To qualify as a real estate investment trust (“REIT”), we are required to distribute annually 90% of our taxable net income. As long as we qualify as a REIT, we generally will not be subject to U.S. federal income tax on our taxable net income that we distribute to our shareholders.

REIT distributions to shareholders generally will be taxable as ordinary income. We may at times classify part of our distribution as long-term capital gain or as qualified dividend income. If we make a distribution that exceeds our taxable earnings, such distributions generally will be treated as a tax-free return of capital to the extent of such shareholder’s tax basis in its stock and as capital gain thereafter.

Shareholders will be notified of the proper tax characterization of our distributions by way of IRS Form 1099-DIV following the close of each tax year. Due to the complex nature of the applicable tax rules, we recommend that shareholders consult their tax advisors to ensure proper tax treatment of distributions received.