. You should read the following discussion in conjunction with the sections of this prospectus entitled “Risk Factors,” “Cautionary Note Regarding Forward-Looking Statements” and “Our Business” and our historical and pro forma consolidated financial statements and the related notes thereto included elsewhere in this prospectus. This discussion contains forward-looking statements reflecting current expectations that involve risks and uncertainties. Actual results and the timing of events may differ materially from those contained in these forward-looking statements due to a number of factors, including those discussed in the section entitled “Risk Factors” and elsewhere in this prospectus.

Overview and Background

We are an internally managed real estate investment trust focused on the acquisition, ownership and leasing of specialized industrial cultivation/processing and retail/dispensary cannabis properties. As of the date of this prospectus, our portfolio is comprised of six cannabis properties and one mortgage note receivable, with an aggregate investment value of $40.1 million. Our six properties are leased to subsidiaries of Curaleaf, a vertically integrated multi-state operator, pursuant to separate triple-net leases that provide for aggregate annualized base rent of $3.6 million as of October 1, 2020. Our properties include two specialized industrial cultivation/processing properties and four retail/dispensary properties located in Florida, Massachusetts and New Jersey.

We conduct our business through an umbrella partnership REIT, or UPREIT, structure, consisting of our operating partnership and subsidiaries of our operating partnership. Our wholly owned limited liability company, Freehold OP GP, LLC, is the sole general partner of our operating partnership, and we presently own all the OP units. In the future, we may issue OP units to third parties in connection with property acquisitions, as compensation or otherwise. As the sole owner of the general partner of our operating partnership, we have the exclusive power to manage and conduct our operating partnership’s business.

We elected to be taxed as a REIT for U.S. federal income tax purposes commencing with our short taxable year ended December 31, 2019. To qualify as a REIT, we must meet certain organizational and operational requirements, including a requirement to distribute at least 90% of our annual REIT taxable income to our stockholders (which is computed without regard to the dividends paid deduction or net capital gain and which does not necessarily equal net income as calculated in accordance with generally accepted accounting principles, or GAAP).

Critical Accounting Policies

We believe that our critical accounting policies are those that require significant judgments and estimates by management. The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, 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 period. These estimates will be made and evaluated on an on-going basis using information that is available as well as various other assumptions believed to be reasonable under the circumstances. Actual results could differ from those estimates.

Revenue Recognition — Leases of Real Estate

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on a straight-line basis or cash basis. If the assessment of collectability changes after the commencement date, any difference between rental income that would have been recognized on a straight-line basis and cash basis must be recognized as an adjustment to rental income in the current period. As of June 30, 2020, we do not consider collectability to be probable for our long-term leases as a result of the uncertain regulatory environment in the United States relating to the cannabis industry, not based on creditworthiness of our tenants.

If the lease provides for tenant improvements, the Company determines whether the tenant improvements, for accounting purposes, are owned by the tenant or by the Company. When the Company is the owner of the tenant improvements, the tenant is not considered to have taken physical possession or have control of the physical leased asset until the tenant improvements are substantially completed. When the tenant is the owner of the tenant improvements, any tenant improvement allowance funded is treated as a lease incentive and amortized as a reduction of revenue over the lease term. The determination of ownership of the tenant improvements is subject to significant judgment. If the Company’s assessment of the owner of the tenant improvements for accounting purposes were different, the timing and amount of revenue recognized would be impacted.

The Company’s leases are generally “triple-net” leases with terms requiring operating expenses associated with the Company’s facilities, such as taxes, insurance and utilities, to be paid directly by the Company’s tenants. Failure by a tenant to pay such expenses timely would result in a violation of the lease agreement, which could lead to an event of default if not cured timely. Amounts paid directly by a tenant to third parties are not reflected in our consolidated financial statements.

Revenue Recognition — Mortgage Notes Receivable

Mortgage notes receivable are classified as held-for-investment based on management’s intent and ability to hold the mortgage notes receivable for the foreseeable future or to maturity. The Company recognizes interest income on mortgage notes receivable, including the amortization of any discounts and premiums, using the interest method applied on a loan-by-loan basis when collectability of the future payments is reasonably assured. Premiums, discounts and related costs are recognized as yield adjustments over the term of the related loans.

Mortgage notes receivable are placed on non-accrual status at such time as management determines that collectability of contractual amounts is not reasonably assured. While on non-accrual status, mortgage notes receivable are either accounted for on a cash basis, in which income is recognized only upon receipt of cash, or on a cost-recovery basis, where cash receipts reduce the carrying value of the loan, based on management’s judgment of collectability. As of June 30, 2020, no mortgage notes receivable were on non-accrual status.

Allowances are established for loans based upon an estimate of probable losses on an individual basis if they are determined to be impaired. Loans are impaired when it is deemed probable that the Company will be unable to collect all amounts due on a timely basis in accordance with the contractual terms of the loan. The allowance is based upon management’s assessment of the borrower’s overall financial condition, resources and payment record; the prospects for support from any financially responsible guarantors; and, if appropriate, the net realizable value of any collateral. These estimates consider all available evidence including, as appropriate, the present value of the expected future cash flows discounted at the loan’s effective interest rate, the fair value of collateral, general economic conditions and trends, historical and industry loss experience, and other relevant factors. At June 30, 2020, the Company had no allowance for loan losses.

Commitment, origination and other fees from lending activities are recognized as interest income over the life of the related loan.

Allocation of Purchase Price of Acquired Real Estate

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obtained in connection with the acquisition of the respective property and other market data. The Company also considers information obtained about each property as a result of the Company’s pre-acquisition due diligence, marketing and leasing activities in estimating the fair value of the assets acquired.

The Company records above-market and below-market in-place lease values, if any, which are based on the present value of the difference between (i) the contractual amounts to be paid pursuant to the in-place leases, and (ii) management’s estimate of fair market lease rates for the corresponding in-place leases, measured over a period equal to the remaining non-cancelable term of the lease, or, for below-market in-place leases, including any bargain renewal option terms. The Company amortizes any resulting capitalized above-market lease values as a reduction of rental income over the lease term. The Company amortizes any resulting capitalized below-market lease values as an increase to rental income over the lease term. As of June 30, 2020, the Company did not have any above-market or below-market in-place leases.

Depreciation and amortization of real estate assets and liabilities is provided for on a straight-line basis over the estimated useful lives of the assets:

	Building			28 to 42 years
	Improvements			6 to 14 years
	Equipment			5 to 8 years

Asset Impairment — Real Estate Properties

Real estate asset impairment losses are recorded when events or changes in circumstances indicate the asset is impaired and the estimated undiscounted cash flows to be generated by the asset are less than its carrying amount. Management assesses the impairment of properties individually and impairment losses are calculated as the excess of the carrying amount over the fair value of assets to be held and used, and carrying amount over the fair value less cost to sell in instances where management has determined that the Company will dispose of the property and the criteria are met for the property to be classified as held-for-sale. In determining the fair value, the Company uses current appraisals or other third-party opinions of value and other estimates of fair value such as estimated discounted future cash flows.

Factors That May Influence Future Results of Operations

The Company’s revenues are derived from rents earned pursuant to the lease agreements entered into with our tenants and interest earned under a funding agreement entered into with a borrower. Our tenants and borrower operate in the cannabis industry. The capacity of our tenants and borrower to pay our rents and interest payments is dependent upon their ability to conduct their operations at profitable levels. We believe that the business environment of the industry segments in which our tenants and borrower operate is generally positive for efficient operators. However, our tenants’ and borrower’s operations are subject to economic, regulatory and market conditions that may affect their profitability, including as a result of the COVID-19 pandemic, which could impact our results of operations and cash flows. Accordingly, the Company actively monitors certain key factors, including changes in those factors that we believe may provide early indications of conditions that may affect the level of risk in our lease and loan portfolio.

For key factors that the Company considers in underwriting prospective tenants, borrowers, guarantors and properties and in monitoring the performance of existing tenants, borrowers, guarantors and properties, see “Our Business — Investment and Acquisition Process — Underwriting.”

The Company also actively monitors the financial and operational performance of its tenants and lease guarantors and of the specific facilities in which the Company invests through a variety of methods, such as reviewing periodic financial reporting and operating data, regular meetings with the facility management teams and joint strategic planning with the facility operators. Through these means we are able to monitor the credit quality of our tenants and guarantors. Our approach to current and any future investments in real estate-related debt investments will be similar to our process when seeking to purchase the underlying property. We intend to service any future mortgage and mezzanine loans in-house and will monitor both the credit quality of the borrower as well as the value of our collateral on an ongoing basis. If we originate construction loans, we may retain third parties to monitor the progress of developments and to service the loans.

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Certain business factors, in addition to those described above that directly affect our tenants and borrowers, will likely materially influence our future results of operations, including the following:

•

the financial and operational performance of our tenants, particularly those that we expect to account for a significant portion of the income generated by our portfolio, such as the Curaleaf subsidiaries;

•

trends in the cost and availability of capital, including market interest rates, that our prospective tenants may use for financing their real estate assets through lease structures;

•

competition from other property owners and financing sources;

•

the regulatory environment of the cannabis industry both nationally and in the states in which we operate;

•

the economic conditions in our key markets; and

•

the geographic concentration of our portfolio.

Recent Developments

On October 11, 2019, we acquired a property consisting of 21 acres along with a 120,000 square foot building in Winslow, NJ from a subsidiary of Curaleaf for $5.5 million. At closing, we leased the property to a subsidiary of Curaleaf for use as a cultivation/processing facility, pursuant to a 10-year triple-net lease that provided for annual rent of $0.6 million. Pursuant to the purchase and sale agreement, the tenant had an option to purchase the property for $5.5 million, which was scheduled to expire on December 31, 2020. On July 13, 2020, we sold the property to Curaleaf for $5.5 million pursuant to Curaleaf’s exercise of its purchase option. We used the net proceeds from the disposition to fund a portion of our commitment related to the Webster, MA facility. See “Our Business — Our Portfolio — Description of Leases.”

Results of Operations

Three months ended June 30, 2020

	For the three months ended June 30, 2020
	(dollars in thousands)
Revenues
Rental income		$	866
Interest on mortgage note receivable			182
Total revenues			1,048
Expenses
General and administrative			1,006
Depreciation and amortization			512
Transaction costs			105
Total operating expenses			1,623
Net loss			(575)
Less: preferred stock dividends			(7)
Net loss attributable to common stockholders		$	(582)

The Company recognized a net loss attributable to common stockholders of $582,000 for the three months ended June 30, 2020. Financial highlights for the three months ended June 30, 2020 are provided below:

Revenues totaled $1,048,000 for the period. These revenues were generated from the Company’s $35.0 million in real estate investments and $5.4 million in a mortgage note receivable investment as of June 30, 2020.

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Operating expenses for the period totaled $1,623,000 and were comprised of the following:

•

General and administrative expenses of $1,006,000, which included:

•

$836,000 of salary and benefits-related costs, including $302,000 of noncash share-based compensation and $169,000 of accrued bonus compensation; and

•

$170,000 of corporate operating expenses.

•

Depreciation and amortization expense of $512,000 primarily related to real estate assets.

•

Transaction costs of $105,000, consisting of costs related to real estate acquisitions the Company ultimately decided not to pursue.

Six months ended June 30, 2020

	For the six months ended June 30, 2020
	(dollars in thousands)
Revenues
Rental income		$	1,732
Interest on mortgage note receivable			345
Total revenues			2,077
Expenses
General and administrative			2,086
Depreciation and amortization			1,024
Transaction costs			272
Total operating expenses			3,382
Net loss			(1,305)
Less: preferred stock dividends			(7)
Net loss attributable to common stockholders		$	(1,312)

The Company recognized a net loss attributable to common stockholders of $1,312,000 for the six months ended June 30, 2020. Financial highlights for the six months ended June 30, 2020 are provided below:

Revenues totaled $2,077,000 for the period. These revenues were generated from the Company’s $35.0 million in real estate investments and $5.4 million in a mortgage note receivable investment as of June 30, 2020.

Operating expenses for the period totaled $3,382,000 and were comprised of the following:

•

General and administrative expenses of $2,086,000, which included:

•

$1,519,000 of salary and benefits-related costs, including $460,000 of noncash share-based compensation and $337,000 of accrued bonus compensation; and

•

$567,000 of corporate operating expenses.

•

Depreciation and amortization expense of $1,024,000 primarily related to real estate assets.

•

Transaction costs of $272,000, consisting of costs related to real estate acquisitions the Company ultimately decided not to pursue.

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Period from April 23, 2019 (inception) through December 31, 2019

	For the period from April 23, 2019 (inception) through December 31, 2019 (in thousands)
Revenues
Rental income		$	1,115
Interest on mortgage note receivable			90
Total revenues			1,205
Expenses
General and administrative			1,455
Depreciation and amortization			663
Transaction costs			59
Total operating expenses			2,177
Net loss			(972)
Less: preferred stock dividends			(1)
Net loss attributable to common stockholders		$	(973)

The Company recognized a net loss attributable to common stockholders of $973,000 for the period from April 23, 2019 (inception) through December 31, 2019. The Company’s operations for this period were impacted by several factors including the timing of closing and the size of the private placements of its common stock; the timing of closing certain real estate investment transactions; and the amount of organizational costs incurred prior to commencement of operations on August 28, 2019, which costs are not expected to recur.

Financial highlights for the period from April 23, 2019 (inception) through December 31, 2019 are provided below:

Revenues totaled $1,205,000 for the period. These revenues were generated from the Company’s $35.0 million in real estate investments and $3.9 million in a mortgage note receivable investment as of December 31, 2019.

Operating expenses for the period totaled $2,177,000 and were comprised of the following:

•

General and administrative expenses of $1,455,000, which included:

•

$307,000 of organizational costs, primarily legal expense, related to the formation activities of the Company that occurred from inception through August 28, 2019, the date the Company received the proceeds from the sale of its common stock in its initial private placement.

•

$478,000 of salary and benefits-related costs.

•

$670,000 of corporate operating expenses.

•

Depreciation and amortization expense of $663,000 primarily related to the real estate acquired during the period.

•

Transaction costs of $59,000, including $20,000 of costs related to real estate acquisitions the Company ultimately decided not to pursue.

Liquidity and Capital Resources

Overview

Liquidity is a measure of our ability to meet potential cash requirements, including ongoing commitments to fund and maintain our assets and operations, make distributions to our stockholders and

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other general business needs. The Company’s primary sources of cash to date include funds received through private placements of common stock and rent payments from tenants. Our primary uses of cash to date include funding acquisitions and investments consistent with our investment strategy, as well as general and administrative expenses.

At June 30, 2020, we had $1.6 million of cash on hand. The Company received net proceeds of $2.8 million from the private placements of its common stock during the six months ended June 30, 2020. These net proceeds were used to fund the mortgage note receivable and pay accounts payable and accrued liabilities.

Our long-term liquidity needs consist primarily of funds necessary to pay for the costs of acquiring additional properties, funding loan commitments, making new loans and other investments, including potential future developments and redevelopments, and principal and interest payments on any debt that we may incur. In addition, although the terms of our net leases generally obligate our tenants to pay capital expenditures necessary to maintain and improve our net-leased properties, we from time to time may fund the capital expenditures for our net-leased properties through loans to the tenants or advances, some of which may increase the amount of rent payable with respect to the properties. We expect to meet our long-term liquidity requirements through various sources of capital, including future equity issuances (including OP units) or debt offerings, net cash provided by operations, and secured and unsecured borrowings. However, disruptions in equity and credit markets as a result of the COVID-19 pandemic, related government action, and uncertainty regarding their duration and impact could adversely affect our ability to access equity or debt financing on favorable terms, or at all. Furthermore, costs associated with our pending litigation with Revolution and any potential damages, for which we cannot provide an estimate at this time, could have a negative impact on our liquidity position. See "Our Business — Legal Proceedings" for additional information.

We may utilize various types of debt to finance a portion of our acquisition and investment activities, including long-term, fixed-rate mortgage loans, variable-rate term loans, secured revolving lines of credit and construction financing facilities. However, to date, we have not been able to obtain debt on terms that are acceptable to us, and we can provide no assurances that we will be able to obtain debt on attractive terms, or at all, especially in light of the fact that we operate in the cannabis industry. See “Risk Factors — Risks Related to Regulation and Our Industry.” Any debt we incur will likely be subject to continuing covenants, and we will likely be required to make continuing representations and warranties in connection with that debt. Moreover, some or all of our debt may be secured by some or all of our assets. In the event of a default, the lenders could accelerate the timing of payments under the debt obligations and we may be required to repay such debt with capital from other sources, which may not be available on attractive terms, or at all, which would have a material adverse effect on our liquidity, financial condition, results of operations and ability to make distributions to our stockholders. As of June 30, 2020 and the date of this prospectus, we had no outstanding debt.

Sources and Uses of Cash

Six months ended June 30, 2020

The sources and uses of cash reflected in our consolidated statement of cash flow is summarized below (dollars in thousands):

	For the six months ended June 30, 2020
Cash at beginning of period		$	1,477
Net cash used in operating activities			(1,179)
Net cash used in investing activities			(1,524)
Net cash provided by financing activities			2,804
Cash at end of period		$	1,578

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Operating Activities

Net cash used in operating activities was impacted by a net decrease in cash of $1,357,000 related to operating assets and liabilities, noncash depreciation expense of $1,024,000, noncash share-based compensation of $459,000, and a net loss of $1,305,000. See “Results of Operations” above for further discussion.

Investing Activities

Net cash used in investing activities includes the funding of one mortgage note receivable totaling $1,523,000 and acquisition of corporate property totaling $1,000.

Financing Activities

Net cash provided by financing activities includes $2,811,000 in net proceeds from the issuance of common stock in the private placements completed in January 2020 and payment of preferred stock dividends of $7,000.

Period from April 23, 2019 (inception) through December 31, 2019

The sources and uses of cash reflected in our consolidated statement of cash flow is summarized below (dollars in thousands):

	For the period from April 23, 2019 (inception) through December 31, 2019
Cash at beginning of period		$	—
Net cash provided by operating activities			475
Net cash used in investing activities			(36,058)
Net cash provided by financing activities			37,060
Cash at end of period		$	1,477

Operating Activities

Net cash provided by operating activities was impacted by a net increase in cash of $764,000 related to operating assets and liabilities, noncash depreciation expense of $663,000, noncash share-based compensation of $20,000, and a net loss of $972,000, which includes $335,000 of organizational costs related to the formation of the Company that are not expected to recur. See “Results of Operations” above for further discussion.

Investing Activities

Net cash used in investing activities includes the acquisition of seven properties totaling $32,158,000 and funding of one mortgage note receivable totaling $3,876,000.

Financing Activities

Net cash provided by financing activities includes the $36,950,000 in net proceeds from the issuance of common stock in the private placements that were completed in August and September 2019. As of December 31, 2019, $1,558,000 of offering costs were accrued and will reduce net proceeds when paid. We received net proceeds of $111,000 from the issuance of Series A Preferred Stock in December 2019. We declared and paid $1,000 in dividends on the Series A Preferred Stock issued in December 2019.

Off-Balance Sheet Arrangements

As of the date of this prospectus, we had no off-balance sheet transactions.

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Inflation

We expect to be exposed to inflation risk as income from long-term leases will be a main source of our cash flows from operations. For our leased properties, we expect there to be rent escalation provisions in the majority of our leases that will protect us from the impact of inflation. However, due to the long-term nature of the anticipated leases, among other factors, the leases may not re-set frequently enough to cover inflation.

Non-GAAP Financial Measures

Funds from Operations

FFO is a non-GAAP measure used by many investors and analysts that follow the real estate industry. FFO, as defined by the National Association of Real Estate Investment Trusts, or Nareit, represents net income (computed in accordance with GAAP), excluding gains (losses) on sales of real estate and impairments of real estate assets, plus real estate-related depreciation and amortization and after adjustments for unconsolidated partnerships and joint ventures. We compute FFO in accordance with Nareit’s definition, which may differ from the methodology for calculating FFO, or similarly titled measures, used by other companies.

Historical cost accounting for real estate assets implicitly assumes that the value of real estate assets diminishes predictably over time. Since real estate values instead have historically risen or fallen with market conditions, most real estate industry investors consider FFO to be helpful in evaluating a real estate company’s operations. We believe that the presentation of FFO provides useful information to investors regarding our operating performance by excluding the effect of real-estate related depreciation and amortization, gains or losses from sales for real estate, including impairments and the portion of items related to unconsolidated entities, all of which are based on historical cost accounting, and that FFO can facilitate comparisons of operating performance between periods and between REITs, even though FFO does not represent an amount that accrues directly to common stockholders.

Our calculation of FFO may not be comparable to measures calculated by other companies that do not use the Nareit definition of FFO or do not calculate FFO per diluted share in accordance with Nareit guidance. FFO should not be considered as an alternative to net loss (computed in accordance with GAAP) as an indicator of our financial performance or to cash flow from operating activities (computed in accordance with GAAP) as an indicator of our liquidity.

Adjusted Funds from Operations

AFFO is a non-GAAP measure used by many investors and analysts to measure a real estate company’s operating performance by removing the effect of items that do not reflect ongoing property operations. AFFO is designed to reflect growth inherent in real estate lease contracts over time. To calculate AFFO, we further adjust FFO for certain items that are not added to net income in Nareit’s definition of FFO, such as organizational costs, acquisition expenses on completed real estate transactions accounted for as business combinations, non-real estate-related depreciation and amortization, stock-based compensation, and any other non-comparable or non-operating items, that do not relate to the operating performance of our properties. To calculate AFFO, we also adjust FFO to remove the effect of straight-line rent revenue, if any, which represents the recognition of net unbilled rental income expected to be collected in future periods of a lease agreement that exceeds the actual contractual rent due periodically from tenants for their use of the leased real estate under each lease.

Our calculation of AFFO may differ from the methodology used for calculating AFFO by certain other REITs and, accordingly, our AFFO may not be comparable to AFFO reported by other REITs. AFFO should not be considered as an alternative to net income (computed in accordance with GAAP) as an indicator of our financial performance or to cash flow from operating activities (computed in accordance with GAAP) as an indicator of our liquidity.

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The table below reconciles net loss, the most directly comparable GAAP metric, to FFO and AFFO and is presented using the weighted-average common shares as determined in our computation of earnings per share for the three and six month periods ended June 30, 2020. The amounts presented below are in thousands, except per share amounts.

	For the three months ended June 30, 2020			For the six months ended June 30, 2020
Net loss attributable to common stockholders		$	(582)		$	(1,312)
Real estate depreciation and amortization			511			1,021
FFO attributable to common stockholders			(71)			(291)
Stock-based compensation expense			302			459
Non-real estate depreciation and amortization			1			3
AFFO attributable to common stockholders		$	232		$	171
FFO per share – basic and diluted		$	(0.01)		$	(0.06)
AFFO per share – basic and diluted		$	0.05		$	0.04
FFO weighted average common shares outstanding – basic and diluted			4,743			4,718
AFFO weighted average common shares outstanding – basic			4,743			4,718
AFFO weighted average common shares outstanding – diluted			4,772			4,738

The table below reconciles net loss, the most directly comparable GAAP metric, to FFO and AFFO and is presented using the weighted-average common shares as determined in our computation of earnings per share for the period from April 23, 2019 (inception) through December 31, 2019. The amounts presented below are in thousands, except per share amounts.

	For the period from April 23, 2019 (inception) through December 31, 2019
Net loss attributable to common stockholders		$	(973)
Real estate depreciation and amortization			661
FFO attributable to common stockholders			(312)
Organizational costs			335
Stock-based compensation expense			20
Non-real estate depreciation and amortization			2
AFFO attributable to common stockholders		$	45
FFO per share – basic and diluted		$	(0.07)
AFFO per share – basic and diluted		$	0.01
Weighted average common shares outstanding – basic and diluted			4,592

Quantitative and Qualitative Disclosures about Market Risks

Market risk includes risks that arise from changes in interest rates, foreign currency exchange rates, commodity prices, equity prices and other market changes that affect market sensitive instruments. In pursuing our business and investment objectives, we expect that the primary market risk to which we will be exposed is interest rate risk.

We may be exposed to the effects of interest rate changes primarily as a result of long-term debt used to acquire properties and make loans and other investments. Our interest rate risk management objectives will be to limit the impact of interest rate changes on earnings and cash flows and to lower overall borrowing costs. To achieve our objectives, we may borrow at fixed rates or variable rates. We also may enter into derivative financial instruments such as interest rate swaps and caps in order to mitigate our interest rate risk on a related financial instrument. We will not enter into derivative transactions for speculative purposes.

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In addition to changes in interest rates, the value of our future investments is subject to fluctuations based on changes in local and regional economic conditions and changes in the creditworthiness of tenants/operators, and which may affect our ability to refinance our debt if necessary.

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OUR BUSINESS

Overview

We are an internally managed real estate investment trust focused on the acquisition, ownership, and leasing of specialized industrial cultivation/processing and retail/dispensary cannabis properties. As of the date of this prospectus, our portfolio is comprised of six cannabis properties and one mortgage note receivable, with an aggregate investment value of $40.1 million. Our six properties are leased to subsidiaries of Curaleaf, a vertically integrated multi-state operator, pursuant to separate triple-net leases that provide for aggregate annualized base rent of $3.6 million as of October 1, 2020. Our properties include two specialized industrial cultivation/processing properties and four retail/dispensary properties located in Florida, Massachusetts and New Jersey.

We intend to acquire retail properties that have already been qualified and licensed for retail/dispensary cannabis sales, which we believe gives strategic defensibility to the operators’ business and the real estate. Finding locations for retail/dispensary cannabis properties can be difficult because they not only need to be

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in highly desirable locations but also need to satisfy local zoning requirements and overcome any local objections. Each city and state has its own requirements and specifications for an entitlement process, but generally these conditional-use permitting processes are complex. For example, in contrast to the initial markets that legalized cannabis (Colorado, Washington, Oregon), the new markets are typically more oligopolistic with cities implementing very strict ordinances that require dispensaries to be located a certain distance away from certain properties, such as schools, parks and churches. Cities also seek to avoid “clustering” of retail stores and cannabis dispensaries and, therefore, require a minimum distance between them, resulting in less competition for a retail location once it is established. Local regulations also vary widely, are subject to exceptions and grandfathering, and can be enormously complex to navigate.

Our management team has extensive real estate finance and diverse corporate operating experience. We believe that our management team’s depth of experience in real estate, operations, risk management, accounting, finance and facility construction positions us favorably to take advantage of cannabis investment opportunities. Our management team is led by the following individuals listed below. See “Management” for more information about our management team.

•

Jeffery C. Walraven, our Co-Founder, Chief Operating Officer and a Member of our Board of Directors. Mr. Walraven has more than 28 years of experience, , including five years as the executive vice president and chief financial officer of MedEquities Realty Trust, Inc. (formerly NYSE: MRT), and 22 years of public accounting experience, most recently as an assurance managing partner of the Memphis office of BDO USA, LLP where his primary responsibilities included providing core and peripheral assurance services and business operational and tax consulting services, including with respect to numerous public and private REITs.

•

Louis S. Yi, Chief Financial Officer. Mr. Yi has approximately 20 years of experience in investment banking, including over ten years at FBR Capital Markets and eight years with Bear, Stearns & Co. Inc. His most recent positions at FBR Capital Markets included managing director in real estate investment banking and head of equity-linked securities across all sectors.

•

Benjamin H. Hendren, Senior Vice President and Chief Accounting Officer. Mr. Hendren has over 18 years of experience, including 15 years with BDO USA, LLP, with three years as an assurance partner. Prior to joining our company, Mr. Hendren was the chief financial officer of Salus Workers’ Compensation, a managing general agent and third party administrator specializing in workers’ compensation insurance.

•

John A. Travis, Senior Vice President and Chief of Acquisitions and Asset Management. Mr. Travis has over 25 years of experience, including 14 years as the founder and president of Control Power Concepts, Inc., a specialized engineering firm. A seasoned entrepreneur, Mr. Travis brings relevant experience in business development, marketing, technology utilization, process development, project management and specialized engineering that enables him to assess the highly engineered, capital-intensive, controlled environment for specialized industrial cultivation/processing properties.

Market Opportunity

We believe the convergence of changing public attitudes, increased legalization momentum in various states and a more relaxed federal enforcement posture toward regulated cannabis use creates an attractive opportunity to invest in regulated specialized industrial cultivation/processing and retail/dispensary properties. Further, the increased sophistication of the regulated cannabis industry and the development of strong business, operational and compliance practices have made the sector more attractive for investment. Increasingly, stated-licensed, regulated cannabis facilities are becoming sophisticated business enterprises that use state-of-the-art technologies and well-honed business and operational processes to maximize product yield and revenues. Furthermore, growers and dispensaries have developed an increasing portfolio of

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products into which they are able to incorporate legal cannabis in a safe and appealing manner, including a variety of edibles, drinks and topicals.

We believe the following conditions create a favorable environment for investing in real estate assets that support the regulated adult- and medical-use cannabis industry:

•

significant industry growth in recent years and expected continued growth;

•

continued state-level legalization of adult- and medical-use cannabis, which we believe is driven in part by states’ desire to generate incremental tax revenue;

•

a shift in public opinion, especially with respect to adult- and medical-use cannabis;

•

the real estate-dependent and capital-intensive nature of the cannabis industry with operators needing access to each of these assets on an ongoing basis; and

•

limited access to capital for cannabis operators resulting in pricing dislocation and favorable demand environment for REITs.

U.S. Cannabis Market — A $60 billion+ Market Opportunity

According to New Frontier Data, cannabis’ total addressable U.S. market is expected to double from $30 billion in 2015 to more than $60 billion in 2025, driven by favorable regulatory changes, gradual growth in population and rising prevalence rate, both in availability and usage. The key underlying trend in this growth is the rising share of the legal market from just 23% in 2017 to 42% in 2025, driven by states that legalize cannabis use. The key components of this growth will be:

•

The legal medical-use cannabis market, which is projected to grow at a 16.8% compound annual growth rate, or CAGR, from $4.6 billion in 2017 to an estimated $13.1 billion by 2025, driven by the rising awareness of the medical applications of cannabis and the expectation of additional states legalizing cannabis for medical-use.

•

The legal adult-use market, which is projected to grow from $3.3 billion in 2017 to an estimated $16.6 billion in 2025, driven by the increasing social acceptance of adult-use use.

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Continued State-Level Legalization

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State cannabis legalization efforts are gaining momentum. Arizona, New Jersey, New York, South Dakota, Montana, Vermont and Pennsylvania are considering legislation for adult-use cannabis in the next one-to-two years. In addition, Connecticut is coordinating with New York to develop a regional approach to legalize adult-use cannabis, while Florida could place adult-use cannabis on its ballot soon. In addition, states considering legalizing medical-use cannabis include Mississippi, Alabama, Nebraska and Kentucky. If all these reforms were to move forward, approximately 90% of the U.S. population could have access to legal cannabis of some sort by the end of 2021, according to Intro-Act. We can provide no assurances, however, that these bills will be approved on the timeline expected or at all. In addition, following the approval of adult- or medical-use cannabis, state programs must be developed and businesses must be licensed before commencing cannabis sales. Some states have developed the necessary procedures and licensing requirements quickly, while other states have taken years to develop their programs for production and sales of cannabis.

Another factor driving the state-level legalization trend is the tax revenue that cannabis can contribute. According to a report by the Tax Foundation, U.S. states have designed different excise tax systems as they have legalized adult-use cannabis. While most states tax based on price (ad valorem), several states also tax cannabis based on weight or, in the case of Illinois, by THC content. In addition to levying excise taxes, most states also levy the state general sales tax on adult-use cannabis.

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Tax generated from cannabis sales is growing rapidly in many states. For example, excise tax collected by Colorado authorities on the sale of adult-use cannabis grew from just over $80 million in 2015 to more than $250 million in 2019 and Alaska’s cannabis tax collections grew more than 10 times from 2017 to 2019, based on data reported by the respective state departments. High and fast-growing tax revenue is expected to act as a driver for other states to legalize cannabis in the coming years. For example, according to the state governor’s office New York’s fiscal deficit for the fiscal year from April 2020 to March 2021 is estimated be nearly $6 billion and, according to the New York’s own estimates, adult-use legalization could bring in $300 million in annual tax revenue. Tax revenues of most U.S. states have been impacted by the COVID-19 pandemic, which could provide political and economic incentive to lawmakers to legalize cannabis in the coming years.

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Shifting Public Attitudes Support Legalization

The findings of the Pew survey are supported by an October 2019 survey by Gallup, which found that 66% of U.S. adults support legalizing cannabis. There also is support across the political spectrum, with

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76% of Democrats and 68% of Independents supporting legalization, as well as 51% of Republicans, according to the Gallup survey. While Gallup’s poll did not distinguish between adult- and medical-use cannabis, they show increasing acceptance over several decades.

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Prospects of Federal Legalization

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SAFE Banking Act, which would amend federal law so that commercial banking and other financial institutions could legally offer services to state-compliant cannabis businesses. The SAFE Banking Act was passed by the U.S. House of Representatives with strong bipartisan support in 2019 and was again part of the $3 trillion HEROES Act passed by the U.S. House of Representatives in the first half of 2020, although the act remains in committee and has not been voted on in the U.S. Senate;

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STATES Act, which would allow states that have legalized cannabis through their legislatures or citizen initiatives to regulate cannabis in a manner they deem best. Specifically, the STATES Act would amend the Controlled Substances Act to exclude its application to persons who are acting in compliance with state law relating to the manufacture, production, possession, distribution, dispensation, administration or delivery of cannabis; and

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MORE Act, which would decriminalize cannabis at the federal level by removing it from the list of Schedule I controlled substances.

Essential Designation Accelerating Growth Despite the Pandemic

Despite the COVID-19 pandemic, the 2020 gross merchandise value, or GMV, has outpaced the 2019 total following cannabis’ essential designation and the easing of lockdown measures. Cannabis sales in the first two months of the year were tracking their 2019 total, based on LeafLink’s survey of 26 U.S. states and Canadian territories. However, as COVID-19 and related news spread in March, retailers stocked up in March, almost a month earlier than the usual spike in April ahead of the 4/20 celebrations. This pre-buying, coupled with strict stay-at-home orders across many states, meant that sales dipped in weeks 13 and 14. However, many state and local governments classified cannabis businesses as “essential,” allowing them to stay open during the pandemic. In addition, new services such as expanded delivery and curbside pickup have

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made it easier for consumers to get access to cannabis while respecting social distancing measures. These factors led to an increase in cannabis sales, with the 2020 cumulative GMV remaining above the 2019 total through the end of June, supporting cannabis’ emerging status as a recession-proof defensive industry.

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Real Estate-Dependent and Capital-Intensive Business

According to a survey published in the 2019 Marijuana Business Factbook, among cannabis producers/processors, the most expensive startup costs are equipment and real estate. Producers/processors must purchase not only extraction equipment but also cultivation equipment. They must find a physical location suited for processing and manufacturing cannabis as well as growing it — or consider separate locations and the increased real estate costs that go with such an approach.

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Limited Access to Capital by Cannabis Operators Resulting in Pricing Dislocation and Favorable Demand Environment for REITs.

The licensed specialized industrial cultivation/processing and retail/dispensary sale of cannabis are each real estate dependent and capital-intensive. However, despite their state licenses, cannabis operators’ access to both real estate and capital has been constrained due to the current federal regulatory environment. This has resulted in a significant opportunity for cannabis REITs. The status of state-licensed cannabis under U.S. federal law and current U.S. federal regulations have significantly limited the ability of state-licensed cannabis operators to access the U.S. banking system and traditional sources of capital. For example, according to U.S. Government data, there were just 710 depository institutions that bank cannabis businesses in the U.S. as of March 31, 2020, down from the prior quarter end of 739, each of which is less than 7% of the combined number of depository institutions (commercial banks, savings banks and credit unions) in the U.S. In addition, for those operators that can access banking services, the cost of such access is extremely high due to regulatory guidelines and reporting requirements for offering banking services to cannabis-related businesses. While pending legislation could improve banking access for cannabis businesses, the current nature of the industry creates a significant opportunity for REITs like Freehold to provide funding to cannabis operators through sale-leaseback and other similar transactions and provide favorable returns on such investments.

In addition, cannabis operators’ difficulty in raising equity capital is creating growth opportunities and pricing power for those cannabis REITs that are well capitalized and have the underwriting capabilities to fill the funding gap. Capital markets activity in the cannabis industry was at its peak in 2018. However, cannabis stocks hit multi-year lows in 2019, which made it more difficult for cannabis companies to raise capital and to use their stock as currency to fund mergers and acquisitions in an accretive manner. According to Viridian Capital Advisors, equity capital raises by cannabis companies fell 31%, from $11.6 billion in 2018 to $8 billion in 2019 and are expected to decline by approximately 60% (by value) in

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2020, compared to 2019. In light of these factors, we believe it is critical to partner with the highest quality operators with experienced management teams, strong financial foundations and operational expertise to navigate the dynamic changes in the cannabis industry.

With the current federal regulatory environment presently unchanged and equity capital remaining expensive, we believe that cannabis operators will continue to use their real estate to acquire growth capital, resulting in a rapid rise in structured lease transactions with cannabis REITs. These deals involve cannabis operators selling their own specialized industrial cultivation/processing and retail/dispensary properties to REITs and leasing them back, or the REIT partnering with operators to acquire targeted real estate and simultaneously enter into a long-term lease as a way to meet their real estate capital needs. We believe the pace of transactions is likely to accelerate and act as a key growth driver for REITs that have the capital and the underwriting capabilities to identify high-quality operators and thus emerge as beneficiaries of this environment.

Our Competitive Strengths

We believe that the following competitive strengths will support the accretive growth of our business and the implementation of our business plan:

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Our management team and members of our board of directors have long-standing relationships with owners, operators and developers of cannabis properties, who we believe value their industry knowledge and commitment to working in a cooperative and supportive manner. In addition, we have extensive relationships with private equity groups, attorneys, contractors and commercial bankers who invest in or otherwise support cannabis operators. We believe these relationships will provide us access to an ongoing pipeline of attractive asset acquisition and other investment opportunities that may not be available to our competitors.

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Scalable Platform. We believe our team is skilled at internally deploying and customizing the process platforms such as accounting, finance and asset management, which makes us capable of substantially decreasing relative administrative overhead as we grow the size of portfolio. In addition to our existing and growing network of relationships we employ technology to substantially increase our throughput of opportunities well beyond the capacity of traditional relationship and deal development methods. We believe these factors along with the nature of our triple-net leasing structure, will enable us to support a significant increase in the size of our portfolio without a proportionate increase in administrative or management costs.

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Operator First Investment Philosophy and Experience-Driven Underwriting. We have an underwriting philosophy that is focused on aligning ourselves with high-quality operators with sound credit worthiness, locations, and assets. Our goal is sustainable long-term triple net leases to provide long-term capital to our operating tenant partners.

Our operator-first approach focuses on a number of factors, the following aspects:

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Financial Strength — Analyze the operator’s corporate-level financial information to gain understanding of overall financial strength. Does the operator have profitable assets in good markets, and is there a sightline to profitability? Is it capitalized sufficiently to fund working capital and capital expenditure needs?

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Access to Capital — Review the operator’s historical ability to raise capital. Has it been able to successfully raise capital at a reasonable cost? Is it capital structure matters that may have

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long-term impact to its successful operations and our ability to transact future deals with them? Can it continue to raise capital outside of transactions with us?

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We believe our underwriting process will support our ability to identify high-quality operators and deliver attractive risk-adjusted returns to our stockholders.

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High-Quality Portfolio. As of the date of this prospectus, our portfolio is comprised six cannabis properties and one mortgage note receivable with an aggregate investment value of $40.1 million. Our properties include two specialized industrial cultivation/processing properties and four retail/dispensary properties located in Florida, Massachusetts and New Jersey. Our six properties are leased to subsidiaries of Curaleaf (CSE: CURA; OTCQX: CURLF), a vertically integrated, multi-state operator, pursuant to separate triple-net leases that provide for aggregate annualized base rent of $3.6 million as of October 1, 2020, with annual rent escalators of 3%, and expire in August 2029. Each of the leases is cross-defaulted with the other leases and is fully guaranteed by Curaleaf. As of August 27, 2020, Curaleaf operated in 23 states with 89 dispensaries, 22 cultivation sites with more than 2.2 million square feet of cultivation capacity and over 30 processing sites.

Our current properties are, and we expect to continue to seek to acquire properties that are, (i) specifically suited to operate within the regulatory environments and market conditions in which they are located, (ii) built, renovated or converted with quality in both facility design and physical construction, and (iii) have historical and projected financial performance that contributes beneficially to the operator’s overall corporate performance.

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Early-Mover Advantage in a Rapidly Growing and Undercapitalized Industry. The licensed cultivation, processing and retail sale of cannabis are both real estate dependent and capital-intensive. Revenues from the sale of legal cannabis in the U.S. have grown from $7.9 billion in 2017 to $13.6 billion in 2019 and are expected to reach $30 billion by 2025, according to New Frontier Data. Despite this growth, cannabis operators’ access to both real estate and capital has been constrained due to the current federal regulatory environment. We believe cannabis operators’ need for capital to fund the growth of their businesses will result in significant opportunities for us to acquire specialized industrial cultivation/processing and retail/dispensary properties that can provide stable and increasing rental revenue along with the potential for long-term value appreciation. As of the date of this prospectus, there is only one publicly traded company focused on meeting the real estate needs of cannabis operators in the U.S., and the similar private companies in the industry have not gained significant shares of the market. We believe our enhanced ability to access the capital markets as a public company will allow us to secure an early-mover advantage in the industry and take advantage of the barriers to entry in the cannabis operator industry created by state licensing and other regulations to become integral real estate capital partners with high-quality cannabis operators.

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Strong Alignment of Economic and Incentive Interests. We believe the interests of our management team, our board of directors and our stockholders are strongly aligned. Immediately prior to this offering, our executive officers and members of our board of directors owned a total of 900,887 shares of our common stock, or approximately 17.35% of the outstanding shares of our common stock. Upon completion of this offering, we expect to grant our management team an aggregate of restricted shares of our common stock, which will vest on the third anniversary of the grant date, and an aggregate of restricted stock units, which will vest on the third anniversary of the grant date only if certain performance metrics are achieved. See “Management — Executive Compensation — IPO Equity Grants.” As a result, upon completion of this offering, our management

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team and directors will collectively own approximately % of our company on a fully diluted basis, which we believe aligns their interests with those of our stockholders. In addition, we issued 311,991 shares of our common stock to Curaleaf as partial consideration for our acquisition of six properties from them, and we intend to use our equity to fund a portion of future acquisitions, which aligns the interests of sellers with our stockholders and provides further incentive for future collaborative efforts in acquisitions.

Our Business and Growth Strategies

Our business and growth strategies includes the following:

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Partner with and Grow Alongside High-Quality Operators while Utilizing a Flexible Investment Strategy. We believe it is critical to partner with the highest quality operators with strong financial foundations and operational expertise to navigate the dynamic changes in the cannabis industry, including expansion of the cannabis market due to new states adopting medical-use laws or existing states with only medical-use expanding their laws to include adult-use. We do not believe the market has been efficient in pricing the difference between lower- and higher-tier operators. We believe our existing tenant, Curaleaf (CSE: CURA; OTCQX: CURLF), is a market leader with a demonstrated track record of executing on its business plan, and we have a right of first offer through August 2021 to act as purchaser or landlord with respect to any cultivation/processing or retail/dispensary cannabis properties that Curaleaf intends to offer to third parties. See “— Our Portfolio — Right of First Offer.” Given the real estate dependent and capital-intensive business of cannabis operators, we will endeavor to grow alongside operators like Curaleaf and others as they identify new locations and markets to expand their businesses. As such, we believe the composition of our portfolio should be dynamic given the evolving cannabis market. We will evaluate the composition of our portfolio in terms of retail versus cultivation, medical-use versus adult-use and geography in the context of a number of factors, including the needs of our operator partners, industry trends and regulatory changes. We will maintain a flexible investment strategy and continuously monitor these factors in order to optimally position our portfolio both offensively and defensively in the market.

In addition, while our primary and preferred form of investment is sole fee simple ownership of a property subject to a long-term triple-net lease with the cannabis operator, we may also provide debt capital as a pathway to the ultimate acquisition of assets, including by financing the development of properties that have been pre-leased or providing mortgage loans for existing properties, with purchase options or rights of first offer for the underlying properties. We believe that providing operators and developers with a variety of financing options enhances yield, provides a pathway to additional investments and positions us as a favorable capital partner that can accommodate creative and flexible capital structures.

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Focus on Acquiring Cannabis Real Estate for Income and Appreciation. We acquire real property that will be leased via well-structured triple-net leases to licensed cannabis operators, and we believe our acquisition opportunities will continue to expand as additional states legalize adult- and medical-use cannabis. We primarily lease our acquired properties under long-term (10 to 20 years) triple-net leases with an initial fixed base rent and annual escalators, where the tenant is responsible for all aspects of and costs related to the property and its operation during the lease term, including maintenance, taxes and insurance. We also intend to enter into lease extensions during the term of the lease in connection with additional acquisitions, reinvestment projects and other opportunities that arise from our close tenant relationships. Our lease structures also are designed to provide us with key credit support for our rents, including lease deposits, and in certain cases, various provisions for cross-default, cross-collateralization and corporate or parent guarantees, when appropriate. We expect these features to help insulate us from variability in operator cash flows at individual properties and enable us to minimize our expenses while we build our portfolio.

In addition to generating a high, stable long-term yield as compared to traditional retail and industrial assets, we believe there are several factors that could drive an appreciation in cannabis real

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estate values from, including regulatory changes, continued maturation of the industry, changes in investor sentiment and operator-specific performance.

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Adherence to Rigorous Investment Criteria. Our operator first investment philosophy focuses primarily on the quality and credit worthiness of the operator and the quality and design of its assets. In executing that philosophy, we have developed a set of decision making criteria for evaluating our potential operator relationships and approaching acquisition opportunities through our rigorous underwriting and acquisition process that includes the following:

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Operator First — As described above, we seek to partner with high-quality operators by focusing on the operator’s management team, financial strength, access to capital, operational efficiency and regulatory compliance.

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Asset Location and Market Environment Second — We seek operators and assets that are specifically suited to operate within the regulatory environments and market conditions in which they are located. We evaluate the asset location within the market, local economic and demographic data, barriers to entry, cannabis-related demand drivers, state and local regulatory environment and the overall competitive landscape of the market.

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Asset Quality, Design and Operation Third — We evaluate the asset’s construction quality, condition, design, projected capital needs and property condition assessments. In addition, we utilize traditional net lease real estate operating metrics, such as rent coverage, to quantitatively assess the historical and projected financial performance of the asset and its contribution to the operator’s overall corporate performance.

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Asset Type Fourth — We believe the composition of our portfolio should be dynamic given the evolving cannabis market. We will evaluate the composition of our portfolio in terms of retail versus cultivation, adult-use versus medical-use and geography in the context of a number of factors, including the needs of our operator partners, industry trends and regulatory changes.

We believe the cannabis industry continues to grow substantially and has many desirable operators with an addressable market of existing and needed assets allowing us to forgo distressed and speculative acquisitions and instead focus on high-quality operators and assets that provide sustainable long-term lease income and value appreciation for our stockholders.

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Actively Monitor the Performance of Our Facilities and Industry Trends. We actively monitor the financial and operational performance of our tenants and lease guarantors and of the specific facilities in which we invest through a variety of methods, such as reviewing periodic financial reporting and operating data, regular meetings with the facility management teams and joint strategic planning with the facility operators. Integral to our asset management philosophy is our desire to continue our existing, and develop new, long-term relationships with our tenants so that they view us as a valuable partner and member of their teams. The value of our investments depends, in part, on our tenants’ ability to prosper. Therefore, pursuant to the terms of our leases, our tenants are required to provide us with certain periodic financial statements and operating data, and, during the terms of such leases, we intend to conduct joint evaluations of local facility operations and participate in discussions about strategic plans that may ultimately require our approval pursuant to the terms of our lease agreements. Our management also communicates regularly with their counterparts at our tenants and others who closely follow the cannabis industry in order to maintain knowledge about changing regulatory and business conditions. We believe this knowledge, combined with our management team’s experience in the real estate and cannabis industries, allows us to anticipate changes in our tenants’ operations in sufficient time to strategically and financially plan for changing economic, market and regulatory conditions. Collectively, these activities will provide us with leading indicators to proactively evaluate when to sell assets and reinvest the proceeds into new acquisition and investment opportunities.

Our Portfolio

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The following table contains information regarding the cannabis properties in our portfolio as of the date of this prospectus (dollars in thousands):

		Property Type	Land			Bldg.		Total Investment(2)			% of Total Investment		Annualized Base Rent(3)			Lease Expiration
Property Address	Tenant(1)	Property Type	Acres			Sq. Ft.		Total Investment(2)			% of Total Investment		Annualized Base Rent(3)			Lease Expiration
30 Worcester Road Webster, MA	Curaleaf Massachusetts, Inc.	Cultivation/Processing			31.00		105,000(4)		$	15,068(5)		43.4%		$	1,630		09/2029
111 Coolidge Avenue Bellmawr, NJ	Curaleaf NJ II, Inc.	Cultivation/Processing			1.96		42,433		$	13,255		38.2%		$	1,352		09/2029
3218 US Highway 1Fort Pierce, FL	Curaleaf Florida, LLC	Retail/Dispensary			0.67		10,311		$	1,862		5.4%		$	190		09/2029
640 Creek Road Bellmawr, NJ	Curaleaf NJ II, Inc.	Retail/Dispensary			0.61		9,571		$	1,772		5.1%		$	181		09/2029
910 W. International Speedway Blvd. Daytona Beach, FL	Curaleaf Florida, LLC	Retail/Dispensary		��	0.64		5,620		$	1,578		4.5%		$	161		09/2029
170 Commercial Street, Unit 3 Provincetown, MA	Curaleaf Massachusetts, Inc.	Retail/Dispensary			0.34		2,700		$	1,178		3.4%		$	119		09/2029
Total									$	34,713		100%		$	3,633

(1)

Each lease in our portfolio is guaranteed by Curaleaf, Inc., the indirect parent of each tenant, and direct subsidiary of Curaleaf.

(2)

Total investment is as of October 1, 2020 and includes our purchase price for the asset and all non-reimbursed transactional closing costs that are capitalized under GAAP.

(3)

(4)

(5)

Total investment includes $5.4 million that we have funded for the renovation of this facility. See “— Our Portfolio — Description of Leases” for additional information regarding this renovation.

Description of Properties

The six properties in our portfolio were acquired through a series of sale-leaseback transactions with subsidiaries of Curaleaf on August 29, 2019 for a total consideration of $28.3 million, including $25.5 million in cash and $2.8 million in shares of our common stock. A description of each property is provided below:

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The Webster, Massachusetts cultivation facility is comprised of two contiguous spaces. The building, built in 1973, had been sitting vacant and was previously operated by a recycling company. Improvements were made to the operating portion of the building starting in the Fall of 2016 and, in June 2017, Curaleaf commenced operations in that portion of the building, which is approximately 50,000 square feet. Improvements to the other section of the building are underway and expected to be completed during the fourth quarter of 2020. See “— Description of Leases” for information regarding our funding of this renovation.

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The Bellmawr, New Jersey campus is a vertically integrated facility that includes multiple buildings of varying sizes that are used both for cultivation and as a retail dispensary. All of the buildings are former industrial buildings and have been extensively remodeled and repurposed to serve the needs of Curaleaf’s operations. The buildings at 111 Coolidge Avenue serve as a cultivation and production facility. The building at 640 Creek Road was extensively remodeled in 2016 and opened in 2017 as a state-of-the-art dispensary facility.

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The Fort Pierce, Florida dispensary is a mixed-use building that is located along US Highway 1, which is the primary commercial corridor in the area. Roughly one-third of the building is utilized as

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a dispensary. The remaining building area is climate-controlled warehouse space that Curaleaf uses to store non-cannabis inventory. The Fort Pierce property was extensively renovated in 2018 with a new roof, HVAC and interior buildout to include a new retail storefront along with patient consultation rooms and a waiting area.

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The Daytona, Florida dispensary is a free-standing retail building located along the highly-trafficked International Speedway Boulevard, which is a major thoroughfare in the Daytona area. The building was originally constructed in 1972 but was extensively renovated in 2018 to serve as a dispensary for Curaleaf. As part of the renovation, Curaleaf invested in a new roof and HVAC in addition to building out a new retail storefront with patient consultation rooms and a waiting area. Further, extensive security cameras were installed along with a vault that is used to store inventory outside of business hours. Currently, 2,500 square feet are vacant and unused by Curaleaf. If adult-use cannabis is legalized in the future, the retail portion of the dispensary would likely be expanded into the vacant space to meet the expected increase in demand. To the extent that Curaleaf requests that we fund the additional tenant improvement expansions, rent would be adjusted accordingly.

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The Provincetown, Massachusetts dispensary is a condominium located at the southwest corner of Winthrop Street and Commercial Street, which is the primary commercial thoroughfare in Provincetown and is located near the beach. The building was originally constructed in 1950; however, the condominium unit has recently undergone a complete renovation to serve as a dispensary for Curaleaf.

Description of Our Tenant

Curaleaf had $123 million of cash and $210 million of working capital (current assets minus current liabilities) as of June 30, 2020, compared with $42 million of cash and $43 million of working capital as of December 31, 2019. As of June 30, 2020 and December 31, 2019, Curaleaf had total assets of $1.3 billion and $737 million, respectively, and total liabilities of $655 million and $333 million, respectively.

For the six months ended June 30, 2020, Curaleaf had total revenues of $214 million, gross profit of $149 million and net loss attributable to Curaleaf of $17 million, compared to total revenues of $84 million, gross profit of $48 million and net loss attributable to Curaleaf of $35 million for the six months ended June 30, 2019. For the year ended December 31, 2019, Curaleaf had total revenues of $221 million, gross profit of $142 million and net loss attributable to Curaleaf of $67 million, compared to total revenues of $77 million, gross profit of $46 million and net loss attributable to Curaleaf of $56 million for the year ended December 31, 2018.

Curaleaf also has achieved five consecutive quarters of positive adjusted EBITDA through the quarter ended June 30, 2020, growing from $3.3 million in the second quarter of 2019 to $27.9 million in the second quarter of 2020.

Description of Leases

Each of our leases was executed with a subsidiary of Curaleaf in connection with our acquisition of the properties in August 2019 and is a triple-net lease with the tenant responsible for all aspects of and costs related to the property and its operation during the lease term, including maintenance, taxes and insurance. Each lease initially expires in August 2029 and contains two five-year renewal options. Annual rent under each lease escalates 3% annually, including during the renewal periods if the option is exercised by the tenant. Curaleaf, Inc., a direct subsidiary of Curaleaf, guarantees each lease, and each lease is cross-defaulted with the other leases.

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The lease for the Webster, MA facility was amended in July 2020 to permit us to provide up to $13.9 million of additional capital to fund the renovation of previously unconverted industrial space at the facility. If we fund the commitment in full, the lease term will automatically extend to fifteen years from the final funding date. If we do not fund the commitment in full by the first anniversary of the amendment, the tenant will have an option, for the nine-month period commencing on the first anniversary date of the amendment, to purchase the property at a price based on our total invested capital. As of August 31, 2020, we had funded $5.4 million of the $13.9 million expansion capital described above. We receive additional rent equal to 12% per annum initially, with annual escalators at 2.5%, of the amount we fund pursuant to this commitment.

Right of First Offer

Our purchase agreement and each of our leases with subsidiaries of Curaleaf provide us with a right of first offer, until August 29, 2021, in the event that Curaleaf determines to accept proposals from unaffiliated third parties to act as purchaser, owner, landlord or developer of cultivation/processing or retail/dispensary cannabis properties, which we refer to as the Curaleaf ROFO. Under the Curaleaf ROFO, we have five business days from the receipt of notice from Curaleaf to make an offer to act as purchaser, owner, landlord or developer, as applicable, for the applicable property on terms consistent with, or better than, our existing leases with Curaleaf’s subsidiaries. If we exercise this right, Curaleaf cannot enter into a binding agreement with another party on terms materially less favorable than our offer. However, if we have not entered into a binding agreement with Curaleaf within 90 days of making our offer, despite Curaleaf’s and our good faith efforts to do so, Curaleaf may enter into any transaction with any party with respect to such property.

Mortgage Note Receivable

On October 4, 2019, we entered into a leasehold mortgage agreement and related agreements with ICC Holdings, LLC d/b/a Revolution Enterprises, or Revolution, to provide up to $28.8 million to fund the development of a 75,000 square-foot indoor cultivation facility and greenhouse space in Delavan, Illinois. The mortgage note receivable is secured by certain property rights, including a leasehold mortgage. We have funded $5.4 million under this commitment as of the date of this prospectus.

The mortgage note bears interest at 12.75% annually, which escalates by 2.5% annually, and requires interest only payments until maturity. Interest payments were deferred through June 30, 2020 and all deferred interest payments are scheduled to be repaid through June 30, 2021. In conjunction with entry into the mortgage note receivable, the operator also assigned as collateral their leasehold purchase option for the underlying real property to us, which may be exercised in the event of a default or at our option between January 1, 2021 through February 28, 2021. If we exercise the purchase option, the mortgage note receivable balance will be included in the lease basis used to determine rent. If we do not exercise the purchase option, the mortgage note receivable will remain outstanding and require interest-only payments with a balloon payment of principal due on February 28, 2026.

In the event that additional capital is not made available by us to fund the remainder of this commitment and upon legal termination of the funding agreement by the operator, the outstanding balance will convert to an unsecured promissory note payable to us bearing interest at 8% annually with principal and interest payable monthly over a five-year straight-line amortization period.

Construction on this project was temporarily paused in March 2020 due to funding concerns and considerations influenced by the COVID-19 pandemic. Through the date of this prospectus, we have not funded any additional reimbursement requests from the operator, nor have we received any notice of termination of the funding agreement from the operator. As described below under “— Legal Proceedings,” on October 22, 2020, Revolution filed a complaint against us alleging breach of contract for failing to fund additional amounts under the tenant improvement funding agreement with Revolution. We believe the claims asserted in the complaint are without merit and intend to vigorously defend against these claims.

Other Transactions

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to a subsidiary of Curaleaf for use as a cultivation/processing facility, pursuant to a 10-year triple-net lease that provided for annual rent of $0.6 million. Pursuant to the purchase and sale agreement, the tenant had an option to purchase the property for $5.5 million, which was scheduled to expire on December 31, 2020. On July 13, 2020, we sold the property to Curaleaf for $5.5 million pursuant to Curaleaf’s exercise of its purchase option. We used the net proceeds from the disposition to fund a portion of our commitment related to the Webster, MA facility. See “— Description of Leases.”

Our Acquisition and Investment Pipeline

Our management team and board of directors have an extensive network of long-standing relationships with owners, operators and developers of commercial real estate properties and cannabis operations. We believe this network of relationships will provide us access to an ongoing pipeline of attractive acquisition and other investment opportunities, which may not be available to our competitors. We also have a right of first offer through August 2021 to act as purchaser or landlord with respect to any cultivation/processing or retail/dispensary cannabis properties that Curaleaf intends to offer to third parties. See “— Our Portfolio — Right of First Offer.”

In addition to the six properties in our portfolio, we are actively seeking and evaluating additional specialized industrial cultivation/processing properties and retail/dispensary cannabis properties to purchase with the net proceeds of this offering. We have identified and are in various stages of reviewing additional potential cannabis properties for total investment of approximately $ million. There can be no assurance that we will consummate the acquisition of any of the properties in our current acquisition pipeline on the terms anticipated, or at all.

Investment and Acquisition Process

Sourcing and Screening

Our management team has developed and maintains an extensive network of relationships with owners, operators, industry professionals, and developers of commercial real estate properties. In addition, we receive multiple daily inquiries for active projects by both brokers and operators directly. Our asset acquisition and management team routinely communicates with these industry participants to seek out market knowledge and cultivate relationships. Through this daily market interaction, we develop a pipeline of potential acquisitions and investments that we can selectively process based on our extensive underwriting and due diligence.

We have customized off-the-shelf software to develop an acquisition and underwriting process that efficiently filters projects through a series of screening steps earmarked by internal review and go/no-go decision points. Once an asset and operator has passed our initial underwriting and investment criteria, it moves to the transactional due diligence process. During the initial due diligence, the seller of the assets will carry a significant portion of the cost and timing burden of completing the checklist of routine documents and inspections while the lease negations are led by counsel and Company management. This process allows us to efficiently evaluate a significant number of potential acquisitions relative to the size of our team.

Underwriting

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Operator First: We seek to partner with high-quality operators by focusing on the following:

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Management Team — Evaluate the qualifications, experience and track record of the operator’s executive management team;

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Access to Capital — Evaluate the operator’s capital raising history and ability to access affordable and sustainable capital via traditional or alternative financing solutions;

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Asset Location and Market Environment Second: We seek operators and assets that are specifically suited to operate within the regulatory environments and market conditions in which they are located. We evaluate the asset location within the market, local economic and demographic data, barriers to entry, cannabis-related demand drivers, state and local regulatory environment and the overall competitive landscape of the market. We balance these factors with the experience of the operator and will acquire assets in more mature markets, such as Colorado or California, as long as the operator has a proven track record of market loyalty and penetration.

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Asset Type Fourth: We believe the composition of our portfolio should be dynamic given the evolving cannabis market. We will evaluate the composition of our portfolio in terms of retail versus cultivation, medical-use versus adult-use and geography in the context of a number of factors, including the needs of our operator partners, industry trends and regulatory changes. We will maintain a flexible investment strategy and continuously monitor these factors in order to optimally position our portfolio both offensively and defensively in the market.

Investment Committee

After our management team has elected to pursue an acquisition opportunity based on extensive underwriting and due diligence, an in-depth investment package is be prepared and presented to our investment committee for approval. Our investment committee is comprised of Messrs. Brain, Walraven and Yi and our three non-management board members. The investment package consists of core analysis items such as the facility type, operator, operator parent company (lease guarantor), acquisition price, planned tenant improvement expenditures, purchase and lease terms, summarized asset and operator financial statements and other relevant analysis and market considerations determined by the management team to support its recommendations.

Company Background and Information

We were incorporated in the state of Maryland on June 24, 2019 to act as a holding company for our operating partnership, which was formed on April 23, 2019, and we commenced operations upon the closing of our initial private placements on August 28, 2019.

We conduct our business through an umbrella partnership REIT, or UPREIT, structure, consisting of our operating partnership and subsidiaries of our operating partnership. Through our wholly owned subsidiary, we are the sole general partner of our operating partnership, and we presently own all of the OP units. In the future, we may issue OP units to third parties in connection with property acquisitions, as compensation or otherwise. As the sole owner of the general partner of our operating partnership, we have the exclusive power to manage and conduct our operating partnership’s business.

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We elected to be taxed as REIT for U.S. federal income tax purposes commencing with our short taxable year ended December 31, 2019.

Our principal executive office is located at 232 3rd Avenue N., Franklin, Tennessee 37064. Our telephone number at our executive offices is (877) 981-0900 and our corporate website is www.freeholdprop.com. The information contained on, or accessible through, our website is not incorporated by reference into, and does not form a part of, this prospectus.

Competition

The current market for properties that meet our investment objectives may be limited. We believe finding properties that are appropriate for the specific use of allowing adult- and/or medical-use cannabis operations may be limited as more competitors enter the market. We face competition from a mix of market participants, including but not limited to, other companies with similar business models, independent investors, hedge funds and other real estate investors, and cannabis operators themselves, all of whom may compete with us in our efforts to acquire real estate zoned for adult- and medical-use cannabis stores, dispensaries, and facilities. Our primary public company competitor is Innovative Industrial Properties, Inc. (NYSE: IIPR). In addition, there are several private companies that have entered the marketplace over the past 18 months, including NewLake Capital Partners, Treehouse Real Estate Investment Trust, Inc., GreenAcreage Real Estate Corp. and Power REIT (NYSE American: PWR). In some instances, we will be competing to acquire real estate with persons who have no interest in the cannabis industry, but have identified value in a piece of real estate that we may be interested in acquiring.

These competitors may prevent us from acquiring desirable properties or may cause an increase in the price we must pay for properties. Our competitors may have greater resources than we do and may be willing to pay more for certain assets or may be willing to accept more risk than we believe can be prudently managed. In particular, larger companies may enjoy significant competitive advantages that result from, among other things, a lower cost of capital and enhanced operating efficiencies. Our competitors may also adopt transaction structures similar to ours, which would decrease our competitive advantage in offering flexible transaction terms. In addition, due to a number of factors, including but not limited to potential greater clarity of the laws and regulations governing adult- and medical-use cannabis by state and federal governments, the number of entities and the amount of funds competing for suitable investment properties may increase, resulting in increased demand and increased prices paid for these properties. If we pay higher prices for properties, our profitability may decrease, and you may experience a lower return on your investment. Increased competition for properties may also preclude us from acquiring those properties that would generate attractive returns to us.

Governmental Regulation

Real Estate Industry Regulation

Generally, the ownership and operation of real properties is subject to various laws, ordinances and regulations, including regulations relating to zoning, land use, water rights, wastewater, storm water runoff and lien sale rights and procedures. These laws, ordinances or regulations, such as the Comprehensive Environmental Response and Compensation Liability Act and its state analogs, or any changes to any such laws, ordinances or regulations, could result in or increase the potential liability for environmental conditions or circumstances existing, or created by tenants or others, on our properties. Laws related to upkeep, safety and taxation requirements may result in significant unanticipated expenditures, loss of our properties or other impairments to operations, any of which would adversely affect our cash flows from operating activities.

Our property management activities, to the extent we are required to engage in them due to lease defaults by tenants or vacancies on certain properties, will likely be subject to state real estate brokerage laws and regulations as determined by the particular real estate commission for each state.

State Laws Applicable to the Adult- and Medical-Use Cannabis Industry

As of the date of this prospectus, 36 U.S. states and the District of Columbia have legalized adult- and/or medical-use cannabis in some form. In most states that have legalized cannabis in some form, the

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selling, dispensing, cultivation and/or manufacturing of cannabis generally requires that the operator obtain one or more licenses in accordance with applicable state requirements. In addition, many states regulate various aspects of the selling, dispensing, cultivation and/or manufacturing of adult- and medical-use cannabis.

Local governments in some cases also impose rules and regulations on the manner of operating cannabis businesses. As a result, applicable state and local laws and regulations vary widely, including with respect to the types of strains that can be grown, the types of products that can be sold and operator licensing processes and renewals. Due to licensing requirements, if our tenants default under their leases, we may not be able to find new tenants that have the requisite license to engage in the cultivation of adult- or medical-use cannabis on the properties.

Federal Laws Applicable to the Adult- and Medical-Use Cannabis Industry

Cannabis is classified as a Schedule I controlled substance under the CSA. Even in those jurisdictions in which the manufacture and use of cannabis has been legalized at the state level, the possession, use and cultivation all remain violations of federal law. Moreover, on two separate occasions, the U.S. Supreme Court ruled that the CSA trumps state law. That means that the federal government may enforce U.S. drug laws against companies operating in accordance with state cannabis laws, creating a climate of legal uncertainty regarding the production and sale of medical-use cannabis.

Under the Obama Administration, the DOJ previously issued certain memoranda on August 29, 2013, including the so-called “Cole Memo,” which provided internal guidance to federal enforcement agencies as to how to prioritize civil enforcement, criminal investigations and prosecutions regarding cannabis in all states. The Cole Memo characterized use of federal law enforcement resources to prosecute those complying with state regulatory systems allowing the use, manufacture and distribution of cannabis as an inefficient use of federal investigative and prosecutorial resources when state regulatory and enforcement efforts are effective with respect to enumerated federal enforcement priorities under the CSA.

However, in January 2018, the U.S. Attorney General at that time, Jeff Sessions, issued a new memorandum (the “Sessions Memo”) that rescinded the Cole Memo, stating that, given the DOJ’s well-established general principles, “previous nationwide guidance specific to marijuana is unnecessary and is rescinded, effective immediately.” The Sessions Memo instructs federal prosecutors that when determining which cannabis-related activities to prosecute under federal law with the DOJ’s finite resources, prosecutors should follow the well-established principles set forth in the U.S. Attorneys’ Manual governing all federal prosecutions. The Sessions Memo states that “these principles require federal prosecutors deciding which cases to prosecute to weigh all relevant considerations, including federal law enforcement priorities set by the Attorney General, the seriousness of the crime, the deterrent effect of criminal prosecution, and the cumulative impact of particular crimes on the community.”

In January 2019, current U.S. Attorney General William Barr stated in his nomination proceedings in front of the Senate Judiciary Committee that he did not plan on using federal resources to “go after” companies if they are complying with state law. However, Attorney General Barr left the Sessions Memo in place as official DOJ policy.

Federal prosecutors have significant prosecutorial discretion. Therefore, no assurance can be given that the federal prosecutor in each judicial district where we purchase a property will not choose to strictly enforce the federal laws governing cannabis production, processing or distribution. There is also no guarantee that the current administration or future administrations will not revise the federal enforcement priorities or otherwise choose to strictly enforce the federal laws governing cannabis production or distribution. Any such change in the federal government’s current enforcement posture with respect to state-licensed adult- or medical-use cannabis would result in our inability to execute our business plan, and we would likely suffer significant losses with respect to our investment in cannabis facilities in the United States. Furthermore, we may face the risk of prosecution for aiding and abetting violations of the CSA and federal laws governing money laundering by our tenants, particularly our tenants involved in the cultivation and sale of cannabis for adult use. See “Risk Factors — Risks Related to Regulation and Our Industry.”

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Laws Applicable to Banking for the Adult- and Medical-Use Cannabis Industry

All banks are subject to federal law, whether the bank is a national bank or state-chartered bank. At a minimum, all banks maintain federal deposit insurance, which requires adherence to federal law. Violation of federal law could subject a bank to loss of its charter. All U.S. banks are subject to the requirements of the Bank Secrecy Act. Under the Bank Secrecy Act, banks must report to the federal government any suspected illegal activity, which would include any transaction associated with a cannabis-related business. These reports must be filed even though the business is operating in compliance with applicable state and local laws.

The Financial Crimes Enforcement Network, a division of the Department of Treasury, issued guidance in February 2014 that sets expectations for financial institutions dealing with cannabis-related businesses. The guidance also sets extensive requirements for financial institutions to meet if they want to offer bank accounts to cannabis businesses, including close monitoring of businesses to determine that they meet all of the requirements established by the DOJ, including those enumerated in the Cole Memo. This is a level of scrutiny that is far beyond what is expected of any normal banking relationship. In addition, it remains unclear what impact the rescission of the Cole Memo will have, but federal prosecutors may increase enforcement activities against institutions or individuals that are conducting financial transactions related to cannabis activities.

Due to the CSA’s categorization of cannabis as a Schedule I drug, U.S. federal law makes it illegal for financial institutions that depend on the Federal Reserve’s money transfer system to take any proceeds from cannabis sales as deposits. Banks and other financial institutions could be prosecuted and possibly convicted of money laundering for providing services to cannabis businesses under the Bank Secrecy Act. Under U.S. federal law, banks or other financial institutions that provide a cannabis business with a checking account, debit or credit card, small business loan, or any other service could be found guilty of money laundering or conspiracy.

In March 2019, Congress introduced several proposed bills focused on the regulated cannabis industry, including the SAFE Banking Act. If it became law, the SAFE Banking Act would, among other things, provide protection from federal prosecution to banks and other financial institutions that provide financial services to state-licensed, compliant cannabis operators, which may include the provision of loans by financial institutions to such operators.

Given the current legal landscape and uncertainties, many banks remain hesitant to offer any banking services to cannabis-related businesses, including opening bank accounts. While we currently have a bank account, our inability to maintain that account or the lack of access to bank accounts or other banking services in the future, would make it difficult for us to operate our business, increase our operating costs and pose additional operational, logistical and security challenges. Similarly, if our tenants are unable to access banking services, they will not be able to enter into triple-net leasing arrangements with us, as our leases will require rent payments to be made by check or wire transfer. See “Risk Factors — Risks Related to Regulation and Our Industry.”

Agricultural Regulation

The properties that we acquire are used primarily for cultivation and manufacturing of adult- and medical-use cannabis and will be subject to the laws, ordinances and regulations of state, local and federal governments, including laws, ordinances and regulations involving land use and usage, water rights, treatment methods, disturbance, the environment and eminent domain.

Each governmental jurisdiction has its own distinct laws, ordinances and regulations governing the use of agricultural lands. Many such laws, ordinances and regulations seek to regulate water usage and water runoff because water can be in limited supply. In addition, runoff from rain or from irrigation is governed by laws, ordinances and regulations from state, local and federal governments. Additionally, if any of the water used on or running off from our properties flows to any rivers, streams, ponds, the ocean or other waters, there may be specific laws, ordinances and regulations governing the amount of pollutants, including sediments, nutrients and pesticides, that such water may contain.

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We expect that the properties in our portfolio will, at the time of acquisition, have sources of water, including wells and/or surface water, that will provide sufficient amounts of water necessary for the current growing operations at each location. However, should the need arise for additional water from wells and/or surface water sources, we may be required to obtain additional permits or approvals or to make other required notices prior to developing or using such water sources. Permits for drilling water wells or withdrawing surface water may be required by federal, state and local governmental entities pursuant to laws, ordinances, regulations or other requirements, and such permits may be difficult to obtain due to drought, the limited supply of available water within the districts of the states in which our properties are located or other reasons.

In addition to the regulation of water usage and water runoff, state, local and federal governments also seek to regulate the type, quantity and method of use of chemicals and materials for growing crops, including fertilizers, pesticides and nutrient rich materials. Such regulations could include restricting or preventing the use of such chemicals and materials near residential housing or near water sources. Further, some regulations have strictly forbidden or significantly limited the use of certain chemicals and materials. Licenses, permits and approvals must be obtained from governmental authorities requiring such licenses, permits and approvals before chemicals and materials can be used at grow facilities. Reports on the usage of such chemicals and materials must be submitted pursuant to applicable laws, ordinances and regulations and the terms of the specific licenses, permits and approvals. Failure to comply with laws, ordinances and regulations, to obtain required licenses, permits and approvals or to comply with the terms of such licenses, permits and approvals could result in fines, penalties and/or imprisonment.

The use of land for agricultural purposes in certain jurisdictions is also subject to regulations governing the protection of endangered species. When agricultural lands border, or are in close proximity to, national parks, protected natural habitats or wetlands, the agricultural operations on such properties must comply with laws, ordinances and regulations related to the use of chemicals and materials and avoid disturbance of habitats, wetlands or other protected areas.

Because the properties we own will be used for growing cannabis, there may be other additional land use and zoning regulations at the state or local level that affect our properties that may not apply to other types of agricultural uses.

As an owner of agricultural lands, we may be liable or responsible for the actions or inactions of our tenants with respect to these laws, regulations and ordinances.

Environmental Matters

Our properties and the operations thereon are subject to federal, state and local environmental laws, ordinances and regulations, including laws relating to water, air, solid wastes and hazardous substances. Our properties and the operations thereon are also subject to federal, state and local laws, ordinances, regulations and requirements related to the federal Occupational Safety and Health Act, as well as comparable state statutes relating to the health and safety of our employees and others working on our properties. Although we believe that we and our tenants are in material compliance with these requirements, there can be no assurance that we will not incur significant costs, civil and criminal penalties and liabilities, including those relating to claims for damages to persons, property or the environment resulting from operations at our properties. See “Risk Factors — Risks Related to Our Business and Growth Strategy — We face possible liability for environmental cleanup costs and damages for contamination related to properties we acquire, which could materially and adversely affect our business, financial condition, results of operations and ability to make distributions to our stockholders.”

Insurance

We have purchased general liability insurance (lessor’s risk) that provides coverage for bodily injury and property damage to third parties resulting from our ownership of the cannabis properties that are leased to and occupied by our tenants. Our leases with tenants also require the tenants to carry general liability, professional liability, all risks, loss of earnings and other insurance coverages and to name us as an additional insured under these policies. We believe the policy specifications and insured limits are appropriate given the relative risk of loss, the cost of the coverage and industry practice.

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Employees

As of the date of this prospectus, we have seven employees, all of whom are full-time employees.

Legal Proceedings

On October 22, 2020, Revolution filed a complaint against us and one of our wholly owned subsidiaries in the Circuit Court of Cook County, Illinois in an action entitled Revolution Global, LLC v. FHP of Delavan IL — C, LLC and Freehold Properties, Inc. The complaint alleges, among other things, a breach of contract as a result of our failure to fund additional amounts under our tenant improvement funding agreement related to the Delavan, Illinois property. The complaint seeks, among other things, damages of at least $3.1 million, damages equal to the cost of completing the development project and damages for lost profits, plus attorneys’ fees and costs. We believe the claims asserted in the complaint are without merit and intend to vigorously defend against these claims. We can provide no assurances, however, as to the ultimate outcome of this litigation or any estimation of damages and costs related to this litigation at this time.

Other than as described in the paragraph above, we are not currently a party, as plaintiff or defendant, to any legal proceedings. We may be party from time to time to various lawsuits, claims and other legal proceedings that arise in the ordinary course of our business. There can be no assurance that these matters that arise in the future, individually or in aggregate, will not have a material adverse effect on our financial condition or results of operations in any future period.

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MANAGEMENT

Our Directors and Executive Officers

Our board of directors currently consists of five directors. In addition, pursuant to the terms of our Investor Rights Agreement, Tilden Park has designated a non-voting board observer.

The following table sets forth certain information regarding our executive officers, certain other officers and directors:

Name	Age		Position
Donald C. Brain		66	Chief Executive Officer and Chairman of the Board of Directors
Jeffery C. Walraven		51	Chief Operating Officer and Director
Louis S. Yi		42	Chief Financial Officer
Benjamin H. Hendren		40	Senior Vice President and Chief Accounting Officer
John A. Travis		50	Senior Vice President and Chief of Acquisitions and Asset Management
Randall L. Churchey*		60	Director
James G. Mueller*		52	Director
Lori B. Wittman*		61	Director

Independent within the meaning of the listing standards of the New York Stock Exchange, or NYSE.

Biographical Summaries of Executive Officers, Certain Employees and Directors

The following is a summary of certain biographical information concerning our directors, executive officers and certain other officers:

Donald C. Brain, Co-Founder, Chief Executive Officer and Chairman

Mr. Brain has served as our Chief Executive Officer and Chairman of our board of directors since the formation of our company. Since August 2018, Mr. Brain has served as a managing director at Enfinite Capital, and since June 2012, he has been the owner of Handcrafted Wines, LLC. From October 2012 to October 2015, Mr. Brain served as senior vice president of Fidelity National Title Insurance Company. Mr. Brain has over 40 years of professional experience, including the last 15 years as an investor, partner and entrepreneur in a diverse set of companies in the wine and spirits, distribution, technology and energy industries. Prior to that, Mr. Brain spent 25 years with risk management and advisory services companies.

Mr. Brain holds a Bachelor’s degree in Business Administration from the University of Notre Dame.

Mr. Brain was selected to serve as Chairman of our board of directors because of his significant investment and entrepreneurial experience and general business acumen.

Jeffery C. Walraven, Co-Founder, Chief Operating Officer and Director

Mr. Walraven has served as our Chief Operating Officer and a director since the formation of our company. From January 2014 to May 2019, Mr. Walraven has served as Executive Vice President and Chief Financial Officer, of MedEquities Realty Trust, Inc. (formerly, NYSE: MRT), an internally managed healthcare REIT that was initially funded privately in July 2014, completed an initial public offering on the New York Stock Exchange in September 2016 and was subsequently sold in a public-to-public sale to Omega Healthcare Investors, Inc. (NYSE: OHI) that closed in May 2019.

From 2006 to 2013, Mr. Walraven held several positions with BDO USA, LLP, most recently an assurance managing partner of the Memphis office, where his primary responsibilities included providing core and peripheral assurance services and business operational and tax consulting services. Mr. Walraven has 22 years of public accounting experience, serving many public REIT clients since 1999. Mr. Walraven worked extensively with publicly-traded companies on all aspects of compliance with Securities Act and

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Exchange Act filings, including quarterly, annual and special reports, and compliance relating to acquisitions, dispositions and securities offerings. Mr. Walraven has had engagement partner responsibility for numerous public and private securities offering by REITs and other clients, including initial public offerings, secondary offerings and private placements.

Mr. Walraven holds a Bachelor’s degree in Financial Management from Bob Jones University and a Master of Professional Accountancy from Clemson University.

Mr. Walraven was selected to serve as a director because of his experience managing public real estate companies and his background in accounting and finance.

Louis S. Yi, Chief Financial Officer

Mr. Yi has served as our Chief Financial Officer since the formation of our company. Mr. Yi has approximately 20 years of experience in investment banking, including over 10 years at FBR & Co. and eight years with Bear, Stearns & Co. Inc. From July 2008 to February 2019, he served in various roles, most recently as a managing director in real estate investment banking as well as head of equity-linked securities across all sectors, at FBR & Co.

Mr. Yi holds a Bachelor’s degree in Economics from Johns Hopkins University.

Benjamin H. Hendren, Senior Vice President and Chief Accounting Officer

Mr. Hendren has served as our Senior Vice President and Chief Accounting Officer since September 2019. Mr. Hendren has over 18 years of experience in accounting and auditing. From September 2002 to June 2017, he served in various roles, most recently as an assurance partner, providing assurance services for both public and private entities, including multiple initial public offerings, at BDO USA, LLP. From October 2017 to July 2018, Mr. Hendren served as a consultant assisting companies with technical accounting matters and adoption of new accounting standards at LBMC Staffing Solutions, LLC. From July 2018 to September 2019, he served in various roles, including most recently as Chief Financial Officer, at Salus Workers’ Compensation, an insurance managing general agent and third party administrator focused on workers’ compensation insurance.

Mr. Hendren holds a Bachelor’s degree in Accounting from Union University and is a licensed Certified Public Accountant.

John A. Travis, Senior Vice President and Chief of Acquisitions and Asset Management

Mr. Travis has served as our Senior Vice President and Chief of Acquisitions and Asset Management since July 2019. Mr. Travis founded Control Power Concepts Inc., a specialized power engineering and field services firm, in May 2006. In this role he was instrumental to the development of power infrastructure and systems for the resort casino industry in Macau and later for developing compliance protocols for power companies nationally in the United States. As a business owner and entrepreneur, Mr. Travis has gained substantial experience and skill in business operations, project management, business development, and leadership. He maintains his status as the Chairman of the board of directors at Control Power Concepts Inc. Since December 2018, he has also served as an advisory board member for Elysium Services Inc., a logistics company specializing in the distribution wine, cannabis and beer in California. Mr. Travis is a U.S. Naval veteran successfully completing the rigorous Naval Nuclear Training Program and for exemplary leadership and performance, he gained the highest possible rank available during his term in service. He was selected to instruct trainings regarding nuclear power to junior sailors and served as a nuclear reactor operator on a fast attack submarine.

Mr. Travis holds a Bachelor’s degree in Nuclear Engineering Technology from Thomas Edison State University.

Randall L. Churchey, Independent Director

Mr. Churchey has served as an independent director since July 2019. Mr. Churchey served as President, Chief Executive Officer and a member of the board of directors of Education Realty Trust, Inc. (formerly,

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NYSE: EDR) from 2010 until the sale of the company in September 2018 and as Chairman of the board of directors from January 2015 until the sale of the company in September 2018. He also served as a member of the board of directors of MedEquities Realty Trust, Inc. from 2014 until the sale of the company in May 2019. In addition, Mr. Churchey served on the board of directors of Jernigan Capital, Inc. (NYSE: JCAP) from 2018 until 2019. From December 2004 until the sale of the company to a private equity firm in May 2012, Mr. Churchey was a member of the board of directors of Great Wolf Resorts, Inc., a public indoor water park resort company, and was the Interim Chief Executive Officer of Great Wolf from May 2008 until December 2008. He was President and Chief Executive Officer and a member of the board of directors of Golden Gate National Senior Care (the successor to Beverly Enterprises) from March 2006 to September 2007. Prior to that, Mr. Churchey served as an executive for several publicly traded REITs. Mr. Churchey is a former member of the board of governors of Nareit.

Mr. Churchey holds a Bachelor of Science degree from the University of Alabama.

Mr. Churchey was selected to serve as a director because of his public company experience and his experience in the real estate industry.

James G. Mueller, Co-Founder and Independent Director

Mr. Mueller has served as an independent director since May 2019. Since May 1996, Mr. Mueller has served as the Chairman of the board of directors at Mid America Capital, Inc., a Midwest based investment banking and advisory firm specializing in middle-market mergers and acquisitions and troubled company acquisitions. Since January 2019, he has also served as the Chairman of the board of directors at Mid-America Asset Management, Inc.

Mr. Mueller holds a Bachelor of Science degree from the University of Missouri.

Mr. Mueller was selected to serve as a director because of his experience in investing in alternative agriculture and cannabis companies, as well as his experience in the cannabis industry.

Lori B. Wittman, Independent Director

Ms. Wittman has served as an independent director since October 2019, and currently serves as our lead independent director and chair of our audit committee. Ms. Wittman has served as an advisor to Big Rock Partners Acquisition Corp., or Big Rock, a blank check company, since February 2020. From September 2017 to February 2020, Ms. Wittman served as Chief Financial Officer and a member of the board of directors of Big Rock. From August 2015 to August 2017, Ms. Wittman was the chief financial officer of Care Capital Properties, Inc. (NYSE: CCP), a public healthcare REIT with a diversified portfolio of triple-net leased properties, which merged with Sabra Healthcare REIT, Inc. in 2017. Previously, Ms. Wittman was Senior Vice President of Capital Markets and investor relations at Ventas, Inc., a REIT focused on the healthcare sector from 2011 to August 2015. Prior to her time at Ventas, Ms. Wittman served in a number of finance, accounting and capital markets-related roles at various companies, including General Growth Properties, Big Rock Partners, LLC and Heitman Financial. Ms. Wittman has been a director of IMH Financial Corporation, or IMH, a real estate investment and finance company, since July 2014, and currently serves as Chairperson of the Compensation Committee and as a member of the Audit Committee of IMH. Ms. Wittman has also served as a director of Global Medical REIT Inc. (NYSE: GMRE), a REIT engaged primarily in the acquisition of healthcare facilities, since May 2018, and currently serves as Chairperson of the Audit Committee and a member of the Compensation Committee of GMRE. Ms. Wittman also serves a member of the board of directors of NETSTREIT Corp. (NYSE: NTST), a single-tenant retail REIT.

Ms. Wittman holds a Bachelor’s degree in Geography and Sociology from Clark University, a Master of City Planning from the University of Pennsylvania and a Master in Business Administration from the University of Chicago.

Ms. Wittman was selected to serve as a director because of her public company experience and her experience in the real estate industry.

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Corporate Governance Profile

We have structured our corporate governance in a manner we believe closely aligns our interests with those of our stockholders. Notable features of our corporate governance structure include the following:

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our board of directors is not classified, with each of our directors subject to re-election annually, and we may not classify our board without stockholder approval;

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we have a majority voting standard for uncontested director elections;

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although we are not required to do so, we intend to comply with the corporate governance standards of the New York Stock Exchange, or NYSE, including having committees of our board of directors comprised solely of independent directors;

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a majority of our directors are independent under the listing standards of the NYSE;

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we have a lead independent director;

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we anticipate that at least one of our directors will qualify as an “audit committee financial expert,” as defined by the SEC;

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our stockholders have the ability to amend our bylaws by the affirmative vote of a majority of the outstanding shares of our common stock;

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we have opted out of the business combination and control share acquisition statutes under the MGCL; and

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we do not have a stockholder rights plan.

Our directors will stay informed about our business by attending meetings of our board of directors and its committees and through supplemental reports and communications. Our independent directors will meet regularly in executive sessions without the presence of our corporate officers or non-independent directors.

Role of the Board in Risk Oversight

One of the key functions of our board of directors is informed oversight of our risk management process. Our board of directors administers this oversight function directly, with support from its three standing committees, the audit committee, the nominating and corporate governance committee and the compensation committee, each of which addresses risks specific to their respective areas of oversight. In particular, our audit committee has the responsibility to consider and discuss our major financial risk exposures and the steps our management has taken to monitor and control these exposures, including guidelines and policies to govern the process by which risk assessment and management is undertaken. The audit committee also monitors compliance with legal and regulatory requirements. Our nominating and corporate governance committee monitors the effectiveness of our corporate governance guidelines and code of business conduct and ethics, including whether they are successful in preventing illegal or improper liability-creating conduct. Our compensation committee will assess and monitor whether any of our compensation policies and programs has the potential to encourage excessive risk-taking.

Lead Independent Director

Our board of directors believes that its governance structure ensures a strong, independent board of directors even though it does not have an independent chair. To strengthen the role of our independent directors and encourage independent leadership, our board has established the position of lead independent director, which is currently held by Ms. Whitman. The responsibilities of the lead independent director include, among others:

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presiding at all meetings of the board of directors at which the executive chairman is not present;

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scheduling meetings of the independent directors from time to time, but not less than twice per year;

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developing the agendas for, and presiding at, executive sessions of the independent directors;

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communicating the sense of the board of directors to our executive chairman and our chief executive officer;

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assisting the executive chairman in reviewing and setting the agenda and schedule for each of the meetings of the board of directors, including bringing to the attention of the executive chairman particular issues for the directors’ attention and consideration and ensuring there is sufficient time for discussion of all agenda items;

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assisting in improving the effectiveness of meetings of the board of directors;

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assisting the executive chairman in the review and approval of information and materials to be sent to the board of directors, including in particular providing input as to the quality, quantity and timeliness of the information submitted by management that is necessary or appropriate for the independent directors to effectively and responsibly perform their duties; and

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coordinating with committee chairs with respect to committee self-evaluations.

Board Committees

Our board of directors has established three standing committees: an audit committee, a compensation committee and a nominating and corporate governance committee. Matters put to a vote of any one of our four committees must be approved by a majority of the directors on the committee who are present at a meeting at which there is a quorum or by unanimous written or electronic consent of the directors on that committee. The principal functions of each committee are briefly described below. We intend to comply with the listing requirements and other rules and regulations of the NYSE, as amended or modified from time to time, and each of these committees will be comprised exclusively of independent directors. Additionally, our board of directors may from time to time establish certain other committees to facilitate the management of our company.

Audit Committee

Our audit committee is comprised of our three independent directors, with Ms. Wittman serving as chair. Ms. Wittman qualifies as an “audit committee financial expert” as that term is defined by the applicable SEC regulations and NYSE corporate governance listing standards. We have adopted an audit committee charter, which details the principal functions of the audit committee, including oversight related to:

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our accounting and financial reporting processes;

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the integrity of our consolidated financial statements and financial reporting process;

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our systems of disclosure controls and procedures and internal control over financial reporting;

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our compliance with financial, legal and regulatory requirements;

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the evaluation of the qualifications, independence and performance of our independent registered public accounting firm; and

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our overall risk profile.

The audit committee will also be responsible for engaging an independent registered public accounting firm, reviewing with the independent registered public accounting firm the plans and results of the audit engagement, approving professional services provided by the independent registered public accounting firm, including all audit and non-audit services, reviewing the independence of the independent registered public accounting firm, considering the range of audit and non-audit fees and reviewing the adequacy of our internal accounting controls. The audit committee also will prepare the audit committee report required by SEC regulations to be included in our annual proxy statement.

Compensation Committee

Our compensation committee is comprised of our three independent directors, with Mr. Churchey serving as chair. Prior to the completion of this offering, we have adopted a compensation committee charter, which details the principal functions of the compensation committee, including:

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reviewing and approving on an annual basis the corporate goals and objectives relevant to our chief executive officer’s compensation, evaluating our chief executive officer’s performance in light of such

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goals and objectives and determining and approving the remuneration of our chief executive officer based on such evaluation;

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reviewing and approving the compensation of all of our other executive officers;

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reviewing our executive compensation policies and plans;

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reviewing employments agreements and severance agreements of employees who are not executive officers;

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implementing and administering our incentive compensation equity-based remuneration plans;

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assisting management in complying with our proxy statement and annual report disclosure requirements;

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producing a report on executive compensation to be included in our annual proxy statement, to the extent required; and

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reviewing, evaluating and recommending changes, if appropriate, to the remuneration for directors.

Nominating and Corporate Governance Committee

Our nominating and corporate governance committee is comprised of our three independent directors, with Mr. Churchey serving as chair. We have adopted a nominating and corporate governance committee charter, which details the principal functions of the nominating and corporate governance committee, including:

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identifying and recommending to our board of directors qualified candidates for election as directors and recommending nominees for election as directors at the annual meeting of stockholders;

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developing and recommending to our board of directors corporate governance guidelines and implementing and monitoring such guidelines;

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reviewing and making recommendations on matters involving the general operation of our board of directors, including board size and composition, and committee composition and structure;

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recommending to our board of directors nominees for each committee of our board of directors;

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annually facilitating the assessment of our board of directors’ performance as a whole and of the individual directors, as required by applicable law and regulations; and

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overseeing our board of directors’ evaluation of management.

In identifying and recommending nominees for directors, the nominating and corporate governance committee may consider diversity of relevant experience, expertise and background.

Code of Business Conduct and Ethics

Upon completion of this offering, our board of directors will establish a code of business conduct and ethics that applies to our directors, officers and other employees. Among other matters, our code of business conduct and ethics will be designed to deter wrongdoing and to promote:

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honest and ethical conduct, including the ethical handling of actual or apparent conflicts of interest between personal and professional relationships;

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full, fair, accurate, timely and understandable disclosure in our SEC reports and other public communications;

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compliance with applicable laws, rules and regulations;

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prompt internal reporting of violations of the code to appropriate persons identified in the code; and

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accountability for adherence to the code of business conduct and ethics.

Any waiver of the code of business conduct and ethics for our executive officers or directors must be approved by a majority of our independent directors, and any such waiver shall be promptly disclosed as required by law.

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Director Compensation

As compensation for serving on our board of directors, each of our non-employee directors receives an annual cash retainer of $50,000 and an annual grant of restricted shares of our common stock with an aggregative market value of $50,000, which vest ratably on each of the first three anniversaries of the date of grant. The lead independent director, who currently is Lori Wittman, receives an additional cash retainer of $10,000 per year. Additionally, the chair of each committee receives an additional cash retainer for serving as chair in the amount of $15,000 for our audit committee, $10,000 for our compensation committee and $7,500 for our nominating and corporate governance committee. Our non-employee directors are entitled to participate in our Alignment of Interest Program under our Equity Incentive Plan, or our Alignment of Interest Program, pursuant to which they may elect to receive restricted shares of our common stock in lieu of their cash retainers described above. See “— Alignment of Interest Program” for more information about our Alignment of Interest Program. In addition, we reimburse our directors for their reasonable out-of-pocket expenses incurred in attending board of directors and committee meetings. Directors who are also officers or employees of our company do not receive additional compensation as directors. Our board of directors may change the compensation of our independent directors in its discretion.

The following table provides information on the compensation for our non-employee directors for their services during the year ended December 31, 2019.

Name	Fees Earned or Paid in Cash(1)			Stock Awards(1)			Total
Randall L. Churchey		$	58,333(2)		$	88,010(3)		$	146,343
James G. Mueller			16,667(4)			55,000(5)			71,667
Adam Levinson(6)			—			50,000(7)			50,000
Lori B. Wittman			63,333(2)			88,010(8)			151,343

(1)

Represents the grant date fair value of restricted shares of our common stock calculated in accordance with ASC 718.

(2)

Includes $55,000 in cash retainers, which each of Mr. Churchey and Ms. Wittman elected to receive in the form of 5,500 restricted shares of our common stock that vest three years from the date of grant pursuant to our Alignment of Interest Program. Under the Alignment of Interests Program, if a non-employee director elects to receive restricted shares of our common stock that vest on the third anniversary of the date of grant in lieu of a cash retainer, such director is entitled to an award in the form of restricted shares of our common stock equal to the amount of such cash retainer plus a multiple 0.6 times the amount of the cash retainer. The incremental amount above the amount of the forgone cash retainer representing the 0.6 times multiple is reflected in the Stock Awards column.

(3)

Represents (i) $55,000 in the form of 5,500 restricted shares of our common stock granted to Mr. Churchey on October 30, 2019 that vest ratably on each of the first three anniversaries of the date of grant and (ii) $33,010 in the form of 3,301 restricted shares of our common stock granted to Mr. Churchey pursuant our Alignment of Interest Program that vest on the third anniversary of the date of grant, which represents a multiple of 0.6 times the $55,000 in cash retainers that Mr. Churchey elected to receive in the form of restricted shares of our common stock.

(4)

Mr. Mueller did not participate in the Alignment of Interest Program. This amount reflects the fact that we began paying the cash retainers on August 28, 2019 when we commenced operations.

(5)

Represents $55,000 in the form of 5,500 restricted shares of our common stock granted to Mr. Mueller on October 30, 2019 that vest ratably on each of the first three anniversaries of the date of grant.

(6)

Mr. Levinson joined our board of directors in October 2019 and subsequently resigned in January 2020.

(7)

Represents $50,000 in the form of 5,000 restricted shares of our common stock that were forfeited upon Mr. Levinson’s resignation.

(8)

Represents (i) $55,000 in the form of 5,500 restricted shares of our common stock granted to Ms. Wittman on October 30, 2019 that vest ratably on each of the first three anniversaries of the date of grant and (ii) $33,010 in the form of 3,301 restricted shares of our common stock granted to

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Ms. Wittman pursuant our Alignment of Interest Program that on the third anniversary of the date of grant, which represents a multiple of 0.6 times the $55,000 in cash retainers that Ms. Wittman elected to receive in the form of restricted shares of our common stock.

Executive Compensation

As noted above, we are an “emerging growth company” under the federal securities laws and, as such, we have elected to comply with certain reduced disclosure requirements, including with respect to executive compensation. The following provides compensation information for the year ended December 31, 2019 with respect to our named executive officers, Mr. Brain, our chief executive officer and chairman, Mr. Walraven, our chief operating officer, and Mr. Yi, our chief financial officer.

Summary Compensation Table

The table below sets forth all compensation earned, awarded or paid, as applicable, to our named executive officers in the fiscal year ended December 31, 2019.

Name and Principal Position	Year		Salary(1)			Bonus			Stock Awards(5)			Total
Donald C. Brain		2019		$	249,390(2)		$	249,390(2)		$	380,030(6)		$	878,810
Chief Executive Officer and Chairman
Jeffery C. Walraven		2019			218,840(3)			220,020(3)			427,030(7)			865,890
Chief Operating Officer
Louis S. Yi		2019			162,090(4)			165,020(4)			297,860(8)			624,970
Chief Financial Officer

(1)

Amounts represent the portion of annual base salary for the period commencing on July 1, 2019 and ended December 31, 2019, based on the following annual salaries: Mr. Brain — $475,000; Mr. Walraven — $400,000; and Mr. Yi — $300,000.

(2)

Mr. Brain’s salary amount includes $130,640, which Mr. Brain elected to receive in the form of restricted shares of our common stock that vest on the sixth anniversary of the date of grant pursuant to our Alignment of Interest Program. Mr. Brain elected to receive his full bonus amount of $249,390 in the form of restricted shares of our common stock that vest on the sixth anniversary of the date of grant pursuant to our Alignment of Interest Program. Under our Alignment of Interests Program, if an executive officer elects to receive restricted shares of our common stock that vest on the sixth anniversary of the date of grant in lieu of a cash salary or bonus amount, such executive officer is entitled to an award in the form of restricted shares of our common stock equal to the amount of such salary or bonus plus a multiple 1.0 times the amount of the salary or bonus. The incremental amount above the amount of the forgone salary and bonus representing the 1.0 times multiple is reflected in the Stock Awards column.

(3)

Mr. Walraven’s salary amount includes $207,010, which Mr. Walraven elected to receive in the form of restricted shares of our common stock that vest on the sixth anniversary of the date of grant pursuant to our Alignment of Interest Program. Mr. Walraven elected to receive his full bonus amount of $220,020 in the form of restricted shares of our common stock that vest on the sixth anniversary of the date of grant pursuant to our Alignment of Interest Program. Under our Alignment of Interests Program, if an executive officer elects to receive restricted shares of common stock that vest on the sixth anniversary of the date of grant in lieu of a cash salary or bonus amount, such executive officer is entitled to an award in the form of restricted shares of our common stock equal to the amount of such salary or bonus plus a multiple 1.0 times the amount of the salary or bonus. The incremental amount above the amount of the forgone salary and bonus representing the 1.0 times multiple is reflected in the Stock Awards column.

(4)

Mr. Yi’s salary amount includes $132,480, which Mr. Yi elected to receive in the form of restricted shares of our common stock that vest on the sixth anniversary of the date of grant pursuant to our Alignment of Interest Program. Mr. Yi elected to receive his full bonus amount of $165,020 in the form

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of restricted shares of our common stock that vest on the sixth anniversary of the date of grant pursuant to our Alignment of Interest Program. Under our Alignment of Interests Program, if an executive officer elects to receive restricted shares of our common stock that vest on the sixth anniversary of the date of grant in lieu of a cash salary or bonus amount, such executive officer is entitled to an award in the form of restricted shares of common stock equal to the amount of such salary or bonus plus a multiple 1.0 times the amount of the salary or bonus. The incremental amount above the amount of the forgone salary and bonus representing the 1.0 times multiple is reflected in the Stock Awards column.

(5)

Represents the grant date fair value of restricted shares of our common stock calculated in accordance with ASC 718.

(6)

Represents $380,030 in the form of 38,003 restricted shares of our common stock granted to Mr. Brain pursuant our Alignment of Interest Program, a portion of which vests on August 25, 2025 and a portion of which vests on December 31, 2025, which represents a multiple of 1.0 times the $130,640 in salary and $249,030 in bonus that Mr. Brain elected to receive in the form of restricted shares of our common stock.

(7)

Represents $427,030 in the form of 42,703 restricted shares of our common stock granted to Mr. Walraven pursuant our Alignment of Interest Program that vest on December 31, 2025, which represents a multiple of 1.0 times the $130,640 in salary and $249,030 in bonus that Mr. Walraven elected to receive in the form of restricted shares of our common stock.

(8)

Represents $297,860 in the form of 29,786 restricted shares of our common stock granted to Mr. Yi pursuant our Alignment of Interest Program that vest on December 31, 2025, which represents a multiple of 1.0 times the $130,640 in salary and $249,030 in bonus that Mr. Yi elected to receive in the form of restricted shares of our common stock.

Outstanding Equity Awards at Fiscal Year-End December 31, 2019

The following table presents information about our named executive officers’ outstanding equity awards as of December 31, 2019. The equity awards consist of time-vesting restricted shares of common stock.

Name	Grant Date		Number of Shares or Units of Stock That Have Not Vested(1)		Market Value of Shares or Units of Stock That Have Not Vested(2)
Donald C. Brain		12/31/19		52,256(3)		$	760,060
Chief Executive Officer and Chairman		12/31/19		23,750(4)
Jeffery C. Walraven		12/31/19		85,406(3)		$	854,060
Chief Operating Officer and Director
Louis S. Yi		12/31/19		59,572(3)		$	595,720
Chief Financial Officer

(1)

Represents restricted shares of our common stock granted under our Equity Incentive Plan.

(2)

Market value reflects the number of restricted shares multiplied by $10.00 per share, which was the grant date fair value each of the restricted shares of our common stock reflected in the table above as well as the price per share of the shares of our common stock issued in our private placement that closed on September 27, 2019.

(3)

The restricted shares of our common stock will vest on August 28, 2025.

(4)

The restricted shares of our common stock will vest on the sixth anniversary of grant date.

IPO Equity Grants

Concurrently with the completion of this offering, we will make the following equity grants to our named executive officers under our Equity Incentive Plan:

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Time-Vesting Restricted Stock. We will grant , and restricted shares of our common stock to Messrs. Brain, Walraven and Yi, respectively, which will vest on the third anniversary of the date of grant, subject to their continued employment on such date. Dividends on the restricted shares will accrue during the vesting period but will not be paid unless and until the vesting of the restricted shares.

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Performance-Vesting Restricted Stock Units. We will grant , and performance-vesting restricted stock units to Messrs. Brain, Walraven and Yi, respectively, which will vest on the third anniversary of the date of the grant based on the achievement of absolute total shareholder return, or TSR, which includes stock price appreciation and dividends paid over the measurement period. Dividends on the restricted stock units will accrue but will not be paid unless and until the underlying restricted stock units vest and are converted into shares of common stock. The TSR hurdles and the percentage of the restricted stock units that will vest are below. For amounts between the specified TSR hurdles, the amount earned would be interpolated on a linear basis.

	Absolute TSR Award
	TSR Performance			% of Award Earned
	24.00%			0%
	30.00%			50%
	36.00%			100%

Alignment of Interest Program

Our Alignment of Interest Program allows eligible employees and non-employee directors to elect to receive restricted shares of our common stock issued under the Equity Incentive Plan subject to long-term vesting in lieu of their cash compensation. The number of shares issued will be increased through a Company match depending on the length of the vesting period selected. The employees’ vesting period choices are: two years for a 33% match; four years for a 66% match; and six years for a 100% match. The non-employee directors’ vesting period choices are: one year for a 20% match; two years for a 40% match; and three years for a 60% match. Restricted shares of common stock issued under the Alignment of Interest Program are generally subject to cliff vesting periods varying from one to six years beginning on the date of issue. If a recipient voluntarily terminates his or her relationship with us or is terminated for cause before the end of the vesting period, the shares are forfeited.

For 2020, Mr. Brain has elected to receive restricted shares of our common stock that vest on the sixth anniversary of the date of grant in lieu of $237,500 of his salary and up to $237,500 of his bonus, Mr. Walraven has elected to receive restricted shares of our common stock that vest on the sixth anniversary of the date of grant in lieu of $200,000 of his salary and up to $200,000 of his bonus, and Mr. Yi has elected to receive restricted shares of our common stock that vest on the sixth anniversary of the date of grant in lieu of $150,000 of his salary and up to $150,000 of his bonus. On March 31, 2020, Mr. Brain received 47,500 restricted shares of our common stock and 47,500 restricted stock units, Mr. Walraven received 40,000 restricted shares of our common stock and 40,000 restricted stock units and Mr. Yi received 30,000 restricted shares of our common stock and 30,000 restricted stock units. The restricted shares of common stock will vest on January 1, 2026, subject to their continued employment on such date. The restricted stock units will vest upon review and approval by the compensation committee of each executive’s performance during the year ending December 31, 2020. Based on the compensation committee’s determination with respect to such performance, no later than March 15, 2021, all or some of the restricted stock units will convert into restricted shares of common stock that will vest on the January 1, 2026, subject to their continued employment on such date.

Employment Agreements

We entered into employment agreements with Messrs. Brain, Walraven, and Yi on October 30, 2019. Set forth below is a description of the terms of each employment agreement.

The employment agreements have initial three-year terms with automatic one-year renewals thereafter, unless the executive or we provide(s) notice of non-renewal to the other party. The employment agreements

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provide for an annual base salary of $475,000 for Mr. Brain, $400,000 for Mr. Walraven and $300,000 for Mr. Yi, which may be increased (but not decreased) at the discretion of our board of directors. Pursuant to the employment agreements, the executives are eligible to receive an annual discretionary bonus based on a target percentage, which is anticipated to be equal to 100% of the executive’s annual base salary, subject to being set by our board of directors pursuant to our officer incentive program or any other annual bonus plan as may be in effect from time to time. Under the employment agreements, during the employment term, the executives will also be eligible to participate in other compensatory and benefit plans available to all employees.

The employment agreements provide that, if the executive’s employment is terminated:

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by us for “cause,” by the executive without “good reason,” as a result of a non-renewal of the employment term by the executive, or due to the executive’s death, then we shall pay the executive: (i) all accrued but unpaid wages through the termination date; (ii) all earned and accrued but unpaid bonuses; and (iii) all approved, but unreimbursed, business expenses. In addition, upon a termination of employment due to the executive’s death, all of the outstanding equity-based awards held by the executive will become fully vested and, as applicable, exercisable;

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by us without “cause,” by the executive for “good reason,” or as a result of a non-renewal of the employment term by us, then we shall pay or provide the executive: (i) all accrued but unpaid wages through the termination date; (ii) all earned and accrued but unpaid bonuses; (iii) all approved, but unreimbursed, business expenses; (iii) a separation payment equal to the sum of two times (2x) of the executive’s (A) then current base salary and (B) average annual bonus for the two annual bonus periods completed prior to termination (or target bonus for any fiscal year not yet completed), with such separation payment being payable in equal installments over a period of 12 months following such termination; (iv) all of the outstanding equity-based awards held by the executive becoming fully vested and, as applicable, exercisable, without any further action by our board of directors; and (v) subject to the executive’s timely election of coverage under COBRA, COBRA continuation coverage for the executive (or his eligible dependents) at the premium rate paid by active employees for a period of 18 months (or up to 24 months if eligibility is extended under COBRA), or such period of time that the executive (and/or the executive’s eligible dependents) are eligible for COBRA continuation coverage. Upon the executive (and/or the executive’s eligible dependents) becoming ineligible for COBRA continuation coverage, the executive will be reimbursed for the premiums paid by the executive for medical insurance for the executive (and/or the executive’s eligible dependents) for a period of time extending to 24 months following termination of employment; provided, however, that our obligation to make additional payments will cease during any period that the executive is employed by a third party that provides comparable coverage; or

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due to the executive’s “disability,” then we shall pay or provide the executive (or the executive’s estate and/or beneficiaries, as the case may be): (i) all accrued but unpaid wages through the termination date; (ii) all earned and accrued but unpaid bonuses prorated to the date of his disability; (iii) all approved, but unreimbursed, business expenses; (iv) COBRA continuation coverage at the premium rate that is paid by active employees for coverage for a period of 18 months, or, if less, until the executive (and/or the executive’s eligible dependents) is no longer entitled to such COBRA coverage; and (v) all of the outstanding equity-based awards held by the executive becoming fully vested and, as applicable, exercisable.

Additionally, in the event of a change in control (as defined in the employment agreements), all of the executives’ equity-based awards that are outstanding at the time of the change in control will be immediately become fully vested and, as applicable, exercisable, without further action by our board of directors. The executive’s right to receive the severance payments and benefits described above is subject to his delivery and non-revocation of an effective general release of claims in favor of our company and compliance with customary restrictive covenant provisions, including, relating to confidentiality, noncompetition, nonsolicitation, cooperation and nondisparagement.

In addition, under the employment agreements, to the extent any payment or benefit would be subject to an excise tax imposed in connection with Section 4999 of the Code, such payments and/or benefits may be subject to a “best pay cap” reduction to the extent necessary so that the executive receives the greater of the

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(i) net amount of the payments and benefits reduced such that such payments and benefits will not be subject to the excise tax and (ii) net amount of the payments and benefits without such reduction.

Under the employment agreements, “cause” is defined as: (i) the executive’s refusal to substantially perform, following notice by us to the executive, the executive’s duties to us, or gross negligence or willful misconduct in connection with the performance of the executive’s duties to us; (ii) the executive’s conviction or plea of guilty or nolo contendere of a felony; (iii) the executive’s conviction of any other criminal offense involving an act of dishonesty intended to result in personal enrichment of the executive at the expense of us or our affiliates; or (iv) the executive’s breach of any material company policy, or term of the employment agreement or any other employment, consulting or other services, confidentiality, intellectual property or non-competition agreements, if any, between the executive and us or our affiliates. The executive will have rights to cure certain events constituting “cause.”

Under the employment agreements, “good reason” is defined as the occurrence of any of the following events, without the express written consent of the executive, unless such events are not habitually repeated and are fully corrected in all material respects by us within 30 days following written notification by the executive to us of the occurrence of one of the following: (i) a reduction in or material delay in payment of the executive’s aggregate base salary (including the target bonus opportunity), excluding any reductions in bonuses caused by the failure to achieve performance targets (as the same may be in effect from time to time); (ii) a material adverse change in the reporting structure applicable to the executive, the assignment to the executive of substantial duties or responsibilities inconsistent with the executive’s position, or any other action by us which results in a substantial diminution of the executive’s duties, authorities or responsibilities (other than temporarily while physically or mentally incapacitated or as required by applicable law); (iii) a requirement that the executive work principally from a location that is 30 miles further from the executive’s residence than our principal office; or (iv) our material breach of the terms of the employment agreement or any other agreement or document which grants or gives the executive the right to receive equity in the company.

Equity Incentive Plan

Our board of directors adopted, and our stockholders approved, our Equity Incentive Plan for the purpose of attracting and retaining non-employee directors, executive officers and other key employees and service providers, including officers and employees of our affiliates, and to stimulate their efforts toward our continued success, long-term growth and profitability. Our Equity Incentive Plan provides for the grant of stock options, stock awards (including restricted shares of our common stock, unrestricted stock, deferred stock units and restricted stock units), stock appreciation rights, dividend equivalent rights, performance awards, cash awards and other equity-based awards, including LTIP units, although we do not expect to issue LTIP units at this time. We have reserved a total of 2,500,000 shares of common stock for issuance pursuant to our Equity Incentive Plan, subject to certain adjustments set forth in the plan. This summary is qualified in its entirety by the detailed provisions of our Equity Incentive Plan, which is filed as an exhibit to this registration statement.

Our Equity Incentive Plan provides that no participant in the plan will be permitted to acquire, or will have any right to acquire, shares thereunder if such acquisition would be prohibited by the ownership limits contained in our charter or bylaws or would impair our status as a REIT.

Administration of Our Equity Incentive Plan

Our Equity Incentive Plan is administered by our compensation committee. Each member of our compensation committee that administers our Equity Incentive Plan is a “non-employee director” within the meaning of Rule 16b-3 under the Exchange Act and “independent” within the meaning of the NYSE listing rules and the rules and regulations of the SEC. Our compensation committee determines eligibility for and designate participants of our Equity Incentive Plan, determines the type and amount of awards to be granted, determines the timing, terms, and conditions of any award (including the exercise price), determines the performance measurements or other criteria of any awards and makes other determinations and interpretations as provided in our Equity Incentive Plan. All decisions and interpretations made by our compensation committee with respect to our Equity Incentive Plan are binding on us and participants. During any period of time in which we do not have a compensation committee, our Equity Incentive Plan

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will be administered by our board of directors or another committee appointed by our board of directors. References below to our compensation committee include a reference to our board of directors or another committee appointed by our board of directors for those periods in which our board of directors or such other committee is acting. To the extent permitted by applicable law, the administrator may delegate to a committee of one or more directors or to one or more officers or a committee of officers, the authority to grant awards to certain employees.

Eligible Participants

All of our employees and the employees of our subsidiaries and affiliates, including our operating partnership, are eligible to receive awards under our Equity Incentive Plan. In addition, our non-employee directors, consultants and advisors who perform services for us and our subsidiaries and affiliates and any other individual whose participation in the Equity Incentive Plan is determined to be in the best interests of the company by our compensation committee, may receive awards under our Equity Incentive Plan. Incentive stock options, however, are only available to our employees.

Share Authorization

The maximum number of shares of our common stock that may be issued pursuant to awards under the Equity Incentive Plan is 2,500,000. In connection with stock splits, distributions, recapitalizations and certain other events, our board of directors or compensation committee will make proportionate adjustments that it deems appropriate in the aggregate number of shares of common stock that may be issued under our Equity Incentive Plan and the terms of outstanding awards. As of the date of this prospectus, 454,644 restricted shares of our common stock and 170,234 restricted stock units had been awarded under our Equity Incentive Plan and were outstanding.

Share Usage

Shares of common stock subject to awards are counted against our Equity Incentive Plan share limit as one share for every one share subject to the award. If a stock appreciation right that is to be settled in shares is exercised, in whole or in part, the number of shares deemed to have been issued under the Equity Incentive Plan will be the full number of shares that were subject to the stock appreciation right or portion thereof that was exercised, and not the net number of shares actually issued upon the settlement of the stock appreciation right. If any awards terminate, expire or are canceled, forfeited, exchanged or surrendered without having been exercised or paid or if any awards are forfeited or expire or otherwise terminate without the delivery of shares of common stock, the shares of common stock subject to such awards will again be available for purposes of our Equity Incentive Plan. The number of shares available for issuance under the Equity Incentive Plan will not be increased by (i) any shares tendered or withheld in connection with the purchase of shares upon exercise of an option, (ii) any shares deducted, withheld or delivered from an award in connection with tax withholding obligations, or (iii) any shares we purchase with proceeds from option exercises.

Stock Options

Our Equity Incentive Plan authorizes our compensation committee to grant incentive stock options (under Section 422 of the Internal Revenue Code of 1986, as amended (the “Code”)) and options that do not qualify as incentive stock options. The exercise price of each option will be determined by our compensation committee, provided that the price cannot be less than 100% of the fair market value of shares of our common stock on the date on which the option is granted. If we were to grant incentive stock options to any 10% stockholder, the exercise price may not be less than 110% of the fair market value of our shares of common stock on the date of grant.

The term of an option cannot exceed ten years from the date of grant. If we were to grant incentive stock options to any 10% stockholder, the term cannot exceed five years from the date of grant. Our compensation committee determines at what time or times each option may be exercised and the period of time, if any, after retirement, death, disability or termination of employment during which options may be exercised. Options may be made exercisable in installments. The vesting and exercisability of options may be accelerated by our compensation committee.

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The exercise price for any option or the purchase price for restricted shares of our common stock, if any, is generally payable (i) in cash or cash equivalents, (ii) to the extent the award agreement provides, by the surrender of shares of common stock (or attestation of ownership of such shares) with an aggregate fair market value, on the date on which the option is exercised, of the exercise price, (iii) with respect to an option only, to the extent permitted by law and the award agreement so provides, by payment through a broker in accordance with procedures set forth by us or (iv) to the extent the award agreement provides and/or unless otherwise specified in an award agreement, any other form permissible by applicable laws, including net exercise.

Stock Awards

Our Equity Incentive Plan also provides for the grant of stock awards, including restricted shares of our common stock, unrestricted stock, stock units and restricted stock units. A stock award is an award of shares of common stock or stock units that may be subject to restrictions on transferability and other restrictions as our compensation committee determines in its sole discretion on the date of grant. The restrictions, if any, may lapse over a specified period of time or through the satisfaction of conditions, in installments or otherwise, as our compensation committee may determine. Deferred stock units and restricted stock units are contractual promises to deliver shares of common stock in the future and may be settled in cash, shares, other securities or property (as determined by our compensation committee) upon the lapse of restrictions applicable to the award and otherwise in accordance with the award agreement. A participant who receives restricted shares of our common stock will have all of the rights of a stockholder as to those shares, including, without limitation, the right to vote and the right to receive dividends or distributions on the shares, except that our compensation committee may require any dividends to be reinvested in shares. A participant who receives restricted stock units will have no rights of a stockholder with respect to the restricted stock units but may be granted the right to receive dividend equivalent rights. During the period, if any, when stock awards are non-transferable or forfeitable, a participant is prohibited from selling, transferring, assigning, pledging, exchanging, hypothecating or otherwise encumbering or disposing of his or her award shares.

Stock Appreciation Rights

Our Equity Incentive Plan authorizes our compensation committee to grant stock appreciation rights that provide the recipient with the right to receive, upon exercise of the stock appreciation right, cash, common stock or a combination of the two. The amount that the recipient will receive upon exercise of the stock appreciation right generally will equal the excess of the fair market value of shares of our common stock on the date of exercise over the shares’ fair market value on the date of grant. Stock appreciation rights will become exercisable in accordance with terms determined by our compensation committee. Stock appreciation rights may be granted in tandem with an option grant or independently from an option grant. The term of a stock appreciation right cannot exceed ten years from the date of grant.

Performance Awards

Our Equity Incentive Plan also authorizes our compensation committee to grant performance awards. Performance awards represent the participant’s right to receive a compensation amount, based on the value of our common stock, if performance goals established by our compensation committee are met. Our compensation committee will determine the applicable performance period, the performance goals and such other conditions that apply to the performance award. Performance goals may relate to our financial performance, the participant’s performance or such other criteria determined by our compensation committee. If the performance goals are met, performance awards will be paid in cash, shares of common stock or a combination thereof.

Dividend Equivalents

Our compensation committee may grant dividend equivalents in connection with the grant of any equity-based award. Dividend equivalents may be paid in cash or may be deemed reinvested in additional shares of stock and may be payable in cash, common stock or a combination of the two. To the extent the dividend equivalents are provided with respect to another award that vests or is earned based upon

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achievement of performance goals, any dividend equivalents will not be paid currently, but instead will be paid only to the extent the award vests. Our compensation committee will determine the terms of any dividend equivalents.

Other Equity-Based Awards

Our compensation committee may grant other types of equity-based awards under our Equity Incentive Plan, including LTIP units. Other equity-based awards are payable in cash, common stock or other equity, or a combination thereof, and may be restricted or unrestricted, as determined by our compensation committee. The terms and conditions that apply to other equity-based awards are determined by our compensation committee. LTIP units are a special class of units in our operating partnership that are intended to qualify as profits interests under the Code. Each LTIP unit reduces the number of shares available for other equity awards on a one-for-one basis. The vesting period for any LTIP units, if any, will be determined at the time of issuance. Initially, each LTIP unit will have a capital account of zero and, therefore, the holder of the LTIP unit would receive nothing if our operating partnership were liquidated immediately after the LTIP unit is awarded.

Recoupment

If we adopt a “clawback” or recoupment policy, any awards granted pursuant to our Equity Incentive Plan will be subject to repayment to us to the extent provided under the terms of such policy. We reserve the right in any award agreement to cause a forfeiture of the gain realized by a recipient if such recipient is in violation of or in conflict with certain agreements with us (including but not limited to an employment or non-competition agreement) or upon termination for “cause” as defined in our Equity Incentive Plan, applicable award agreement or any other agreement between us or an affiliate and the recipient.

Termination of Service

Unless our compensation committee otherwise provides in an award agreement or in writing, upon the termination of a participant’s employment or service, any restricted shares of our common stock, restricted stock units and any dividend equivalent rights thereunder that have not vested will immediately be deemed forfeited. Each award agreement will set forth the participant’s right to exercise an option or a stock appreciation right following the termination of employment or service.

Changes in Capitalization

Our compensation committee will make appropriate adjustments in outstanding awards and the number of shares available for issuance under our Equity Incentive Plan, including the individual limitations on awards, to reflect stock splits and other similar events. If the number of our outstanding common stock is increased or decreased or the common stock are changed into or exchanged for a different number or kind of shares or other securities as a result of any recapitalization, reclassification, stock split, reverse stock split, spin-off, combination of share, exchange of shares, share dividend or other distribution payable in capital shares, or other increase or decrease in such shares effected without receipt of consideration by us, our compensation committee will make proportionate adjustments in outstanding awards and the number of shares available for issuance under our Equity Incentive Plan in a manner it deems equitable. Such adjustment in outstanding options or stock appreciation shares will not change the aggregate exercise price payable with respect to the shares that are subject to the unexercised portion of an outstanding option or stock appreciation right, but will include a corresponding proportionate adjustment in the exercise price per share. In the event of any distribution to our stockholders of securities of any other entity or other assets (including an extraordinary dividend but excluding a non-extraordinary dividend) without receipt of consideration by us, we will make appropriate adjustment to the number and kind of shares subject to outstanding awards and/or the exercise price of outstanding options and stock appreciation rights to reflect such distribution.

Change in Control

Except as otherwise provided in the applicable award agreements, if we experience a change in control in which outstanding awards that are not exercised prior to the change in control will not be assumed or

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continued by the surviving entity: (1) except for performance awards, all restricted shares of our common stock, LTIP units and restricted stock units will vest and the underlying shares of common stock and all dividend equivalent rights will be delivered immediately before the change in control; or (2) at our board of director’s or compensation committee’s discretion, (A) all options and stock appreciation rights will become exercisable during the 15 day period immediately prior to the scheduled date of the change in control and terminate upon completion of the change in control, or (B) all options, stock appreciation rights, restricted shares of our common stock and restricted stock units will be cashed out before the change in control. In the case of performance awards denominated in shares, restricted stock units or LTIP units, if more than half of the performance period has lapsed, the awards will be converted into restricted shares of our common stock or restricted stock units based on actual performance to date (or unrestricted stock if no future restrictions apply). If less than half of the performance period has lapsed, or if actual performance is not determinable, the awards will be converted into restricted shares of our common stock or restricted stock units assuming target performance has been achieved (or unrestricted stock if no further restrictions apply).

In summary, a change in control under our Equity Incentive Plan occurs if:

•

a person, entity or affiliated group (with certain exceptions) acquires, in a transaction or series of transactions, 50% or more of the total combined voting power of our outstanding securities;

•

the consummation of a merger or consolidation, unless (1) the holders of our voting shares immediately prior to the merger have at least 50.1% of the combined voting power of the securities in the surviving entity or its parent or (2) no person owns 50% or more of the shares of the surviving entity or the combined voting power of our outstanding voting securities;

•

we sell or dispose of all or substantially all of our assets; or

•

during any period of twelve consecutive months, individuals who at the beginning of such period constitute our board of directors cease for any reason to constitute a majority of our board of directors, treating any individual whose election or nomination was approved by a majority of the incumbent directors as an incumbent director for this purpose.

Transferability of Awards

Except as otherwise permitted in an award agreement or by our compensation committee, awards under the Equity Incentive Plan are not transferable other than by a participant’s will or the laws of descent and distribution.

Term and Amendment

Our board of directors may amend or terminate our Equity Incentive Plan at any time; provided that no amendment may impair the rights or obligations of participants with respect to outstanding awards without the participants’ consent. Our Equity Incentive Plan will continue until terminated by our board of directors. The right to issue incentive stock options under the Equity Incentive Plan will expire after ten years unless shareholders approve an extension of this right.

Tax Withholding

We may deduct or withhold, or require a participant to remit, an amount sufficient to satisfy federal, state, local, domestic or foreign taxes required by law or regulation to be withheld with respect to any taxable event arising as a result of the Equity Incentive Plan. Subject to the prior approval by us, a participant may elect to have the withholding requirement be satisfied, in whole or in part, by having us withhold, or by tendering to us, shares of common stock having a fair market value equal to the minimum withholding obligation.

Parachute Limitation

Unless a recipient is party to another agreement that addressed Sections 280G and 4999 of the Code, to the extent any payment or benefit would be subject to an excise tax imposed in connection with Section 4999 of the Code, such payments and/or benefits may be subject to a “best pay cap” reduction to

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the extent necessary so that the executive receives the greater of the (i) net amount of the payment and benefits reduced such that such payments and benefits will not be subject to the excise tax and (ii) net amount of the payments and benefits without reduction but with the executive paying the excise tax liability.

Section 409A

We intend to administer our Equity Incentive Plan so that awards will be exempt from, or will comply with, the requirements of Section 409A of the Code; however, we do not warrant that any award under our Equity Incentive Plan will qualify for favorable tax treatment under Section 409A of the Code or any other provision of federal, state, local or foreign law. We will not be liable to any participant for any tax, interest, or penalties that such participant might owe as a result of the grant, holding, vesting, exercise, or payment of any award under our Equity Incentive Plan.

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PRINCIPAL STOCKHOLDERS

As of October 26, 2020, there were 5,192,755 shares of our common stock outstanding. Upon completion of this offering, there will be shares of common stock outstanding, assuming the underwriters do not exercise their overallotment option. The following table sets forth certain information, prior to and after this offering, regarding the beneficial ownership of our common stock by:

•

each of our directors and director nominees;

•

each of our executive officers;

•

each beneficial owner of 5% or more of our outstanding common stock; and

•

all of our directors and executive officers as a group.

The SEC has defined “beneficial” ownership of a security to mean the possession, directly or indirectly, of voting power and/or investment power of such security. A stockholder is also deemed to be, as of any date, the beneficial owner of all securities that such stockholder has the right to acquire within 60 days after that date through (i) the exercise of any option, warrant or right, (ii) the conversion of a security, (iii) the power to revoke a trust, discretionary account or similar arrangement, or (iv) the automatic termination of a trust, discretionary account or similar arrangement.

Each person named in the table has sole voting and investment power with respect to all of the shares of common stock shown as beneficially owned by such person, except as otherwise set forth in the notes to the table. Unless otherwise indicated, the address of each named person is c/o Freehold Properties, Inc., 232 3rd Avenue N., Franklin, Tennessee 37064. No shares beneficially owned by any executive officer, director or director nominee have been pledged as security.

	Shares Beneficially Owned Before the Offering				Shares Beneficially Owned After the Offering(1)
Name	Number		Percentage		Number		Percentage
Donald C. Brain		343,528(2)		6.62%		(3)		%
Jeffery C. Walraven		125,406(4)		2.42%		(5)		%
Louis S. Yi		100,574(6)		1.94%		(7)		%
Randall Churchey(8)		47,304		*				%
James G. Mueller(9)		192,518		3.71%				%
Lori B. Wittman(10)		14,301		*				%
All executive officers and directors as a group (6 persons)		823,631		15.86%				%
Tilden Park Investment Master Fund LP(11)		2,750,275		52.96%				%
David A. Straz, Jr. Foundation(12)		600,000		11.55%				%
Focused Investment Partners LLC(13)		311,991		6.01%				%

Represents less than 1% of the number of shares of common stock outstanding upon completion of the offering.

(1)

Assumes shares of our common stock are outstanding immediately following this offering, which does not reflect shares of our common stock issuable upon exercise of the underwriters’ overallotment option.

(2)

Includes (i) 220,022 shares held by Brain Squared, LLC and (ii) 123,506 restricted shares of our common stock. Excludes 47,500 restricted stock units issued on March 31, 2020.

(3)

Includes (i) 220,022 shares held by Brain Squared, LLC, (ii) 123,506 restricted shares of our common stock, and (iii) restricted shares of our common stock to be granted upon completion of this offering, which will vest on the third anniversary of the date of grant, subject to continued employment through such date. Excludes (i) 47,500 restricted stock units issued on March 31, 2020 and (ii) restricted stock units to be granted upon completion of this offering, which are performance-based and will not vest unless certain TSR metrics are achieved.

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(4)

Includes 125,406 restricted shares of our common stock and excludes 40,000 restricted stock units issued on March 31, 2020.

(5)

Includes (i) 125,406 restricted shares of our common stock and (ii) restricted shares of our common stock to be granted upon completion of this offering, which will vest on the third anniversary of the date of grant, subject to continued employment through such date. Excludes (i) 40,000 restricted stock units issued on March 31, 2020 and (ii) restricted stock units to be granted upon completion of this offering, which are performance-based and will not vest unless certain TSR metrics are achieved.

(6)

Includes 89,572 restricted shares of our common stock and excludes 30,000 restricted stock units issued on March 31, 2020.

(7)

Includes (i) 89,572 restricted shares of our common stock, and (ii) restricted shares of our common stock to be granted upon completion of this offering, which will vest on the third anniversary of the date of grant, subject to continued employment through such date. Excludes (i) 30,000 restricted stock units issued on March 31, 2020 and (ii) restricted stock units to be granted upon completion of this offering, which are performance-based and will not vest unless certain TSR metrics are achieved.

(8)

Includes (i) 33,003 shares held by the Randall Churchey Spousal Trust and (ii) 14,301 restricted shares of our common stock.

(9)

Includes (i) 187,018 shares held by MAC FHP, LLC and (ii) 5,500 restricted shares of our common stock.

(10)

Includes 14,301 restricted shares of our common stock.

(11)

The address of the principal business office of Tilden Park Investment Master Fund LP is 452 Fifth Avenue, 28th Floor, New York, NY 10018. We have been advised that David Busker and Samuel C. Alcoff have voting and investment control over these shares.

(12)

The address of the principal business office of the David A. Straz, Jr. Foundation is 4401 West Kennedy Blvd., Suite 150, Tampa, FL 33609. We have been advised that Catherine L. Straz, as trustee, has voting and investment control over these shares.

(13)

The address of the principal business office of Focused Investment Partners LLC is 301 Edgewater Place, Suite 405, Wakefield, MA 01880. Focused Investment Partners LLC is a wholly owned subsidiary of Curaleaf. We have been advised that Joe Lusardi and Kyle Crossley have voting and investment control over the shares.

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SELLING STOCKHOLDERS

The following table sets forth information, as of , 2020, with respect to the selling stockholders and common stock beneficially owned by the selling stockholders that the selling stockholders propose to offer pursuant to this prospectus. In accordance with SEC rules, each listed person’s beneficial ownership includes:

•

all shares the investor actually owns beneficially or of record;

•

all shares over which the investor has or shares voting or dispositive control; and

•

all shares the investor has the right to acquire within 60 days (such as upon exercise of options that are currently vested or which are scheduled to vest within 60 days or warrants that are immediately exercisable or exercisable within 60 days). The shares issuable under those options are treated as if they were outstanding for computing the percentage ownership of the person holding those options but are not treated as if they were outstanding for purposes of computing percentage ownership of any other person.

The common stock offered by the selling stockholders pursuant to this prospectus were originally issued and sold by us in connection with our prior private placements. The term selling stockholder includes the holders of our common stock listed below and the beneficial owners of our common stock and their transferees, pledgees, donees or other successors.

Percentage ownership calculations are based on 5,192,755 shares of our common stock outstanding as of October 26, 2020 and shares of our common stock outstanding after completion of this offering. To our knowledge, except as indicated in the footnotes to the following table and under applicable community property laws, the persons or entities identified in the table below have sole voting and investment power with respect to all of the common stock shown as beneficially owned by them.

Shares Beneficially Owned
Before the Offering

Number of
Shares
Being Offered

Shares Beneficially Owned
After the Offering

Name of Beneficial Owner

Percentage

Except as indicated above, the selling stockholders do not have, and have not had since our inception, any position, office or other material relationship with us or any of our affiliates. The selling stockholders identified above may have sold, transferred or otherwise disposed of all or a portion of their securities (other than the securities to be sold in this offering) since the date on which they provided the information regarding their securities, in transactions exempt from the registration requirements of the Securities Act.

Each selling stockholder has agreed with us not to directly or indirectly sell, offer to sell, grant any option or otherwise transfer or dispose of our common stock not sold in this offering for 180 days after the date of this prospectus. We have agreed not to waive or otherwise modify this agreement without the prior written consent of .

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CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Equity Grants

Upon completion of this offering, we will issue an aggregate of restricted shares of our common stock to our executive officers and certain other employees in accordance with our Equity Incentive Plan. Restricted shares of our common stock granted to our executive officers and certain other employees will vest on the third anniversary of the grant date, subject to continued employment through such date.

In addition, upon the completion of this offering, we will grant an aggregate of performance-vesting restricted stock units to our executive officers and certain other employees in accordance with our Equity Incentive Plan. These restricted stock units will vest on the third anniversary of the grant date, subject to continued employment and the achievement of certain TSR hurdles through such date. See “Management — Executive Compensation — IPO Equity Grants” for additional information regarding equity grants to our executive officers and certain other employees.

Indemnification Agreements with Executive Officers and Directors

We have entered into indemnification agreements with our executive officers and directors providing for, to the maximum extent permitted by law, indemnification by us and advancements by us of certain expenses and costs relating to claims, suits or proceedings arising from their service to us. See “Certain Provisions of Maryland Law and of Our Charter and Bylaws — Limitation of Liability and Indemnification of Directors and Officers.”

Employment Agreements with Executive Officers

We have entered into Employment Agreements with our executive officers. See “Management — Employment Agreements” for a description of the terms of these agreements.

Registration Rights Agreement

In connection with our prior private placements, we entered into a registration rights agreement with the holders of substantially all of our common stock, including Messrs. Brain, Walraven and Yi and entities controlled by Messrs. Churchey and Mueller. For more information about the registration rights agreement, see “Description of Capital Stock — Registration Rights Agreement.”

Investor Rights Agreement

In connection with our initial private placement, we entered into the Investor Rights Agreement with Tilden Park, pursuant to which Tilden Park, as long as it continues to own at least 20% of our outstanding equity securities, has the right to appoint a non-voting board observer to our board of directors and its committees, which, at Tilden Park’s option, may become a full voting member of our board of directors and its committees. Certain other rights of Tilden Park under the Investor Rights Agreement will automatically terminate upon the completion of this offering.

Transactions with Curaleaf

On August, 29, 2019, in connection with the acquisition of two of the six properties in our existing portfolio, we issued 311,991 shares of common stock to Focused Investment Partners LLC, a wholly owned subsidiary of Curaleaf. As a result, Focused Investment Partners LLC became a holder of greater than five percent of our outstanding common stock. As described elsewhere in this prospectus, we have entered into lease agreements with other subsidiaries of Curaleaf. For more information, see “Our Business — Our Portfolio.”

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DESCRIPTION OF CAPITAL STOCK

The following summary describes the material terms of our capital stock. This summary does not purport to be complete and is subject to and qualified in its entirety by reference to the MGCL and to our charter and bylaws. For a complete description, we refer you to the MGCL and to our charter and our bylaws, the forms of which are filed as exhibits to the registration statement of which this prospectus forms a part.

General

Our charter provides that we may issue up to 500,000,000 shares of common stock, par value $0.0001 per share, or common stock, and 50,000,000 shares of preferred stock, $0.0001 par value per share, or preferred stock. Upon completion of this offering, there will be shares of common stock issued and outstanding (or shares if the underwriters exercise their overallotment option in full) and no shares of preferred stock issued and outstanding. Our charter authorizes our board of directors, with the approval of a majority of the entire board of directors and without any action by our stockholders, to amend our charter to increase or decrease the aggregate number of authorized shares of stock or the number of authorized shares of any class or series of our stock.

Under Maryland law, stockholders generally are not personally liable for our debts or obligations solely as a result of their status as stockholders.

Common Stock

Subject to the preferential rights, if any, of holders of any other class or series of stock and to the provisions of our charter regarding restrictions on ownership and transfer of our stock, holders of our common stock:

•

have the right to receive ratably any distributions from funds legally available therefor, when, as and if authorized by our board of directors and declared by us; and

•

are entitled to share ratably in the assets of our company legally available for distribution to the holders of our common stock in the event of our liquidation, dissolution or winding up of our affairs.

There are generally no redemption, sinking fund, conversion, preemptive or appraisal rights with respect to our common stock.

Subject to the provisions of our charter regarding restrictions on ownership and transfer of our stock and except as may otherwise be specified in the terms of any class or series of stock, each outstanding share of our common stock entitles the holder to one vote on all matters submitted to a vote of stockholders, including the election of directors and, except as may be provided with respect to any other class or series of stock, the holders of such shares will possess the exclusive voting power. There is no cumulative voting in the election of our directors. Our bylaws provide for majority voting in uncontested elections of directors. Under this majority voting standard, the affirmative vote of a majority of the votes cast is required for the election of a director in an uncontested election, which means that the number of votes cast for a director must exceed the number of votes cast against such director. In any contested election, in which the number of director nominees exceeds the number of directors to be elected, directors will be elected by a plurality of the votes cast. Consequently, at each annual meeting of stockholders, the holders of a majority of the outstanding shares of our common stock can elect all of the directors then standing for election, and the holders of the remaining shares will not be able to elect any directors.

Power to Reclassify and Issue Stock

Our board of directors may classify any unissued shares of preferred stock, and reclassify any unissued shares of common stock or any previously classified but unissued shares of preferred stock into other classes or series of stock, including one or more classes or series of stock that have priority over our common stock with respect to voting rights or distributions or upon liquidation, and authorize us to issue the newly classified shares. Prior to the issuance of shares of each class or series, our board of directors is required by the MGCL and our charter to set, subject to the provisions of our charter regarding the restrictions on ownership and transfer of our stock, the preferences, conversion or other rights, voting powers, restrictions,

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limitations as to dividends or other distributions, qualifications or terms or conditions of redemption for each such class or series. These actions can be taken without stockholder approval, unless stockholder approval is required by applicable law, the terms of any other class or series of our stock or the rules of any stock exchange or automated quotation system on which our stock may be then listed or quoted.

Power to Increase or Decrease Authorized Stock and Issue Additional Shares of Our Common Stock and Preferred Stock

Our charter authorizes our board of directors, with the approval of a majority of the entire board of directors, to amend our charter to increase or decrease the aggregate number of authorized shares of stock or the number of authorized shares of stock of any class or series without stockholder approval. We believe that the power of our board of directors to increase or decrease the number of authorized shares of stock and to classify or reclassify unissued shares of our common stock or preferred stock and thereafter to cause us to issue such shares of stock will provide us with increased flexibility in structuring possible future financings and acquisitions and in meeting other needs which might arise. The additional classes or series, as well as the additional shares of stock, will be available for future issuance without further action by our stockholders, unless such action is required by applicable law, the terms of any other class or series of stock or the rules of any stock exchange or automated quotation system on which our securities may be listed or traded. Our board of directors could authorize us to issue a class or series that could, depending upon the terms of the particular class or series, delay, defer or prevent a transaction or a change in control of our company that might involve a premium price for our stockholders or otherwise be in their best interests.

Restrictions on Ownership and Transfer

In order to qualify as a REIT under the Code, our shares of stock must be beneficially owned by 100 or more persons during at least 335 days of a taxable year of 12 months (other than the first year for which an election to be a REIT has been made) or during a proportionate part of a shorter taxable year. Also, not more than 50% of the value of our outstanding shares of capital stock may be owned, directly or indirectly, by five or fewer individuals (as defined in the Code to include certain entities) during the last half of a taxable year (other than the first year for which an election to be a REIT has been made).

Because our board of directors believes it is at present essential for us to qualify as a REIT, among other purposes, our charter, subject to certain exceptions, will contain restrictions on the number of our shares of stock that a person may own. Our charter provides that, subject to certain exceptions, no person may beneficially or constructively own more than 9.8% in value or in number of shares, whichever is more restrictive, of the outstanding shares of any class or series of our capital stock, or the ownership limit.

Our charter also prohibits any person from:

•

beneficially owning shares of our capital stock to the extent that such beneficial ownership would result in our being “closely held” within the meaning of Section 856(h) of the Code (without regard to whether the ownership interest is held during the last half of the taxable year);

•

transferring shares of our capital stock to the extent that such transfer would result in our shares of capital stock being beneficially owned by fewer than 100 persons (determined under the principles of Section 856(a)(5) of the Code);

•

beneficially or constructively owning shares of our capital stock to the extent such beneficial or constructive ownership would cause us to constructively own ten percent or more of the ownership interests in a tenant (other than a TRS) of our real property within the meaning of Section 856(d)(2)(B) of the Code;

•

beneficially or constructively owning or transferring shares of our capital stock if such beneficial or constructive ownership or transfer would otherwise cause us to fail to qualify as a REIT under the Code; or

•

transferring or attempting to transfer shares of capital stock to the extent such transfer would result in 25% or more of any class or series of shares of our capital stock (excluding shares of our capital stock held by persons or their affiliates who have discretionary authority or control over our assets, or who provide investment advice for a fee with respect to our assets), being beneficially owned by one

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or more Benefit Plan Investors at any time prior to the date that either a class or series of our capital stock qualifies as a class of “publicly-offered securities” (as defined in our charter) for purposes of ERISA or another exception under ERISA applies.

Our board of directors, in its sole discretion, may prospectively or retroactively exempt a person from certain of the limits described in the paragraph above and may establish or increase an excepted holder percentage limit for that person. The person seeking an exemption must provide to our board of directors any representations, covenants and undertakings that our board of directors may deem appropriate in order to conclude that granting the exemption will not cause us to lose our status as a REIT. Our board of directors may not grant an exemption to any person if that exemption would result in our failing to qualify as a REIT. Our board of directors may require a ruling from the IRS or an opinion of counsel, in either case in form and substance satisfactory to our board of directors, in its sole discretion, in order to determine or ensure our status as a REIT.

Notwithstanding the receipt of any ruling or opinion, our board of directors may impose such guidelines or restrictions as it deems appropriate in connection with granting such exemption. In connection with granting a waiver of the ownership limit or creating an exempted holder limit or at any other time, our board of directors from time to time may increase or decrease the ownership limit, subject to certain exceptions.

Any attempted transfer of shares of our capital stock which, if effective, would violate any of the restrictions described above will result in the number of shares of our capital stock causing the violation (rounded up to the nearest whole share) to be automatically transferred to a trust for the exclusive benefit of one or more charitable beneficiaries, except that any transfer that results in the violation of the restriction relating to shares of our capital stock being beneficially owned by fewer than 100 persons will be null and void. In either case, the proposed transferee will not acquire any rights in those shares. The automatic transfer will be deemed to be effective as of the close of business on the business day prior to the date of the purported transfer or other event that results in the transfer to the trust. Shares held in the trust will be issued and outstanding shares. The proposed transferee will not benefit economically from ownership of any shares held in the trust, will have no rights to dividends or other distributions and will have no rights to vote or other rights attributable to the shares held in the trust. The trustee of the trust will have all voting rights and rights to dividends or other distributions with respect to shares held in the trust. These rights will be exercised for the exclusive benefit of the charitable beneficiary. Any dividend or other distribution paid prior to our discovery that shares have been transferred to the trust will be paid by the recipient to the trustee upon demand. Any dividend or other distribution authorized but unpaid will be paid when due to the trustee. Any dividend or other distribution paid to the trustee will be held in trust for the charitable beneficiary. Subject to Maryland law, the trustee will have the authority (i) to rescind as void any vote cast by the proposed transferee prior to our discovery that the shares have been transferred to the trust and (ii) to recast the vote in accordance with the desires of the trustee acting for the benefit of the charitable beneficiary. However, if we have already taken irreversible corporate action, then the trustee will not have the authority to rescind and recast the vote.

Within 20 days of receiving notice from us that shares of our stock have been transferred to the trust, the trustee will sell the shares to a person, designated by the trustee, whose ownership of the shares will not violate the above ownership and transfer limitations. Upon the sale, the interest of the charitable beneficiary in the shares sold will terminate and the trustee will distribute the net proceeds from the sale to the proposed transferee and to the charitable beneficiary as follows. The proposed transferee will receive the lesser of (i) the price paid by the proposed transferee for the shares or, if the proposed transferee did not give value for the shares in connection with the event causing the shares to be held in the trust (e.g., a gift, devise or other similar transaction), the market price (as defined in our charter) of the shares on the day of the event causing the shares to be held in the trust and (ii) the price per share received by the trustee (net of any commission and other expenses of sale) from the sale or other disposition of the shares. The trustee may reduce the amount payable to the proposed transferee by the amount of dividends or other distributions paid to the proposed transferee and owed by the proposed transferee to the trustee. Any net sale proceeds in excess of the amount payable to the proposed transferee will be paid immediately to the charitable beneficiary. If, prior to our discovery that our shares of our stock have been transferred to the trust, the shares are sold by the proposed transferee, then (i) the shares shall be deemed to have been sold on behalf of the trust and

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(ii) to the extent that the proposed transferee received an amount for the shares that exceeds the amount he or she was entitled to receive, the excess shall be paid to the trustee upon demand.

In addition, shares of our stock held in the trust will be deemed to have been offered for sale to us, or our designee, at a price per share equal to the lesser of (i) the price per share in the transaction that resulted in the transfer to the trust (or, in the case of a devise or gift, the market price at the time of the devise or gift) and (ii) the market price on the date we, or our designee, accept the offer, which we may reduce by the amount of dividends and distributions paid to the proposed transferee and owed by the proposed transferee to the trustee. We will have the right to accept the offer until the trustee has sold the shares. Upon a sale to us, the interest of the charitable beneficiary in the shares sold will terminate and the trustee will distribute the net proceeds from the sale to the proposed transferee.

If a transfer to a charitable trust, as described above, would be ineffective for any reason to prevent a violation of a restriction, the transfer that would have resulted in a violation will be null and void, and the proposed transferee shall acquire no rights in those shares.

Any certificate representing shares of our capital stock, and any notices delivered in lieu of certificates with respect to the issuance or transfer of uncertificated shares, will bear a legend referring to the restrictions described above.

Any person who acquires or attempts or intends to acquire beneficial or constructive ownership of shares of our capital stock that will or may violate any of the foregoing restrictions on transferability and ownership, or any person who would have owned shares of our capital stock that resulted in a transfer of shares to a charitable trust, is required to give written notice immediately to us, or in the case of a proposed or attempted transaction, to give at least 15 days’ prior written notice, and provide us with such other information as we may request in order to determine the effect of the transfer on our status as a REIT. The foregoing restrictions on transferability and ownership will not apply if our board of directors determines that it is no longer in our best interests to attempt to qualify, or to continue to qualify, as a REIT.

Every owner of more than 5% (or any lower percentage as required by the Code or the regulations promulgated thereunder) in number or value of the outstanding shares of our capital stock, within 30 days after the end of each taxable year, is required to give us written notice, stating his or her name and address, the number of shares of each class and series of shares of our capital stock that he or she beneficially owns and a description of the manner in which the shares are held. Each of these owners must provide us with additional information that we may request in order to determine the effect, if any, of his or her beneficial ownership on our status as a REIT and to ensure compliance with the ownership limits. In addition, each stockholder will upon demand be required to provide us with information that we may request in good faith in order to determine our status as a REIT and to comply with the requirements of any taxing authority or governmental authority or to determine our compliance.

These ownership limitations could delay, defer or prevent a transaction or a change in control that might involve a premium price for shares of our common stock or otherwise be in the best interests of our stockholders.

Registration Rights

The purchasers of common stock in our prior private placements are entitled to the benefits of a registration rights agreement between us, the purchasers and our directors and executive officers in that offering, which has been filed as an exhibit to the registration statement of which this prospectus forms a part.

Under the registration rights agreement, we are obligated, among other things, to use our commercially reasonable efforts to cause a resale shelf registration statement registering all of the shares of our common stock sold in the prior private placements that are not sold by selling stockholders in this offering to be declared effective by the SEC as soon as practicable after the filing of the resale registration statement, and in any event, subject to certain exceptions, no later than March 31, 2021. The original deadline under the registration rights agreement was extended by the stockholders in accordance with the terms of the registration rights agreement.

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If, prior to March 31, 2021, the resale registration statement has not been declared effective by the SEC and the registrable shares have not been listed for trading on the NYSE American, the New York Stock Exchange, the Nasdaq Capital Market, the Nasdaq Global Market, the Nasdaq Global Select Market, the OTCQX Market, the OTCQB Market, the Toronto Stock Exchange, the Canadian Securities Exchange or the NEO Exchange, then the registration rights agreement and our bylaws require that we hold a special meeting of our stockholders for the purpose of considering and voting on the removal of our directors then in office and electing the successors of any directors so removed, unless the holders of at least two-thirds of the outstanding registrable shares (other than shares of our common stock held by our directors and executive officers) waive or defer the requirement that we hold the special election meeting. The registration rights agreement also prohibits holders of shares of our common stock issued to our directors and executive officers from nominating, or participating in the nomination of, any individual for election as a director at the special election meeting. However, our directors and executive officers may vote in favor of the removal of a director, the expansion of the size of the board of directors to create new vacancies, or any other proposal at the Special Meeting if expressly consented to or requested by the other holders.

All purchasers of common stock in our prior private placements and each of their respective direct and indirect transferees may elect to participate in this offering as selling stockholders, subject to:

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execution of a customary underwriting agreement;

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completion and execution of any questionnaires, powers of attorney, indemnities, custody agreements, securities escrow agreements and other documents, including opinions of counsel, reasonably required under the terms of such underwriting agreement;

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provision to us of such information as we may reasonably request in writing for inclusion in this prospectus;

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compliance with the registration rights agreement;

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cutback rights on the part of the underwriters; and

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other conditions and limitations that may be imposed by the underwriters.

The holders of shares of our common stock purchased in our prior private placements who elect, pursuant to the registration rights agreement, to include their shares of our common stock for resale in this offering will not be able to sell any of their shares of our common stock that are not included in the this offering for 180 days following the effective date of the registration statement of which this prospectus forms a part (other than to donees or partners of the stockholder who agree to be bound by the terms the lock-up). Those holders of shares of our common stock purchased in our prior private placements who do not elect, despite their right to do so under the registration rights agreement, to include their shares of our common stock for resale in this offering may not directly or indirectly sell, offer to sell, grant any option or otherwise dispose of any shares of our common stock (or securities convertible into such shares) for a period of 60 days following the effective date of the registration statement of which this prospectus forms a part (other than to donees or partners of the stockholder who agree to be bound by the terms the lock-up).

We have agreed to indemnify each selling stockholder for certain violations of federal or state securities laws in connection with any registration statement in which such selling stockholder sells our common stock pursuant to these registration rights.

The preceding summary of certain provisions of the registration rights agreement is not intended to be complete, and is subject to, and qualified in its entirety by reference to, all of the provisions of the registration rights agreement, a copy of which has been filed as an exhibit to the registration statement of which this prospectus forms a part.

Transfer Agent and Registrar

The transfer agent and registrar for our shares of common stock is VStock Transfer, LLC.

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CERTAIN PROVISIONS OF MARYLAND LAW AND OF OUR CHARTER AND BYLAWS

The following is a summary of certain provisions of the MGCL and of our charter and bylaws. This summary does not purport to be complete and is subject to and qualified in its entirety by reference to the MGCL and to our charter and bylaws. For a complete description, we refer you to the MGCL and to our charter and our bylaws, copies of which are filed as exhibits to the registration statement of which this prospectus forms a part.

Our Board of Directors; Annual Elections

Our charter and bylaws provide that the number of directors of our company may be established, increased or decreased by our board of directors, but may not be less than the minimum number required under the MGCL, which is one, or, unless our bylaws are amended, more than fifteen. We have elected by a provision of our charter to be subject to a provision of Maryland law requiring that, subject to the rights of holders of one or more classes or series of preferred stock, any vacancy may be filled only by a majority of the remaining directors, even if the remaining directors do not constitute a quorum, and any director elected to fill a vacancy will serve for the full term of the directorship in which such vacancy occurred and until his or her successor is duly elected and qualifies.

Each member of our board of directors is elected by our stockholders to serve until the next annual meeting of stockholders and until his or her successor is duly elected and qualifies. Holders of shares of our common stock will have no right to cumulative voting in the election of directors. Our bylaws provide for majority voting in uncontested elections of directors. Under this majority voting standard, the affirmative vote of a majority of the votes cast is required for the election of a director in an uncontested election, which means that the number of votes cast for a director must exceed the number of votes cast against such director. In any contested election, in which the number of director nominees exceeds the number of directors to be elected, directors will be elected by a plurality of the votes cast. Consequently, at each annual meeting of stockholders, the holders of a majority of the shares of our common stock will be able to elect all of our directors.

In addition, our corporate governance guidelines require incumbent director nominees who fail to receive a majority of the votes cast in an uncontested election of directors to submit an offer to resign from our board of directors. The nominating and corporate governance committee of our board of directors must consider any such offer to resign and make a recommendation to our board of directors on whether to accept or reject the resignation. Taking into account the recommendation of the nominating and corporate governance committee of our board of directors, our board of directors will determine whether to accept or reject any such resignation within 90 days after the certification of the election results, and we will report such decision in a press release, filing with the SEC or by other public announcement. If an incumbent director’s resignation is accepted by our board of directors, then our board of directors may fill the resulting vacancy or decrease the size of our board of directors in accordance with our amended and restated bylaws. If a director’s resignation is not accepted by our board of directors, such director will continue to serve until his or her successor is duly elected and qualified, or his or her earlier death, resignation, retirement or removal. For the purposes of applying this majority voting standard, an election is considered “uncontested” if no stockholder provides notice of its intention to nominate one or more candidates to compete with our board of directors’ nominees in the manner required by our amended and restated bylaws, or if any such stockholder has withdrawn all such nominations on or before the close of business ten days prior to the filing our definitive proxy statement with the SEC.

Removal of Directors

Our charter provides that, subject to the rights of holders of one or more classes or series of preferred stock to elect or remove one or more directors, a director may be removed at any time with or without cause only by the affirmative vote of holders of shares entitled to cast at least a majority of the votes entitled to be cast generally in the election of directors. Except as described below, this provision, when coupled with the exclusive power of our board of directors to fill vacant directorships, may preclude stockholders from removing incumbent directors except for cause and by a substantial affirmative vote and filling the vacancies created by such removal with their own nominees.

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Business Combinations

Under the MGCL, certain “business combinations” (including a merger, consolidation, share exchange or, in circumstances specified in the statute, an asset transfer or issuance or reclassification of equity securities) between a Maryland corporation and an interested stockholder or an affiliate of an interested stockholder, are prohibited for five years after the most recent date on which the interested stockholder becomes an interested stockholder. Maryland law defines an interested stockholder as (1) any person (other than the corporation or any subsidiary) who beneficially owns 10% or more of the voting power of the corporation’s outstanding voting stock after the date on which the corporation had 100 or more beneficial owners of its stock, or (2) an affiliate or associate of the corporation who, at any time within the two-year period immediately prior to the date in question, was the beneficial owner of 10% or more of the voting power of the then outstanding stock of the corporation after the date on which the corporation had 100 or more beneficial owners of its stock After the five year period, any such business combination between the Maryland corporation and an interested stockholder generally must be recommended by the board of directors of such corporation and approved by the affirmative vote of at least (1) 80% of the votes entitled to be cast by holders of outstanding shares of voting stock of the corporation and (2) two-thirds of the votes entitled to be cast by holders of voting stock of the corporation other than shares held by the interested stockholder with whom (or with whose affiliate) the business combination is to be effected or held by an affiliate or associate of the interested stockholder, unless, among other conditions, the corporation’s common stockholders receive a minimum price (as defined in the MGCL) for their shares and the consideration is received in cash or in the same form as previously paid by the interested stockholder for its shares. A person is not an interested stockholder under the statute if the board of directors approved in advance the transaction by which the person otherwise would have become an interested stockholder. The board of directors may provide that its approval is subject to compliance, at or after the time of approval, with any terms and conditions determined by it.

The statute permits various exemptions from its provisions, including business combinations that are exempted by the board of directors prior to the time that the interested stockholder became an interested stockholder. Our bylaws contain a provision exempting any business combinations between us and any other person or entity from the business combination provisions of the MGCL and, consequently, the five-year prohibition and the supermajority vote requirements will not apply to business combinations between us and any person as described above. As a result, any person described above may be able to enter into business combinations with us that may not be in the best interest of our stockholders without compliance by our company with the supermajority vote requirements and other provisions of the statute. There can be no assurance that such provision will not be amended or eliminated at any time in the future by our board of directors.

Control Share Acquisitions

The MGCL provides that holders of “control shares” of a Maryland corporation acquired in a “control share acquisition” have no voting rights with respect to those shares except to the extent approved by the affirmative vote of at least two-thirds of the votes entitled to be cast by stockholders entitled to vote generally in the election of directors, excluding votes cast by (1) the person who makes or proposes to make a control share acquisition, (2) an officer of the corporation or (3) an employee of the corporation who is also a director of the corporation. “Control shares” are voting shares of stock which, if aggregated with all other such shares of stock previously acquired by the acquirer or in respect of which the acquirer is able to exercise or direct the exercise of voting power (except solely by virtue of a revocable proxy), would entitle the acquirer to exercise voting power in electing directors within one of the following ranges of voting power: (1) one-tenth or more but less than one-third, (2) one-third or more but less than a majority or (3) a majority or more of all voting power. Control shares do not include shares the acquiring person is then entitled to vote as a result of having previously obtained stockholder approval. A “control share acquisition” means the acquisition of issued and outstanding control shares, subject to certain exceptions.

A person who has made or proposes to make a control share acquisition, upon satisfaction of certain conditions (including an undertaking to pay expenses), may compel the board of directors to call a special meeting of stockholders to be held within 50 days of demand to consider the voting rights of the shares. If no request for a meeting is made, the corporation may itself present the question at any stockholders meeting.

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If voting rights are not approved at the meeting or if the acquiring person does not deliver an acquiring person statement as required by the statute, then, subject to certain conditions and limitations, the corporation may redeem any or all of the control shares (except those for which voting rights have previously been approved) for fair value determined, without regard to the absence of voting rights for the control shares, as of the date of the last control share acquisition by the acquirer or of any meeting of stockholders at which the voting rights of such shares are considered and not approved. If voting rights for control shares are approved at a stockholders meeting and the acquirer becomes entitled to vote a majority of the shares entitled to vote, all other stockholders may exercise appraisal rights. The fair value of the shares as determined for purposes of such appraisal rights may not be less than the highest price per share paid by the acquirer in the control share acquisition.

The control share acquisition statute does not apply to, among other things, (1) shares acquired in a merger, consolidation or share exchange if the corporation is a party to the transaction or (2) acquisitions approved or exempted by the charter or bylaws of the corporation.

Our bylaws contain a provision exempting from the control share acquisition statute any acquisition by any person of shares of our stock. There can be no assurance that such provision will not be amended or eliminated at any time in the future by our board of directors.

Subtitle 8

Subtitle 8 of Title 3 of the MGCL permits a Maryland corporation with a class of equity securities registered under the Exchange Act and at least three independent directors to elect to be subject, by provision in its charter or bylaws or a resolution of its board of directors, without stockholder approval, and notwithstanding any contrary provision in the charter or bylaws, to any or all of five provisions of the MGCL which provide, respectively, that:

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the corporation’s board of directors will be divided into three classes;

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the affirmative vote of two-thirds of the votes cast in the election of directors generally is required to remove a director;

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the number of directors may be fixed only by vote of the directors;

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a vacancy on its board of directors be filled only by the remaining directors and that directors elected to fill a vacancy will serve for the remainder of the full term of the class of directors in which the vacancy occurred; and

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the request of stockholders entitled to cast at least a majority of all the votes entitled to be cast at the meeting is required for stockholders to require the calling of a special meeting of stockholders.

We have elected by a provision in our charter to be subject to the provisions of Subtitle 8 relating to the filling of vacancies on our board of directors. We have not elected, however, to be subject to any of the other provisions of Subtitle 8, including the provisions that would permit us to classify our board of directors without stockholder approval. Our board of directors is not classified. Moreover, our charter provides that, without the affirmative vote of a majority of the votes cast on the matter by our stockholders entitled to vote generally in the election of directors, we may not elect to be subject to the classified board provisions of Subtitle 8.

Through provisions in our charter and bylaws unrelated to Subtitle 8, our charter and bylaws already vests in our board of directors the exclusive power to fix the number of directors.

Meetings of Stockholders

Pursuant to our bylaws, an annual meeting of our stockholders for the purpose of the election of directors and the transaction of any business will be held on a date and at the time and place set by our board of directors. Each of our directors is elected by our stockholders to serve until the next annual meeting and until his or her successor is duly elected and qualifies under Maryland law. In addition, our chairman, our president and chief executive officer or our board of directors may call a special meeting of our stockholders. Subject to the provisions of our bylaws, a special meeting of our stockholders to act on any

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matter that may properly be considered by our stockholders will also be called by our secretary upon the written request of stockholders entitled to cast a majority of all the votes entitled to be cast at the meeting on such matter, accompanied by the information required by our bylaws. Our secretary will inform the requesting stockholders of the reasonably estimated cost of preparing and mailing the notice of meeting (including our proxy materials), and the requesting stockholder must pay such estimated cost before our secretary may prepare and mail the notice of the special meeting.

Amendment to Our Charter and Bylaws

Under the MGCL, a Maryland corporation generally cannot amend its charter unless approved by the affirmative vote of stockholders entitled to cast at least two-thirds of the votes entitled to be cast on the matter unless a lesser percentage (but not less than a majority of all of the votes entitled to be cast on the matter) is set forth in the corporation’s charter. Our charter generally may be amended only if the amendment is approved by the affirmative vote of stockholders entitled to cast a majority of all of the votes entitled to be cast on the matter. Our board of directors, with the approval of a majority of the entire board, and without any action by our stockholders, may also amend our charter to increase or decrease the aggregate number of shares of stock or the number of shares of stock of any class or series we are authorized to issue.

Our board of directors has the power to adopt, alter, amend or repeal any provision of our bylaws and to make new bylaws. In addition, stockholders have the power to adopt, alter, amend or repeal any provision of our bylaws or make new bylaws by the affirmative vote of a majority of the outstanding shares of our common stock.

Extraordinary Transactions

Under the MGCL, a Maryland corporation generally cannot dissolve, merge, sell all or substantially all of its assets, engage in a statutory share exchange or engage in similar transactions outside the ordinary course of business unless approved by the affirmative vote of stockholders entitled to cast at least two-thirds of the votes entitled to be cast on the matter unless a lesser percentage (but not less than a majority of all of the votes entitled to be cast on the matter) is set forth in the corporation’s charter. As permitted by the MGCL, our charter provides that any of these actions may be approved by the affirmative vote of stockholders entitled to cast a majority of all of the votes entitled to be cast on the matter and must be declared advisable by our board of directors. Many of our operating assets will be held by our subsidiaries, and these subsidiaries may be able to merge or sell all or substantially all of their assets without the approval of our stockholders.

Appraisal Rights

Our charter provides that our stockholders generally will not be entitled to exercise statutory appraisal rights.

Dissolution of Our Company

Our dissolution must be declared advisable by a majority of our entire board of directors and approved by the affirmative vote of stockholders entitled to cast a majority of all of the votes entitled to be cast on the matter.

Advance Notice of Director Nominations and New Business

Our bylaws provide that, with respect to an annual meeting of stockholders, nominations of individuals for election to our board of directors and the proposal of other business to be considered by our stockholders at an annual meeting of stockholders may be made only (1) pursuant to our notice of the meeting, (2) by or at the direction of our board of directors or (3) by a stockholder who was a stockholder of record both at the time of giving of notice and at the time of the meeting, who is entitled to vote at the meeting on the election of the individual so nominated or such other business and who has complied with the advance notice procedures set forth in our bylaws, including a requirement to provide certain information about the stockholder and its affiliates and the nominee or business proposal, as applicable.

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With respect to special meetings of stockholders, only the business specified in our notice of meeting may be brought before the meeting. Nominations of individuals for election to our board of directors may be made at a special meeting of stockholders at which directors are to be elected only (1) by or at the direction of our board of directors or (2) provided that the special meeting has been properly called in accordance with our bylaws for the purpose of electing directors, by a stockholder who is a stockholder of record both at the time of giving of notice and at the time of the meeting, who is entitled to vote at the meeting on the election of each individual so nominated and who has complied with the advance notice provisions set forth in our bylaws, including a requirement to provide certain information about the stockholder and its affiliates and the nominee.

Anti-takeover Effect of Certain Provisions of Maryland Law and Our Charter and Bylaws

Our charter and bylaws and Maryland law contain provisions that may delay, defer or prevent a change in control or other transaction that might involve a premium price for our common stock or otherwise be in the best interests of our stockholders, including:

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provisions that vacancies on our board of directors may be filled only by the remaining directors for the full term of the directorship in which the vacancy occurred;

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the power of our board of directors, without stockholder approval, to increase or decrease the aggregate number of authorized shares of stock or the number of shares of any class or series of stock;

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the power of our board of directors to cause us to issue additional shares of stock of any class or series and to fix the terms of one or more classes or series of stock without stockholder approval;

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the restrictions on ownership and transfer of our stock; and

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advance notice requirements for director nominations and stockholder proposals.

Likewise, if the provision in the bylaws opting out of the business combination provisions of the MGCL was repealed, or the business combination is not approved by our board of directors, or the provision in the bylaws opting out of the control share acquisition provisions of the MGCL were rescinded, these provisions of the MGCL could have similar anti-takeover effects.

Exclusive Forum Bylaw

As permitted under Section 2-113 of the MGCL, our bylaws provide that, unless we consent in writing to the selection of an alternative forum, the Circuit Court for Baltimore City, Maryland, or, if that Court does not have jurisdiction, the United States District Court for the District of Maryland, Baltimore Division, shall be the sole and exclusive forum for the following: (a) any derivative action or proceeding brought on our behalf; (b) any action asserting a claim of breach of any duty owed by us or by any of our directors, officers or other employees to us or our stockholders; (c) any action asserting a claim against us or any of our directors, officers or other employees arising pursuant to any provision of the MGCL or our charter or bylaws; or (d) any action asserting a claim against us or any of our directors, officers or other employees that is governed by the internal affairs doctrine. This bylaw provision allows certain disputes to be resolved by the courts most familiar with the MGCL, which governs the matters covered by the provision. In addition, we believe that this bylaw provision is advisable because it allows us to avoid the cost and uncertainty of multi-jurisdictional parallel litigation, which could result in inconsistent outcomes and misinterpretations of Maryland corporate law by courts in other jurisdictions.

Limitation of Liability and Indemnification of Directors and Officers

Maryland law permits a Maryland corporation to include in its charter a provision limiting the liability of its directors and officers to the corporation and its stockholders for money damages, except for liability resulting from (1) actual receipt of an improper benefit or profit in money, property or services or (2) active and deliberate dishonesty that is established by a final judgment and is material to the cause of action. Our charter contains a provision that eliminates such liability to the maximum extent permitted by Maryland law.

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Our charter and bylaws provide for indemnification of our officers and directors against liabilities to the maximum extent permitted by the MGCL, as amended from time to time.

The MGCL requires a corporation (unless its charter provides otherwise, which our charter does not) to indemnify a director or officer who has been successful, on the merits or otherwise, in the defense of any proceeding to which he or she is made, or threatened to be made, a party by reason of his or her service in that capacity. The MGCL permits a corporation to indemnify its present and former directors and officers, among others, against judgments, penalties, fines, settlements and reasonable expenses actually incurred by them in connection with any proceeding to which they may be made, or threatened to be made, a party by reason of their service in those or other capacities unless it is established that:

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the act or omission of the director or officer was material to the matter giving rise to the proceeding and (1) was committed in bad faith or (2) was the result of active and deliberate dishonesty;

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the director or officer actually received an improper personal benefit in money, property or services; or

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in the case of any criminal proceeding, the director or officer had reasonable cause to believe that the act or omission was unlawful.

However, under the MGCL, a Maryland corporation may not indemnify for an adverse judgment in a suit by or in the right of the corporation or for a judgment of liability on the basis that personal benefit was improperly received, unless in either case a court orders indemnification if it determines that the director or officer is fairly and reasonably entitled to indemnification, and then only for expenses. In addition, the MGCL permits a Maryland corporation to advance reasonable expenses to a director or officer upon its receipt of:

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a written affirmation by the director or officer of his or her good faith belief that he or she has met the standard of conduct necessary for indemnification by the corporation; and

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a written undertaking by the director or officer or on the director’s or officer’s behalf to repay the amount paid or reimbursed by the corporation if it is ultimately determined that the director or officer did not meet the standard of conduct.

Our charter authorizes us, and our bylaws obligate us, to the maximum extent permitted by Maryland law in effect from time to time, to indemnify and, without requiring a preliminary determination of the ultimate entitlement to indemnification, pay or reimburse reasonable expenses in advance of final disposition of such a proceeding to:

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any present or former director or officer of our company who is made, or threatened to be made, a party to the proceeding by reason of his or her service in that capacity; or

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any individual who, while a director or officer of our company and at our request, serves or has served as a director, officer, partner, trustee, member or manager of another corporation, real estate investment trust, limited liability company, partnership, joint venture, trust, employee benefit plan or other enterprise and who is made, or threatened to be made, a party to the proceeding by reason of his or her service in that capacity.

Our charter and bylaws also permit us to indemnify and advance expenses to any employee or agent of our company or a predecessor.

We have entered into indemnification agreements with each of our directors and executive officers that provide for indemnification to the maximum extent permitted by Maryland law.

Restrictions on Ownership and Transfer

Subject to certain exceptions, our charter provides that no person or entity may actually or beneficially own, or be deemed to own by virtue of the applicable constructive ownership provisions of the Code, more than 9.8% (in value or number of shares, whichever is more restrictive) of the outstanding shares of our common stock or more than 9.8% in value of the aggregate outstanding shares of our stock. For a more detailed description of this and other restrictions on ownership and transfer of our stock, see “Description of Capital Stock — Restrictions on Ownership and Transfer.”

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REIT Qualification

Our charter provides that our board of directors may revoke or otherwise terminate our REIT election, without approval of our stockholders, if it determines that it is no longer in our best interests to attempt to qualify, or to continue to qualify, as a REIT.

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POLICIES WITH RESPECT TO CERTAIN ACTIVITIES

The following is a discussion of certain our policies with respect to investments, financing and certain other activities. The policies with respect to these activities may be amended and revised from time to time at the discretion of our board of directors without notice to or a vote of our stockholders.

Investment Policies

Investments in Real Estate or Interests in Real Estate

We conduct all of our investment activities through our operating partnership and its subsidiaries. Our primary business objective is acquire and own a portfolio of specialized industrial cultivation/processing and retail/dispensary properties in the regulated adult- and medical-use cannabis markets that are net leased to high-quality tenant operators, thereby generating attractive returns for our stockholders. For a discussion of the acquisitions and investments in our portfolio, our business and other strategic objectives, see “Our Business.”

While our primary and preferred form of investment is sole fee simple ownership of a property subject to a long-term triple-net lease with the cannabis operator, we may also provide debt capital as a pathway to the ultimate acquisition of assets, including by financing the development of properties that have been pre-leased or providing mortgage loans for existing properties, with purchase options or rights of first offer for the underlying properties. We anticipate that future investment and development activity will be focused in the United States but will not be limited to any geographic area. We intend to engage in such future investment activities in a manner that is consistent with requirements applicable to REITs for U.S. federal income tax purposes. Provided we comply with these requirements, however, there are no limitations on the percentage of our assets that may be invested in any one real estate asset.

We may enter into joint ventures from time to time, if we determine that doing so would be the most effective means of raising capital. Equity investments may be subject to existing mortgage financing and other debt or such financing or debt may be incurred in connection with acquiring investments. Any such financing or debt will have priority over our equity interest in such property. Investments are also subject to our policy not to be treated as an investment company under the Investment Company Act of 1940, as amended, or the Investment Company Act.

From time to time, we may make investments or agree to terms that support the objectives of tenants without necessarily maximizing our short-term financial return, which may allow us to build long-term relationships and acquire properties otherwise unavailable to our competition. We believe that these dynamics create long-term, sustainable relationships and, in turn, profitability for us.

Purchase and Development of Properties

Our policy is to acquire properties primarily for cash flow growth potential and long-term value appreciation. From time to time, we may engage in strategic development opportunities. These opportunities may involve replacing or renovating properties in our portfolio that have become economically obsolete or identifying new sites that present an attractive opportunity and complement our existing portfolio.

Investments in Real Estate Mortgages and Mezzanine Loans

We do not have a policy limiting our ability to make loans to other persons. Subject to REIT qualification rules, we may make loans to third parties. For example, we may consider offering purchase money financing in connection with the sale of properties where the provision of that financing will increase the value to be received by us for the property sold or we may consider making loans to joint ventures in which we or they participate or may participate in the future. We may choose to guarantee the debt of certain joint ventures with third parties. Consideration for those guarantees may include, but are not limited to, fees, long-term management contracts, options to acquire additional ownership and promoted equity positions. Our board of directors may, in the future, adopt a lending policy without notice to or the vote of our stockholders.

As part of our investment strategy, we may, at the discretion of our board of directors, invest in mortgages and other real estate-related debt investments consistent with the rules applicable to REITs. The

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mortgages in which we may invest may be either first mortgages or junior mortgages, and may or may not be insured by a governmental agency. We also may invest in mezzanine loans, which are loans made to property owners that are subordinate to mortgage debt and are secured by pledges of the borrower’s ownership interests in the property and/or the entity that owns the property. Investments in mortgage loans and mezzanine loans are subject to the risk that one or more borrowers may default and that the collateral securing mortgages may not be sufficient to enable us to recover our full investment.

Investments in Securities or Interests in Entities Primarily Engaged in Real Estate Activities and Other Issuers

Subject to the gross income and asset requirements required for REIT qualification, we may invest in securities of entities engaged in real estate activities or securities of other issuers (normally partnership interests, limited liability company interests or other joint venture interests in special purpose entities owning properties), including for the purpose of exercising control over such entities. We may acquire some, all or substantially all of the securities or assets of other REITs or entities engaged in real estate activities where such investment would be consistent with our investment policies and the REIT requirements. There are no limitations on the amount or percentage of our total assets that may be invested in any one issuer, other than those imposed by the gross income and asset tests we must meet in order to qualify as a REIT under the Code. In any event, we do not intend that our investments in securities will require us to register as an “investment company” under the Investment Company Act, and we would generally divest appropriate securities before any such registration would be required.

Investments in Other Securities

Other than as described above, we do not intend to invest in any additional securities such as bonds, preferred stock or common stock.

Dispositions

We will continuously evaluate our portfolio to determine whether we should selectively dispose of properties in order to redeploy capital into new acquisition and investment opportunities. We will actively seek to improve the quality and attractiveness of our properties and may determine to exit certain markets entirely if we see adverse competitive or other conditions developing in such markets. Our ability to dispose of certain properties may be limited by REIT requirements.

Financing and Leverage Policy

Although to date we have been unable to obtain debt financing on terms and conditions that we find acceptable, subject to market conditions and availability, we expect to employ leverage in our capital structure in amounts determined from time to time by our board of directors. Although our board of directors has not adopted a policy that limits the total amount of debt that we may incur, it will consider a number of factors in evaluating our level of debt from time to time, as well as the amount of such debt that will be either fixed or variable rate. Our charter and bylaws do not limit the amount or percentage of debt that we may incur nor do they restrict the form in which our debt will be taken (including recourse or non-recourse debt, cross collateralized debt, etc.). Although our board of directors has not yet adopted a policy limiting the total amount of debt that we may incur, we initially intend to target a ratio of debt to gross undepreciated asset value of between 25% and 45%, subject to market conditions and availability of debt financing on terms and conditions that we find acceptable. Our board of directors may from time to time modify our debt policy in light of then-current economic conditions, relative costs of debt and equity capital, market values of our properties, general market conditions for debt and equity securities, fluctuations in the market price of our common stock, growth and acquisition opportunities and other factors.

Equity Capital Policies

To the extent that our board of directors determines to obtain additional capital, we may, without stockholder approval, issue debt or equity securities, including OP units, retain earnings (subject to the REIT distribution requirements for U.S. federal income tax purposes) or pursue a combination of these methods. As long as our operating partnership is in existence, the proceeds of all equity capital raised by us

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will be contributed to our operating partnership in exchange for additional interests in our operating partnership, which will dilute the ownership interests of the limited partners in our operating partnership.

Existing common stockholders will have no preemptive rights to common or preferred stock or units issued in any securities offering by us or our operating partnership, and any such offering might cause a dilution of a stockholder’s investment in us. We may issue shares of capital stock or OP units in connection with acquisitions of property in the future.

We may, under certain circumstances, purchase shares of our common stock or other securities in the open market or in private transactions with our stockholders, provided that those purchases are approved by our board of directors. Our board of directors has no present intention of causing us to repurchase any shares of our common stock or other securities, and any such action would only be taken in conformity with applicable federal and state laws and the applicable requirements for qualification as a REIT.

Reporting Policies

We currently make available to our stockholders audited annual financial statements and unaudited quarterly financial statements. Upon completion of this offering, we will become subject to the information reporting requirements of the Exchange Act, pursuant to which we will be required to file periodic and current reports, proxy statements and other information, including audited financial statements, with the SEC.

Conflict of Interest Policies

Our governing instruments do not restrict any of our directors, officers, stockholders or affiliates from having a pecuniary interest in an investment or transaction in which we have an interest or from conducting, for their own account, business activities of the type we conduct. However, our policies will be designed to eliminate or minimize potential conflicts of interest. A “conflict of interest” occurs when a director’s, officer’s or employee’s private interest interferes in any way, or appears to interfere, with the interests of the Company as a whole. Our board of directors plans to adopt a policy that prohibits personal conflicts of interest. This policy will provide that any situation that involves, or may reasonably be expected to involve, a conflict of interest must be disclosed immediately to a supervisor or a member of our audit committee.

In connection with this offering, our board of directors will adopt a written related person transaction policy. The purpose of this policy will be to describe the procedures used to identify, review, approve and disclose, if necessary, any transaction, arrangement or relationship (or any series of similar transactions, arrangements or relationships) in which (x) the Company was, is or will be a participant, (y) the aggregate amount involved exceeds $120,000 and (z) a related person has or will have a direct or indirect interest. For purposes of this policy, a related person is (i) any person who is, or at any time since the beginning of our last fiscal year was, an executive officer, director or director nominee of the Company, (ii) any person who is known to be the beneficial owner of more than 5% of our common stock, (iii) any immediate family member of any of the foregoing persons, or (iv) any firm, corporation or other entity in which any of the foregoing persons is employed or is a general partner or principal or in a similar position, or in which all the related persons, in the aggregate, have a 10% or greater beneficial interest. Under this policy, our audit committee will be responsible for reviewing, approving or ratifying each related person transaction or proposed transaction. In determining whether to approve or ratify a related person transaction, the audit committee will consider all relevant facts and circumstances of the related person transaction available to it and will approve only those related person transactions that are in, or not inconsistent with, our best interests and the best interests of our stockholders, as the audit committee determines in good faith. No member of the audit committee will be permitted to participate in any consideration of a related person transaction with respect to which that member or any of his or her immediate family is a related person.

These policies may not be successful in eliminating the influence of conflicts of interest or related person transactions. If they are not successful, decisions could be made that might fail to reflect fully the interests of all stockholders.

Interested Director and Officer Transactions

Pursuant to the MGCL, a contract or other transaction between us and a director or between us and any other corporation or other entity in which any of our directors is a director or has a material financial

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interest is not void or voidable solely on the grounds of such common directorship or interest, the presence of such director at the meeting at which the contract or transaction is authorized, approved or ratified or the counting of the director’s vote in favor thereof, provided that:

•

the fact of the common directorship or interest is disclosed or known to our board of directors or a committee of our board, and our board or committee authorizes, approves or ratifies the transaction or contract by the affirmative vote of a majority of disinterested directors, even if the disinterested directors constitute less than a quorum;

•

the fact of the common directorship or interest is disclosed or known to our stockholders entitled to vote thereon, and the transaction or contract is authorized, approved or ratified by a majority of the votes cast by the stockholders entitled to vote other than the votes of shares owned of record or beneficially by the interested director or corporation, firm or other entity; or

•

the transaction or contract is fair and reasonable to us.

Furthermore, under Nevada law (where our operating partnership is formed), we, as the sole member of the general partner, have a fiduciary duty to our operating partnership and, consequently, such transactions are also subject to the duties of care and loyalty that we, as the sole member of the general partner, owe to limited partners in the operating partnership (to the extent such duties have not been eliminated pursuant to the terms of the operating partnership agreement). Our policy requires that all contracts and transactions between us, our operating partnership or any of our subsidiaries, on one hand, and any of our directors or executive officers or any entity in which such director or executive officer is a director or has a material financial interest, on the other hand, must be approved by the affirmative vote of a majority of the disinterested directors even if less than a quorum. Where appropriate in the judgment of the disinterested directors, our board of directors may obtain a fairness opinion or engage independent counsel to represent the interests of nonaffiliated securityholders, although our board of directors will have no obligation to do so.

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SHARES ELIGIBLE FOR FUTURE SALE

General

Upon the completion of this offering, we will have outstanding shares of our common stock ( shares if the underwriters’ overallotment option is exercised in full), including shares issued by us in this offering ( shares if the underwriters’ overallotment option is exercised in full), 4,743,111 shares issued in our prior private placements and an aggregate of restricted shares of our common stock issued to our executive officers, non-employee directors and certain employees under our Equity Incentive Plan. In addition, of our common stock are available for issuance under our Equity Incentive Plan. See “Management — Equity Incentive Plan.”

Of these shares, the shares sold in this offering ( shares if the underwriters’ overallotment option is exercised in full) and shares of our common stock sold in our prior private placements will be freely transferable without restriction or further registration under the Securities Act, subject to the limitations on ownership set forth in our charter, except for any shares purchased in this offering by our “affiliates,” as that term is defined by Rule 144 under the Securities Act. The remaining outstanding shares of our common stock, other than the shares of our common stock to be issued to our non-affiliates under our Equity Incentive Plan, will be “restricted shares” as defined in Rule 144. See “— Registration Rights.”

Prior to this offering, there has been no public market for our common stock. Following the completion of this offering, our common stock is expected to be traded on the and quoted on the OTCQX. No assurance can be given as to (1) the likelihood that an active market for our shares of common stock will develop, (2) the liquidity of any such market, (3) the ability of the stockholders to sell the shares or (4) the prices that stockholders may obtain for any of the shares. No prediction can be made as to the effect, if any, that future sales of shares, or the availability of shares for future sale, will have on the market price prevailing from time to time. Sales of substantial amounts of our common stock, or the perception that such sales could occur, may adversely affect prevailing market prices of our common stock. In particular, Tilden Park owns % of the outstanding shares of our common stock as of date of this prospectus. If Tilden Park sells all or a substantial portion of their shares, it could have a material adverse impact on the market price of our common stock. See “Risk Factors — Risks Related to this Offering and Ownership of Our Common Stock — Common stock eligible for future sale could have an adverse effect on the value of our common stock.”

For a description of certain restrictions on transfers of shares of our common stock held by certain of our stockholders, see “Description of Capital Stock — Restrictions on Ownership and Transfer.”

Rule 144

Shares of our common stock that are “restricted” securities under the meaning of Rule 144 under the Securities Act may not be sold in the absence of registration under the Securities Act unless an exemption from registration is available, including the exemption provided by Rule 144.

In general, under Rule 144 as currently in effect, beginning 90 days after the date of this prospectus, a person who is not deemed to have been an affiliate of ours at any time during the 90 days preceding a sale and who has beneficially owned shares considered to be restricted securities under Rule 144 for at least six months would be entitled to sell those shares, subject only to the availability of current public information about us. A non-affiliated person who has beneficially owned shares considered to be restricted securities under Rule 144 for at least one year would be entitled to freely sell those shares without regard to the provisions of Rule 144.

An affiliate of ours who has beneficially owned shares of our common stock for at least six months would be entitled to sell, within any three-month period, a number of shares that does not exceed the greater of:

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1% of the shares of our common stock then outstanding; or

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the average weekly trading volume of our common stock during the four calendar weeks preceding the date on which notice of the sale is filed with the SEC.

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Sales under Rule 144 by our affiliates or persons selling shares on behalf of our affiliates are also subject to manner of sale provisions, notice requirements and the availability of current public information about us.

Registration Rights

In our prior private placements, we issued and sold an aggregate of 4,743,111 shares of our common stock and entered into a registration rights agreement for the benefit of the purchasers in those offerings. Pursuant to the registration rights agreement, the purchasers in our prior private placements have a right to participate in this offering as selling stockholders, subject to certain conditions, and holders of shares of our common stock have exercised their rights to sell in this offering. In addition, under this registration rights agreement, we have agreed to use our commercially reasonable efforts to cause a resale shelf registration statement to become effective under the Securities Act as promptly as practicable after the filing of such registration statement, and in any event, subject to certain exceptions, no later than March 31, 2021, and to maintain such registration statement continuously effective under the Securities Act for a specified period. See “Description of Capital Stock — Registration Rights.”

Lock-Up Agreements

For a description of certain restrictions on transfers of our common stock held by certain of our stockholders, see “Underwriting.”

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OUR OPERATING PARTNERSHIP AND OUR PARTNERSHIP AGREEMENT

The following is a summary of the material provisions of the First Amended and Restated Agreement of Limited Partnership of our operating partnership, or the partnership agreement, a copy of which is filed as an exhibit to the registration statement of which this prospectus is a part. This summary does not purport to be complete and is subject to and qualified in its entirety by reference to applicable provisions of the Nevada Uniform Limited Partnership Act, as amended, and the partnership agreement. See “Where You Can Find More Information.” For purposes of this section, references to “we,” “our,” “us” and “our company” refer to solely Freehold Properties, Inc., and not to its subsidiaries, including the operating partnership. For the purposes of this section, references to the “general partner” refer to Freehold OP GP, LLC, a wholly owned subsidiary of Freehold Properties, Inc.

General

Pursuant to the partnership agreement, subject to certain protective rights of the limited partners described below, we have, through our control of the general partner, full, exclusive and complete responsibility and discretion in the management and control of our operating partnership, including the ability to cause our operating partnership to enter into certain major transactions including a merger of our operating partnership or a sale of all or substantially all of the assets of our operating partnership. The limited partners have no power to remove the general partner without the general partner’s consent.

The general partner may not conduct any business without the consent of a majority of the limited partners other than in connection with: the ownership, acquisition and disposition of partnership interests; the management of the business of our operating partnership; our operation as a reporting company with a class of securities registered under the Exchange Act; the offering, sale syndication, private placements or public offering of stock, bonds, securities or other interests, financing or refinancing of any type related to our operating partnership or its assets or activities; and such activities as are incidental to those activities discussed above. In general, we must contribute any assets or funds that we acquire to our operating partnership in exchange for additional partnership interests. We may, however, in our sole and absolute discretion, from time to time hold or acquire assets in our own name or otherwise other than through our operating partnership so long as we take commercially reasonable measures to ensure that the economic benefits and burdens of such assets are otherwise vested in our operating partnership. We and our affiliates may also engage in any transactions with our operating partnership on such terms as we may determine in our sole and absolute discretion.

We, as the parent of the general partner, are under no obligation to give priority to the separate interests of our stockholders or the limited partners in deciding whether to cause our operating partnership to take or decline to take any actions. If there is a conflict between the interests of our stockholders on the one hand and the limited partners (including us) on the other, we, as the parent of the general partner, will endeavor in good faith to resolve the conflict in a manner that is not adverse to either our stockholders or the limited partners (including us). The general partner is not liable under the partnership agreement to our operating partnership or to any partner for monetary damages for losses sustained, liabilities incurred, or benefits not derived by limited partners (including us) in connection with such decisions, unless the general partner acted in bad faith and the act or omission was material to the matter giving rise to the loss, liability or benefit not derived.

Substantially all of our business activities, including all activities pertaining to the acquisition and operation of properties, must be conducted through our operating partnership, and our operating partnership must be operated in a manner that will enable us to satisfy the requirements for qualification as a REIT.

Operating Partnership Units

Interests in our operating partnership are denominated in units of limited partnership interest. Pursuant to the partnership agreement, our operating partnership has designated the following classes of units of limited partnership interest, or operating partnership units: OP units and LTIP units.

OP Units

We own 100% of the OP units. To the extent that we issue OP units, commencing on the date that is the 12-month anniversary of the date of the on which the OP units were initially issued to a limited partner, each limited

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partner (other than us) will have the right, subject to the terms and conditions set forth in the partnership agreement, to require our operating partnership to redeem all or a portion of the OP units held by such limited partner in exchange for cash in an amount equal to the number of tendered OP units multiplied by the per share price of our common stock (determined in accordance with, and subject to adjustment under, the terms of the partnership agreement), unless the terms of such OP units or a separate agreement entered into between our operating partnership and the holder of such OP units provide that they are not entitled to a right of redemption or provide for a shorter or longer period before such limited partner may exercise such right of redemption or impose conditions on the exercise of such right of redemption. On or before the close of business on the tenth business day after the general partner receives a notice of redemption, we may, as the parent of the general partner, in our sole and absolute discretion, but subject to the restrictions on the ownership of our common stock imposed under our charter and the transfer restrictions and other limitations thereof, elect to acquire some or all of the tendered OP units from the tendering partner in exchange for cash or shares of our common stock, based on an exchange ratio of one share of our common stock for each OP unit to be redeemed (subject to anti-dilution adjustments provided in the partnership agreement).

LTIP Units

In the future, we, as the parent of the general partner, may cause our operating partnership to issue LTIP units to our independent directors, executive officers and certain other employees and persons who provide services to our operating partnership. These LTIP units will be subject to certain vesting requirements. In general, LTIP units are similar to OP units and will receive the same quarterly per-unit profit distributions as OP units; provided, however, that the general partner may adjust distributions with respect to LTIP units as it deems necessary. The rights, privileges, and obligations related to each series of LTIP units will be established at the time the LTIP units are issued. As profits interests, LTIP units initially will not have full parity, on a per-unit basis, with OP units with respect to liquidating distributions. Upon the occurrence of specified events, LTIP units can over time achieve full parity with OP units and therefore accrete to an economic value for the holder equivalent to OP units. If such parity is achieved, vested LTIP units may be converted on a one-for-one basis into OP units, which, in turn, may be tendered by the holder for redemption in exchange for cash or, at our election, for shares of our common stock on a one-for-one basis. However, there are circumstances under which LTIP units will not achieve parity with OP units, and until such parity is reached, the value that a holder of LTIP units could realize for a given number of LTIP units will be less than the value of an equal number of shares of our common stock and may be zero.

Management Liability and Indemnification

To the maximum extent permitted under Nevada law, neither we, the general partner nor any of our directors and officers will be liable to our operating partnership or the limited partners or assignees for losses sustained, liabilities incurred or benefits not derived as a result of errors in judgment or mistakes of fact or law or of any act or omission, unless such person acted in bad faith and the act or omission was material to the matter giving rise to the loss, liability or benefit not derived. The partnership agreement provides for indemnification of the general partner, us, our affiliates and each of our respective directors, officers, employees and any persons we may designate from time to time in our sole and absolute discretion, to the fullest extent permitted by applicable law against any and all losses, claims, damages, liabilities (whether joint or several), expenses (including, without limitation, attorneys’ fees and other legal fees and expenses), judgments, fines, settlements and other amounts arising from any and all claims, demands, actions, suits or proceedings, civil, criminal, administrative or investigative, that relate to the operations of our operating partnership, provided that our operating partnership will not indemnify such person if (i) an act or omission of the person was material to the matter giving rise to the action and either was committed in bad faith or was the result of active and deliberate dishonesty, (ii) the person actually received an improper personal benefit in money, property or services, or (iii) in the case of a criminal proceeding, the person had reasonable cause to believe the act or omission was unlawful, as set forth in the partnership agreement (subject to the exceptions described below under “— Fiduciary Responsibilities”).

Insofar as the foregoing provisions permit indemnification of directors, officers or persons controlling us for liability arising under the Securities Act, we have been informed that in the opinion of the SEC this indemnification is against public policy as expressed in the Securities Act and is therefore unenforceable.

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Fiduciary Responsibilities

Our directors and officers have duties under applicable Maryland law to manage us in a manner consistent with our best interests. At the same time, the general partner has fiduciary duties to manage our operating partnership in a manner beneficial to our operating partnership and its partners. Our duties, as the parent of the general partner, to our operating partnership and its limited partners, therefore, may come into conflict with the duties of our directors and officers to us and our stockholders.

Pursuant to the partnership agreement, the limited partners of our operating partnership have expressly acknowledged that we are acting for the collective benefit of our operating partnership, the limited partners and our stockholders. We will be under no obligation to give priority to the separate interests of the limited partners of our operating partnership (including, without limitation, any tax consequences) in deciding whether to cause our operating partnership to take or decline to take any actions. The limited partners of our operating partnership have agreed that in the event of a conflict in the duties owed by our directors and officers to us and our stockholders and the fiduciary duties owed by us, in our capacity as the parent of the general partner of our operating partnership, to such limited partners, we will fulfill our fiduciary duties to such limited partners by acting in the best interests of our stockholders.

Distributions

The partnership agreement provides that we, as the parent of the general partner, shall cause our operating partnership to make quarterly (or more frequent) distributions of all of its available cash (which is defined to be cash available for distribution as determined by us, in our capacity as the parent of the general partner) (i) first, with respect to any OP units that are entitled to any preference in accordance with the rights of such operating partnership unit (and, within such class, pro rata according to their respective percentage interests) and (ii) second, with respect to any OP units that are not entitled to any preference in distribution, in accordance with the rights of such class of OP units (and, within such class, pro rata in accordance with their respective percentage interests).

Allocations of Net Income and Net Loss

Net income and net loss of our operating partnership are determined and allocated with respect to each fiscal year of our operating partnership as of the end of the year. Except as otherwise provided in the partnership agreement, an allocation of a share of net income or net loss is treated as an allocation of the same share of each item of income, gain, loss or deduction that is taken into account in computing net income or net loss. Except as otherwise provided in the partnership agreement, net income and net loss are allocated to the holders of OP units holding the same class or series of OP units in accordance with their respective percentage interests in the class or series at the end of each fiscal year. Our operating partnership currently is treated as an entity disregarded from us for U.S. federal income tax purposes. However, the partnership agreement contains provisions for special allocations intended to comply with certain regulatory requirements that will apply as soon as our operating partnership becomes a multiple partner “partnership” for U.S. income tax purposes, including the requirements of Treasury Regulations Sections 1.704-1(b) and 1.704-2. Except as otherwise required by the partnership agreement or the Code and the Treasury Regulations, each operating partnership item of income, gain, loss and deduction is allocated among the limited partners of our operating partnership for U.S. federal income tax purposes in the same manner as its correlative item of book income, gain, loss or deduction is allocated pursuant to the partnership agreement. In addition, under Section 704(c) of the Code, items of income, gain, loss and deduction with respect to appreciated or depreciated property which is contributed to a partnership, such as our operating partnership, in a tax-free transaction must be specially allocated among the partners in such a manner so as to take into account such variation between the tax basis and the fair market value of the property at the time of contribution. Our operating partnership will allocate tax items to the holders of operating partnership units taking into consideration the requirements of Section 704(c) of the Code. See “Material U.S. Federal Income Tax Considerations.”

The general partner has sole discretion to ensure that allocations of income, gain, loss and deduction of our operating partnership are in accordance with the interests of the partners of our operating partnership as determined under the Code, and all matters concerning allocations of tax items not expressly provided for in the partnership agreement may be determined by the general partner in its sole discretion.

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Redemption Rights

Commencing on the 12-month anniversary of the date on which the OP units were initially issued to a limited partner, each limited partner (other than us) will have the right, subject to the terms and conditions set forth in the partnership agreement, to require our operating partnership to redeem all or a portion of such units in exchange for cash in an amount equal to the number of tendered units multiplied by the per share price of our common stock (determined in accordance with, and subject to adjustment under, the terms of the partnership agreement), unless the terms of such units or a separate agreement entered into between our operating partnership and the holder of such units provide that they do not have a right of redemption or provide for a shorter or longer period before such holder may exercise such right of redemption or impose conditions on the exercise of such right of redemption. On or before the close of business on the tenth business day after the general partner receives a notice of redemption, we may, as the parent of the general partner, in our sole and absolute discretion, but subject to the restrictions on the ownership of our common stock imposed under our charter and the transfer restrictions and other limitations thereof, elect to acquire some or all of the tendered units in exchange for cash or shares of our common stock, based on an exchange ratio of one share of our common stock for each OP unit to be redeemed (subject to anti-dilution adjustments provided in the partnership agreement). If we give the limited partners notice of our intention to make an extraordinary distribution of cash or property to our stockholders or effect a merger, a sale of all or substantially all of our assets, or any other similar extraordinary transaction, each limited partner may exercise its OP unit redemption rights, regardless of the length of time such limited partner has held its OP units.

Transferability of Operating Partnership Units; Extraordinary Transactions

The general partner generally is not be able to withdraw voluntarily from our operating partnership or transfer any of its interest in our operating partnership unless the transfer is: (i) to our affiliate; (ii) to a wholly owned subsidiary of the general partner or the owner of all of the ownership interests of the general partner; or (iii) otherwise expressly permitted under the partnership agreement.

The partnership agreement permits the general partner or us, as the parent of the general partner, to engage in a merger, consolidation or other combination, or sale of substantially all of our assets if:

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we receive the consent of a majority in interest of the limited partners (excluding us);

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following the consummation of such transaction, substantially all of the assets of the surviving entity are owned directly or indirectly by the operating partnership or another limited partnership or limited liability company which is the survivor of a merger, consolidation or combination of assets with the operating partnership; or

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as a result of such transaction all limited partners will receive, or will have the right to receive, for each operating partnership unit an amount of cash, securities or other property equal in value to the greatest amount of cash, securities or other property paid in the transaction to a holder of one share of our common stock, provided that if, in connection with the transaction, a purchase, tender or exchange offer shall have been made to and accepted by the holders of more than 50% of the outstanding shares of our common stock, each holder of operating partnership units shall be given the option to exchange such units for the greatest amount of cash, securities or other property that a limited partner would have received had it exercised its redemption right (described above) and received shares of our common stock immediately prior to the expiration of the offer.

With certain limited exceptions, limited partners may not transfer their interests in our operating partnership, in whole or in part, without the prior written consent of the general partner, which consent may be withheld in its sole and absolute discretion. Except with the general partner’s consent to the admission of the transferee as a limited partner, transferees shall not have any rights by virtue of the transfer other than the rights of an assignee and will not be entitled to vote or effect a redemption with respect to their operating partnership units in any matter presented to the limited partners for a vote. The general partner will have the right to consent to the admission of a transferee of the interest of a limited partner, which consent may be given or withheld by in our sole and absolute discretion.

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Issuance of Our Stock and Additional Partnership Interests

Pursuant to the partnership agreement, upon the issuance of our stock other than in connection with a redemption of OP units, we generally are obligated to contribute or cause to be contributed the cash proceeds or other consideration received from the issuance of our stock to our operating partnership in exchange for, in the case of common stock, OP units or, in the case of an issuance of preferred stock, preferred operating partnership units with designations, preferences and other rights, terms and provisions that are substantially the same as the designations, preferences and other rights, terms and provisions of the preferred stock. In addition, the general partner may cause our operating partnership to issue additional operating partnership units or other partnership interests and to admit additional limited partners to our operating partnership from time to time, on such terms and conditions and for such capital contributions as we, as the parent of the general partner, may establish in our sole and absolute discretion, without the approval or consent of any limited partner, including: (i) upon the conversion, redemption or exchange of any debt, units or other partnership interests or other securities issued by our operating partnership; (ii) for less than fair market value; or (iii) in connection with any merger of any other entity into our operating partnership.

Tax Matters

Our operating partnership currently is treated as an entity disregarded from its owner for U.S. federal income tax purposes. However, pursuant to the partnership agreement and as soon as our operating partnership becomes a multiple-partner “partnership” for income tax purposes, the general partner will be the “partnership representative” of our operating partnership and has certain other rights relating to tax matters. Accordingly, as both the general partner and the partnership representative, we have the authority to handle tax audits and to make tax elections under the Code, in each case, on behalf of our operating partnership.

Term

The term of our operating partnership commenced on April 23, 2019 and will continue perpetually, unless earlier terminated in the following circumstances:

•

a final and non-appealable judgment is entered by a court of competent jurisdiction ruling that the general partner is bankrupt or insolvent, or a final and non-appealable order for relief is entered by a court with appropriate jurisdiction against the general partner, in each case under any federal or state bankruptcy or insolvency laws as now or hereafter in effect, unless, prior to the entry of such order or judgment, a majority in interest of the remaining outside limited partners agree in writing, in their sole and absolute discretion, to continue the business of our operating partnership and to the appointment, effective as of a date prior to the date of such order or judgment, of a successor general partner;

•

an election to dissolve our operating partnership made by the general partner in its sole and absolute discretion, with or without the consent of a majority in interest of the outside limited partners;

•

entry of a decree of judicial dissolution of our operating partnership pursuant to the provisions of the Nevada Uniform Limited Partnership Act;

•

the occurrence of any sale or other disposition of all or substantially all of the assets of our operating partnership or a related series of transactions that, taken together, result in the sale or other disposition of all or substantially all of the assets of our operating partnership;

•

the redemption (or acquisition by the general partner) of all operating partnership units that we have authorized other than those held by us; or

•

the incapacity or withdrawal of the general partner, unless all of the remaining partners in their sole and absolute discretion agree in writing to continue the business of our operating partnership and to the appointment, effective as of a date prior to the date of such incapacity, of a substitute general partner.

Amendments to the Partnership Agreement

Amendments to the partnership agreement may be proposed by the general partner or by any limited partner holding 25% or more of the percentage interest of OP units designated as Class A Units. Generally,

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the partnership agreement may be amended with the general partner’s approval and the approval of the limited partners holding a majority of all outstanding limited partner units (excluding limited partner units held by us or our subsidiaries). Certain amendments that would, among other things, have the following effects, must be approved by each partner adversely affected thereby:

•

conversion of a limited partner’s interest into a general partner’s interest (except as a result of the general partner acquiring such interest);

•

modification of the limited liability of a limited partner;

•

alteration or modification of the rights of any partner to receive the distributions to which such partner is entitled (subject to certain exceptions);

•

alteration or modification of the redemption rights provided by the partnership agreement; or

•

Alteration or modification of the provisions governing transfer of the general partner’s partnership interest.

Notwithstanding the foregoing, we, as the parent of the general partner, will have the power, without the consent of the limited partners, to amend the partnership agreement as may be required to:

•

add to the general partner’s obligations or surrender any right or power granted to the general partner or any of its affiliates for the benefit of the limited partners;

•

reflect the admission, substitution, or withdrawal of partners or the termination of our operating partnership in accordance with the partnership agreement and to cause our operating partnership or our operating partnership’s transfer agent to amend its books and records to reflect our operating partnership unit holders in connection with such admission, substitution or withdrawal;

•

reflect a change that is of an inconsequential nature or does not adversely affect the limited partners as such in any material respect, or to cure any ambiguity, correct or supplement any provision in the partnership agreement not inconsistent with the law or with other provisions, or make other changes with respect to matters arising under the partnership agreement that will not be inconsistent with the law or with the provisions of the partnership agreement;

•

satisfy any requirements, conditions, or guidelines contained in any order, directive, opinion, ruling or regulation of a U.S. federal or state agency or contained in U.S. federal or state law;

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set forth or amend the designations, preferences, conversion or other rights, voting powers, duties restrictions, limitations as to distributions, qualifications or terms or conditions of redemption of the holders of any additional operating partnership units issued or established pursuant to the partnership agreement;

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reflect such changes as are reasonably necessary for us to maintain or restore our qualification as a REIT, to satisfy the REIT requirements or to reflect the transfer of any operating partnership units between us and any qualified REIT subsidiary or entity that is disregarded as an entity separate from us for U.S. federal income tax purposes;

•

modify either or both the manner in which items of net income or net loss are allocated or the manner in which capital accounts are computed (but only to the extent set forth in the partnership agreement, or to the extent required by the Code or applicable income tax regulations under the Code);

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issue additional partnership interests;

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impose restrictions on the transfer of operating partnership units if we receive an opinion of counsel reasonably to the effect that such restrictions are necessary in order to comply with any federal or state securities laws or regulations applicable to our operating partnership or the operating partnership units;

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reflect any other modification to the partnership agreement as is reasonably necessary for our business or operations or those of our operating partnership and which does not otherwise require the consent of each partner adversely affected; and

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reflect an increase or decrease in the amount that a limited partner is obligated to contribute to our operating partnership upon the occurrence of certain events.

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Certain provisions affecting the general partner’s rights and duties (e.g., restrictions relating to certain extraordinary transactions involving us, the general partner or our operating partnership) may not be amended without the approval of the holders of a majority of the operating partnership units (excluding operating partnership units held by us).

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MATERIAL U.S. FEDERAL INCOME TAX CONSIDERATIONS

This section summarizes the material U.S. federal income tax considerations that you, as a prospective investor, may consider relevant in connection with the acquisition, ownership and disposition of our common stock and our election to be taxed as a REIT. As used in this section and unless the context requires otherwise, the terms “we” and “our” refer solely to Freehold Properties, Inc., and not to our subsidiaries and affiliates, which have not elected to be taxed as REITs for U.S. federal income tax purposes.

This discussion does not exhaust all possible tax considerations and does not provide a detailed discussion of any state, local or foreign tax considerations. Nor does this discussion address all aspects of U.S. federal income taxation that may be relevant to particular investors in light of their personal investment or tax circumstances, or to certain types of investors that are subject to special treatment under the U.S. federal income tax laws, such as insurance companies, tax-exempt organizations (except to the limited extent discussed below under “— Taxation of Tax-Exempt Stockholders”), financial institutions, broker-dealers, partnerships and other pass-through entities and trusts, persons holding our stock on behalf of other persons as nominees, persons who receive our stock as compensation, persons subject to the alternative minimum tax, persons holding our stock as part of a hedge, straddle or other risk reduction, constructive sale or conversion transaction, non-U.S. individuals and foreign corporations (except to the limited extent discussed below under “— Taxation of Non-U.S. Stockholders”) and other persons subject to special tax rules. Moreover, this summary assumes that our stockholders hold our common stock as a “capital asset” for U.S. federal income tax purposes, which generally means property held for investment.

The statements in this section are based on the current U.S. federal income tax laws, including the Code, the Treasury Regulations, rulings and other administrative interpretations and practices of the IRS, and judicial decisions, all as currently in effect, and all of which are subject to differing interpretations or to change, possibly with retroactive effect. This discussion is for general purposes only and is not tax advice. We cannot assure you that new laws, interpretations of law, or court decisions, any of which may take effect retroactively, will not cause any statement in this section to be inaccurate.

We urge you to consult your own tax advisor regarding the specific tax consequences to you of the acquisition, ownership and disposition of our common stock and of our election to be taxed as a REIT. Specifically, you should consult your own tax advisor regarding the U.S. federal, state, local, foreign, and other tax consequences of such acquisition, ownership, disposition and election, and regarding potential changes in applicable tax laws.

Taxation of Our Company

We have elected to be taxed and to operate in a manner that will allow us to qualify as a REIT for U.S. federal income tax purposes commencing with our short taxable year ending December 31, 2019. Our qualification as a REIT will depend upon our ability to meet, on a continuing basis, various complex requirements under the Code relating to, among other things, the sources of our gross income, the composition and values of our assets, our distribution levels and the diversity of ownership of our stock. We believe that, commencing with such short taxable year, we will be organized and will operate in such a manner as to qualify for taxation as a REIT under the Code, and we intend to continue to operate in such a manner. However, no assurances can be provided regarding our qualification as a REIT because such qualification depends on our ability to satisfy numerous asset, income, stock ownership and distribution tests described below, the satisfaction of which will depend, in part, on our operating results.

In connection with this offering, Morrison & Foerster LLP will render an opinion that, commencing with our short taxable year ending December 31, 2019, we will be organized in conformity with the requirements for qualification and taxation as a REIT under the U.S. federal income tax laws, and our current and proposed method of operation will enable us to satisfy the requirements for qualification and taxation as a REIT under the U.S. federal income tax laws for our taxable year ending December 31, 2019 and thereafter. Investors should be aware that Morrison & Foerster LLP’s opinion will be based on the U.S. federal income tax laws governing qualification as a REIT as of the date of such opinion, which will be subject to change, possibly on a retroactive basis, will not be binding on the IRS or any court, and will speak only as of the date issued. In addition, Morrison & Foerster LLP’s opinion will be based on customary assumptions and will be conditioned upon certain representations made by us as to factual matters, including

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representations regarding the nature of our assets and the future conduct of our business. Moreover, our qualification and taxation as a REIT depend on our ability to meet, on a continuing basis, through actual results, certain qualification tests set forth in the U.S. federal income tax laws. Those qualification tests involve, among other things, the percentage of our gross income that we earn from specified sources, the percentage of our assets that falls within specified categories, the diversity of our stock ownership and the percentage of our earnings that we distribute. Morrison & Foerster LLP will not review our compliance with those tests on a continuing basis. Accordingly, no assurance can be given that the actual results of our operations for any particular taxable year will satisfy such requirements. Morrison & Foerster LLP’s opinion will not foreclose the possibility that we may have to use one or more of the REIT savings provisions described below, which may require us to pay a material excise or penalty tax in order to maintain our REIT qualification. For a discussion of the U.S. federal income tax consequences of our failure to maintain our qualification as a REIT, see “— Failure to Qualify as a REIT” below.

If we qualify as a REIT, we generally will not be subject to U.S. federal income tax on the taxable income that we distribute to our stockholders because we will be entitled to a deduction for dividends that we pay. Such tax treatment avoids the “double taxation,” or taxation at both the corporate and stockholder levels, that generally results from owning stock in a corporation. In general, income generated by a REIT is taxed only at the stockholder level if such income is distributed by the REIT to its stockholders. However, we will be subject to U.S. federal income tax in the following circumstances:

•

We will be subject to U.S. federal corporate income tax on any REIT taxable income, including net capital gain, that we do not distribute to our stockholders during, or within a specified time period after, the calendar year in which the income is earned.

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We may be subject to corporate “alternative minimum tax.”

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We will be subject to U.S. federal corporate income tax, on net income from the sale or other disposition of property acquired through foreclosure, or foreclosure property, that we hold primarily for sale to customers in the ordinary course of business, and other non-qualifying income from foreclosure property.

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We will be subject to a 100% tax on net income from sales or other dispositions of property, other than foreclosure property, that we hold primarily for sale to customers in the ordinary course of business.

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We may be required to pay monetary penalties to the IRS in certain circumstances including if we fail to meet recordkeeping requirements intended to monitor our compliance with rules relating to the composition of a REIT’s stockholders, as described below in “— Requirements for Qualification as a REIT.”

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If we fail to satisfy one or both of the 75% gross income test or the 95% gross income test, as described below under “— Gross Income Tests,” but nonetheless maintain our qualification as a REIT because we meet certain other requirements, we will be subject to a 100% tax on:

•

the greater of the amount by which we fail the 75% gross income test or the 95% gross income test, in either case, multiplied by

•

a fraction intended to reflect our profitability.

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If we fail to distribute during a calendar year at least the sum of: (1) 85% of our REIT ordinary income for the year, (2) 95% of our REIT capital gain net income for the year, and (3) any undistributed taxable income required to be distributed from earlier periods, then we will be subject to a 4% nondeductible excise tax on the excess of the required distribution over the sum of (a) the amount we actually distributed; and (b) the amounts we retained and upon which we paid income tax at the corporate level.

•

If we fail any of the asset tests, other than a de minimis failure of the 5% asset test, the 10% vote test or the 10% value test, as described below under “— Asset Tests,” as long as (1) the failure was due to reasonable cause and not to willful neglect, (2) we file a description of each asset that caused such failure with the IRS, and (3) we dispose of the assets causing the failure or otherwise comply with the asset tests within six months after the last day of the quarter in which we identify such failure, we

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will pay a tax with respect to such failure equal to the greater of $50,000 or the highest U.S. federal corporate income tax rate (currently 21%) multiplied by the net income from the nonqualifying assets during the period in which we failed to satisfy the asset tests.

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If we fail to satisfy one or more requirements for REIT qualification, other than the gross income tests and the asset tests, and such failure is due to reasonable cause and not to willful neglect, we will be required to pay a penalty of $50,000 for each such failure.

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We will be subject to a 100% excise tax on transactions with a TRS that are not conducted on an arm’s-length basis.

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If we acquire any asset from a C corporation, or a corporation that generally is subject to full corporate-level tax, in a merger or other transaction in which we acquire a basis in the asset that is determined by reference either to the C corporation’s basis in the asset or to another asset, we will pay tax at the highest U.S. federal corporate income tax rate applicable if we recognize gain on the sale or disposition of the asset during the 5-year period after we acquire the asset. The amount of gain on which we will pay tax generally is the lesser of:

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the amount of gain that we recognize at the time of the sale or disposition, and

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the amount of gain that we would have recognized if we had sold the asset at the time we acquired it.

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The earnings of our subsidiary entities that are C corporations, including TRSs, will be subject to U.S. federal corporate income tax.

In addition, we may be subject to a variety of taxes, including payroll taxes and state, local and foreign income, property and other taxes on our assets and operations. We also could be subject to tax in situations and on transactions not presently contemplated.

The requirements relating to qualification, operation and taxation as a REIT are highly technical and complex. The following discussion sets forth only the material aspects of those sections. This summary is qualified in its entirety by the applicable Code provisions and the related Treasury Regulations and administrative and judicial interpretations thereof.

Requirements for Qualification as a REIT

A REIT is a corporation, trust or association that satisfies each of the following requirements:

(1)

It is managed by one or more trustees or directors;

(2)

Its beneficial ownership is evidenced by transferable shares of stock, or by transferable shares or certificates of beneficial interest;

(3)

It would be taxable as a domestic corporation, but for Sections 856 through 860 of the Code, i.e., the REIT provisions;

(4)

It is neither a financial institution nor an insurance company subject to special provisions of the U.S. federal income tax laws;

(5)

At least 100 persons are beneficial owners of its stock or ownership shares or certificates (determined without reference to any rules of attribution);

(6)

Not more than 50% in value of its outstanding stock or shares of beneficial interest are owned, directly or indirectly, by five or fewer individuals, which the U.S. federal income tax laws define to include certain entities, during the last half of any taxable year;

(7)

It elects to be a REIT, or has made such election for a previous taxable year, and satisfies all relevant filing and other administrative requirements established by the IRS that must be met to qualify to be taxed as a REIT for U.S. federal income tax purposes;

(8)

It uses a calendar year for U.S. federal income tax purposes and complies with the recordkeeping requirements of the U.S. federal income tax laws;

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(9)

It meets certain other requirements, described below, regarding the sources of its gross income, the nature and diversification of its assets and the distribution of its income; and

(10)

It has no undistributed earnings and profits from any non-REIT taxable year at the close of any taxable year.

We must satisfy requirements 1 through 4 and 8 during our entire taxable year and must satisfy requirement 5 during at least 335 days of a taxable year of 12 months, or during a proportionate part of a taxable year of less than 12 months. Requirements 5 and 6 will not apply to us for our short taxable year ending December 31, 2019. If we comply with certain requirements for ascertaining the beneficial ownership of our outstanding stock in a taxable year and have no reason to know that we violated requirement 6, we will be deemed to have satisfied requirement 6 for that taxable year. For purposes of determining stock ownership under requirement 6, an “individual” generally includes a supplemental unemployment compensation benefits plan, a private foundation, or a portion of a trust permanently set aside or used exclusively for charitable purposes. An “individual,” however, generally does not include a trust that is a qualified employee pension or profit sharing trust under the U.S. federal income tax laws, and beneficiaries of such a trust will be treated as holding our stock in proportion to their actuarial interests in the trust for purposes of requirement 6.

Our charter provides restrictions regarding the ownership and transfer of shares of our capital stock. We believe that we will issue sufficient stock with enough diversity of ownership to allow us to satisfy requirements 5 and 6 above. The restrictions in our charter are intended, among other things, to assist us in satisfying requirements 5 and 6 described above. These restrictions, however, may not ensure that we will be able to satisfy such share ownership requirements in all cases. If we fail to satisfy these share ownership requirements, our qualification as a REIT may terminate.

For purposes of requirement 8, we have adopted December 31 as our year end for U.S. federal income tax purposes, and thereby satisfy this requirement.

Qualified REIT Subsidiaries. A “qualified REIT subsidiary” generally is a corporation, all of the stock of which is owned, directly or indirectly, by a REIT and that is not treated as a TRS. A corporation that is a “qualified REIT subsidiary” is treated as a division of the REIT that owns, directly or indirectly, all of its stock and not as a separate entity for U.S. federal income tax purposes. Thus, all assets, liabilities, and items of income, deduction, and credit of a “qualified REIT subsidiary” are treated as assets, liabilities, and items of income, deduction, and credit of the REIT that directly or indirectly owns the qualified REIT subsidiary. Consequently, in applying the REIT requirements described herein, the separate existence of any “qualified REIT subsidiary” that we own will be ignored, and all assets, liabilities, and items of income, deduction, and credit of such subsidiary will be treated as our assets, liabilities, and items of income, deduction, and credit.

Other Disregarded Entities and Partnerships. An unincorporated domestic entity, such as a partnership or limited liability company, that has a single owner, as determined under U.S. federal income tax laws, generally is not treated as an entity separate from its owner for U.S. federal income tax purposes. We may own various direct and indirect interests in entities that are classified as partnerships and limited liability companies for state law purposes. Nevertheless, many of these entities may not be treated as entities separate from their owners for U.S. federal income tax purposes because such entities are treated as having a single owner for U.S. federal income tax purposes. Currently, our operating partnership is disregarded from our Company for U.S. federal income tax purposes because it is treated as wholly owned by our Company for U.S. federal income tax purposes. Consequently, the assets and liabilities, and items of income, deduction, and credit, of such entities will be treated as our assets and liabilities, and items of income, deduction, and credit, for U.S. federal income tax purposes, including the application of the various REIT qualification requirements.

An unincorporated domestic entity with two or more owners, as determined under the U.S. federal income tax laws, generally is taxed as a partnership for U.S. federal income tax purposes. In the case of a REIT that is an owner in an entity that is taxed as a partnership for U.S. federal income tax purposes, the REIT is treated as owning its proportionate share of the assets of the entity and as earning its allocable share of the gross income of the entity for purposes of the applicable REIT qualification tests. Thus, our

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proportionate share of the assets and items of gross income of any partnership, joint venture, or limited liability company that is taxed as a partnership for U.S. federal income tax purposes is treated as our assets and items of gross income for purposes of applying the various REIT qualification tests. For purposes of the 10% value test (described in “— Asset Tests”), our proportionate share is based on our proportionate interest in the equity interests and certain debt securities issued by the entity. For all of the other asset and income tests, our proportionate share is based on our proportionate interest in the capital of the entity.

We have control of our operating partnership and intend to operate it in a manner consistent with the requirements for our qualification as a REIT. We may from time to time be a limited partner or non-managing member in a partnership or limited liability company. If a partnership or limited liability company in which we own an interest takes or expects to take actions that could jeopardize our status as a REIT or require us to pay tax, we may be forced to dispose of our interest in such entity. In addition, it is possible that a partnership or limited liability company could take an action which could cause us to fail a gross income or asset test, and that we would not become aware of such action in time to dispose of our interest in the partnership or limited liability company or take other corrective action on a timely basis. In that case, we could fail to qualify as a REIT unless we were entitled to relief, as described below.

In the event that a disregarded subsidiary of ours ceases to be wholly-owned — for example, if any equity interest in our operating partnership is acquired by a person other than us or another disregarded subsidiary of ours — the subsidiary’s separate existence would no longer be disregarded for U.S. federal income tax purposes. Instead, the subsidiary would have multiple owners and would be treated as either a partnership or a taxable corporation. Such an event could, depending on the circumstances, adversely affect our ability to satisfy the various asset and gross income requirements applicable to REITs, including the requirement that REITs generally may not own, directly or indirectly, more than 10% of the total value or total voting power of the outstanding securities of another corporation. See “— Asset Tests” and “— Gross Income Tests”.

Taxable REIT Subsidiaries, or TRSs. A REIT is permitted to own, directly or indirectly, up to 100% of the stock of one or more TRSs. The subsidiary and the REIT generally must jointly elect to treat the subsidiary as a TRS. However, a corporation of which a TRS directly or indirectly owns more than 35% of the voting power or value of the securities is automatically treated as a TRS without an election.

Unlike a qualified REIT subsidiary, the separate existence of a TRS is not ignored for U.S. federal income tax purposes and a TRS is a fully taxable corporation subject to U.S. federal corporate income tax on its earnings. We will not be treated as holding the assets of any TRS or as receiving the income earned by any TRS. Rather, we will treat the stock issued by any TRS as an asset and will treat any distributions paid to us from any TRS as income. This treatment may affect our compliance with the gross income test and asset tests.

Restrictions imposed on REITs and their TRSs are intended to ensure that TRSs will be subject to appropriate levels of U.S. federal income taxation. These restrictions limit the deductibility of interest paid or accrued by a TRS to its parent REIT and impose a 100% excise tax on transactions between a TRS and its parent REIT or the REIT’s tenants that are not conducted on an arm’s-length basis. Dividends paid to us from a TRS, if any, will be treated as dividend income received from a corporation. The foregoing treatment of TRSs may reduce the cash flow generated by us and our subsidiaries in the aggregate and our ability to make distributions to our stockholders and may affect our compliance with the gross income tests and asset tests.

A TRS generally may be used by a REIT to undertake indirectly activities that the REIT requirements might otherwise preclude the REIT from doing directly, such as the provision of noncustomary tenant services or the disposition of property held for sale to customers. See “— Gross Income Tests — Rents from Real Property” and “— Gross Income Tests — Prohibited Transactions.”

Gross Income Tests

We must satisfy two gross income tests annually to qualify and maintain our qualification as a REIT. First, at least 75% of our gross income for each taxable year generally must consist of the following:

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rents from real property;

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interest on debt secured by mortgages on real property or on interests in real property;

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dividends or other distributions on, and gain from the sale of, stock or shares of beneficial interest in other REITs;

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gain from the sale of real estate assets;

•

income and gain derived from foreclosure property; and

•

income derived from the temporary investment of new capital attributable to the issuance of our stock or a public offering of our debt with a maturity date of at least five years and that we receive during the one-year period beginning on the date on which we receive such new capital.

Second, in general, at least 95% of our gross income for each taxable year must consist of income that is qualifying income for purposes of the 75% gross income test, other types of interest and dividends, gain from the sale or disposition of stock or securities (including interest and gain from nonqualified publicly offered REIT debt instruments as defined under Section 856(c)(5)(L)(ii) of the Code), or any combination of these.

Cancellation of indebtedness income and gross income from a sale of property that we hold primarily for sale to customers in the ordinary course of business will be excluded from gross income for purposes of the 75% and 95% gross income tests. In addition, gains from “hedging transactions,” as defined in “— Hedging Transactions,” that are clearly and timely identified as such will be excluded from gross income for purposes of the 75% and 95% gross income tests. Finally, certain foreign currency gains will be excluded from gross income for purposes of one or both of the gross income tests.

The following paragraphs discuss the specific application of certain relevant aspects of the gross income tests to us.

Rents from Real Property. Rent that we receive for the use of our real property will qualify as “rents from real property,” which is qualifying income for purposes of the 75% and 95% gross income tests, only if the following conditions are met:

First, the rent must not be based in whole or in part on the income or profits of any person. However, participating rent will qualify as “rents from real property” if it is based on percentages of receipts or sales and the percentages generally:

•

are fixed at the time the leases are entered into;

•

are not renegotiated during the term of the leases in a manner that has the effect of basing percentage rent on income or profits; and

•

conform with normal business practice.

In compliance with the rules above, we intend to set and accept rents which are fixed dollar amounts with an annual percentage increase after a certain fixed number of years based on either a fixed percentage or the “consumer price index”, and not to any extent determined by reference to any person’s income or profits.

Second, we generally must not own, actually or constructively, 10% or more of the stock or the assets or net profits of any tenant, referred to as a “related-party tenant.” The constructive ownership rules generally provide that, if 10% or more in value of our stock is owned, directly or indirectly, by or for any person, we are considered as owning the stock owned, directly or indirectly, by or for such person. Because the constructive ownership rules are broad and it is not possible to monitor direct and indirect transfers of our stock continually, no assurance can be given that such transfers or other events of which we have no knowledge will not cause us to own constructively 10% or more of a tenant (or a subtenant, in which case only rent attributable to the subtenant is disqualified).

Third, we must not furnish or render noncustomary services, other than a de minimis amount of noncustomary services, to the tenants of our properties other than through (i) an independent contractor from whom we do not derive or receive any income or (ii) a TRS. However, we generally may provide services directly to our tenants to the extent that such services are “usually or customarily rendered” in connection

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with the rental of space for occupancy only and are not considered to be provided for the tenants’ convenience. In addition, we may provide a minimal amount of noncustomary services to the tenants of a property, other than through an independent contractor from whom we do not derive or receive any income or a TRS, as long as the income attributable to the services (valued at not less than 150% of the direct cost of performing such services) does not exceed 1% of our gross income from the related property. If the rent from a lease does not qualify as “rents from real property” because we furnish noncustomary services having a value (as provided in the previous sentence) in excess of 1% of our gross income from the related property to the tenants of the property, other than through a qualifying independent contractor or a TRS, none of the rent from the property will qualify as “rents from real property.” We do not intend to provide any noncustomary services to our tenants unless such services are provided through independent contractors from whom we do not derive or receive any income or TRSs.

Fourth, rent attributable to any personal property leased in connection with a lease of real property will not qualify as “rents from real property” if the rent attributable to such personal property exceeds 15% of the total rent received under the lease. If a portion of the rent that we receive from a property does not qualify as “rents from real property” because the rent attributable to personal property exceeds 15% of the total rent for a taxable year, the portion of the rent attributable to personal property will not be qualifying income for purposes of either the 75% or 95% gross income test. We believe the ratio of rents attributable to personal property will be less than 15% of all rent received under the leases we intend to enter into.

Fifth, the leases must be respected as true leases for U.S. federal income tax purposes and not treated as service contracts, joint ventures or some other type of arrangement. The determination of whether our leases are true leases depends on an analysis of all the surrounding facts and circumstances. Subject to the discussion below regarding sale-leaseback transactions, we intend to enter into leases that will be treated as true leases.

We believe rents received under our leases generally will qualify as “rents from real property” and any income attributable to noncustomary services or personal property will not jeopardize our ability to qualify as a REIT. However, there can be no assurance that the IRS would not challenge our conclusions, or that a court would agree with our conclusions. If such a challenge were successful, we could fail to satisfy the 75% or 95% gross income test and thus potentially lose our REIT status.

Interest. Interest income constitutes qualifying income for purposes of the 75% gross income test to the extent that the obligation upon which such interest is paid is secured by a mortgage on real property or on an interest in real property. For purposes of the 75% and 95% gross income tests, the term “interest” generally does not include any amount received or accrued, directly or indirectly, if the determination of such amount depends in whole or in part on the income or profits of any person. However, an amount received or accrued generally will not be excluded from the term “interest” solely because it is based on a fixed percentage or percentages of receipts or sales. Furthermore, to the extent that interest from a loan that is based on the profit or net cash proceeds from the sale of the property securing the loan constitutes a “shared appreciation provision,” income attributable to such participation feature will be treated as gain from the sale of the secured property.

Prohibited Transactions. A REIT will incur a 100% tax on the net income derived from any sale or other disposition of property, other than foreclosure property, that the REIT holds primarily for sale to customers in the ordinary course of a trade or business. Net income derived from such prohibited transactions is excluded from gross income for purposes of the 75% and 95% gross income tests. We believe that we will not hold any of our properties as inventory or primarily for sale to customers in the ordinary course of a trade or business. Whether a REIT holds an asset “primarily for sale to customers in the ordinary course of a trade or business” depends on the facts and circumstances that exist from time to time, including those related to a particular asset. A safe harbor to the characterization of the sale of property by a REIT as a prohibited transaction is available if the following requirements are met:

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the REIT has held the property for not less than two years;

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the aggregate capital expenditures made by the REIT, or any partner of the REIT, during the two-year period preceding the date of the sale do not exceed 30% of the selling price of the property;

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either (1) during the year in question, the REIT did not make more than seven property sales other than sales of foreclosure property or sales to which Section 1033 of the Code applies, (2) the aggregate adjusted bases of all such properties sold by the REIT during the year did not exceed 10% of the aggregate bases of all of the assets of the REIT at the beginning of the year, (3) the aggregate fair market value of all such properties sold by the REIT during the year did not exceed 10% of the aggregate fair market value of all of the assets of the REIT at the beginning of the year or (4) either, (a) the REIT satisfies the requirements of clause (2) applied by substituting “20%” for “10%” and the “3-year average adjusted bases percentage” (as defined in the Code) for the taxable year does not exceed 10%, or (b) the REIT satisfies the requirements of clause (3) applied by substituting “20%” for “10%” and the “3-year average fair market value percentage” (as defined in the Code) for the taxable year does not exceed 10%;

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in the case of property not acquired through foreclosure or lease termination, the REIT has held the property for at least two years for the production of rental income; and

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if the REIT has made more than seven property sales (excluding sales of foreclosure property) during the taxable year, substantially all of the marketing and development expenditures with respect to the property were made through an independent contractor from whom the REIT derives no income.

We will attempt to comply with the terms of the foregoing safeharbor. However, we cannot assure you that we will be able to comply with the safe-harbor provisions or that we will avoid owning property that may be characterized as property held “primarily for sale to customers in the ordinary course of a trade or business.” We may hold and dispose of certain properties through a TRS if we conclude that the sale or other disposition of such property may not fall within the safeharbor provisions. The 100% prohibited transactions tax will not apply to gains from the sale of property by a TRS, although such income will be taxed to the TRS at U.S. federal corporate income tax rates.

Foreclosure Property. We generally will be subject to tax at the maximum corporate rate on any net income from foreclosure property, other than income that otherwise would be qualifying income for purposes of the 75% gross income test. Gross income from foreclosure property will qualify under the 75% and 95% gross income tests.

Hedging Transactions. From time to time, we or our subsidiaries may enter into hedging transactions with respect to one or more of our or our subsidiaries’ assets or liabilities. Our or our subsidiaries’ hedging activities may include entering into interest rate swaps, caps, and floors, options to purchase such items, and futures and forward contracts. Income and gain from “hedging transactions” will be excluded from gross income for purposes of both the 75% and 95% gross income tests. A “hedging transaction” means either (1) any transaction entered into in the normal course of our or our subsidiaries’ trade or business primarily to manage the risk of interest rate, price changes, or currency fluctuations with respect to borrowings made or to be made, or ordinary obligations incurred or to be incurred, to acquire or carry real estate assets or (2) any transaction entered into primarily to manage the risk of currency fluctuations with respect to any item of income or gain that would be qualifying income under the 75% or 95% gross income test (or any property which generates such income or gain). We are required to clearly identify any such hedging transaction before the close of the day on which it was acquired, originated, or entered into and to satisfy other identification requirements. We intend to structure any hedging transactions in a manner that does not jeopardize our qualification as a REIT; however, no assurance can be given that our hedging activities will give rise to income that is excluded from gross income or qualifies for purposes of either or both of the gross income tests.

Failure to Satisfy Gross Income Tests. We intend to monitor our sources of income, including any non-qualifying income received by us, and manage our assets so as to ensure our compliance with the gross income tests. If we fail to satisfy one or both of the gross income tests for any taxable year, we nevertheless may qualify as a REIT for that year if we qualify for relief under certain provisions of the U.S. federal income tax laws. Those relief provisions are available if:

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our failure to meet the applicable test is due to reasonable cause and not to willful neglect; and

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following such failure for any taxable year, we file a schedule of the sources of our income with the IRS in accordance with the Treasury Regulations.

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We cannot predict, however, whether any failure to meet these tests will qualify for the relief provisions. In addition, as discussed above in “— Taxation of Our Company,” even if the relief provisions apply, we would incur a 100% tax on the gross income attributable to the greater of (1) the amount by which we fail the 75% gross income test, or (2) the amount by which we fail the 95% gross income test, multiplied, in either case, by a fraction intended to reflect our profitability.

Asset Tests

To qualify as a REIT, we also must satisfy the following asset tests at the end of each quarter of each taxable year.

First, under the “75% asset test,” at least 75% of the value of our total assets generally must consist of:

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cash or cash items, including certain receivables and shares in certain money market funds;

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government securities;

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interests in real property, including leaseholds and options to acquire real property and leaseholds;

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interests in mortgage loans secured by real property;

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interests in mortgage loans secured by both real property and personal property if the fair market value of such personal property does not exceed 15% of the total fair market value of all such property;

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stock or shares of beneficial interest in other REITs;

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investments in stock or debt instruments during the one-year period following our receipt of new capital that we raise through equity offerings or public offerings of debt with at least a five-year term;

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debt investments of “publicly offered REITs”; and

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personal property leased in connection with the lease of real property for which the rent attributable to the personal property is not more than 15% of the total rent received under the lease.

Second, under the “5% asset test,” of our assets that are not qualifying assets for purposes of the 75% asset test described above, the value of our interest in any one issuer’s securities may not exceed 5% of the value of our total assets.

Third, of our assets that are not qualifying assets for purposes of the 75% asset test described above, we may not own more than 10% of the voting power of any one issuer’s outstanding securities, or the “10% vote test,” or more than 10% of the value of any one issuer’s outstanding securities, or the “10% value test.”

Fourth, no more than 20% of the value of our total assets may consist of the securities of one or more TRSs.

Fifth, no more than 25% of the value of our total assets may consist of the securities of TRSs and other assets that are not qualifying assets for purposes of the 75% asset test.

Sixth, not more than 25% of the value of our total assets may be represented by debt instruments of “publicly offered REITs” to the extent those debt instruments are not secured by real property or an interest in real property.

For purposes of the 5% asset test, the 10% vote test and the 10% value test, the term “securities” does not include securities that qualify under the 75% asset test, securities of a TRS and equity interests in an entity taxed as a partnership for U.S. federal income tax purposes. For purposes of the 10% value test, the term “securities” also does not include: certain “straight debt” securities; any loan to an individual or an estate; most rental agreements and obligations to pay rent; any debt instrument issued by an entity taxed as a partnership for U.S. federal income tax purposes in which we are an owner to the extent of our proportionate interest in the debt and equity securities of the entity; and any debt instrument issued by an entity taxed as a partnership for U.S. federal income tax purposes if at least 75% of the entity’s gross income, excluding income from prohibited transactions, is qualifying income for purposes of the 75% gross income test described above in “— Gross Income Tests.”

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For purposes of the 10% value test, our proportionate share of the assets of a partnership is our proportionate interest in any securities issued by the partnership, without regard to the securities described in the last two bullet points above.

Failure to Satisfy Asset Tests. We will monitor the status of our assets for purposes of the various asset tests and will manage our portfolio in order to comply at all times with such tests. No assurance, however, can be given that we will continue to be successful in this effort. In this regard, to determine our compliance with these requirements, we will have to value our investment in our assets to ensure compliance with the asset tests. Although we seek to be prudent in making these estimates, no assurances can be given that the IRS will agree with these determinations and assert that a different value is applicable, in which case we might not satisfy the 75% asset test and the other asset tests.

Nevertheless, if we fail to satisfy the asset tests at the end of a calendar quarter, we will not lose our REIT status if:

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we satisfied the asset tests at the end of the preceding calendar quarter; and

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the discrepancy between the value of our assets and the asset test requirements arose from changes in the market values of our assets and was not caused, in part or in whole, by the acquisition of one or more non-qualifying assets.

If we did not satisfy the condition described in the second bullet point immediately above, we still could avoid REIT disqualification by eliminating any discrepancy within 30 days after the close of the calendar quarter in which the discrepancy arose.

In the event that we violate the 5% asset test, the 10% vote test or the 10% value test described above, we will not lose our REIT status if (1) the failure is de minimis (up to the lesser of 1% of our assets or $10 million) and (2) we dispose of assets causing the failure or otherwise comply with the asset tests within six months after the last day of the quarter in which we identify such failure. In the event of a failure of any of such asset tests other than a de minimis failure, as described in the preceding sentence, we will not lose our REIT status if (1) the failure was due to reasonable cause and not to willful neglect, (2) we file a description of each asset causing the failure with the IRS, (3) we dispose of assets causing the failure or otherwise comply with the asset tests within six months after the last day of the quarter in which we identify the failure, and (4) we pay a tax equal to the greater of $50,000 or the highest U.S. federal corporate income tax rate (currently 21%) multiplied by the net income from the nonqualifying assets during the period in which we failed to satisfy the asset tests.

Sale-Leaseback Transactions and Purchase Options

Many of our investments may be in the form of sale-leaseback transactions. In most instances, depending on the economic terms of the transaction, we will be treated for U.S. federal income tax purposes as either the owner of the property or the holder of a debt secured by the property. We do not expect to request an opinion of counsel concerning the status of any leases of properties as true leases for federal income tax purposes.

The IRS may take the position that specific sale-leaseback transactions we may treat as true leases are not true leases for U.S. federal income tax purposes but are, instead, financing arrangements or loans. We may also structure some sale-leaseback transactions as loans. In this event, for purposes of the asset tests and the 75% income test, each such loan may be viewed as secured by real property to the extent of the fair market value of the underlying property. It is expected that, for this purpose, the fair market value of the underlying property would be determined without taking into account our lease. If a sale-leaseback transaction we treat as a lease were re-characterized as a loan, we might fail to satisfy the 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 could cause us to fail one or both of the income tests or the distribution requirements, described below.

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Annual Distribution Requirements

Each taxable year, we must make distributions, other than capital gain dividend distributions and deemed distributions of retained capital gain, to our stockholders in an aggregate amount at least equal to:

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the sum of:

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90% of our “REIT taxable income,” computed without regard to the dividends paid deduction and excluding any net capital gain, and

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90% of our after-tax net income, if any, from foreclosure property, minus

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the sum of certain items of non-cash income.

Generally, we must pay such distributions in the taxable year to which they relate, or in the following taxable year if either (1) we declare the distribution before we timely file our U.S. federal income tax return for the year and pay the distribution on or before the first regular dividend payment date after such declaration or (2) we declare the distribution in October, November, or December of the taxable year, payable to stockholders of record on a specified day in any such month, and we actually pay the dividend before the end of January of the following year. In both instances, these distributions relate to our prior taxable year for purposes of the annual distribution requirement to the extent of our earnings and profits for such prior taxable year.

In order for distributions to be counted as satisfying the annual distribution requirements for REITs other than “publicly offered” REITs, and to provide a REIT-level tax deduction for such REITs, the distributions must not be “preferential dividends”. Such preferential dividend rules will not apply to our distributions if we qualify as a “publicly offered” REIT. We believe that we will be a “publicly offered” REIT.

We will pay U.S. federal income tax on any taxable income, including net capital gain, that we do not distribute to our stockholders. Furthermore, if we fail to distribute during a calendar year, or by the end of January of the following calendar year in the case of distributions with declaration and record dates falling in the last three months of the calendar year, at least the sum of:

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85% of our REIT ordinary income for the year,

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95% of our REIT capital gain net income for the year, and

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any undistributed taxable income from prior years,

we will incur a 4% nondeductible excise tax on the excess of such required distribution over the amounts we actually distributed.

We may elect to retain and pay U.S. federal income tax on the net long-term capital gain that we recognize in a taxable year. If we so elect, we will be treated as having distributed any such retained amount for purposes of the 4% nondeductible excise tax described above. We intend to make timely distributions sufficient to satisfy the annual distribution requirement and to minimize U.S. federal corporate income tax and avoid the 4% nondeductible excise tax.

It is possible that, from time to time, we may experience timing differences between the actual receipt of income and actual payment of deductible expenses and the inclusion of that income and deduction of such expenses in arriving at our REIT taxable income. Further, it is possible that, from time to time, we may be allocated a share of net capital gain from an entity taxed as a partnership for U.S. federal income tax purposes in which we own an interest that is attributable to the sale of depreciated property that exceeds our allocable share of cash attributable to that sale. As a result of the foregoing, we may have less cash than is necessary to make distributions to our stockholders that are sufficient to avoid U.S. federal corporate income tax and the 4% nondeductible excise tax imposed on certain undistributed income or even to meet the annual distribution requirement. In such a situation, we may need to borrow funds or issue additional stock or, if possible, pay dividends consisting, in whole or in part, of our stock or debt securities.

It is possible that the IRS could disallow certain of our ordinary business expense deductions by alleging that we, through our rental agreements with our state-licensed adult- and medical-use cannabis tenants, are primarily or vicariously liable for “trafficking” a Schedule I substance (cannabis) under

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Section 280E of the Code. If the IRS were to disallow certain of our deductions, we may be unable to meet the distribution requirements and would fail to qualify as a REIT. Likewise, if any governmental entity were to impose fines on us for our business involvement in state-licensed adult- and medical-use cannabis, such fines would not be deductible and the inability to deduct such fines could also cause us to be unable to satisfy the distribution requirements.

Under certain circumstances, we may be able to correct a failure to meet the distribution requirement for a year by paying “deficiency dividends” to our stockholders in a later year. We may include such deficiency dividends in our deduction for dividends paid for the earlier year. Although we may be able to avoid income tax on amounts distributed as deficiency dividends, we will be required to pay interest to the IRS based on the amount of any deduction we take for deficiency dividends.

Recordkeeping Requirements

We must maintain certain records in order to qualify as a REIT. To avoid paying monetary penalties, we must demand, on an annual basis, information from certain of our stockholders designed to disclose the actual ownership of our outstanding stock, and we must maintain a list of those persons failing or refusing to comply with such demand as part of our records. A stockholder that fails or refuses to comply with such demand is required by the Treasury Regulations to submit a statement with its tax return disclosing the actual ownership of our stock and other information. We intend to comply with these recordkeeping requirements.

Any record shareholder who, upon our request, does not provide us with required information concerning actual ownership of our interests is required to include specified information relating to his, her, or its interests in his, her or its federal income tax return. We also must maintain, within the Internal Revenue District in which we are required to file our federal income tax return, permanent records showing the information we have received about the actual ownership of our interests and a list of those persons failing or refusing to comply with our demand.

Failure to Qualify as a REIT

If we fail to satisfy one or more requirements for REIT qualification, other than the gross income tests and the asset tests, we could avoid disqualification if our failure is due to reasonable cause and not to willful neglect and we pay a penalty of $50,000 for each such failure. In addition, there are relief provisions available under the Code for a failure of the gross income tests and asset tests, as described in “— Gross Income Tests” and “— Asset Tests.”

If we were to fail to qualify as a REIT in any taxable year, and no relief provision applied, we would be subject to U.S. federal income tax on our taxable income at U.S. federal corporate income tax rates and any applicable alternative minimum tax. In calculating our taxable income for a year in which we failed to qualify as a REIT, we would not be able to deduct amounts distributed to our stockholders, and we would not be required to distribute any amounts to our stockholders for that year. Unless we qualified for relief under the statutory relief provisions described in the preceding paragraph, we also would be disqualified from taxation as a REIT for the four taxable years following the year during which we ceased to maintain our qualification as a REIT. We cannot predict whether in all circumstances we would qualify for such statutory relief.

Taxation of Taxable U.S. Stockholders

For purposes of our discussion, the term “U.S. stockholder” means a beneficial owner of our common stock that, for U.S. federal income tax purposes, is:

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an individual citizen or resident of the United States;

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a corporation (including an entity treated as a corporation for U.S. federal income tax purposes) created or organized under the laws of the United States, any of its states or the District of Columbia;

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an estate whose income is subject to U.S. federal income taxation regardless of its source; or

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any trust if (1) a U.S. court is able to exercise primary supervision over the administration of such trust and one or more “United States persons” have the authority to control all substantial decisions of the trust or (2) it has a valid election in place to be treated as a “United States person”.

If an entity or arrangement treated as a partnership for U.S. federal income tax purposes (a “partnership”) holds our common stock, the U.S. federal income tax treatment of an owner of the partnership generally will depend on the status of the owner and the activities of the partnership. Partnerships and their owners should consult their tax advisors regarding the consequences of the ownership and disposition of our common stock by the partnership.

Distributions. If we qualify as a REIT, distributions made out of our current and accumulated earnings and profits that we do not designate as capital gain dividends will be ordinary dividend income to taxable U.S. stockholders. A corporate U.S. stockholder will not qualify for the dividends- received deduction generally available to corporations. Our ordinary dividends also generally will not qualify for the preferential long-term capital gain tax rate applicable to “qualified dividends” unless certain holding period requirements are met and such dividends are attributable to (i) qualified dividends received by us from non-REIT corporations, such as any TRSs, or (ii) income recognized by us and on which we have paid U.S. federal corporate income tax. We do not expect a meaningful portion of our ordinary dividends to be eligible for taxation as qualified dividends. However, through the 2025 tax year, individual U.S. stockholders will be entitled to deduct 20% of ordinary REIT dividends they receive. In combination with the 37% maximum rate applicable to non-corporate U.S. stockholders in such years, ordinary REIT dividends are subject to a maximum income tax rate of 29.6% under current law. If we fail to qualify as a REIT, such stockholders may not claim this deduction with respect to dividends paid by us. Individual taxable U.S. stockholders should consult their own tax advisors to determine the impact of these provisions.

Any distribution we declare in October, November, or December of any year that is payable to a U.S. stockholder of record on a specified date in any of those months and is attributable to our current and accumulated earnings and profits for such year will be treated as paid by us and received by the U.S. stockholder on December 31 of that year, provided that we actually pay the distribution during January of the following calendar year.

Distributions to a U.S. stockholder which we designate as capital gain dividends generally will be treated as long-term capital gain, without regard to the period for which the U.S. stockholder has held our stock. A corporate U.S. stockholder may be required to treat up to 20% of certain capital gain dividends as ordinary income.

We may elect to retain and pay U.S. federal corporate income tax on the net long-term capital gain that we receive in a taxable year. In that case, to the extent that we designate such amount in a timely notice to our stockholders, a U.S. stockholder would be taxed on its proportionate share of our undistributed long-term capital gain. The U.S. stockholder would receive a credit or refund for its proportionate share of the U.S. federal corporate income tax we paid. The U.S. stockholder would increase its basis in our common stock by the amount of its proportionate share of our undistributed long-term capital gain, minus its share of the U.S. federal corporate income tax we paid.

A U.S. stockholder will not incur U.S. federal income tax on a distribution in excess of our current and accumulated earnings and profits if the distribution does not exceed the U.S. stockholder’s adjusted basis in our common stock. Instead, the distribution will reduce the U.S. stockholder’s adjusted basis in our common stock. The excess of any distribution to a U.S. stockholder over both its share of our current and accumulated earnings and profits and its adjusted basis will be treated as capital gain and long-term capital gain if the stock has been held for more than one year.

We will notify U.S. stockholders after the close of our taxable year as to the portions of the distributions attributable to that taxable year that constitute ordinary income, return of capital and capital gain.

Dispositions. In general, a U.S. stockholder will recognize gain or loss on the sale or other taxable disposition of our stock in an amount equal to the difference between (i) the sum of the fair market value of any property and the amount of cash received in such disposition and (ii) the U.S. stockholder’s adjusted tax basis in such stock. A U.S. stockholder’s adjusted tax basis in our stock generally will equal the U.S.

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stockholder’s acquisition cost, increased by the excess of undistributed net capital gains deemed distributed to the U.S. stockholder over the federal corporate income tax deemed paid by the U.S. stockholder on such gains and reduced by any returns of capital. Such gain or loss generally will be long-term capital gain or loss if the U.S. stockholder has held such stock for more than one year and short-term capital gain or loss otherwise. However, a U.S. stockholder must treat any loss on a sale or exchange of our common stock held by such stockholder for six months or less as a long-term capital loss to the extent of capital gain dividends and any other actual or deemed distributions from us that such U.S. stockholder treats as long-term capital gain. All or a portion of any loss that a U.S. stockholder realizes on a taxable disposition of shares of our common stock may be disallowed if the U.S. stockholder purchases other shares of our common stock within 30 days before or after the disposition. Capital losses generally are available only to offset capital gains of the stockholder except in the case of individuals, who may offset up to $3,000 of ordinary income each year.

Other Considerations. U.S. stockholders may not include in their individual U.S. federal income tax returns any of our net operating losses or capital losses. Instead, these losses are generally carried over by us for potential offset against our future income. Taxable distributions from us and gain from the disposition of our common stock will not be treated as passive activity income and, therefore, U.S. stockholders generally will not be able to apply any “passive activity losses” against such income. In addition, taxable distributions from us and gain from the disposition of our common stock generally will be treated as investment income for purposes of the investment interest limitations.

Tax Rates. The maximum U.S. federal income tax rate on ordinary income and short-term capital gains applicable to U.S. stockholders that are taxed at individual rates currently is 37%, and the maximum U.S. federal income tax rate on long-term capital gains applicable to U.S. stockholders that are taxed at individual rates currently is 20%. However, the maximum tax rate on long-term capital gain from the sale or exchange of “section 1250 property” (i.e., generally, depreciable real property) is 25% to the extent the gain would have been treated as ordinary income if the property were “section 1245 property” (i.e., generally, depreciable personal property). We generally will designate whether a distribution that we designate as a capital gain dividend (and any retained capital gain that we are deemed to distribute) is attributable to the sale or exchange of “section 1250 property.” Additionally, through the 2025 tax year, individual U.S. stockholders may be entitled to claim a deduction in determining their taxable income of 20% of ordinary REIT dividends (dividends other than capital gain dividends and dividends attributable to qualified dividend income received by us, if any), which temporarily reduces the effective tax rate on these dividends to a maximum tax rate of 29.6% for those years.

Additional Medicare Tax. Certain U.S. stockholders, including individuals, estates and trusts, will be subject to an additional 3.8% tax, which, for individuals, applies to the lesser of (i) “net investment income” or (ii) the excess of “modified adjusted gross income” over $200,000 ($250,000 if married and filing jointly or $125,000 if married and filing separately). “Net investment income” generally equals the taxpayer’s gross investment income reduced by the deductions that are allocable to such income. Investment income generally includes passive income such as interest, dividends, annuities, royalties, rents and capital gains.

Taxation of Tax-Exempt Stockholders

Tax-exempt entities, including qualified employee pension and profit sharing trusts, or “qualified trusts,” and individual retirement accounts and annuities, generally are exempt from U.S. federal income taxation. However, they are subject to taxation on their “unrelated business taxable income,” or UBTI. Amounts that we distribute to tax-exempt stockholders generally should not constitute UBTI. However, if a tax-exempt stockholder were to finance its acquisition of our common stock with debt, a portion of the distribution that it received from us would constitute UBTI pursuant to the “debt- financed property” rules. Furthermore, social clubs, voluntary employee benefit associations, supplemental unemployment benefit trusts, and qualified group legal services plans that are exempt from taxation under special provisions of the U.S. federal income tax laws are subject to different UBTI rules, which generally will require them to characterize distributions that they receive from us as UBTI.

Finally, in certain circumstances, a qualified trust that owns more than 10% of the value of our stock must treat a percentage of the dividends that it receives from us as UBTI. Such percentage is equal to the gross income that we derive from unrelated trades or businesses, determined as if we were a qualified trust,

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divided by our total gross income for the year in which we pay the dividends. Such rule applies to a qualified trust holding more than 10% of the value of our stock only if:

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we are classified as a “pension-held REIT”; and

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the amount of gross income that we derive from unrelated trades or businesses for the year in which we pay the dividends, determined as if we were a qualified trust, is at least 5% of our total gross income for such year.

We will be classified as a “pension-held REIT” if:

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we qualify as a REIT by reason of the modification of the rule requiring that no more than 50% of our stock be owned by five or fewer individuals that allows the beneficiaries of the qualified trust to be treated as holding our stock in proportion to their actuarial interests in the qualified trust; and

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either:

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one qualified trust owns more than 25% of the value of our stock; or

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a group of qualified trusts, of which each qualified trust holds more than 10% of the value of our stock, collectively owns more than 50% of the value of our stock.

As a result of restrictions on ownership and transfer of our stock set forth in our charter, we do not expect to be classified as a “pension-held REIT” and, as a result, the tax treatment discussed above should not apply to our stockholders.

Taxation of Non-U.S. Stockholders

For purposes of our discussion, the term “non-U.S. stockholder” means a beneficial owner of our common stock that is not a U.S. stockholder, an entity or arrangement taxed as a partnership for U.S. federal income tax purposes or a tax-exempt stockholder. The rules governing U.S. federal income taxation of non-U.S. stockholders, including nonresident alien individuals, foreign corporations, foreign partnerships and other foreign stockholders, are complex. This section is only a summary of certain of those rules.

We urge non-U.S. stockholders to consult their own tax advisors to determine the impact of U.S. federal, state, local and foreign income tax laws on the acquisition, ownership and disposition of our common stock, including any reporting requirements.

Distributions. Distributions to a non-U.S. stockholder (i) out of our current and accumulated earnings and profits, (ii) not attributable to gain from our sale or exchange of a “United States real property interest,” or a USRPI, and (iii) not designated by us as a capital gain dividend will be subject to a withholding tax at a rate of 30% unless:

•

a lower treaty rate applies and the non-U.S. stockholder submits an IRS Form W-8BEN or W-8BEN-E, as applicable (or any applicable successor form), to us evidencing eligibility for that reduced rate; or

•

the non-U.S. stockholder submits an IRS Form W-8ECI (or any applicable successor form) to us claiming that the distribution is income effectively connected to a U.S. trade or business of such stockholder.

A non-U.S. stockholder generally will be subject to U.S. federal income tax at graduated rates on any distribution treated as effectively connected with the non-U.S. stockholder’s conduct of a U.S. trade or business in the same manner as a U.S. stockholder. In addition, a corporate non-U.S. stockholder may be subject to a 30% branch profits tax with respect to any such distribution.

A non-U.S. stockholder will not incur tax on a distribution in excess of our current and accumulated earnings and profits if such excess does not exceed such non-U.S. stockholder’s adjusted basis in our common stock. Instead, the excess portion of such distribution will reduce the non-U.S. stockholder’s adjusted basis in our common stock. The excess of a distribution over both our current and accumulated earnings and profits and the non-U.S. stockholder’s adjusted basis in our common stock will be taxed, if at all, as gain from the sale or disposition of our common stock. See “— Dispositions” below. Under FIRPTA (discussed

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below), we may be required to withhold 15% of the portion of any distribution that exceeds our current and accumulated earnings and profits.

Because we generally cannot determine at the time we make a distribution whether the distribution will exceed our current and accumulated earnings and profits, we may withhold tax at a rate of 30% (or such lower rate as may be provided under an applicable tax treaty) on the entire amount of any distribution. To the extent that we do not do so, we nevertheless may withhold at a rate of 15% on any portion of a distribution not subject to withholding at a rate of 30%. A non-U.S. stockholder may obtain a refund of amounts that we withhold if we later determine that a distribution in fact exceeded our current and accumulated earnings and profits.

Under the Foreign Investment in Real Property Tax Act of 1980, or FIRPTA, distributions attributable to capital gains from the sale or exchange by us of USRPIs are treated like income effectively connected with the conduct of a U.S. trade or business, generally are subject to U.S. federal income taxation in the same manner and at the same rates applicable to U.S. stockholders and, with respect to corporate non-U.S. stockholders, may be subject to a 30% branch profits tax. However, these distributions will not be subject to tax under FIRPTA, and will instead be taxed in the same manner as distributions described above, if:

•

the distribution is made with respect to a class of shares regularly traded on an established securities market in the United States; and

•

the non-U.S. stockholder does not own more than 10% of such class at any time during the one-year period preceding the distribution.

Although we intend to cause our common stock to be listed for trading on an established securities market following this offering, our common stock in fact will not be regularly traded on an established securities market in the United States immediately following this offering and, as a result, capital gain distributions to non-U.S. stockholders attributable to our sales of USRPIs will be subject to tax under FIRPTA. We are required to withhold from, at the applicable rate, any distribution to a non-U.S. stockholder owning more than 10% of the relevant class of shares that is designated by us as a capital gain dividend. Any amount so withheld is creditable against the non-U.S. stockholder’s U.S. federal income tax liability.

A distribution to a non-U.S. stockholder attributable to capital gains from the sale or exchange of non-USRPIs will not be subject to U.S. federal income taxation unless such distribution is effectively connected with a U.S. trade or business conducted by such non-U.S. stockholder, in which case such distribution generally would be subject to U.S. federal income taxation in the same manner and at the same rates applicable to U.S. stockholders and, with respect to corporate non-U.S. stockholders, may be subject to a 30% branch profits tax.

Although not free from doubt, amounts we designate as retained capital gains in respect of the common stock held by U.S. stockholders generally should be treated with respect to non-U.S. stockholders in the same manner as actual distributions by us of capital gain dividends. Under this approach, a non-U.S. stockholder would be able to offset as a credit against its U.S. federal income tax liability resulting from its proportionate share of the tax paid by us on such retained capital gains, and to receive from the IRS a refund to the extent the non-U.S. stockholder’s proportionate share of such tax paid by us exceeds its actual U.S. federal income tax liability, provided that the non-U.S. stockholder furnishes required information to the IRS on a timely basis.

Dispositions. Non-U.S. stockholders may incur tax under FIRPTA with respect to gain recognized on a disposition of our common stock unless one of the applicable exceptions described below applies. Any gain subject to tax under FIRPTA generally will be taxed in the same manner as it would be in the hands of U.S. stockholders, except that corporate non-U.S. stockholders also may be subject to a 30% branch profits tax. In addition, the purchaser of such common stock could be required to withhold 10% of the purchase price for such stock and remit such amount to the IRS.

Non-U.S. stockholders generally will not incur tax under FIRPTA with respect to gain on a sale of our common stock as long as, at all times during a specified testing period, we are “domestically controlled,” i.e., non-U.S. persons hold, directly or indirectly, less than 50% in value of our outstanding stock. We cannot assure you that we will be domestically controlled. In addition, even if we are not domestically controlled,

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if our common stock is “regularly traded” on an established securities market, a non-U.S. stockholder that owned, actually or constructively, 10% or less of our outstanding common stock at all times during the five-year period prior to a sale of our common stock will not incur tax under FIRPTA on gain from a sale of such common stock. However, our common stock will not be immediately traded on an established securities market following this offering. If a non-U.S. stockholder is subject to tax under FIRPTA on gain from the disposition of our stock, such stockholder would be subject to tax at graduated income tax rates in a manner similar to U.S. stockholders and would incur U.S. tax return filing obligations. In addition, such non-U.S. stockholder may be subject to withholding taxes on the gross proceeds from such disposition.

A non-U.S. stockholder generally will incur tax on gain from a disposition of our common stock not subject to FIRPTA if:

•

the gain is effectively connected with the conduct of the non-U.S. stockholder’s U.S. trade or business, in which case the non-U.S. stockholder generally will be subject to the same treatment as U.S. stockholders with respect to such gain, except that a non-U.S. stockholder that is a corporation also may be subject to the 30% branch profits tax; or

•

the non-U.S. stockholder is a nonresident alien individual who was present in the U.S. for 183 days or more during the taxable year and certain other conditions are satisfied, in which case the non-U.S. stockholder generally will incur a 30% tax on its capital gains.

Information Reporting Requirements and Backup Withholding

We will report to our stockholders and to the IRS the amount of distributions that we pay during each calendar year, and the amount of tax that we withhold, if any. Under the backup withholding rules, a stockholder may be subject to backup withholding (at a rate of 24%) with respect to distributions unless the stockholder:

•

is a corporation or qualifies for certain other exempt categories and, when required, demonstrates this fact; or

•

provides a taxpayer identification number, certifies as to no loss of exemption from backup withholding, and otherwise complies with the applicable requirements of the backup withholding rules.

A stockholder who does not provide us with its correct taxpayer identification number also may be subject to penalties imposed by the IRS. Any amount paid as backup withholding will be creditable against the stockholder’s U.S. federal income tax liability. In addition, we may be required to withhold a portion of capital gain distributions to any stockholders who fail to certify their non-foreign status to us.

Backup withholding generally will not apply to payments of dividends made by us or our paying agents, in their capacities as such, to a non-U.S. stockholder provided that such non-U.S. stockholder furnishes to us or our paying agent the required certification as to its non-U.S. status, such as providing a valid IRS Form W-8BEN or W-8BEN-E, as applicable, or W-8ECI (or any applicable successor form), or certain other requirements are met. Notwithstanding the foregoing, backup withholding may apply if either we or our paying agent has actual knowledge, or reason to know, that the holder is a “United States person” that is not an exempt recipient. Payments of the proceeds from a disposition or a redemption of our common stock that occurs outside the U.S. by a non-U.S. stockholder made by or through a foreign office of a broker generally will not be subject to information reporting or backup withholding. However, information reporting (but not backup withholding) generally will apply to such a payment if the broker has certain connections with the U.S. unless the broker has documentary evidence in its records that demonstrates that the beneficial owner is a non-U.S. stockholder and specified conditions are met or an exemption is otherwise established. Payment of the proceeds from a disposition of our stock by a non-U.S. stockholder made by or through the U.S. office of a broker generally is subject to information reporting and backup withholding unless the non-U.S. stockholder certifies under penalties of perjury that it is not a U.S. person and satisfies certain other requirements, or otherwise establishes an exemption from information reporting and backup withholding.

Backup withholding is not an additional tax. Any amounts withheld under the backup withholding rules may be refunded or credited against the stockholder’s U.S. federal income tax liability if certain

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required information is furnished to the IRS. Stockholders should consult their own tax advisors regarding application of backup withholding to them and the availability of, and procedure for obtaining an exemption from, backup withholding.

FATCA

The Foreign Account Tax Compliance Act, or FATCA, imposes a U.S. federal withholding tax on certain types of payments made to “foreign financial institutions” and certain other non-U.S. entities unless certain due diligence, reporting, withholding, and certification obligation requirements are satisfied. FATCA generally imposes a U.S. federal withholding tax at a rate of 30% on dividends on, and gross proceeds from the sale or other disposition of, our stock if paid to a foreign entity unless either (i) the foreign entity is a “foreign financial institution” that undertakes certain due diligence, reporting, withholding, and certification obligations, or in the case of a foreign financial institution that is a resident in a jurisdiction that is treated as having an intergovernmental agreement to implement FATCA, the entity complies with the diligence and reporting requirements of such agreement, (ii) the foreign entity is not a “foreign financial institution” and identifies certain of its U.S. investors, or (iii) the foreign entity otherwise is excepted under FATCA. If we determine withholding is appropriate in respect of our common stock, we may withhold tax at the applicable statutory rate, and we will not pay any additional amounts in respect of such withholding. Proposed U.S. Treasury Regulations would eliminate the U.S. federal withholding tax of 30% on the gross proceeds from a sale of our common stock. The IRS has stated that taxpayers may generally rely on these proposed Treasury Regulations until final Treasury Regulations are issued.

If withholding is required under FATCA on a payment related to our common stock, holders of our common stock that otherwise would not be subject to withholding (or that otherwise would be entitled to a reduced rate of withholding) generally will be required to seek a refund or credit from the IRS to obtain the benefit of such exemption or reduction (provided that such benefit is available). You should consult your own tax advisor regarding the effect of FATCA on an investment in our common stock.

Tax Aspects of Our Investments in Our Operating Partnership and Other Subsidiary Partnerships

We currently hold, directly and indirectly, all of the ownership interests in our operating partnership and our other subsidiaries; therefore, our operating partnership and our other subsidiaries (other than any taxable REIT subsidiaries) currently are disregarded for U.S. federal income tax purposes. If additional partners or members are admitted to our operating partnership or any of our other subsidiaries, as applicable, we intend for such entity to be treated as a partnership for U.S. federal income tax purposes.

The following discussion summarizes the material U.S. federal income tax considerations that are applicable to our direct and indirect investments in our subsidiaries that are taxed as partnerships for U.S. federal income tax purposes, each individually referred to as a “Partnership” and, collectively, as the “Partnerships.” The following discussion does not address state or local tax laws or any U.S. federal tax laws other than income tax laws.

Classification as Partnerships

We are required to include in our income our distributive share of each Partnership’s income and allowed to deduct our distributive share of each Partnership’s losses but only if such Partnership is classified for U.S. federal income tax purposes as a partnership rather than as a corporation or an association treated as a corporation. An unincorporated entity with at least two owners, as determined for U.S. federal income tax purposes, will be classified as a partnership, rather than as a corporation, for U.S. federal income tax purposes if it:

•

is treated as a partnership under the Treasury Regulations relating to entity classification, or the “check-the-box regulations”; and

•

is not a “publicly traded partnership.”

Under the check-the-box regulations, an unincorporated entity with at least two owners may elect to be classified either as an association treated as a corporation or as a partnership for U.S. federal income tax purposes. If such an entity does not make an election, it generally will be taxed as a partnership for U.S. federal

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income tax purposes. If additional partners are admitted to our operating partnership following this offering, our operating partnership intends to be classified as a partnership for U.S. federal income tax purposes and will not elect to be treated as an association treated as a corporation.

A publicly traded partnership is a partnership whose interests are traded on an established securities market or are readily tradable on a secondary market or the substantial equivalent thereof. A publicly traded partnership generally is treated as a corporation for U.S. federal income tax purposes, but will not be so treated if, for each taxable year beginning after December 31, 1987 in which it was classified as a publicly traded partnership, at least 90% of the partnership’s gross income consisted of specified passive income, including real property rents, gains from the sale or other disposition of real property, interest, and dividends, or the “90% passive income exception.” The Treasury Regulations provide limited safe harbors from treatment as a publicly traded partnership. Pursuant to one of those safe harbors, interests in a partnership will not be treated as readily tradable on a secondary market or the substantial equivalent thereof if (1) all interests in the partnership were issued in a transaction or transactions that were not required to be registered under the Securities Act of 1933, as amended, and (2) the partnership does not have more than 100 partners at any time during the partnership’s taxable year. In determining the number of partners in a partnership, a person owning an interest in a partnership, grantor trust, or S corporation that owns an interest in the partnership is treated as a partner in such partnership only if (1) substantially all of the value of the owner’s interest in the entity is attributable to the entity’s direct or indirect interest in the partnership and (2) a principal purpose of the use of the entity is to permit the partnership to satisfy the 100-partner limitation. If any Partnership does not qualify for any safe harbor and is treated as a publicly traded partnership, we believe that such Partnership would have sufficient qualifying income to satisfy the 90% passive income exception and, therefore, would not be treated as a corporation for U.S. federal income tax purposes.

We have not requested, and do not intend to request, a ruling from the IRS that any Partnership is or will be classified as a partnership for U.S. federal income tax purposes. If, for any reason, a Partnership were treated as a corporation, rather than as a partnership, for U.S. federal income tax purposes, we may not be able to qualify as a REIT, unless we qualify for certain statutory relief provisions. See “— Gross Income Tests” and “— Asset Tests.” In addition, any change in a Partnership’s status for U.S. federal income tax purposes might be treated as a taxable event, in which case we might incur tax liability without any related cash distribution. See “— Annual Distribution Requirements.” Further, items of income and deduction of such Partnership would not pass through to us, and we would be treated as a stockholder for U.S. federal income tax purposes. Consequently, such Partnership would be required to pay income tax at U.S. federal corporate income tax rates on its net income, and distributions to us would constitute dividends that would not be deductible in computing such Partnership’s taxable income.

Income Taxation of the Partnerships and Their Partners

Partners, Not the Partnerships, Subject to Tax. A partnership is not a taxable entity for U.S. federal income tax purposes. Rather, we are required to take into account our distributive share of each Partnership’s income, gains, losses, deductions, and credits for each taxable year of the Partnership ending with or within our taxable year, even if we receive no distribution from the Partnership for that year or a distribution that is less than our share of taxable income. Similarly, even if we receive a distribution, it may not be taxable if the distribution does not exceed our adjusted tax basis in our interest in the Partnership.

Partnership Allocations. Although an agreement among the owners of an entity taxed as a partnership for U.S. federal income tax purposes generally will determine the allocation of income and losses among the owners, such allocations will be disregarded for tax purposes if they do not comply with the provisions of the U.S. federal income tax laws governing partnership allocations. If an allocation is not recognized for U.S. federal income tax purposes, the item subject to the allocation will be reallocated in accordance with the “partners’ interests in the partnership,” which will be determined by taking into account all of the facts and circumstances relating to the economic arrangement of the owners with respect to such item.

Tax Allocations With Respect to Contributed Properties. Income, gain, loss, and deduction attributable to appreciated or depreciated property contributed to an entity taxed as a partnership for U.S. federal income tax purposes in exchange for an interest in such entity must be allocated for U.S. federal income tax purposes in a manner such that the contributing owner is charged with, or benefits from, respectively, the

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unrealized gain or unrealized loss associated with the property at the time of the contribution (the “704(c) Allocations”). The amount of such unrealized gain or unrealized loss, referred to as “built-in gain” or “built-in loss,” at the time of contribution is generally equal to the difference between the fair market value of the contributed property at the time of contribution and the adjusted tax basis of such property at that time, referred to as a book-tax difference.

A book-tax difference attributable to depreciable property generally is decreased on an annual basis as a result of the allocation of depreciation deductions to the contributing owner for book purposes, but not for tax purposes. The Treasury Regulations require entities taxed as partnerships for U.S. federal income tax purposes to use a “reasonable method” for allocating items with respect to which there is a book-tax difference and outline several reasonable allocation methods.

Any gain or loss recognized by a partnership on the disposition of contributed properties generally will be allocated first to the partners of the partnership who contributed such properties to the extent of their built-in gain or loss on those properties for U.S. federal income tax purposes, as adjusted to take into account reductions in book-tax differences described in the previous paragraph. Any remaining gain or loss recognized by the partnership on the disposition of the contributed properties generally will be allocated among the partners in accordance with their partnership agreement unless such allocations and agreement do not satisfy the requirements of applicable Treasury Regulations, in which case such allocation will be made in accordance with the “partners’ interests in the partnership.”

In the future we may acquire properties pursuant to a contribution of such properties to our operating partnership. As a result, our operating partnership will receive a “carryover” tax basis in such properties. As a result, such properties may have significant built-in gain or loss subject to Section 704(c). We expect our operating partnership will adopt the “traditional” method for purposes of allocating items with respect to any book-tax difference attributable to such built-in gain or loss. Under the “traditional method,” as well as certain other reasonable methods available to us, built-in gain or loss with respect to our depreciable properties (i) could cause us to be allocated lower amounts of depreciation deductions for tax purposes than for economic purposes and (ii) in the event of a sale of such properties, could cause us to be allocated taxable gain in excess of the economic gain allocated to us as a result of such sale, with a corresponding tax benefit to the contributing partners. As a result of the foregoing, a greater portion of our distributions may be treated as a taxable dividend.

Basis in Partnership Interest. Our adjusted tax basis in any Partnership interest we own generally will be:

•

the amount of cash and the basis of any other property we contribute to the Partnership;

•

increased by our distributive share of the Partnership’s income (including tax-exempt income) and any increase in our allocable share of indebtedness of the Partnership; and

•

reduced, but not below zero, by our distributive share of the Partnership’s loss (including any non-deductible items), the amount of cash and the basis of property distributed to us, and any reduction in our allocable share of indebtedness of the Partnership.

Loss allocated to us in excess of our basis in a Partnership interest will not be taken into account for U.S. federal income tax purposes until we again have basis sufficient to absorb the loss. A reduction of our allocable share of Partnership indebtedness will be treated as a constructive cash distribution to us, and will reduce our adjusted tax basis in the Partnership interest. Distributions, including constructive distributions, in excess of the basis of our Partnership interest will constitute taxable income to us. Such distributions and constructive distributions normally will be characterized as long-term capital gain.

Sale of a Partnership’s Property. Generally, any gain realized by a Partnership on the sale of property held for more than one year will be long- term capital gain, except for any portion of the gain treated as depreciation or cost recovery recapture. Our share of any Partnership’s gain from the sale of inventory or other property held primarily for sale to customers in the ordinary course of the Partnership’s trade or business will be treated as income from a prohibited transaction subject to a 100% tax. See “— Gross Income Tests.”

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Legislative or Other Actions Affecting Tax Consequences

Prospective stockholders should recognize that the present U.S. federal income tax treatment of an investment in us may be modified by legislative, judicial or administrative action at any time and that any such action may affect investments and commitments previously made. The rules dealing with U.S. federal income taxation are constantly under review by persons involved in the legislative process, the IRS and the U.S. Treasury Department, resulting in revisions of regulations and revised interpretations of established concepts as well as statutory changes. Revisions in U.S. federal tax laws and interpretations of these laws could adversely affect the tax consequences of your investment.

The rules dealing with U.S. federal income taxation are constantly under review by persons involved in the legislative process and by the IRS and the U.S. Department of the Treasury. No assurance can be given as to whether, when, or in what form, U.S. federal income tax laws applicable to us and our stockholders may be enacted. Changes to the U.S. federal income tax laws and interpretations of U.S. federal income tax laws could adversely affect an investment in our common shares.

State and Local Taxes

We and/or you may be subject to taxation by various states and localities, including those in which we or a stockholder transacts business, owns property or resides. The state and local tax treatment may differ from the U.S. federal income tax treatment described above. Consequently, you should consult your own tax advisors regarding the effect of state and local tax laws on an investment in our common stock.

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UNDERWRITING

Under the terms and subject to the conditions in an underwriting agreement dated the date of this prospectus, the underwriters named below, for whom are acting as representatives, have severally agreed to purchase, and we and the selling stockholders have agreed to sell them, severally, and not jointly, the number of shares of our common stock indicated below.

Name			Number of Shares

Total

The underwriters are offering the shares of our common stock subject to their acceptance of the shares from us and the selling stockholders subject to prior sale. The underwriting agreement provides that the obligations of the several underwriters to pay for and accept delivery of the shares of our common stock offered by this prospectus are subject to the approval of certain legal matters by their counsel and to certain other conditions. The underwriters are obligated to take and pay for all of the shares of our common stock offered by this prospectus if any such shares are taken. However, the underwriters are not required to take or pay for the shares covered by the underwriters’ overallotment option described below.

The underwriters initially propose to offer part of the shares of our common stock directly to the public at the initial public offering price listed on the front cover of this prospectus and part to certain dealers, which may include the underwriters, at such offering price less a selling concession not in excess of $ per share. After the initial offering of the shares of our common stock, the public offering price and other selling terms may from time to time be varied by the representatives.

We intend to apply to list our common stock on the under the symbol “ .” In addition, we intend to apply to have our common stock quoted on the OTCQX, and the underwriters intend to file an application with the Financial Industry Regulatory Authority, or FINRA, related to the quoting of our common stock on the OTCQX. There can be no assurance that such applications will be approved, that an active trading market for our common stock will develop, or, if developed, that it will be sustained. We expect our common stock to be quoted on the OTCQX under the symbol “FHP.”

Overallotment Option

We have granted to the underwriters an option, exercisable for 30 days from the date of this prospectus, to purchase, from time to time, in whole or in part, up to an aggregate of additional shares of our common stock at the initial public offering price less underwriting discounts and commissions, to cover overallotments, if any. To the extent the underwriters exercise this option, each underwriter will become obligated, subject to certain conditions, to purchase a number of additional shares of common stock proportionate to that underwriter’s initial commitment as indicated in the preceding table, and we will be obligated to sell the additional shares of common stock to the underwriters.

Offering Price, Commissions and Expenses

The following table shows the per share and total initial public offering price, underwriting discounts and commissions and proceeds before expenses to us and the selling stockholders. These amounts are shown assuming both no exercise and full exercise of the underwriters’ option to purchase up to an additional shares of our common stock, to cover overallotments, if any.

Total

Per Share

Without
Over-allotment

With
Over-allotment

Underwriting discount paid by us

Underwriting discount paid by selling stockholders

Proceeds, before expenses, to us

Proceeds, before expenses, to selling stockholders

The estimated offering expenses payable by us, exclusive of the underwriting discounts and commissions, are approximately $ . We will pay the filing fees and up to $ of the expenses (including the reasonable fees and disbursements of counsel to the underwriters) related to obtaining the required approval

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of certain terms of this offering from FINRA. The estimated offering expenses payable by us include the expenses incurred by the selling stockholders, including the reasonable fees and disbursements of counsel to the selling stockholders, in connection with this offering.

Lock-Up Agreements

Subject to certain exceptions, we, all of our executive officers and directors have agreed that, without the prior written consent of on behalf of the underwriters, we and they will not, during the period ending 180 days after the date of this prospectus:

•

offer, pledge, sell, contract to sell, sell any option or contract to purchase, purchase any option or contract to sell, grant any option, right or warrant to purchase, lend or otherwise transfer or dispose of, directly or indirectly, any shares of our common stock or any securities convertible into or exercisable or exchangeable for shares of our common stock;

•

file any registration statement with the SEC relating to the offering of any shares of our common stock or any securities convertible into or exercisable or exchangeable for our common stock, other than the resale shelf registration statement pursuant to the registration rights agreement; or

•

enter into any swap or other arrangement that transfers to another, in whole or in part, any of the economic consequences of ownership of our common stock;

whether any such transaction described above is to be settled by delivery of common stock or such other securities, in cash or otherwise.

The restrictions described in the immediately preceding paragraph do not apply to the sale of shares to the underwriters or transactions by any person other than us, our directors and officers relating to shares of our common stock or other securities acquired in this offering or in open market transactions after completion of this offering.

, in their sole discretion, may release, or authorize us to release, as the case may be, our common stock and the other securities subject to the lock-up agreements described above in whole or in part at any time with or without notice.

Each selling stockholder has agreed with us not to directly or indirectly sell, offer to sell, grant any option or otherwise transfer or dispose of shares of our common stock not sold in this offering for 180 days after the date of this prospectus without the prior written consent of . Additionally, all of our stockholders that purchased shares in our prior private placements and have not elected to include their shares for resale in this offering have agreed with us not to directly or indirectly sell, offer to sell, grant any option or otherwise transfer or dispose of shares of our common stock for 60 days after the date of this prospectus without the prior written consent of .

Stabilization, Short Positions, and Penalty Bids

In order to facilitate this offering, the underwriters may engage in transactions that stabilize, maintain or otherwise affect the price of our common stock. Specifically, the underwriters may sell more shares than they are obligated to purchase under the underwriting agreement, creating a short position. A short sale is covered if the short position is no greater than the number of shares available for purchase by the underwriters under the overallotment option. The underwriters can close out a covered short sale by exercising the overallotment option or purchasing shares in the open market. In determining the source of shares to close out a covered short sale, the underwriters will consider, among other things, the open market price of shares compared to the price available under the overallotment option. The underwriters may also sell shares in excess of the overallotment option, creating a naked short position. The underwriters must close out any naked short position by purchasing shares in the open market. A naked short position is more likely to be created if the underwriters are concerned that there may be downward pressure on the price of our common stock in the open market after pricing that could adversely affect investors who purchase in this offering. As an additional means of facilitating this offering, the underwriters may bid for, and purchase, shares of our common stock in the open market to stabilize the price of our common stock. These activities may raise or maintain the market price of our common stock above independent market levels or prevent

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or retard a decline in the market price of our common stock. The underwriters are not required to engage in these activities and may end any of these activities at any time.

Indemnification

We, the selling stockholders and the underwriters have agreed to indemnify each other against certain liabilities, including liabilities under the Securities Act.

Electronic Distribution

A prospectus in electronic format may be made available on websites maintained by one or more underwriters, or selling group members, if any, participating in this offering. The representatives may agree to allocate a number of shares of our common stock to underwriters for sale to their online brokerage account holders. Internet distributions will be allocated by the representatives to underwriters that may make Internet distributions on the same basis as other allocations.

Pricing of the Offering

Immediately prior to this offering, there was no public market for our common stock. The initial price to public will be determined by negotiations between us and the representatives. Among the factors that will be considered in determining the initial price to public are our future prospects and those of our industry in general, our revenues, results of operations and certain other financial and operating information in recent periods, the ability of our management to execute on our business strategies, our business potential and earnings prospects, the valuation measures, market prices of securities and certain financial and operating information of companies engaged in activities similar to ours, and the prevailing securities markets at the time of this offering.

Discretionary Sales

The underwriters have informed us that they do not intend to confirm sales to discretionary accounts that exceed 5% of the total number of shares offered by them.

Other Relationships

The underwriters and their respective affiliates are full service financial institutions engaged in various activities, which may include securities trading, commercial and investment banking, financial advisory, investment management, investment research, principal investment, hedging, financing and brokerage activities. Certain of the underwriters and their respective affiliates have, from time to time, performed, and may in the future perform, various financial advisory and investment banking services for us, for which they may receive customary fees and expenses.

In the ordinary course of business, the underwriters and their respective affiliates may make or hold a broad array of investments including serving as counterparties to certain derivative and hedging arrangements and actively trade debt and equity securities (or related derivative securities) and financial instruments (including bank loans) for their own account and for the accounts of their customers, and such investment and securities activities may involve securities and/or instruments of the issuer. The underwriters and their respective affiliates may also make investment recommendations and/or publish or express independent research views in respect of such securities or instruments and may at any time hold, or recommend to clients that they acquire, long and/or short positions in such securities and instruments.

Other than in the United States, no action has been taken by us or the underwriters that would permit a public offering of the securities offered by this prospectus in any jurisdiction where action for that purpose is required. The securities offered by this prospectus may not be offered or sold, directly or indirectly, nor may this prospectus or any other offering material or advertisements in connection with the offer and sale of any such securities be distributed or published in any jurisdiction, except under circumstances that will result in compliance with the applicable rules and regulations of that jurisdiction. Persons into whose possession this prospectus comes are advised to inform themselves about and to observe any restrictions relating to this offering and the distribution of this prospectus. This prospectus does not constitute an offer to sell or a solicitation of an offer to buy any securities offered by this prospectus in any jurisdiction in which such an offer or a solicitation is unlawful.

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LEGAL MATTERS

Certain legal matters relating to this offering will be passed upon for us by Morrison & Foerster LLP. Certain legal matters in connection with this offering will be passed upon for the underwriters by .

EXPERTS

The consolidated financial statements of Freehold Properties, Inc. as of December 31, 2019 and for the period from April 23, 2019 (inception) through December 31, 2019 included in this prospectus and in the registration statement have been so included in reliance on the report of BDO USA, LLP, an independent registered public accounting firm, appearing elsewhere herein and in the registration statement, given on the authority of said firm as experts in auditing and accounting.

CHANGE IN INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

On July 29, 2020, the audit committee of our board of directors decided not to retain BDO USA, LLP, or BDO, as our independent registered public accounting firm. BDO’s audit report, dated January 23, 2020, on our consolidated financial statements as of December 31, 2019 and for the period from April 23, 2019 (inception) through December 31, 2019 did not contain an adverse opinion or disclaimer of opinion, nor was it qualified or modified as to uncertainty, audit scope or accounting principles. During the period from January 23, 2020 to July 29, 2020, BDO was not engaged as, and did not perform any services as, our independent registered public accounting firm. In addition, during the period ended December 31, 2019, as well as during the subsequent interim period preceding July 29, 2020, there were no (i) “disagreements” (as that term is defined in Item 304(a)(1)(iv) of Regulation S-K and related instructions) between us and BDO with respect to any matter relating to accounting principles or practices, financial statement disclosure or auditing scope or procedures which disagreements, if not resolved to the satisfaction of BDO, would have caused BDO to make reference to the subject matter of the disagreement in its reports on our financial statements with respect to such periods; or (ii) “reportable events” (as that term is defined in Item 304(a)(1)(v) of Regulation S-K and the related instructions).

We have provided BDO with a copy of the foregoing disclosure under the heading “Change in Independent Registered Public Accounting Firm” and requested that BDO provide the us with a letter addressed to the Securities and Exchange Commission (the “SEC”) stating whether or not BDO agrees with the foregoing disclosure. A copy of BDO’s letter dated October 26, 2020 is filed as Exhibit 16.1 to the registration statement of which this prospectus forms a part.

On July 29, 2020, with the approval of the audit committee of our board of directors, we engaged Baker Tilly Virchow Krause, LLP, or Baker Tilly, as our new independent registered public accounting firm. During the period ended December 31, 2019 and the subsequent interim period through July 29, 2020, the effective date of our engagement of Baker Tilly, we did not consult with Baker Tilly regarding any of the matters or events set forth in Items 304(a)(2)(i) or (ii) of Regulation S-K.

WHERE YOU CAN FIND ADDITIONAL INFORMATION

We maintain a website at www.freeholdprop.com. Information contained on, or accessible through our website is not incorporated by reference into and does not constitute a part of this prospectus or any other report or documents we file with or furnish to the SEC.

We have filed with the SEC a Registration Statement on Form S-11, including exhibits, schedules and amendments thereto, of which this prospectus is a part, under the Securities Act with respect to the shares of our common stock to be sold in this offering. This prospectus does not contain all of the information set forth in the registration statement and exhibits and schedules to the registration statement. For further information with respect to our company and the shares of our common stock to be sold in this offering, reference is made to the registration statement, including the exhibits and schedules thereto. Statements contained in this prospectus as to the contents of any contract or other document referred to in this prospectus are not necessarily complete and, where that contract or other document has been filed as an exhibit to the registration statement, each statement in this prospectus is qualified in all respects by the exhibit to which the

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reference relates. Copies of the registration statement, including the exhibits and schedules to the registration statement, may be examined without charge on the SEC’s website, www.sec.gov.

AS A RESULT OF THIS OFFERING, WE WILL BECOME SUBJECT TO THE INFORMATION AND PERIODIC REPORTING REQUIREMENTS OF THE EXCHANGE ACT AND WILL FILE PERIODIC REPORTS AND OTHER INFORMATION WITH THE SEC. THESE PERIODIC REPORTS AND OTHER INFORMATION WILL BE AVAILABLE FOR INSPECTION AND COPYING AT THE SEC’S PUBLIC REFERENCE FACILITIES AND THE WEBSITE OF THE SEC REFERRED TO ABOVE.

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INDEX TO FINANCIAL STATEMENTS

FREEHOLD PROPERTIES, INC.

	Unaudited Pro Forma Consolidated Financial Statements:
	Unaudited Pro Forma Consolidated Balance Sheet as of June 30, 2020					F-3
	Unaudited Pro Forma Consolidated Statement of Operations for the six months ended June 30, 2020					F-4
	Unaudited Pro Forma Consolidated Statement of Operations for the year ended December 31, 2020					F-5
	Notes to Unaudited Pro Forma Financial Statements					F-6
	Historical Financial Statements:
	Consolidated Balance Sheets as of June 30, 2020 and December 31, 2019					F-8
	Consolidated Statements of Operations for the three and six months ended June 30, 2020					F-9
	Consolidated Statement of Stockholders’ Equity for the six months ended June 30, 2020					F-10
	Consolidated Statement of Cash Flows for the six months ended June 30, 2020					F-11
	Notes to Interim Consolidated Financial Statements					F-12
	Report of Independent Registered Public Accounting Firm					F-23
	Consolidated Balance Sheet as of December 31, 2019					F-24
	Consolidated Statement of Operations for the period from April 23, 2019 (inception) through December 31, 2019					F-25
	Consolidated Statement of Stockholders’ Equity for the period from April 23, 2019 (inception) through December 31, 2019					F-26
	Consolidated Statement of Cash Flows for the period from April 23, 2019 (inception) through December 31, 2019					F-27
	Notes to Consolidated Financial Statements					F-28

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Freehold Properties, Inc.

Pro Forma Consolidated Financial Statements
(Unaudited)
(Dollars in thousands, except share data)

Freehold Properties, Inc. (the “Company,” “we,” “our” and “us”), a Maryland corporation, was incorporated on June 24, 2019 to act as a holding company for its operating partnership, Freehold Properties Operating Partnership, LP (the “Operating Partnership”), which was formed on April 23, 2019. The Company is an internally managed real estate investment trust focused on the acquisition, ownership and leasing of specialized industrial cultivation/processing and retail/dispensary cannabis properties. The Company was initially capitalized on August 23, 2019 when 5,000,000 shares of its common stock were issued to its founders for total cash consideration of $1,100. The Company did not commence operations until the completion of its initial private placement on August 28, 2019.

The Company conducts its business through an umbrella partnership REIT, or UPREIT, structure, consisting of the Operating Partnership, and subsidiaries of the Operating Partnership. The Company’s wholly owned limited liability company, Freehold OP GP, LLC, is the sole general partner of the Operating Partnership. The Company presently owns all of the limited partnership units of the Operating Partnership (“OP units”). As the sole owner of the general partner of the Operating Partnership, the Company has the exclusive power to manage and conduct the Operating Partnership’s business.

The Company elected to be taxed as a real estate investment trust (“REIT”) for U.S. federal income tax purposes commencing with the Company’s short taxable year ended December 31, 2019. As a REIT, the Company generally will not be subject to U.S. federal income tax on the REIT taxable income that it distributes to its stockholders.

The accompanying unaudited pro forma consolidated financial statements have been derived from the historical consolidated financial statements of the Company. The unaudited pro forma consolidated balance sheet as of June 30, 2020 is presented to reflect adjustments to the Company’s historical balance sheet as if the Company’s initial public offering of its common stock (the “Offering”) and certain other transactions described herein were completed on June 30, 2020. The unaudited pro forma consolidated income statements for the six months ended June 30, 2020 and the year ended December 31, 2019 are presented as if the Offering, the Company’s prior private placements and certain real estate property acquisitions and other transactions described herein were completed on January 1, 2019.

The accompanying unaudited pro forma consolidated financial statements should be read in conjunction with (i) the Company’s historical consolidated balance sheet as of June 30, 2020 and historical consolidated statements of operations for the six months ended June 30, 2020 and the period from April 23, 2019 (inception) to December 31, 2019 and (ii) the “Risk Factors,” “Cautionary Note Regarding Forward-Looking Statements” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” sections in this prospectus. The Company has based the unaudited pro forma adjustments on available information and assumptions that it believes are reasonable. The following unaudited pro forma combined consolidated financial statements are presented for informational purposes only and are not necessarily indicative of what the Company’s actual financial position would have been as of June 30, 2020 assuming the Offering and certain other transactions described herein had been completed on June 30, 2020, what the Company’s actual results of operations would have been for the six months ended June 30, 2020 and the year ended December 31, 2019 assuming the Offering, the Company’s prior private placements and certain real estate property acquisitions and other transactions described herein were completed on the first day of the annual period presented, and are not, and should not be viewed as, indicative of the Company’s future results of operations or financial condition.

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Freehold Properties, Inc.

Unaudited Pro Forma Consolidated Balance Sheet
As of June 30, 2020
(In thousands, except share amounts)

	Freehold Properties, Inc.			Other Transactions		Pro Forma before Offering		Proceeds from Offering		Use of Proceeds		Company Pro Forma
	A			B				C		D
Assets
Real Estate:
Land		$	5,094		$		$		$		$		$
Buildings, improvements and equipment			29,900
Total real estate			34,994
Less accumulated depreciation			(1,681)
Total real estate, net			33,313
Cash			1,578
Mortgage note receivable			5,399
Other assets, net			782
Total assets		$	41,072		$		$		$		$		$
Liabilities and Stockholders’ Equity
Liabilities:
Accounts payable and accrued liabilities		$	1,061		$		$		$		$		$
Deferred revenue			89
Total liabilities			1,150
Stockholders’ Equity:
Preferred stock			—
Common stock			1
Additional paid in capital			42,206
Accumulated deficit			(2,277)
Dividends declared			(8)
Total Stockholders’ Equity:			39,922
Total Liabilities and Stockholders’ Equity		$	41,072		$		$		$		$		$

See notes to unaudited pro forma consolidated financial statements.

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Freehold Properties, Inc.

Unaudited Pro Forma Consolidated Statement of Operations
For the six months ended June 30, 2020
(In thousands, except per share amounts)

	Freehold Properties, Inc.			2019 Acquisitions		Other Pro Forma Adjustments			Company Pro Forma
	AA			BB
Revenues
Rental income		$	1,732		$		$			$
Interest on mortgage note receivable			345
Total revenues			2,077
Expenses
General and administrative			2,086
Depreciation and amortization			1,024
Transaction costs			272
Total operating expenses			3,382
Net loss		$	(1,305)		$		$			$
Less: preferred stock dividends			(7)					DD
Net loss attributable to common stockholders		$	(1,312)		$		$			$
Net loss per share
Basic and diluted		$	(0.28)		$		$			$	EE
Weighted average common shares outstanding
Basic and diluted			4,718

See notes to unaudited pro forma consolidated financial statements.

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Freehold Properties, Inc.

Unaudited Pro Forma Consolidated Statement of Operations
For the year ended December 31, 2019
(In thousands)

	Freehold Properties, Inc.			2019 Acquisitions		Other Pro Forma Adjustments			Company Pro Forma
	AA			BB
Revenues
Rental income		$	1,115		$		$			$
Interest on mortgage note receivable			90
Total revenues			1,205
Expenses
General and administrative			1,455					CC
Depreciation and amortization			663
Transaction costs			59
Total operating expenses			2,177
Net loss		$	(972)		$		$			$
Less: preferred stock dividends			(1)					DD
Net loss attributable to common stockholders		$	(973)		$		$			$
Net loss per share
Basic and diluted		$	(0.21)		$		$			$	EE
Weighted average common shares outstanding
Basic and diluted			4,592

See notes to unaudited pro forma consolidated financial statements.

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Notes to the Unaudited Pro Forma Consolidated Financial Statements

Note 1 — Adjustments to the Pro Forma Consolidated Balance Sheet

(A)

Represents the historical consolidated balance sheet of the Company as of June 30, 2020.

(B)

Reflects the following transactions:

•

On July 13, 2020, the Company sold a property to a subsidiary of Curaleaf Holdings, Inc. (“Curaleaf”) for $5.5 million pursuant to Curaleaf’s exercise of its purchase option. The Company used the net proceeds from the disposition to fund a portion of its commitment related to the Webster, MA facility.

(C)

Reflects aggregate gross proceeds from the Offering of $ million, which will be reduced by underwriters’ discounts and commissions and other expenses of the Offering payable by the Company, resulting in net proceeds to the Company of $ million. These costs will be charged against the gross offering proceeds upon completion of the Offering. A summary is as follows (in thousands):

	Gross Proceeds				$
	Less:
	Underwriters’ discount
	Offering expenses
	Net proceeds				$

(D)

Reflects the use of proceeds from the Offering, which the Company intends to use as follows:

•

approximately $ million to fund the acquisition properties;

•

approximately $ million to fund commitments related to the Company’s existing properties;

•

approximately $0.1 million to redeem the Company’s 12.5% Series A Redeemable Cumulative Preferred Stock (the “Series A Preferred Stock”); and

•

the remaining net proceeds, if any, in cannabis properties in accordance with the Company’s investment strategy and for working capital and general corporate purposes.

Note 2 — Adjustments to the Pro Forma Consolidated Statements of Operations

(AA)

Represents the historical consolidated statements of operations of the Company for the six months ended June 30, 2020 and the period from April 23, 2019 (inception) through December 31, 2019, including the results of operations of the Company’s completed acquisitions and investments as of the date they were acquired.

(BB)

Reflects the operations of the Company’s acquisitions and investments that were completed during the year ended December 31, 2019, as if they occurred on January 1, 2019. The adjustment includes pro forma results only for the portion of the period prior to the closing of the acquisition/investment. We have excluded our investment in a property in Winslow, NJ, which we acquired in August 2019 and sold in July 2020. The net proceeds from the sale of the Winslow, NJ property were reinvested in the Webster, MA property. The additional investment in the Webster, MA property is reflected as if it occurred on January 1, 2019.

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Bellmawr
(Harding)

Webster

Ft. Pierce

Bellmawr
(Creek)

Daytona

Provincetown

Total

Revenues

Rental income

Total revenues

Expenses

Depreciation and amortization

Total expenses

Net income (loss)

(CC)

Reflects adjustments necessary to provide a full year of costs associated with salaries and benefits paid to the Company’s officers in accordance with the provisions of their employment agreements, compensation to the members of the Company’s Board of Directors, stock-based compensation expense for awards granted to the Company’s officers and members of the Company’s Board of Directors and certain other costs for general corporate expenses, including contractual office rent and insurance, all of which allowed the Company to commence operations in August 2019. This does not reflect the additional general and administrative expenses that the Company expects to incur as a result of becoming a public company, including but not limited to incremental salaries and equity incentives, Sarbanes-Oxley Act of 2002 compliance costs, and incremental legal, audit and tax fees, as such costs are not currently quantifiable.

(DD)

Reflects the elimination of dividends on the Series A Preferred Stock, which will be redeemed with a portion of the net proceeds from the Offering.

(EE)

Earnings per share — basic is calculated based on the pro forma weighted average common shares outstanding and assumes the issuance of shares of common stock in the Offering. Earnings per share — diluted is calculated by including the effect of dilutive securities.

Below is a reconciliation of pro forma weighted average common shares outstanding for the six months ended June 30, 2020 (in thousands):

	Number of common shares issued and outstanding – June 30, 2020					4,718
	Number of common shares issued in the Offering
	Total number of common shares – basic
	Dilutive potential shares – June 30, 2020
	Total number of common shares – diluted

Below is a reconciliation of pro forma weighted average common shares outstanding for the year ended December 31, 2019 (in thousands):

	Number of common shares issued and outstanding – December 31, 2019					4,592
	Number of common shares issued in the Offering
	Total number of common shares – basic
	Dilutive potential shares – December 31, 2019
	Total number of common shares – diluted

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Freehold Properties, Inc.

Consolidated Balance Sheets
(In thousands, except share amounts)

	(unaudited) June 30, 2020			December 31, 2019
Assets
Real Estate:
Land		$	5,094		$	5,094
Buildings, improvements and equipment			29,900			29,900
Total real estate			34,994			34,994
Less accumulated depreciation			(1,681)			(661)
Total real estate, net			33,313			34,333
Cash			1,578			1,477
Mortgage note receivable			5,399			3,876
Other assets, net			782			805
Total assets		$	41,072		$	40,491
Liabilities and Stockholders’ Equity
Liabilities:
Accounts payable and accrued liabilities		$	1,061		$	2,845
Deferred revenue			89			260
Total liabilities			1,150			3,105
Commitments and contingencies – Note 10
Stockholders’ Equity:
Preferred stock, $0.0001 par value, 50,000 authorized, 125 shares issued and outstanding			—			—
Common stock, $0.0001 par value, 450,000 authorized, 5,193 and 4,695 shares issued and outstanding, respectively			1			—
Additional paid in capital			42,206			38,359
Accumulated deficit			(2,277)			(972)
Dividends declared			(8)			(1)
Total Stockholders’ Equity			39,922			37,386
Total Liabilities and Stockholders’ Equity		$	41,072		$	40,491

See accompanying notes to consolidated financial statements.

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Freehold Properties, Inc.

Consolidated Statements of Operations
(In thousands, except per share amounts)
(unaudited)

	Three Months Ended June 30, 2020			Six Months Ended June 30, 2020
Revenues
Rental income		$	866		$	1,732
Interest on mortgage note receivable			182			345
Total revenues			1,048			2,077
Expenses
General and administrative			1,006			2,086
Depreciation and amortization			512			1,024
Transaction costs			105			272
Total operating expenses			1,623			3,382
Net loss		$	(575)		$	(1,305)
Less: preferred stock dividends			(7)			(7)
Net loss attributable to common stockholders		$	(582)		$	(1,312)
Net loss per share
Basic and diluted		$	(0.12)		$	(0.28)
Weighted average common shares outstanding
Basic and diluted			4,743			4,718

See accompanying notes to consolidated financial statements.

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Freehold Properties, Inc.

Consolidated Statement of Stockholders’ Equity
For the six months ended June 30, 2020
(In thousands)
(unaudited)

	Series A Preferred Stock					Common Stock					Additional Paid in Capital			Accumulated Deficit			Dividends Declared
	Shares		Par Value			Shares		Par Value			Additional Paid in Capital			Accumulated Deficit			Dividends Declared			Total
Balance at December 31, 2019		—		$	—		4,695		$	—		$	38,359		$	(972)		$	(1)		$	37,386
Issuance of common stock, net of offering costs		—			—		358			1			3,388			—			—			3,389
Stock-based compensation, net of forfeitures		—			—		140			—			459			—			—			459
Dividends to preferred stockholders		—			—		—			—			—			—			(7)			(7)
Net loss		—			—		—			—			—			(1,305)			—			(1,305)
Balance at June 30, 2020		—		$	—		5,193		$	1		$	42,206		$	(2,277)		$	(8)		$	39,922

See accompanying notes to consolidated financial statements.

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Freehold Properties, Inc.

Consolidated Statement of Cash Flows
(In thousands)
(unaudited)

	Six Months ended June 30, 2020
Operating Activities
Net loss		$	(1,305)
Adjustments to reconcile net loss to net cash used in operations:
Depreciation and amortization			1,024
Stock-based compensation			459
Changes in operating assets and liabilities:
Other assets			20
Deferred revenue			(171)
Accounts payable and accrued liabilities			(1,206)
Net Cash used in operating activities			(1,179)
Investing Activities
Investment in mortgage note receivable			(1,523)
Acquisitions of corporate property			(1)
Net Cash used in investing activities			(1,524)
Financing Activities
Proceeds from sale of common shares, net of offering costs			2,811
Dividends paid on Series A preferred stock			(7)
Net cash provided by financing activities			2,804
Increase in cash and cash equivalents			101
Cash and cash equivalents at beginning of period			1,477
Cash and cash equivalents at end of period		$	1,578
Supplemental Cash Flow Information
Liabilities settled with issuance of equity		$	578

See accompanying notes to consolidated financial statements.

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FREEHOLD PROPERTIES, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements
June 30, 2020

Note 1 — Organization and Nature of Business

Freehold Properties Operating Partnership, LP (the “Operating Partnership”), a Nevada limited partnership, was formed on April 23, 2019. Freehold Properties, Inc. (the “Company”), which was incorporated in the state of Maryland on June 24, 2019, was formed as a holding company for the Operating Partnership. The Company is an internally managed company focusing on the purchase, development and leasing of specialized agricultural, industrial and retail cannabis properties. The Company was initially capitalized on August 23, 2019 when 5,000,000 shares of its common stock were issued to its founders for total cash consideration of $1,100. The Company did not commence operations until the completion of its initial private placement on August 28, 2019. As of June 30, 2020, the Company had gross investments of $35.0 million in seven real estate properties and $5.4 million in one mortgage note receivable investment. The Company owns 100% of its properties.

The Company conducts its business through an umbrella partnership REIT, or UPREIT, structure, consisting of the Operating Partnership, and subsidiaries of the Operating Partnership. The Company’s wholly owned limited liability company, Freehold OP GP, LLC, is the sole general partner of the Operating Partnership. The Company presently owns all the limited partnership units of the Operating Partnership (“OP units”). In the future, the Company may issue OP units to third parties in connection with property acquisitions, as compensation or otherwise. As the sole owner of the general partner of the Operating Partnership, the Company has the exclusive power to manage and conduct the Operating Partnership’s business, subject to certain limitations.

The Company elected to be taxed as a real estate investment trust (“REIT”) for U.S. federal income tax purposes commencing with the Company’s short taxable year ended December 31, 2019. To qualify as a REIT, the Company must meet certain organizational and operational requirements, including a requirement to distribute at least 90% of its annual REIT taxable income to its stockholders (which is computed without regard to the dividends paid deduction or net capital gain and which does not necessarily equal net income as calculated in accordance with generally accepted accounting principles (“GAAP”)).

As a REIT, the Company generally will not be subject to U.S. federal income tax to the extent it distributes qualifying dividends to its stockholders. If the Company fails to qualify as a REIT in any taxable year, it will be subject to U.S. federal income tax (including any applicable alternative minimum tax) on its taxable income at regular corporate income tax rates. If, subject to qualifying as a REIT for any taxable year, the Company fails to qualify as a REIT for any subsequent taxable year, then generally the Company will not be permitted to qualify for treatment as a REIT for U.S. federal income tax purposes for the four taxable years following the year during which qualification is lost unless the Internal Revenue Service grants the Company relief under certain statutory provisions. Such an event could materially adversely affect the Company’s net income and net cash available for distribution to stockholders. However, the Company intends to organize and operate in such a manner as to qualify for treatment as a REIT. Even if the Company qualifies for taxation as a REIT, the Company may be subject to state and local taxes on its income and property and federal income and excise taxes on its undistributed income.

Note 2 — Accounting Policies and Related Matters

Basis of Presentation

The accompanying unaudited consolidated financial statements of the Company have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial statements. In the opinion of management, the accompanying unaudited consolidated financial statements reflect all adjustments consisting of normal recurring adjustments necessary for a fair presentation of its financial position and results of operations. Interim results of operations are not necessarily indicative of the results that may be achieved for a full year. The consolidated financial statements and related notes do not include all information and footnotes required for annual reports.

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Use of Estimates

The preparation of the consolidated financial statements in accordance with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the consolidated financial statements and the amounts of revenue and expense reported in the period. Significant estimates are made for the valuation of real estate and mortgage notes receivable and fair value assessments with respect to purchase price allocations. Actual results may differ from those estimates.

Principles of Consolidation

The consolidated financial statements include the accounts of the Company’s wholly owned subsidiaries. All material intercompany transactions and balances have been eliminated in consolidation.

Segment Reporting

The Company owns, acquires and finances specialized agricultural, industrial and retail cannabis properties. The Company is managed as one reporting unit, rather than multiple reporting units, for internal reporting purposes and for internal decision-making. Therefore, the Company discloses its operating results in a single reportable segment.

Cash

Cash consists of highly liquid investments with original maturities of three months or less. The Company’s cash is held at major commercial banks which at times may exceed the Federal Deposit Insurance Corporation limit. The Company has not experienced any losses to date on invested cash.

Revenue Recognition — Leases of Real Estate

At the inception of a new lease arrangement, including new leases that arise from amendments, the Company assesses the terms and conditions to determine the proper lease classification. Currently, all the Company’s lease arrangements are classified as operating leases. Rental income for operating leases is recognized on a straight-line basis over the lease term when collectability is probable, and the tenant has taken possession or controls the physical use of a leased asset. If collectability of the lease payment is not probable at the commencement date, then rental income will be limited to the lesser of the income recognized on a straight-line basis or cash basis. If the assessment of collectability changes after the commencement date, any difference between rental income that would have been recognized on a straight-line basis and cash basis must be recognized as an adjustment to rental income in the current period. As of June 30, 2020, we do not consider collectability to be probable for our long-term leases as a result of the uncertain regulatory environment in the United States relating to the cannabis industry, not based on creditworthiness of our tenants.

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Revenue Recognition — Mortgage Notes Receivable

Allowances are established for loans based upon an estimate of probable losses on an individual basis if they are determined to be impaired. Loans are impaired when it is deemed probable that the Company will be unable to collect all amounts due on a timely basis in accordance with the contractual terms of the loan. The allowance is based upon management’s assessment of the borrower’s overall financial condition, resources and payment record; the prospects for support from any financially responsible guarantors; and, if appropriate, the net realizable value of any collateral. These estimates consider all available evidence including, as appropriate, the present value of the expected future cash flows discounted at the loan’s effective interest rate, the fair value of collateral, general economic conditions and trends, historical and industry loss experience, and other relevant factors. As of June 30, 2020, the Company had no allowance for loan losses.

Commitment, origination and other fees from lending activities are recognized as interest income over the life of the related loan.

Allocation of Purchase Price of Acquired Real Estate

As part of the purchase price allocation process for acquisitions, management makes estimates based upon the relative fair values of each component for asset acquisitions and at a fair value of each component for business combinations. In making estimates of fair values for purposes of allocating purchase prices of acquired real estate, the Company utilizes a number of sources, including independent appraisals that may be obtained in connection with the acquisition of the respective property and other market data. The Company also considers information obtained about each property as a result of the Company’s pre-acquisition due diligence, marketing and leasing activities in estimating the fair value of the assets acquired.

Depreciation and amortization of real estate assets and liabilities is provided for on a straight-line basis over the estimated useful lives of the assets:

	Building			28 to 42 years
	Improvements			6 to 14 years
	Equipment			5 to 8 years

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Asset Impairment — Real Estate Properties

Earnings Per Share

Basic earnings per common share is computed by dividing net income (loss) applicable to common shares by the weighted number of shares of common stock outstanding during the period. Diluted earnings per common share is calculated by including the effect of dilutive securities. Certain of the Company’s unvested restricted stock awards contain non-forfeitable rights to dividends, and accordingly, these awards are deemed to be participating securities. These participating securities are included in the earnings allocation in computing both basic and diluted earnings per common share when their effect is dilutive.

Income Taxes

Commencing with its taxable year ended December 31, 2019, the Company elected to be taxed as a REIT under the Internal Revenue Code of 1986, as amended (the “Code”). The Company intends at all times to maintain its qualification as a REIT under Sections 856 through 860 of the Code. The Company will not be subject to federal income tax provided that the Company qualifies to be taxed as a REIT for its taxable year ended December 31, 2019 and thereafter continues to maintain its qualification as a REIT and makes distributions to stockholders equal to or in excess of the Company’s taxable income.

The Company classifies interest and penalties related to uncertain tax positions, if any, in the Company’s consolidated financial statements as a component of income tax expense. The Company has made no U.S. federal income tax payments.

Stock-Based Compensation

The fair value of stock-based awards is calculated on the date of grant. The Company amortizes the stock-based compensation expense on a straight-line basis over the period that the awards are expected to vest. Forfeitures of stock-based awards are recognized as they occur. We reclassify any non-forfeitable dividends previously paid on forfeited awards from retained earnings to compensation expense.

Organizational Costs

Organizational costs are expensed as incurred and are primarily recorded in general and administrative expense.

Deferred Costs

Costs incurred prior to the completion of offerings of stock or other capital instruments that directly relate to the offering are deferred and netted against proceeds received from the offering. Third party costs incurred prior to completion of asset acquisitions that directly relate to the acquisition are deferred and included in the basis in the assets acquired or are expensed at the time the asset is no longer likely to be acquired.

Fair Value Measurement

Fair value is defined as the price that would be received to sell an asset, or paid to transfer a liability, in an orderly transaction between market participants. In calculating fair value, a company must maximize the use of observable market inputs, minimize the use of unobservable market inputs and disclose in the form of an outlined hierarchy the details of such fair value measurements.

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A hierarchy of valuation techniques is defined to determine whether the inputs to a fair value measurement are considered to be observable or unobservable in a marketplace. Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect the Company’s market assumptions. This hierarchy requires the use of observable market data when available. These inputs have created the following fair value hierarchy:

•

Level 1 — quoted prices for identical instruments in active markets;

•

Level 2 — quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations in which significant inputs and significant value drivers are observable in active markets; and

•

Level 3 — fair value measurements derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable.

If quoted market prices or inputs are not available, fair value measurements are based upon valuation models that utilize current market or independently sourced market inputs, such as interest rates, option volatilities, credit spreads and market capitalization rates. Items valued using such internally generated valuation techniques are classified according to the lowest level input that is significant to the fair value measurement. As a result, the asset or liability could be classified in either Level 2 or 3 even though there may be some significant inputs that are readily observable. Valuation techniques used by the Company include the use of third-party valuations and internal valuations, which may include discounted cash flow models. The Company has recorded all acquisitions based on estimated fair values. The fair values were obtained from third-party appraisals based on comparable properties (using the market approach, which involved Level 3 inputs in the fair value hierarchy).

Recent Accounting Developments

In June 2016, the FASB issued ASU No. 2016-13, “Financial Instruments — Credit Losses (Topic 326),” which requires entities to measure all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions and reasonable and supportable forecasts. The standard also requires additional disclosures related to significant estimates and judgments used in estimating credit losses, as well as the credit quality and underwriting standards of an entity’s portfolio. Receivables arising from operating leases are outside the scope of this guidance and are accounted for under ASC 842. The amended guidance is effective for fiscal years, and interim periods within those years, beginning January 1, 2023 for private companies, with early adoption permitted. The Company is evaluating the impact of adopting this new accounting standard on the Company’s interim consolidated financial statements.

The Company early adopted ASU 2016-02, “Leases (Topic 842)” upon formation in 2019.

Note 3 — Real Estate and Mortgage Note Receivable

Real Estate

The Company made no real estate acquisitions during the six months ended June 30, 2020.

The Company made the following real estate acquisitions during the period from April 23, 2019 (inception) through December 31, 2019.

Initial Curaleaf Acquisitions

On August 29, 2019, the Company acquired six properties from Focused Investment Partners LLC, a subsidiary of Curaleaf, Inc. (“Curaleaf”), in sale-leaseback transactions for total consideration of $28.3 million, including $25.5 million in cash and $2.8 million paid in stock (valued at $9.09 per share), plus transaction costs of $1.0 million for a total investment of $29.3 million. The properties are 100% leased under individual 10-year initial term triple-net leases that expire in August 2029. The six properties consist of the following:

•

A cultivation/production facility in Webster, MA

•

A cultivation/production facility in Bellmawr, NJ

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•

A retail dispensary in Bellmawr, NJ

•

A retail dispensary in Fort Pierce, FL

•

A retail dispensary in Daytona Beach, FL

•

A retail dispensary in Provincetown, MA

Winslow, NJ Acquisition

On October 11, 2019, the Company acquired a property consisting of 21 acres along with a 120,000 square foot building in Winslow, NJ. At closing, the Company leased the property to Curaleaf NJ, Inc., a subsidiary of Curaleaf, for use as a cultivation and processing facility. The purchase price was $5.5 million, and the Company incurred $0.2 million in transaction costs for a total investment of $5.7 million. The property is 100% leased under a 10-year initial term triple-net lease that expires in October 2029. The tenant has an option to purchase the property for $5.5 million, which expires December 31, 2020.

The purchase price allocations for the Company’s real estate investment activity for the period of inception through December 31, 2019 are as follows (dollars in thousands):

	Total Purchase Price
Land		$	5,094
Buildings, improvements and equipment			29,900
Total real estate			34,994
Common stock issued			(2,836)
Total cash paid		$	32,158

Mortgage Note Receivable

The mortgage note bears interest at 12.75% annually, which escalates by 2.5% annually, and requires interest only payments until maturity. Interest payments are deferred through June 30, 2020 and all deferred interest payments will be repaid through June 30, 2021. Accrued interest receivable as of June 30, 2020 was $435,000 and is reflected in Other Assets in the consolidated balance sheet. The mortgage note receivable is secured by the operator’s leasehold interest in the property. In conjunction with entry into the mortgage note receivable, the operator also assigned as collateral their leasehold purchase option for the underlying real property to the Company, which may be exercised in the event of a default or at the Company’s option between January 1, 2021 through February 28, 2021. If the Company exercises the purchase option, the mortgage note receivable balance will be included in the lease basis used to determine rent. If the Company does not exercise the purchase option, the mortgage note receivable will remain outstanding and require interest only payments with a balloon payment of principal due on February 28, 2026.

Construction on this project was temporarily paused in March 2020 due to funding concerns and considerations influenced by the coronavirus disease (“COVID-19”) pandemic.

In the event that additional capital is not made available by the Company to fund the remainder of this commitment and upon legal termination of the funding agreement by the operator, the outstanding balance will convert to an unsecured promissory note payable to the Company bearing interest at 8% annually with principal and interest payable monthly over a five-year straight-line amortization period.

Through August 31, 2020, the date of the subsequent events to these consolidated financial statements in Note 11, the Company has not funded any additional reimbursement requests from the operator, nor has the Company received any notice of termination of the funding agreement from the operator. The Company and the operator continue in a state of mutual forbearance and negotiation of future repayment terms. The Company has provided an offer to the operator that, if accepted, would result in a reversal of previously recognized interest income of approximately $0.2 million.

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Leasing operations

The Company’s properties are generally leased pursuant to non-cancelable, fixed term operating leases with expiration dates through 2029. Leases for the Company’s portfolio generally require the lessee to pay minimum rent (which generally increases annually on a fixed percentage basis), all taxes (including property tax), insurance, maintenance, and other operating costs associated with the leased property.

Minimum rental payments due to the Company in future periods under operating leases that have non-cancelable terms extending beyond one year as of June 30, 2020, are as follows (dollars in thousands):

Year	Contractual Minimum Rent
Remainder of 2020		$	1,764
2021			3,598
2022			3,704
2023			3,812
2024			3,923
2025			4,037
Thereafter			15,945
Total		$	36,783

Concentrations of Credit Risks

For the three and six months ended June 30, 2020, 83% of our revenues were derived from subsidiaries of Curaleaf, which guarantees the lease payments for each of the leases for the Company’s seven real estate properties.

The following table contains information regarding the geographic concentration of the properties in the Company’s real estate portfolio as of June 30, 2020, which includes percentage of rental income for the three and six months ended June 30, 2020 (dollars in thousands):

State	Number of Properties		Gross Investment			% of Total Real Estate Property Investments		% of Rental Income for the three months ended June 30, 2020		% of Rental Income for the six months ended June 30, 2020
New Jersey		3		$	20,740		59.3%		59.4%		59.4%
Massachusetts		2			10,814		30.9%		30.8%		30.8%
Florida		2			3,440		9.8%		9.8%		9.8%
		7		$	34,994		100.0%		100.0%		100.0%

Note 4 — Other Assets

Items included in Other Assets on the Company’s consolidated balance sheets are detailed in the table below (dollars in thousands):

	June 30, 2020			December 31, 2019
Prepaid assets		$	59		$	235
Deferred offering costs			235			180
Deferred acquisition costs			20			266
Mortgage interest receivable			435			90
Other, net			33			34
		$	782		$	805

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Note 5 — Incentive Plan

The Company’s Equity Incentive Plan (the “Plan”) provides for the grant of stock options, share awards (including restricted shares of the Company’s common stock and restricted stock units), stock appreciation rights, dividend equivalent rights, performance awards, annual incentive cash awards and other equity-based awards. The Board of Directors reserved 2,500,000 shares of common stock for issuance pursuant to the Plan, of which 1,875,122 shares of common stock were available for potential future issuance as of June 30, 2020.

A total of 314,734 and 310,144 awards were issued under the Plan during the six months ended June 30, 2020 and the period from April 23, 2019 (inception) through December 31, 2019, respectively, at a weighted average grant date fair value of $10.00 per restricted share of common stock. The remaining unrecognized cost from stock-based awards as of June 30, 2020 is $5.7 million.

Restricted Stock

Effective October 30, 2019, the Company granted 21,500 restricted shares of the Company’s common stock to its non-employee directors as part of the annual director compensation, which will vest ratably on each of the first three anniversaries of the date of grant, subject to the directors’ continued service on the Company’s board of directors through such dates and certain exceptions. The total value of these awards is calculated to be $0.2 million. During January 2020, 5,000 restricted shares of the Company’s common stock were forfeited upon the resignation of a director.

On December 31, 2019, the Company granted 23,750 restricted shares of the Company’s common stock to an executive, all of which will vest on the six-year anniversary of the grant date, subject to the executive’s continued service to the Company and certain exceptions. The total value of this award is calculated to be $0.2 million.

There were no restricted stock awards granted during the six months ended June 30, 2020, other than through the Alignment of Interest Program described below.

For the three and six months ended June 30, 2020, compensation expense resulting from the amortization of grants of restricted shares of the Company’s common stock, net of forfeitures, was approximately $35,000 and $66,000, respectively.

Alignment of Interest Program

The Company’s Alignment of Interest Program allows eligible employees and non-employee directors to elect to receive restricted shares of the Company’s common stock issued under the Plan subject to long-term vesting in lieu of their cash compensation. The number of shares issued will be increased through a Company match depending on the length of the vesting period selected. The employees’ vesting period choices are: two years for a 33% match; four years for a 66% match; and six years for a 100% match. The directors’ vesting period choices are: one year for a 20% match; two years for a 40% match; and three years for a 60% match. Restricted shares of the Company’s common stock issued under the Alignment of Interest Program are generally subject to cliff vesting periods varying from one to six years beginning on the date of issue. If a recipient voluntarily terminates his or her relationship with the Company or is terminated for cause before the end of the vesting period, the shares are forfeited, at no cost to the Company. The Company recognizes the impact of forfeitures as they occur. Once restricted shares of the Company’s common stock have been issued, the recipient has the right to receive dividends and the right to vote the shares.

On December 31, 2019, the Company granted 264,894 restricted shares of the Company’s common stock to our directors and employees through the Alignment of Interest Program, of which 134,648 restricted shares of the Company’s common stock relate to compensation deferrals and 130,246 restricted shares of common stock relate to the Company match. The total value of these awards was calculated to be $2.7 million.

On March 31, 2020, the Company granted 144,500 restricted shares of the Company’s common stock to employees through the Alignment of Interest Program, of which 72,250 restricted shares of the Company’s common stock relate to compensation deferrals and 72,250 restricted shares of the Company’s common stock relate to the Company match. The total value of these awards was calculated to be approximately $1.4 million.

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On March 31, 2020, the Company also granted 170,234 restricted stock units to employees through the Alignment of Interest Program, of which 87,200 restricted stock units relate to compensation deferrals and 83,034 restricted stock units relate to the Company match. The restricted stock units are tied to performance from January 1, 2020 through December 31, 2020. The total number of restricted stock units earned will be determined by the compensation committee of the Company’s board of directors and any unearned awards will be forfeited. Each restricted stock unit earned will convert to one restricted share of common stock. The total value of these awards was calculated to be approximately $1.7 million.

For the three and six months ended June 30, 2020, compensation expense resulting from the amortization of restricted shares of the Company’s common stock grants, net of forfeitures, was approximately $267,000 and $393,000, respectively.

Note 6 — Income Taxes

The Company elected to be taxed as a REIT for U.S. federal income tax purposes commencing with the Company’s short taxable year ended December 31, 2019. To qualify as a REIT, the Company must meet a number of organizational and operational requirements, including a requirement to distribute at least 90% of the Company’s taxable income to its stockholders. As a REIT, the Company generally will not be subject to U.S. federal income tax if it distributes 100% of its taxable income, determined without regard to the deduction for dividends paid and excluding net capital gains, to its stockholders and satisfies certain other requirements. Income tax is paid directly by the Company’s stockholders on the dividends distributed to them. If the Company’s taxable income exceeds its dividends in a tax year, REIT tax rules allow the Company to designate dividends from the subsequent tax year in order to avoid current taxation on undistributed income. If the Company fails to qualify as a REIT in any taxable year, it will be subject to U.S. federal income taxes at regular corporate rates, and it would be precluded from qualifying for treatment as a REIT until the fifth calendar year following the year in which it failed to qualify as a REIT.

Note 7 — Equity

Common stock

On August 28, 2019 and September 13, 2019, the Company sold an aggregate of 3,223,320 shares of common stock to certain institutional and individual investors at a price per share of $9.09. On August 29, 2019, the Company issued an additional 311,991 shares of common stock in exchange for contribution of certain real property at a price per share of $9.09. The issuance of common stock, in each case, was made in reliance upon exemptions from registration provided by Section 4(a)(2) of the Securities Act of 1933, as amended (the “Securities Act”), and Regulation D thereunder. Subsequently, on September 27, 2019, the Company sold an aggregate of 850,000 shares of common stock, at a price per share of $10.00, to certain institutional and individual investors, in reliance upon exemptions from registration provided by Section 4(a)(2) of the Securities Act and Regulation D thereunder. The aggregate net proceeds to the Company from these transactions, after deducting paid and accrued offering expenses of $2.4 million, were approximately $38.2 million. In conjunction with these transactions, the initial 5,000,000 shares of common stock issued to the co-founders were repurchased from the co-founders at the initial purchase price of $1,100.

On January 7, 2020, the Company issued 30,000 shares of common stock, at a price per share of $10.00, to Compass Point Research & Trading, LLC to satisfy $300,000 of costs related to the Company’s private placement of common stock. This obligation was included in accounts payable and accrued liabilities in the Company’s consolidated balance sheet as of December 31, 2019.

On January 13, 2020, the Company sold 300,000 shares of common stock, at a price per share of $10.00, to an institutional investor in reliance upon exemptions from registration provided by Section 4(a)(2) of the Securities Act and Regulation D thereunder. The net proceeds to the Company from this transaction, after deducting offering expenses of $0.2 million, was approximately $2.8 million.

On January 28, 2020, the Company issued 27,800 shares of common stock, at a price per share of $10.00, to affiliates of Skyway Capital Markets to satisfy $278,000 of costs related to the Company’s private placement of common stock. This obligation was included in accounts payable and accrued liabilities in the Company’s consolidated balance sheet as of December 31, 2019.

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Preferred stock

On December 20, 2019, the Company sold 125 shares of newly classified 12.5% Series A Preferred Stock (“Series A Preferred Stock”) for $1,000 per share in order to ensure that the Company meets the beneficial ownership requirement applicable to a REIT under the Code. Dividends on the Series A Preferred Stock are paid semi-annually on June 30 and December 31. The Series A Preferred Stock may be redeemed at any time, subject to a 5% redemption premium through December 31, 2021. The aggregate net proceeds to the Company from the issuance of preferred stock, after deducting offering expenses, were approximately $0.1 million.

Note 8 — Net Loss per share

The Company applies the two-class method for determining earnings per common share as its outstanding restricted shares of the Company’s common stock with non-forfeitable dividend rights are considered participating securities. The following table sets forth the computation of basic and diluted earnings per common share (dollars in thousands, except per share amounts):

	Three Months ended June 30, 2020			Six Months ended June 30, 2020
Numerator:
Net loss		$	(575)		$	(1,305)
Preferred stock dividends			(7)			(7)
Net loss attributable to common stockholders used to compute net loss per share		$	(582)		$	(1,312)
Denominator:
Basic and diluted weighted average common shares			4,743			4,718
Basic and diluted earnings per common share		$	(0.12)		$	(0.28)

The effects of restricted shares of the Company’s common stock and restricted stock units were excluded from the calculation of diluted net loss per share for the three and six months ended June 30, 2020 because their effects were anti-dilutive.

Note 9 — Fair Value of Financial Instruments

Financial Assets and Liabilities Not Carried at Fair Value

The carrying amounts of cash, receivables, and accounts payable and accrued liabilities are reasonable estimates of their fair value as of June 30, 2020 due to the short-term nature of these assets and liabilities. The fair value of the Company’s mortgage note receivable as of June 30, 2020 is estimated by using Level 2 inputs such as discounting the estimated cash flows using current market rates which similar loans would be made to borrowers with similar credit ratings and for the same remaining maturities.

Fair value estimates are made at a specific point in time, are subjective in nature, and involve uncertainties and matters of significant judgment. Settlement at such fair value amounts may not be possible. At June 30, 2020 and December 31, 2019, the estimated fair value of the mortgage note receivable is considered to be equal to its carrying value.

Note 10 — Commitments and Contingencies

Commitments

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immediately subsequent to the initial round of equity funding. As of the date of these financial statements, the necessary contingencies have not been met that would compel issuance of the restricted shares of the Company’s common stock to Curaleaf and settlement of this commitment is limited to such contingent issuance of shares and is not settable in cash or any other form of consideration.

Contingencies

From time to time, the Company or its properties may be subject to claims and suits in the ordinary course of business. The Company’s lessees have agreed to indemnify, and are obligated to continue to indemnify, the Company against all liabilities arising from the operations of the properties and are further obligated to indemnify it against environmental or title problems affecting the real estate underlying such facilities. The Company is not aware of any pending or threatened litigation that, if resolved against the Company, would have a material adverse effect on its consolidated financial condition, results of operations or cash flows.

Note 11 — Subsequent events

Subsequent events have been evaluated through August 31, 2020, the date the financial statements were issued.

On July 13, 2020, the Company disposed of the Winslow, NJ property as the tenant exercised its fixed price purchase option. The Company expects to recognize a loss of approximately $0.1 million in the third quarter of 2020 related to this disposition.

On July 13, 2020, the Company also amended the master lease for the Webster, MA property. Under the terms of the amended lease, the Company agreed to fund up to $13.8 million for tenant improvements at the Webster, MA property. The additional funds advanced under this amendment will yield rent at 12% annually with annual escalators. At closing, the Company funded approximately $5.4 million under this agreement. If the entire $13.8 million commitment is funded by the Company, the lease maturity resets for 15 years from the date of final funding. If the Company does not fully fund the $13.8 million commitment within one year of the lease amendment date, the tenant will have the option to purchase the property at the Company’s total invested costs. We are still evaluating the accounting impact of this lease amendment.

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Report of Independent Registered Public Accounting Firm

The Board of Directors and Stockholders
Freehold Properties, Inc.
Las Vegas, Nevada

Opinion on the Consolidated Financial Statements

We have audited the accompanying consolidated balance sheet of Freehold Properties, Inc. (the “Company”) as of December 31, 2019, the related consolidated statements of operations, stockholders’ equity, and cash flows for the period from April 23, 2019 (inception) through December 31, 2019 and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2019, and the results of its operations and its cash flows for the period from April 23, 2019 (inception) through December 31, 2019, in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

The consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB and in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. Our audit included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audit provides a reasonable basis for our opinion.

/s/ BDO USA, LLP

We have served as the Company’s auditor since 2019.

Nashville, Tennessee
January 23, 2020

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Freehold Properties, Inc.

Consolidated Balance Sheets
(In thousands, except share amounts)

	December 31, 2019
Assets
Real Estate:
Land		$	5,094
Buildings, improvements and equipment			29,900
Total real estate			34,994
Less accumulated depreciation			(661)
Total real estate, net			34,333
Cash			1,477
Mortgage note receivable			3,876
Other assets, net			805
Total assets		$	40,491
Liabilities and Stockholders’ Equity
Liabilities:
Accounts payable and accrued liabilities		$	2,845
Deferred revenue			260
Total liabilities			3,105
Commitments and contingencies
Stockholders’ Equity:
Preferred stock, $0.0001 par value, 50,000 authorized, 125 shares issued and outstanding			—
Common stock, $0.0001 par value, 450,000 authorized, 4,695 shares issued and outstanding			—
Additional paid in capital			38,359
Accumulated deficit			(972)
Dividends declared			(1)
Total Stockholders’ Equity			37,386
Total Liabilities and Stockholders’ Equity		$	40,491

See accompanying notes to the consolidated financial statements.

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Freehold Properties, Inc.

Consolidated Statement of Operations
(In thousands, except per share amounts)

	For the period from April 23, 2019 (inception) through December 31, 2019
Revenues
Rental income		$	1,115
Interest on mortgage note receivable			90
Total revenues			1,205
Expenses
General and administrative			1,455
Depreciation and amortization			663
Transaction costs			59
Total operating expenses			2,177
Net loss		$	(972)
Less: preferred stock dividends			(1)
Net loss attributable to common stockholders		$	(973)
Net loss per share
Basic and diluted		$	(0.21)
Weighted average common shares outstanding
Basic and diluted			4,592

See accompanying notes to the consolidated financial statements.

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Freehold Properties, Inc.

Consolidated Statement of Stockholders’ Equity
(In thousands)

	Series A Preferred Stock					Common Stock					Additional Paid in Capital			Accumulated Deficit			Dividends Declared			Total
	Shares		Par Value			Shares		Par Value			Additional Paid in Capital			Accumulated Deficit			Dividends Declared			Total
Balance at April 23, 2019 (inception)		—		$	—		—		$	—		$	—		$	—		$	—		$	—
Issuance of common stock, net of offering costs		—			—		9,695			1			38,228			—			—			38,229
Common stock redemption		—			—		(5,000)			(1)			—			—			—			(1)
Issuance of preferred stock, net of offering costs		—			—		—			—			111			—			—			111
Stock-based compensation		—			—		—			—			20			—			—			20
Dividends to preferred stockholders		—			—		—			—			—			—			(1)			(1)
Net loss		—			—		—			—			—			(972)			—			(972)
Balance at December 31, 2019		—		$	—		4,695		$	—		$	38,359		$	(972)		$	(1)		$	37,386

See accompanying notes to the consolidated financial statements.

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Freehold Properties, Inc.

Consolidated Statement of Cash Flows
(In thousands)

	For the period from April 23, 2019 (inception) through December 31, 2019
Operating Activities
Net loss		$	(972)
Adjustments to reconcile net loss to net cash provided in operations:
Depreciation and amortization			663
Stock-based compensation			20
Changes in operating assets and liabilities:
Other assets			(783)
Deferred revenue			260
Accounts payable and accrued liabilities			1,287
Net cash provided by operating activities			475
Investing Activities
Acquisitions of real estate			(32,158)
Investment in mortgage note receivable			(3,876)
Acquisitions of corporate property			(24)
Net cash used in investing activities			(36,058)
Financing Activities
Proceeds from sale of common shares, net of offering costs			36,950
Proceeds from sale of Series A preferred stock, net of offering costs			111
Dividends paid on Series A preferred stock			(1)
Net cash provided by financing activities			37,060
Increase in cash and cash equivalents			1,477
Cash and cash equivalents at beginning of period			—
Cash and cash equivalents at end of period		$	1,477
Supplemental Cash Flow Information
Real estate acquired via issuance of common stock		$	2,836
Invoices accrued for offering costs		$	1,558

See accompanying notes to the consolidated financial statements.

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FREEHOLD PROPERTIES, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements
December 31, 2019

Note 1 — Organization and Nature of Business

Freehold Properties Operating Partnership, LP (the “Operating Partnership”), a Nevada limited partnership, was formed on April 23, 2019. Freehold Properties, Inc. (the “Company”), which was incorporated in the state of Maryland on June 24, 2019, was formed as a holding company for the Operating Partnership. The Company is an internally managed company focusing on the purchase, development and leasing of specialized agricultural, industrial and retail cannabis properties. The Company was initially capitalized on August 23, 2019 when 5,000,000 shares of its common stock were issued to its founders for total cash consideration of $1,100. The Company did not commence operations until the completion of its initial private placement on August 28, 2019. As of December 31, 2019, the Company had gross investments of $35.0 million in seven real estate properties and $3.9 million in one mortgage note receivable investment. The Company owns 100% of its properties.

The Company conducts its business through an umbrella partnership REIT, or UPREIT, structure, consisting of the Operating Partnership, and subsidiaries of the Operating Partnership. The Company’s wholly owned limited liability company, Freehold OP GP, LLC, is the sole general partner of the Operating Partnership. The Company presently owns all of the limited partnership units of the Operating Partnership (“OP units”). In the future, the Company may issue OP units to third parties in connection with property acquisitions, as compensation or otherwise. As the sole owner of the general partner of the Operating Partnership, the Company has the exclusive power to manage and conduct the Operating Partnership’s business, subject to certain limitations.

The Company intends to elect to be taxed and operate in a manner that will allow the Company to qualify as a real estate investment trust (“REIT”) for U.S. federal income tax purposes for the Company’s short taxable year ended December 31, 2019. To qualify as a REIT, the Company must meet certain organizational and operational requirements, including a requirement to distribute at least 90% of its annual REIT taxable income to its stockholders (which is computed without regard to the dividends paid deduction or net capital gain and which does not necessarily equal net income as calculated in accordance with generally accepted accounting principles (“GAAP”)).

Note 2 — Accounting Policies and Related Matters

Use of Estimates

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Principles of Consolidation

The consolidated financial statements include the accounts of the Company’s wholly owned subsidiaries. All material intercompany transactions and balances have been eliminated in consolidation.

Segment Reporting

Cash

Cash consists of highly liquid investments with original maturities of three months or less. The majority of the Company’s cash is held at major commercial banks which at times may exceed the Federal Deposit Insurance Corporation limit. The Company has not experienced any losses to date on invested cash.

Revenue Recognition — Leases of Real Estate

At the inception of a new lease arrangement, including new leases that arise from amendments, the Company assesses the terms and conditions to determine the proper lease classification. Currently, all of the Company’s lease arrangements are classified as operating leases. Rental income for operating leases is recognized on a straight-line basis over the lease term when collectability is probable, and the tenant has taken possession or controls the physical use of a leased asset. If collectability of the lease payment is not probable at the commencement date, then rental income will be limited to the lesser of the income recognized on a straight-line basis or cash basis. If the assessment of collectability changes after the commencement date, any difference between rental income that would have been recognized on a straight-line basis and cash basis must be recognized as an adjustment to rental income in the current period. As of December 31, 2019, we do not consider collectability to be probable for our long-term leases as a result of the uncertain regulatory environment in the United States relating to the cannabis industry, not based on creditworthiness of our tenants.

Revenue Recognition — Mortgage Notes Receivable

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Mortgage notes receivable are placed on non-accrual status at such time as management determines that collectability of contractual amounts is not reasonably assured. While on non-accrual status, mortgage notes receivable are either accounted for on a cash basis, in which income is recognized only upon receipt of cash, or on a cost-recovery basis, where cash receipts reduce the carrying value of the loan, based on management’s judgment of collectability. As of December 31, 2019, no mortgage notes receivable were on non-accrual status.

Allowances are established for loans based upon an estimate of probable losses on an individual basis if they are determined to be impaired. Loans are impaired when it is deemed probable that the Company will be unable to collect all amounts due on a timely basis in accordance with the contractual terms of the loan. The allowance is based upon management’s assessment of the borrower’s overall financial condition, resources and payment record; the prospects for support from any financially responsible guarantors; and, if appropriate, the net realizable value of any collateral. These estimates consider all available evidence including, as appropriate, the present value of the expected future cash flows discounted at the loan’s effective interest rate, the fair value of collateral, general economic conditions and trends, historical and industry loss experience, and other relevant factors. At December 31, 2019, the Company had no allowance for loan losses.

Commitment, origination and other fees from lending activities are recognized as interest income over the life of the related loan.

Allocation of Purchase Price of Acquired Real Estate

The Company records above-market and below-market in-place lease values, if any, which are based on the present value of the difference between (i) the contractual amounts to be paid pursuant to the in-place leases, and (ii) management’s estimate of fair market lease rates for the corresponding in-place leases, measured over a period equal to the remaining non-cancelable term of the lease, or, for below-market in-place leases, including any bargain renewal option terms. The Company amortizes any resulting capitalized above-market lease values as a reduction of rental income over the lease term. The Company amortizes any resulting capitalized below-market lease values as an increase to rental income over the lease term. As December 31, 2019, the Company did not have any above-market or below-market in-place leases.

Depreciation and amortization of real estate assets and liabilities is provided for on a straight-line basis over the estimated useful lives of the assets:

	Building			28 to 42 years
	Improvements			6 to 14 years
	Equipment			5 to 8 years

Asset Impairment — Real Estate Properties

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Earnings Per Share

Income Taxes

Commencing with its taxable year ended December 31, 2019, the Company intends to be taxed as a REIT under the Internal Revenue Code of 1986, as amended (the “Code”). The Company intends at all times to maintain its qualification as a REIT under Sections 856 through 860 of the Code. The Company will not be subject to federal income tax provided that the Company qualifies to be taxed as a REIT for its taxable year ended December 31, 2019 and thereafter continues to maintain its qualification as a REIT and makes distributions to stockholders equal to or in excess of the Company’s taxable income.

Stock-Based Compensation

Organizational Costs

Organizational costs are expensed as incurred and were approximately $335,000 for the period ended December 31, 2019. Organizational costs are primarily recorded in general and administrative expense. Certain costs totaling $115,000 related to the formation of the Company, its initial equity offering, and identification of initial prospective acquisitions were funded by members of the Company’s management team. These costs were subsequently reimbursed to the respective management team members using proceeds from the equity offerings.

Deferred Costs

Fair Value Measurement

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•

Level 1 — quoted prices for identical instruments in active markets;

•

Level 3 — fair value measurements derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable.

If quoted market prices or inputs are not available, fair value measurements are based upon valuation models that utilize current market or independently sourced market inputs, such as interest rates, option volatilities, credit spreads and market capitalization rates. Items valued using such internally generated valuation techniques are classified according to the lowest level input that is significant to the fair value measurement. As a result, the asset or liability could be classified in either Level 2 or 3 even though there may be some significant inputs that are readily observable. Valuation techniques used by the Company include the use of third-party valuations and internal valuations, which may include discounted cash flow models. For the period ended December 31, 2019, the Company has recorded all acquisitions based on estimated fair values. The fair values were obtained from third-party appraisals based on comparable properties (using the market approach, which involved Level 3 inputs in the fair value hierarchy).

Recent Accounting Developments

In June 2016, the FASB issued ASU No. 2016-13, “Financial Instruments — Credit Losses (Topic 326),” which requires entities to measure all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions and reasonable and supportable forecasts. The standard also requires additional disclosures related to significant estimates and judgments used in estimating credit losses, as well as the credit quality and underwriting standards of an entity’s portfolio. Receivables arising from operating leases are outside the scope of this guidance and are accounted for under ASC 842. The amended guidance is effective for fiscal years, and interim periods within those years, beginning January 1, 2023 for emerging growth companies, with early adoption permitted. The Company is evaluating the impact of adopting this new accounting standard on the Company’s consolidated financial statements.

The Company early adopted ASU 2016-02, “Leases (Topic 842)” upon formation in 2019.

Note 3 — Real Estate and Mortgage Note Receivable

Real Estate

The Company made the following real estate acquisitions during the period from April 23, 2019 (inception) through December 31, 2019.

Initial Curaleaf Acquisitions

•

A cultivation/production facility in Webster, MA

•

A cultivation/production facility in Bellmawr, NJ

•

A retail dispensary in Bellmawr, NJ

•

A retail dispensary in Fort Pierce, FL

•

A retail dispensary in Daytona Beach, FL

•

A retail dispensary in Provincetown, MA

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Winslow, NJ Acquisition

The purchase price allocations for the Company’s real estate investment activity for the period of inception through December 31, 2019 are as follows (dollars in thousands):

	Total Purchase Price
Land		$	5,094
Buildings, improvements and equipment			29,900
Total real estate			34,994
Common stock issued			(2,836)
Total cash paid		$	32,158

Mortgage Note Receivable

On October 4, 2019, the Company entered into a real estate capital funding agreement with an operator to provide up to $28.8 million to expand a cultivation facility in Delavan, IL, secured by a mortgage note. Construction is expected to be completed in the second half of 2020. The Company has funded $3.9 million as of December 31, 2019. In the event that additional capital is not available to fund the remainder of this commitment, the balance will convert to an unsecured promissory note bearing interest at 8% annually and payment of principal and interest that will be payable monthly over a five-year amortization period.

The mortgage note bears interest at 12.75% annually, which escalates by 2.5% annually, and requires interest only payments until maturity. Interest payments are deferred through June 30, 2020 and all deferred interest payments will be repaid through June 30, 2021. Accrued interest receivable as of December 31, 2019 was $90,000 and is reflected in Other Assets in the consolidated balance sheet. The mortgage note receivable is secured by the operator’s leasehold interest in the property. In conjunction with entry into the mortgage note receivable, the operator also assigned as collateral their leasehold purchase option for the underlying real property to the Company, which may be exercised in the event of a default or at the Company’s option between January 1, 2021 through February 28, 2021. If the Company exercises the purchase option, the mortgage note receivable balance will be included in the lease basis used to determine rent. If the Company does not exercise the purchase option, the mortgage note receivable will remain outstanding and require interest only payments with a balloon payment of principal due on February 28, 2026.

Leasing operations

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Minimum rental payments due to the Company in future periods under operating leases that have non-cancelable terms extending beyond one year as of December 31, 2019, are as follows (dollars in thousands):

Year	Contractual Minimum Rent
2020		$	3,496
2021			3,598
2022			3,704
2023			3,812
2024			3,923
Thereafter			19,982
Total		$	38,515

Concentrations of Credit Risks

For the period ended December 31, 2019, 93% of our revenues were derived from subsidiaries of Curaleaf, which guarantees the lease payments for each of the leases for the Company’s seven real estate properties.

The following table contains information regarding the geographic concentration of the properties in the Company’s real estate portfolio as of December 31, 2019, which includes percentage of rental income for the period ended December 31, 2019 (dollars in thousands):

State	Number of Properties		Gross Investment			% Total Real Estate Property Investments		% of Rental Income for the period ended December 31, 2019
New Jersey		3		$	20,740		59.3%		57.0%
Massachusetts		2			10,814		30.9%		32.6%
Florida		2			3,440		9.8%		10.4%
		7		$	34,994		100.0%		100.0%

Note 4 — Other Assets

Items included in Other Assets on the Company’s consolidated balance sheet as of December 31, 2019 are detailed in the table below (dollars in thousands):

	December 31, 2019
Prepaid assets		$	235
Deferred offering costs			180
Deferred acquisition costs			266
Mortgage interest receivable			90
Other, net			34
		$	805

Note 5 — Incentive Plan

The Company’s Equity Incentive Plan (the “Plan”) provides for the grant of stock options, share awards (including restricted common stock and restricted stock units), stock appreciation rights, dividend equivalent rights, performance awards, annual incentive cash awards and other equity-based awards. The Board of Directors reserved 2,500,000 shares of common stock for issuance pursuant to the Plan, of which 2,189,856 shares of common stock were available for potential future issuance as of December 31, 2019.

Restricted Stock

Effective October 30, 2019, the Company granted 21,500 restricted shares of common stock to its non-employee directors as part of the annual director compensation, which will vest ratably on each of the first

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three anniversaries of the date of grant, subject to the directors’ continued service on the Company’s board of directors through such dates and certain exceptions. The total value of these awards is calculated to be $0.2 million.

On December 31, 2019, the Company granted 23,750 restricted shares of common stock to an executive, all of which will vest on the six-year anniversary of the grant date, subject to the executive’s continued service to the Company and certain exceptions. The total value of this award is calculated to be $0.2 million.

For the period from April 23, 2019 (inception) through December 31, 2019, compensation expense resulting from the amortization of restricted shares of common stock grants was approximately $20,000.

Alignment of Interest Program

The Company’s Alignment of Interest Program allows eligible employees and non-employee directors to elect to receive restricted shares of common stock issued under the Plan subject to long-term vesting in lieu of their cash compensation. The number of shares issued will be increased through a Company match depending on the length of the vesting period selected. The employees’ vesting period choices are: two years for a 33% match; four years for a 66% match; and six years for a 100% match. The directors’ vesting period choices are: one year for a 20% match; two years for a 40% match; and three years for a 60% match. Restricted shares of common stock issued under the Alignment of Interest Program are generally subject to cliff vesting periods varying from one to six years beginning on the date of issue. If a recipient voluntarily terminates his or her relationship with the Company or is terminated for cause before the end of the vesting period, the shares are forfeited, at no cost to the Company. The Company recognizes the impact of forfeitures as they occur. Once restricted shares of common stock have been issued, the recipient has the right to receive dividends and the right to vote the shares. On December 31, 2019, the Company issued 264,894 restricted shares of common stock to our directors and employees through the Alignment of Interest Program. The total value of these awards is calculated to be $2.7 million.

A total of 310,144 restricted shares of common stock were issued under the Plan during the period from April 23, 2019 (inception) through December 31, 2019 at a weighted average grant date fair value of $10.00 per restricted share of common stock. The remaining unrecognized cost from stock-based awards at December 31, 2019 is $3.1 million.

Note 6 — Income taxes

The Company intends to elect to be taxed and to operate in a manner that will allow it to qualify as a REIT for U.S. federal income tax purposes commencing with the Company’s short taxable year ended December 31, 2019. To qualify as a REIT, the Company must meet a number of organizational and operational requirements, including a requirement to distribute at least 90% of the Company’s taxable income to its stockholders. As a REIT, the Company generally will not be subject to U.S. federal income tax if it distributes 100% of its taxable income, determined without regard to the deduction for dividends paid and excluding net capital gains, to its stockholders and satisfies certain other requirements. Income tax is paid directly by the Company’s stockholders on the dividends distributed to them. If the Company’s taxable income exceeds its dividends in a tax year, REIT tax rules allow the Company to designate dividends from the subsequent tax year in order to avoid current taxation on undistributed income. If the Company fails to qualify as a REIT in any taxable year, it will be subject to U.S. federal income taxes at regular corporate rates, and it would be precluded from qualifying for treatment as a REIT until the fifth calendar year following the year in which it failed to qualify as a REIT.

Note 7 — Equity

Common stock

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in reliance upon exemptions from registration provided by Section 4(a)(2) of the Securities Act of 1933, as amended (the “Securities Act”), and Regulation D thereunder. Subsequently, on September 27, 2019, the Company sold an aggregate of 850,000 shares of common stock, at a price per share of $10.00, to certain institutional and individual investors, in reliance upon exemptions from registration provided by Section 4(a)(2) of the Securities Act and Regulation D thereunder. The aggregate net proceeds to the Company from these transactions, after deducting paid and accrued offering expenses of $2.4 million, were approximately $38.2 million. In conjunction with these transactions, the initial 5,000,000 shares of common stock issued to the co-founders were repurchased from the co-founders at the initial purchase price of $1,100.

Preferred stock

Note 8 — Net Loss per share

The Company applies the two-class method for determining earnings per common share as its outstanding restricted common stock with non-forfeitable dividend rights are considered participating securities. The following table sets forth the computation of basic and diluted earnings per common share for the period from April 23, 2019 (inception) through December 31, 2019 (dollars in thousands, except per share amounts):

	For the period from April 23, 2019 (inception) through December 31, 2019
Numerator:
Net loss		$	(972)
Preferred stock dividends			(1)
Net loss attributable to common stockholders used to compute net loss per share			(973)
Denominator
Basic and diluted weighted average common shares			4,592
Basic and diluted earnings per common share		$	(0.21)

The effects of restricted shares of common stock were excluded from the calculation of diluted net loss per share for the period from April 23, 2019 (inception) through December 31, 2019 because their effects were not dilutive.

Note 9 — Fair Value of Financial Instruments

Financial Assets and Liabilities Not Carried at Fair Value

The carrying amounts of cash and cash equivalents, receivables, and accounts payable and accrued liabilities are reasonable estimates of their fair value as of December 31, 2019 due to the short-term nature of these assets and liabilities. The fair value of the Company’s mortgage note receivable as of December 31, 2019 is estimated by using Level 2 inputs such as discounting the estimated cash flows using current market rates which similar loans would be made to borrowers with similar credit ratings and for the same remaining maturities.

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December 31, 2019, the estimated fair value of the mortgage note receivable is considered to be equal to its carrying value since the Company originated the mortgage note receivable in October 2019.

Note 10 — Commitments and Contingencies

Commitments

In conjunction with the purchase-leaseback transaction with Curaleaf discussed in Note 3, the Company agreed to a provision whereby the Company, contingently, may issue additional common equity shares to Curaleaf. This contingent issuance is dependent on when and if a compensatory restricted pool of common shares is approved by the Company’s compensation committee and granted to management and founding advisors to the Company immediately subsequent to the current initial round of equity funding. As of the date of this report, the necessary contingencies have not been met that would compel issuance of the restricted common shares to Curaleaf and settlement of this commitment is limited to such contingent issuance of shares and is not settable in cash or any other form of consideration.

Contingencies

Note 11 — Subsequent events

Subsequent events have been evaluated through January 23, 2020, the date the financial statements were issued.

On January 7, 2020, the Company funded an additional $0.5 million on the mortgage note receivable for the property in Delavan, IL.

On January 13, 2020, the Company sold an aggregate of 300,000 shares of common stock, at a price per share of $10.00, to an institutional investor in reliance upon exemptions from registration provided by Section 4(a)(2) of the Securities Act and Regulation D thereunder. The aggregate net proceeds to the Company from this transaction, after deducting estimated offering expenses of $0.2 million, was approximately $2.8 million.

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Freehold Properties, Inc.

Common Stock

PROSPECTUS

Until , 2020 (the 25 days after the date of this prospectus), all dealers that effect transactions in shares of our common stock, whether or not participating in this offering, may be required to deliver a prospectus. This is in addition to a dealers’ obligation to deliver a prospectus when acting as an underwriter and with respect to an unsold allotment or subscription.

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PART II
INFORMATION NOT REQUIRED IN PROSPECTUS

Item 31.

Other Expenses of Issuance and Distribution.

The following table sets forth the expenses (other than underwriting discounts and commissions) we will incur in connection with the issuance and distribution of the securities to be registered pursuant to this registration statement. All amounts other than the SEC registration fee, FINRA filing fee, listing fee and OTCQX listing fee have been estimated.

SEC registration fee	$	*
FINRA filing fee		*
listing fee		*
OTCQX listing fee		*
Printing and mailing expenses		*
Legal fees and expenses		*
Accounting fees and expenses		*
Transfer agent fees		*
Miscellaneous		*
Total	$	*

To be provided by amendment.

Item 32.

Sales to Special Parties.

The information set forth in Item 33 is incorporated herein by reference.

Item 33.

Recent Sales of Unregistered Securities

On August 23, 2019, the Company sold 5,000,000 shares of our common stock in connection with the initial capitalization of the Company to the co-founders at the initial purchase price of $1,100 and on August 28, 2019, were subsequently repurchased from the co-founders at the initial purchase price, in reliance upon exemptions from registration provided by Section 4(a)(2) of the Securities Act of 1933, as amended (the “Securities Act”) and Regulation D thereunder.

On September 27, 2019, the Company sold an aggregate of 850,000 shares of common stock, at a price per share of $10.00, to certain institutional and individual investors, in reliance upon exemptions from registration provided by Section 4(a)(2) of the Securities Act and Regulation D thereunder.

The aggregate net proceeds to the Company from the issuance on August 28, 2019, September 13, 2019 and September 27, 2019 were approximately $38.2 million.

On December 20, 2019, the Company sold 125 shares of Series A Preferred Stock for $1,000 per share to “accredited investors,” as defined under Rule 501 of the Securities act, with Iroquois Capital Advisors, LLC acting as the placement agent, in reliance upon exemptions from registration provided by Section 4(a)(2) of the Securities Act and Regulation D thereunder. The aggregate placement fee was $12,500, and net proceeds to the Company were approximately $0.1 million.

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In 2019, the Company issued an aggregate of 310,144 restricted shares of common stock to the its directors, executive officers and certain other employees under the Company's Equity Incentive Plan in reliance upon exemptions from registration under Section 4(a)(2) of the Securities Act and Rule 701 thereunder.

Compass Point Research & Trading, LLC provided advisory services in connection with the Company's private placements described above for which the Company paid an advisory fee of $400,000. In satisfaction of a portion of the advisory fee, on January 7, 2020, the Company issued 30,000 shares of common stock, at a price per share of $10.00, in reliance upon exemptions from registration provided by Section 4(a)(2) of the Securities Act and Regulation D thereunder.

Skyway Capital Markets, LLC (“Skyway”) acted as placement agent in connection with certain of the Company’s private placements described above, and the Company paid an aggregate placement fee of $1,840,000 to affiliates of Skyway. In satisfaction of a portion of the aggregate placement fee, on January 28, 2020, the Company issued 27,800 shares of common stock to affiliates of Skyway, at a price per share of $10.00, in reliance upon exemptions from registration provided by Section 4(a)(2) of the Securities Act and Regulation D thereunder.

On March 31, 2020, the Company issued an aggregate of 170,234 performance-vesting restricted stock units and an aggregate of 144,500 restricted shares of common stock to its executives officers and certain other employees under the Company's Equity Incentive Plan in reliance upon exemptions from registration under Section 4(a)(2) of the Securities Act and Rule 701 thereunder.

Item 34.

Indemnification of Directors and Officers.

Maryland law permits a Maryland corporation to include in its charter a provision eliminating the liability of its directors and officers to the corporation and its stockholders for money damages except for liability resulting from actual receipt of an improper benefit or profit in money, property or services or active and deliberate dishonesty that was established by a final judgment and was material to the cause of action. Our charter contains a provision that eliminates the liability of our directors and officers to the maximum extent permitted by Maryland law.

The MGCL requires us (unless our charter provides otherwise, which our charter does not) to indemnify a director or officer who has been successful, on the merits or otherwise, in the defense of any proceeding to which he or she is made a party by reason of his or her service in that capacity. The MGCL permits us to indemnify our present and former directors and officers, among others, against judgments, penalties, fines, settlements and reasonable expenses actually incurred by them in connection with any proceeding to which they may be made or threatened to be made a party by reason of their service in those or other capacities unless it is established that:

•

act or omission of the director or officer was material to the matter giving rise to the proceeding and (i) was committed in bad faith or (ii) was the result of active and deliberate dishonesty;

•

the director or officer actually received an improper personal benefit in money, property or services; or

•

in the case of any criminal proceeding, the director or officer had reasonable cause to believe that the act or omission was unlawful.

Under the MGCL, we may not indemnify a director or officer in a suit by us or in our right in which the director or officer was adjudged liable to us or in a suit in which the director or officer was adjudged liable on the basis that personal benefit was improperly received. Nevertheless, a court may order indemnification if it determines that the director or officer is fairly and reasonably entitled to indemnification, even though the director or officer did not meet the prescribed standard of conduct or was adjudged liable on the basis that personal benefit was improperly received. However, indemnification for an adverse judgment

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in a suit by us or in our right, or for a judgment of liability on the basis that personal benefit was improperly received, is limited to expenses.

In addition, the MGCL permits us to advance reasonable expenses to a director or officer upon our receipt of:

•

written affirmation by the director or officer of his or her good faith belief that he or she has met the standard of conduct necessary for indemnification by us; and

•

a written undertaking by the director or officer or on the director’s or officer’s behalf to repay the amount paid or reimbursed by us if it is ultimately determined that the director or officer did not meet the standard of conduct.

Our charter authorizes us to obligate ourselves and our bylaws obligate us, to the fullest extent permitted by Maryland law in effect from time to time, to indemnify and, without requiring a preliminary determination of the ultimate entitlement to indemnification, pay or reimburse reasonable expenses in advance of final disposition of a proceeding to:

•

any present or former director or officer who is made or threatened to be made a party to or witness in the proceeding by reason of his or her service in that capacity; or

•

any individual who, while a director or officer of our company and at our request, serves or has served as a director, officer, partner, manager, member or trustee of another corporation, REIT, partnership, limited liability company, joint venture, trust, employee benefit plan or any other enterprise and who is made or threatened to be made a party to or witness in the proceeding by reason of his or her service in that capacity.

Our charter and bylaws also permit us to indemnify and advance expenses to any individual who served any predecessor of our company, in any of the capacities described above and any employee or agent of our company or a predecessor of our company.

We have entered into indemnification agreements with each of our executive officers and directors that provide for indemnification to the maximum extent permitted by Maryland law.

Insofar as the foregoing provisions permit indemnification of directors, officers or persons controlling us for liability arising under the Securities Act, we have been informed that, in the opinion of the SEC, this indemnification is against public policy as expressed in the Securities Act and is therefore unenforceable.

Item 35.

Treatment of Proceeds from Stock Being Registered.

None.

Item 36.

Financial Statements and Exhibits

(a)

Financial Statements.

See page F-1 for an index to the financial statements included in the registration statement.

(b)

Exhibits:

The list of exhibits filed with or incorporated by reference in this Registration Statement is set forth in the Exhibit Index prior to the signature page herein.

Item 37.

Undertakings

(a) Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the SEC such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities

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being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue.

(b) The undersigned registrant hereby undertakes to provide to the underwriters at the closing, as specified in the underwriting agreement, certificates in such denomination and registered in such names as required by the underwriters to permit prompt delivery to each purchaser.

(i) For purposes of determining any liability under the Securities Act, the information omitted from the form of prospectus filed as part of this registration statement in reliance upon Rule 430A and contained in a form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed to be part of this registration statement as of the time it was declared effective.

(ii) For the purposes determining any liability under the Securities Act, each post-effective amendment that contains a form of prospectus shall be deemed to be a new registration statement relating to the securities offered herein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.

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EXHIBIT INDEX

The following exhibits are included in this registration statement on Form S-11 (and are numbered in accordance with Item 601 of Regulation S-K).

Exhibit Number			Exhibit Document
1.1*			Form of Underwriting Agreement.
3.1*			Articles of Amendment and Restatement.
3.2*			Articles of Amendment designating the terms of Freehold Properties, Inc.’s 12.5% Series A Preferred Stock.
3.3*			Amended and Restated Bylaws.
5.1*			Opinion of Morrison & Foerster LLP.
8.1*			Opinion of Morrison & Foerster LLP.
10.1*			First Amended and Restated Agreement of Limited Partnership of Freehold Properties Operating Partnership, LP, dated September , 2020.
10.2†*			Freehold Properties, Inc. Equity Incentive Plan.
10.3†*			Freehold Properties, Inc. Alignment of Interest Program.
10.4†*			Form of Restricted Stock Unit Award Agreement.
10.5†*			Form of Restricted Stock Award Agreement for Officers.
10.6†*			Form of Restricted Stock Award Agreement for Officers under the Alignment of Interest Program
10.7†*			Form of Combined Restricted Stock and Restricted Stock Unit Award Agreement under the Alignment of Interest Program
10.8†*			Form of Restricted Stock Award Agreement for Directors.
10.9†*			Form of Restricted Stock Award Agreement for Directors under the Alignment of Interest Program.
10.10†*			Employment Agreement, dated as of October 30, 2019, by and among Freehold Properties, Inc., Freehold Properties Operating Partnership, LP and Donald C. Brain.
10.11†*			Employment Agreement, dated as of October 30, 2019, by and among Freehold Properties, Inc., Freehold Properties Operating Partnership, LP and Jeffrey C. Walraven.
10.12†*			Employment Agreement, dated as of October 30, 2019, by and among Freehold Properties, Inc., Freehold Properties Operating Partnership, LP and Louis Yi.
10.13*			Registration Rights Agreement, dated August 28, 2019, by and among Freehold Properties, Inc., the persons and entities listed on Exhibit A thereto and Affiliated Holders as defined in the agreement.
10.14*			First Amendment to Registration Rights Agreement, dated September 27, 2019, by and among Freehold Properties, Inc. and each of the other parties set forth on the signature pages thereto.
10.15*			Investor Rights Agreement, dated as of August 28, 2019, by and among Freehold Properties, Inc. and each of the entities listed on Exhibit A thereto.
10.16†*			Form Indemnification Agreement by and between Freehold Properties, Inc. and each of its directors and officers listed on Schedule A thereto.
10.17*			Purchase and Sale Agreement, dated as of August 29, 2019, by and between Focused Investment Partners LLC and FHP of Bellmawr-Harding NJ — CP, LLC, FHP of Webster MA — CP, LLC, FHP of Daytona FL — D, LLC and FHP of Fort Pierce FL — D, LLC.
10.18*			Real Estate Contribution Agreement, dated as of August 29, 2019, by and between Focused Investment Partners LLC and FHP of Bellmawr-Creek NJ — D, LLC and FHP of Provincetown MA — D, LLC.

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Exhibit Number			Exhibit Document
10.19*			Master Lease, dated as of August 29, 2019, by and between FHP of Daytona FL — D, LLC and Curaleaf Florida, LLC.
10.20*			Master Lease, dated as of August 29, 2019, by and between FHP of Fort Pierce FL — D, LLC and Curaleaf Florida, LLC.
10.21*			Master Lease, dated as of August 29, 2019, by and between FHP of Provincetown MA — D, LLC and Curaleaf Massachusetts, Inc.
10.22*			Master Lease, dated as of August 29, 2019, by and between FHP of Webster MA — CP, LLC and Curaleaf Massachusetts, Inc.
10.23*			Master Lease, dated as of August 29, 2019, by and between FHP of Bellmawr-Creek NJ — D, LLC and Focused Investment Partners LLC.
10.24*			Master Lease, dated as of August 29, 2019, by and between FHP of Bellmawr-Harding NJ — CP, LLC and Focused Investment Partners LLC.
16.1			Letter of BDO USA, LLP to the Securities and Exchange Commission
21.1*			List of subsidiaries.
23.1*			Consent of BDO USA, LLP.
23.2*			Consent of Morrison & Foerster LLP (included in Exhibit 5.1).
23.3*			Consent of Morrison & Foerster LLP (included in Exhibit 8.1).
24.1			Power of Attorney (included on the signature page to this registration statement).

To be filed by amendment.

†

Indicates management contract or compensatory plan.

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SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, as amended, the registrant certifies that it has reasonable grounds to believe that it meets all the requirements for filing on Form S-11 and has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in Las Vegas, state of Nevada, on the day of , 2020.

				FREEHOLD PROPERTIES, INC.
				By: Donald C. Brain Chief Executive Officer

Pursuant to the requirements of the Securities Act of 1933, as amended, this Registration Statement has been signed by the following persons in the capacities and on the dates indicated.

NAME	CAPACITY	DATE
Donald C. Brain	Chief Executive Officer and Chairman (Principal Executive Officer)	, 2020
Jeffery C. Walraven	Chief Operating Officer and Director	, 2020
Louis S. Yi	Chief Financial Officer (Principal Financial Officer)	, 2020
Benjamin H. Hendren	Senior Vice President and Chief Accounting Officer (Principal Accounting Officer)	, 2020
Randall L. Churchey	Director	, 2020
James G. Mueller	Director	, 2020
Lori B. Wittman	Director	, 2020

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Freehold Properties (FHP) DRSDraft registration statement