SHOPOFF PROPERTIES TRUST, INC.

Transcription

1 As filed with the Securities and Exchange Commission on January 21, 2009 Registration No UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C Post-Effective Amendment No. 2 to Form S-11 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 SHOPOFF PROPERTIES TRUST, INC. (Exact Name of Registrant as Specified in its Governing Instruments) 8951 Research Drive Irvine, California TSG-REIT (Address, Including Zip Code, and Telephone Number, including Area Code, of Registrant s Principal Executive Offices) William A. Shopoff, President and Chief Executive Officer Shopoff Properties Trust, Inc Research Drive Irvine, California TSG-REIT (Facsimile) (Name, Address, Including Zip Code, and Telephone Number, Including Area Code, of Agent for Service) Copies to: Mark Kelson, Esq. Renée E. Becker, Esq. Manatt, Phelps & Phillips, LLP W. Olympic Boulevard Los Angeles, California (310) (310) (Facsimile) Approximate date of commencement of proposed sale to the public: As soon as practicable after the effective date of this Registration Statement. 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. n 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. n 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. n If delivery of the prospectus is expected to be made pursuant to Rule 434, please check the following box. n 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 Commission, acting pursuant to said Section 8(a), may determine.

2 This Post-Effective Amendment No. 2 consists of the following: Supplement No. 1 dated January 21, 2009 to the Prospectus of the Company dated April 30, 2008, included herewith, which will be delivered as an unattached document along with the Prospectus dated April 30, The Registrant s final form of Prospectus, dated April 30, 2008, previously filed on April 30, 2008 and refiled herewith; Part II, included herewith; and Signatures, included herewith.

3 PROSPECTUS SUPPLEMENT DATED JANUARY 21, 2009 SHOPOFF PROPERTIES TRUST, INC. SUPPLEMENT NO. 1 DATED JANUARY 21, 2009 TO THE PROSPECTUS DATED APRIL 30, 2008 This prospectus supplement (this Supplement ) is part of, and should be read in conjunction with, the prospectus of Shopoff Properties Trust, Inc., dated August 29, 2007 (the Prospectus ), and as amended by Post-Effective Amendment No. 1 on April 30, Unless otherwise defined herein, capitalized terms used in this Supplement shall have the same meanings as set forth in the Prospectus. We have just commenced active operations. The purpose of this Supplement is to provide an update of events that have occurred since the date of our last amendment, including our initial acquisition of real estate, changes in the management compensation, a change in federal legislation with respect to taxation of real estate investment trusts, and the fact that the minimum offering of 1,700,000 shares has been sold. Name of Prospectus Section Supplement No. Page Number Prospectus Page Number I. Status of the Offering... 2 N/A II. Initial Acquisitions... 2 N/A III. Other Recent Developments... 4 N/A IV. Investor Suitability Standards i V. Questions and Answers About This Offering... 6 viii VI. Prospectus Summary VII. Risk Factors VIII. Estimated Use of Proceeds in This Offering IX. Investment Objectives and Criteria X. Management of Shopoff Properties Trust, Inc XI. Certain Relationships and Related Transactions XII. Management Compensation XIII. Prior Performance Summary XIV. Management s Discussion and Analysis of Financial Condition and Results of Operations XV. Stock Ownership XVI. Description of Capital Stock XVII. Important Provisions of Maryland General Corporation Law and Our Charter and Bylaws XVIII. Federal Income Tax Considerations XIX. Plan of Distribution XX. Where You Can Find Additional Information XXI. Miscellaneous N/A XXII. Exhibit A Subscription Agreement A-1toA-10

4 I. STATUS OF THE OFFERING We sold the minimum offering of 1,700,000 shares on August 29, 2008, at $9.50 per share. We are continuing the offering at $9.50 per share until a minimum of 2,000,000 shares are sold at $9.50 and then we will begin to sell shares at $10.00 per share. As of December 31, 2008, we had closed on the following sales of shares in the offering: Price Per Unit Number of Units Sold Gross Proceeds Proceeds Net of Organizational and Offering Expenses $ ,836,200 $17,443,900 $15,343,544 $ $ 0 $ 0 Total 1,836,200 $17,443,900 $15,343,544 Upon reaching the minimum offering of 1,700,000 shares on August 29, 2008, we reimbursed our sponsor for various organization and offering costs incurred in connection with the offering and due diligence costs related to properties not acquired. Upon breaking escrow, we reimbursed the sponsor a total of $2,673,000, comprised of $2,078,000 in organization and offering costs and $595,000 in acquisition expenses (due diligence costs) related to properties not acquired, paid for by the sponsor on our behalf. Subsequent to breaking escrow and through December 31, 2008, we have reimbursed our sponsor an additional $365,000, comprised of $22,000 in organizational and offering costs, $250,000 in acquisition expenses (due diligence costs) related to properties not acquired, and $93,000 in dues and subscription expenses paid for by our sponsor on our behalf. To reflect the actual organization and offering costs incurred at the minimum offering threshold, we modified the Organization and Offering Stage section of the Compensation Chart, on pages xi and 56 of the Prospectus, replacing 11.75% with 12.3%. We made a corresponding change in the Estimated Use of Proceeds of this Offering table on page 30 of the Prospectus. These changes are shown in this Supplement in Sections V (Questions and Answers About This Offering), VIII (Estimated Use of Proceeds in this Offering), and XII (Management Compensation). Also, to reflect the actual acquisition expenses (due diligence costs) related to properties evaluated for acquisition but not acquired, we modified the Acquisition Stage section of the Compensation Chart, on pages xi and 56 of the Prospectus, to clarify that the reference to 0.5% as the reimbursement amount is an estimate and that the actual amount of acquisition expenses cannot currently be determined. This change is shown in this Supplement in Sections V (Questions and Answers About This Offering), VIII (Estimated Use of Proceeds in this Offering), and XII (Management Compensation). In addition, we amended the Advisory Agreement to make this corresponding change. The amendment to the Advisory Agreement is filed as Exhibit 10.4 to our Post-Effective Amendment No. 2. II. INITIAL ACQUISITIONS A. Winchester Hills Project (Pulte Home): On December 31, 2008, our affiliate, SPT-SWRC, LLC, a Delaware limited liability company formed for the purpose of this and other acquisitions ( SPT-SWRC ), closed on the acquisition of certain parcels of land located in an unincorporated area of Southwest Riverside County, California (the Winchester Hills Project ), pursuant to a Purchase and Sale Agreement and Escrow Instructions (the Pulte Purchase Agreement ), dated December 23, 2008, with Pulte Home Corporation, a Michigan corporation ( Pulte Home ). SPT-SWRC, LLC is a wholly owned subsidiary of our affiliate, Shopoff Partners, L.P. The purchase price of the Winchester Hills Project pursuant to the Pulte Purchase Agreement was $2,500,000. The Pulte Purchase Agreement was amended by that certain First Amendment to Purchase and Sale Agreement and Escrow Instructions, dated December 23, 2008, which, among other things, lowered the purchase price of the property from $2,500,000 to $2,000,000 and which memorialized certain agreements and understandings requiring SPT-SWRC to reconvey certain properties following the December 31, 2008 Winchester Hills Project closing, pursuant to an existing reconveyance agreement to which the property was subject. These reconveyances were completed immediately after the acquisition. The Pulte Purchase 2

5 Agreement was further amended by that certain Second Amendment to Purchase and Sale Agreement and Escrow Instructions, dated December 30, 2008, which allocated the payment of legal fees and provided for the recording of a memorandum pertaining to the reconveyed properties. The Winchester Hills Project is within the Winchester Hills Specific Plan, which is a master plan for more than 5,600 homes, with parks, schools, and commercial uses. The Winchester Hills Project includes 244 rough graded 7200 square foot residential lots and a graded superpad with entitlements for 225 attached residential condominium units, for a total of 469 graded residential units. The property is situated on the northwest corner of the intersection of Newport Road/Domenigoni Parkway and Leon Road, north of Temecula and just east of Menifee. The Winchester Hills Project has entitlements in place and has water, sewer, and backbone street improvements. The base tax rate is % before special assessments. Annual taxes, based on the base rate, are $22,279. In addition, special assessments will be added to the base rate in the amount of approximately $70,000 annually. Because we do not intend to make improvements to the property, there will be no taxes related to improvements and there will be no components upon which depreciation could be taken. We believe the Winchester Hills Project is adequately covered by insurance. Other land owners within the Winchester Hills Specific Plan have projects similar to ours, although the sizes of their projects vary. We are one of the first projects in the path of an overall larger infrastructure development area. This means that our project can be developed and/or marketed sooner than the projects of a majority of our competitors. Particular risks associated with this property are that it falls within a documented flood plain, it has a shallow ground water table which will require that the site be raised, and historically, the overall development area within which our project is located has experienced corrosion. Pursuant to the Pulte Purchase Agreement, SPT-SWRC has agreed to replace existing subdivision improvement agreements and related bonds within 180 days of the closing and has executed a deed of trust in the amount of $4,692,800 securing this obligation. This deed of trust also secures SPT- SWRC s obligation to record Tract Map No within 180 days of the closing. Pulte Home has the right of first refusal to repurchase the Winchester Hills Project, subject to certain terms and conditions and the our approval of such repurchase. The compensation received by our affiliated advisor, Shopoff Advisors, and its affiliates upon consummation of this transaction is as follows: (i) an acquisition fee equal to 3% of the contract purchase price, or $60,000, and (ii) monthly asset management fees equal to 1/12 of 2% of the total contract price, or $3,333 per month, plus capitalized entitlement and project related costs, for the first year, and then based on the appraised value of the asset after one year. In addition, Shopoff Advisors will be reimbursed for acquisition expenses in the amount of approximately $30,000. The Winchester Hills Project is not an income-producing property. We have no current intent to develop the Winchester Hills Project. In accordance with our business model, we intend to hold the property for longterm investment until market conditions warrant a sale, or multiple phased sales, which we anticipate will occur in the next four years. SPT-SWRC paid an initial deposit of $100,000 to Pulte Home on December 23, 2008 and paid the balance of the purchase price solely from the proceeds of our initial public offering. Pulte Home is not affiliated with us or any of our affiliates. This description of the Pulte Purchase Agreement is qualified in its entirety by the terms of the Pulte Purchase Agreement filed as Exhibit 10.1 to our Current Report on Form 8-K filed on January 7, B. TSG Little Valley Project: Shopoff Advisors, L.P., a Delaware limited partnership and our advisor ( Shopoff Advisors ), entered into a Purchase and Sale Agreement and Joint Escrow Instructions (the TSG Purchase Agreement ), on September 30, 2008, to purchase certain parcels of land from TSG Little Valley, L.P., a California limited partnership ( TSG Little Valley ), consisting of 163 entitled, but unimproved, residential lots, located in the City of Lake Elsinore, County of Riverside, State of California (the TSG Little Valley Project ). The contract purchase price is $4,890,000. Shopoff Advisors paid an initial deposit of $1,000,000 on October 7, 3

6 2008. We intend to assign the TSG Purchase Agreement to a newly formed affiliate of ours prior to the closing of the transaction. We intend to finance the acquisition solely from the proceeds of our initial public offering. The closing of the purchase of the TSG Little Valley Project is contingent upon the execution of a separate purchase agreement with White Rock Acquisition Co., L.P., a Delaware limited partnership, to acquire certain parcels of land consisting of 356 entitled, but unimproved, residential lots and 2 entitled, but unimproved commercial lots, located in the City of Lake Elsinore, County of Riverside, State of California (collectively, the White Rock Project ). Our board of directors has approved the acquisition of the TSG Little Valley Project, subject to the concurrent acquisition of the White Rock Project. The parties are still in negotiations with respect to the acquisition of the White Rock Project. Accordingly, there can be no assurance that the acquisition of the TSG Little Valley Project will be consummated. The closing of the TSG Little Valley Project is currently set for January 30, If the purchase of the TSG Little Valley Project is consummated, the compensation to be received by Shopoff Advisors and its affiliates will be as follows: (i) an acquisition fee equal to 3% of the contract purchase price, or $146,700, and (ii) monthly asset management fees equal to 1 12 of 2% of the total contract price, or $8,150 per month, plus capitalized entitlement and project related costs, and then based upon the appraised value of the asset after one year. In addition, Shopoff Advisors will be reimbursed for acquisition expenses costs in the amount of $31,000. TSG GP, LLC, an affiliate of our sponsor, was formerly the general partner of TSG Little Valley. TSG GP, LLC withdrew as general partner and sold its 1% general partner interest in TSG Little Valley to Portfolio Partners, Inc., an unaffiliated entity, on July 1, Concurrently with the withdrawal of TSG GP, LLC as general partner, William and Cindy Shopoff, who are also our affiliates, withdrew as Class B limited partners of TSG Little Valley. Accordingly, the acquisition of the TSG Little Valley Project is not an affiliated transaction. This description of the TSG Purchase Agreement is qualified in its entirety by the terms of the TSG Purchase Agreement filed as Exhibit 10.1 to our Quarterly Report on Form 10-Q on November 14, III. OTHER RECENT DEVELOPMENTS A. Loans: 1. Aware Loan. On January 9, 2009, our affiliate SPT Real Estate Finance, LLC, a Delaware Limited Liability Company and a wholly owned subsidiary of our affiliate, Shopoff Partners, L.P. formed for the purpose of loan acquisitions ( SPT Real Estate Finance ), closed two separate loans to Aware Development Company, Inc., a California corporation ( Aware ). One loan was in the amount of $1,886,000 and one loan was in the amount of $414,000. The loans were made from the proceeds of the offering and pursuant to two secured notes, each dated January 9, 2009 (the Notes ). The Notes are secured by two separate Collateral Assignment and Pledge of Note, Deed of Trust and Loan Documents, each dated January 9, 2009 (collectively, Pledge Agreements ), by and between Aware and SPT Real Estate Finance, encumbering real property situated in the County of Riverside, California. Interest is payable on the Notes to SPT Real Estate Finance at a rate of 28% per annum and the principal amount of the Notes plus accrued interest are due and payable six months from the date of funding, or July 9, These Notes cannot be prepaid in whole or in part prior to such date, except in connection with a payoff by Aware of the underlying notes in favor of Vineyard Bank N.A., a national banking association (the Bank ), in accordance with the Pledge Agreements. This is a related party transaction. Prior to the closing, Aware had entered into two separate Note Purchase Agreements with Vineyard Bank (the Note Purchase Agreements ). Pursuant to the Note Purchase Agreements, Aware had agreed to purchase from the Bank two loans made by the Bank to Springbrook Investments, L.P., a California limited partnership ( Springbrook ), whose general partner is a California corporation of which the stock is 100% owned by The Shopoff Revocable Trust dated August 12, 2004 (the Trust ). William and Cindy Shopoff are the sole trustees of the Trust. William Shopoff is our president, chief executive officer and chairman of the board of directors. One of the two loans made by the Bank to Springbrook was in the original principal amount of $5,187,000 and one was in the original principal amount of $1,072,000 (as heretofore modified, collectively the Vineyard Loans ). 4

7 The following are additional material terms with respect to the Vineyard Loans: Aware agreed that, in the absence of additional defaults other than payment defaults, Aware would forbear from exercising its rights and remedies under the Vineyard Loans, including without limitation foreclosure, from the date January 9, 2009 through July 9, 2009 ( Forbearance Period ), in order to allow Springbrook time to attempt to refinance the Vineyard Loans. During the Forbearance Period, interest and other required payments under the Vineyard Loans will continue to accrue at the stated rate, and will be added to principal. At any time during the Forbearance Period, Aware shall accept, as payment in full under the Vineyard Loans, with respect to one note, the sum of $1,896,000 plus all accrued interest then due under the Notes, of which amount Springbrook shall cause to be paid $1,886,000 directly to SPT Real Estate Finance, and $10,000 to Aware and all other amounts directly to Lender and, with respect to the second note, the sum of $424,000 plus all accrued interest then due under the Notes, of which amount Springbrook shall cause to be paid $414,000 directly to SPT Real Estate Finance, and $10,000 to Aware and all other amounts directly to Lender. The commercial guaranties executed by William A. Shopoff, an individual, and William A. Shopoff and Cindy I. Shopoff, as Trustees of the Trust, in connection with the Vineyard Loans, have been released, and Aware has waived any and all right to recover under the same. This transaction was approved by a majority of our board of directors and a majority of our independent directors. This description of the transaction is qualified in its entirety by the terms of the Pledge Agreements and Notes filed as Exhibits 10.1, 10.2, 10.3, and 10.4 to our Current Report on Form 8-K Filed on January 15, Mesquite Venture Loan On September 30, 2008, SPT Real Estate Finance made a $600,000 loan to Mesquite Venture I, LLC, a Delaware limited liability company ( Mesquite Venture I ). The loan, which represented approximately 4.21% of our assets of $14,250,931 as of September 30, 2008, after payment of organization and offering expenses and other expenses was made pursuant to a Secured Note, dated September 30, 2008 (the Note ). The Note is secured by a Deed of Trust with Assignment of Rents, dated September 30, 2008, encumbering real property situated in the City of Mesquite in Clark County, Nevada. This property is also subject to a senior lien in favor of East West Bank in the amount of $3,681,000 and a subordinate lien in favor of Painted Hills Partners Limited Partnership in the amount of $5,400,000. Interest is payable on the Note at a rate of 14% per annum and the principal amount of the Note is due and payable nine months from the date of funding or June 30, This was not a related party transaction. B. Tax Legislation. Federal legislation, called the Housing Assistance Tax Act of 2008 ( HATA ), has increased the percentage of assets that may be held in taxable REIT subsidiaries from 20% to 25%. C. Monthly Marketing Fee. Shopoff Securities, Inc., the sole broker-dealer in this offering (the Broker- Dealer ), and The Shopoff Group, the sponsor of the Corporation (the Sponsor ), agreed that the Sponsor may, in its sole and absolute discretion, withhold payment of any portion of the monthly marketing fee to the extent that such payment would result in the Broker-Dealer receiving, at any given time, total underwriting compensation in excess of that which is permitted under the rules of the Financial Industry Regulatory Authority ( FINRA ). D. Stock Awards. The restricted stock awards set forth on Page 48 of the Prospectus were granted as of the date we reached the minimum offering amount. E. REIT Election. We will postpone our election of REIT status until our tax year

8 IV. INVESTOR SUITABILITY STANDARDS A. Page i of the Prospectus is hereby revised to add the following paragraphs: Oklahoma: individual income in excess of $200,000 in each of the two most recent years or joint income with that person s spouse in excess of $300,000 in each of those years and a reasonable expectation of reaching the same income level in the current year, or a minimum individual net worth, or joint net worth with that person s spouse, at the time of purchase of $1,000,000. Oregon: Natural investors who purchase stock pursuant to Oregon Registration Number after August 29, 2008, rather than pursuant to an exemption from registration provided by Oregon law, must have either: (1) a minimum net worth of $500,000 (exclusive of home, auto, and furnishings), or (2) a minimum annual gross income of $100,000 and a net worth of $250,000 (exclusive of home, auto, and furnishings). In addition, a natural investor s maximum investment in us and our affiliates cannot exceed 10% of the investor s net worth. Minnesota: Because this offering is not registered in Minnesota you must qualify for this investment based on the following higher suitability standards for subscribers residing in Minnesota: Investors must have an individual income in excess of $200,000 in each of the two most recent years or joint income with that person s spouse in excess of $300,000 in each of those years and a reasonable expectation of reaching the same income level in the current year; or a minimum individual net worth, or joint net worth with that person s spouse, at the time of purchase, exceeds $1,000,000. Alternatively, Minnesota investors may be institutional investors as defined in Sec. 80A.46 (13) (A) and related sections of the Minnesota Securities Act and rules, regulations and releases promulgated thereunder. V. QUESTIONS AND ANSWERS ABOUT THIS OFFERING A. Page viii The answer to the question How does a best efforts offering work? is replaced with the following paragraph to reflect that the minimum offering has been reached: A: When shares are offered to the public on a best efforts basis, the broker(s) dealer(s) participating in the offering are only required to use their best efforts to sell the shares and have no firm commitment or obligation to purchase any shares. Although we have sold the minimum number of shares required to continue the offering, we cannot guarantee that any minimum number of additional shares will be sold. B. Page ix The answer to the question What will you do with the money raised in this offering? is replaced as follows to clarify that properties acquired may be both partially improved or fully improved and to reflect that the minimum offering has been reached. A: We will use your investment proceeds to purchase undeveloped real estate, partially improved and improved residential and commercial properties, and real estate-related investments. We may also use some net proceeds from this offering to retire existing debt that we may assume when acquiring properties and to pay the fees and expenses due to Shopoff Advisors, Shopoff Securities, and their affiliates, as applicable. Real estate-related investments include, but are not limited to, (i) first mortgages, second mortgages or mezzanine loans, which we refer to collectively in this prospectus as mortgage loans (secured directly or indirectly by the same types of properties we may acquire directly), and (ii) preferred equity investments in corporations, partnerships or limited liability companies that own the same types of properties that we may acquire directly. We intend to have available for investment approximately 87.7% of the offering proceeds with which we will acquire undeveloped real estate, partially improved and improved residential and commercial properties, and real estate-related investments, and pay the fees and expenses of this offering and acquisition expenses and establish a reserve for working capital. Proceeds of this offering not invested in real estate and real estate-related investments, will be invested in short-term, highly liquid or other authorized investments. Such short-term investments will not earn significant returns, and we cannot guarantee how long it will take to fully invest the proceeds in real estate and real estate-related investments. 6

9 C. Page ix The answer to the question Do you currently own any real estate or any real estaterelated investments? is replaced with the following: A: Yes. Please see Section II INITIAL ACQUISITIONS and Section III.A. OTHER RECENT DEVELOPMENTS of this Supplement for a description of our investments and proposed investments. D. Page x The summary answers to the question What are the risks involved in an investment in our shares? is updated as follows to reflect that the minimum offering has been reached, that properties have been acquired, and that we have elected 2009 as our first tax year in which to elect REIT status: 1. Bullet point four. Neither we nor Shopoff Advisors have an operating history. Therefore, we may not be able to successfully and profitably operate our business. You will not have the opportunity to review the assets we acquire or the other investments we make with the proceeds from this offering in advance of the acquisition or investment being made. 2. Bullet point twelve. This offering is being made on a best efforts basis, whereby our brokerdealer, who will sell our shares in this offering, is only required to use its best efforts to sell our shares and has no firm commitment or obligation to purchase any of the shares. As a result, we cannot assure you as to the amount of proceeds that will be raised in this offering. 3. Bullet point thirteen. As of the date of this prospectus we are not qualified as a REIT. We intend to elect REIT status for If we fail to qualify as, or lose our tax status as, a REIT, we will be subject to increased taxes which will reduce the amount of cash we have available to pay dividends, if any, to our stockholders. E. Page xi What are the fees and expense reimbursements you will pay to Shopoff Advisors and Shopoff Securities? 1. The ORGANIZATION AND OFFERING STAGE and ACQUISITION STAGE sections of the Compensation Chart, beginning on Page xi, are hereby replaced as shown below to reflect the following changes: a. Page xi The Method of Compensation column (second column) of the Organization and Offering Stage section of the Compensation Chart with respect to the Marketing Fee, is modified to add a footnote (2) stating that our sponsor may, in its sole and absolute discretion, withhold payment of any portion of the Marketing Fee to the extent that such payment would result in our sole broker-dealer receiving, at any given time, total underwriting compensation in excess of that which is permitted under the rules of the FINRA. b. Page xi The Method of Compensation column (second column) of the Organization and Offering Stage section of the Compensation Chart with respect to the Reimbursement of Organization and Offering Expenses, is modified to replace 11.75% with 12.3% to more closely reflect the actual costs incurred in connection with the offering. c. Page xii The Method of Compensation column (second column) and the Estimated Maximum Amount columns of the Acquisition Stage section of the Compensation Chart, with respect to the Reimbursement of Acquisition Expenses, is hereby modified to clarify that the reference to 0.5% as the reimbursement amount is an estimate and that the actual amount cannot currently be determined. 7

10 ORGANIZATION AND OFFERING STAGE Type of Compensation/Recipient Method of Compensation Estimated Maximum Amount(1) Marketing Fee/Shopoff Securities Reimbursement of Organization and Offering Expenses/Shopoff Advisors, Shopoff Securities, and The Shopoff Group Fixed fee of $100,000 per month (2) paid by The Shopoff Group directly to Shopoff Securities (not from the proceeds of this offering) to cover administrative costs, such as employee salaries and other employee-related expenses, the office lease, computer and technology, insurance and office supplies. Reimbursement of actual expenses is allowable up to 12.3% of gross offering proceeds at the minimum offering amount; however, we expect actual expenses to be approximately 2.88% of gross offering proceeds, or $5,750,000, if we raise the maximum amount pursuant to this offering. $2,400,000 $5,750,000 ACQUISITION STAGE Type of Compensation/Recipient Method of Compensation Estimated Maximum Amount Acquisition and Advisory Fees/Shopoff Advisors Reimbursement of Acquisition Expenses/Shopoff Advisors and Third Parties Debt Financing Fee/Shopoff Advisors 3% of (i) the contract purchase price of the underlying property, for any real estate asset acquired by us directly or indirectly other than a real estate-related investment, and (ii) the contract purchase price of the underlying property, for any real estate-related investment acquired by us directly or indirectly. We will not pay acquisition and advisory fees in connection with any temporary investments. Reimbursement of actual expenses incurred on an on-going basis.(3) 1% of the amount available under any loan or line of credit made available to us. Shopoff Advisors will pay some or all of the fees to third parties with whom it subcontracts to coordinate financing for us.(4) $5,827,500 Not determinable at this time. Actual amounts are dependent upon the amount of any debt financed and, therefore, cannot be determined at the present time. (1) For purposes of this calculation, we have assumed that no debt financing is used to acquire properties or other investments. However, it is our intent to leverage our investments with debt. Therefore, this amount is dependent upon the value of our properties as financed and cannot be determined at the present time. For illustrative purposes, assuming we use debt financing in connection with the acquisition of our properties or other investments and further assuming no reinvestments with the proceeds of any sales of investments were made, we could make investments with an aggregate contract price of approximately 8

11 $400,000,000, less applicable fees, expenses, and reserves for working capital, if the maximum offering is sold. In such a case, acquisition and advisory fees could be approximately $12,000,000 (3% of $400,000,000); acquisition expenses could be approximately $2,000,000 (.5% of $400,000,000); and debt financing fees could be approximately $4,000,000 (1% of $400,000,000). (See Estimated Use of Proceeds of this Offering for more information.) (2) Our sponsor may, in its sole and absolute discretion, withhold payment of any portion of the Marketing Fee to the extent that such payment would result in our broker-dealer receiving, at any given time, total underwriting compensation in excess of that which is permitted under the rules of FINRA. (3) This amount includes customary third-party acquisition expenses, such as legal fees and expenses, costs of appraisal, accounting fees and expenses, title insurance premiums and other closing costs and miscellaneous expenses relating to the acquisition of real estate. We estimate that the third-party costs would average.5% of the contract purchase price of property acquisitions, but the amount of the acquisition expenses is not limited to any specific amount. (See Estimated Use of Proceeds of this Offering for more information.) (4) In the event that the 1% debt financing fee does not cover all loan or letter of credit fees payable, Shopoff Advisors may seek the approval of our independent directors for reimbursement of amounts due in excess of 1%. In determining whether to pay such excess amount, our independent directors will consider, among other things, (i) the difficulty of the loan transaction by comparison with industry standards, (ii) any extraordinary work undertaken in order to complete the loan process, (iii) the number of lenders involved in the transaction, (iv) variations in the fee structures among different market areas, (v) changes in market conditions which result in substantial increases in the standard fees charged. 2. Page xv The first full paragraph on this page is hereby modified with respect to the acquisition of real estate assets or real estate-related investments through a joint venture, to add the following italicized language at the end of this sentence: However, payment of any acquisition and advisory fees and asset management fees owed to Shopoff Advisors by us would be limited to the pro rata portion of our ownership interest in the joint venture, unless a majority of our independent directors who are not otherwise interested in the transaction approve payment of the full amount of the acquisition and advisory fees and asset management fees as in our best interests. F. Page xvi The answer to the question How long will this offering last? is replaced with the following to delete the statement that the offering will be terminated if the minimum offering is not met: A: The offering will not last beyond August 29, 2009 (which is two years after the effective date of the prospectus). We reserve the right to terminate this offering at any time. VI. PROSPECTUS SUMMARY A. Page 1 The last sentence on Page 1, under the heading Shopoff Properties Trust, Inc., is hereby modified as follows to clarify that properties acquired may be both partially improved or fully improved: We may acquire interests in partially improved and improved residential and commercial properties, income producing properties, and ownership interests in firms engaged in real estate activities or whose assets consist of significant real estate holdings, provided these investments meet our overall investment objectives. B. Page 4 The following sentences under the heading Description of Real Estate and Real Estate- Related Investments are hereby modified to substitute the italicized language for the existing language in response to comments from state securities commissioners: 1. We may borrow money to acquire properties and securities, pay related fees and for other purposes, but the aggregate amount of this financing generally will not exceed 100% of the aggregate value of our real estate assets (other than intangibles) at cost before deducting depreciation or other noncash reserves less total liabilities, calculated at least quarterly on a basis consistently applied. 9

12 2. Our charter provides that our independent directors must approve any borrowing in excess of 100% of the aggregate value of our real estate assets and the justification for such excess borrowing must be disclosed to our stockholders in our next quarterly report. C. Page 5 The paragraph under the heading Plan of Distribution is hereby replaced with the following text to reflect the fact that the minimum offering has been reached: Plan of Distribution We are offering the first 2,000,000 shares of our common stock at an offering price of $9.50 for a total amount of $19,000,000. Once 2,000,000 shares are sold, the offering price will increase to $10.00 per share until the remaining 18,100,000 shares of common stock are sold and a total of $200,000,000 has been raised. Prior to the time we sold the minimum offering amount of 1,700,000 shares, or $16,150,000, all subscription proceeds were placed in an account held by our escrow agent, Wells Fargo Bank, N.A., and were held in trust for the benefit of the subscribers. Interest earned on the escrow account was retained by us once the minimum offering was reached. Shares purchased by our executive officers and directors, our broker-dealer and by The Shopoff Group, Shopoff Advisors or affiliates did not count toward the sale of the minimum number of shares required to be sold in this offering. We hold your investment proceeds in our account until we withdraw funds for investment or the payment of fees and expenses. We intend to admit stockholders periodically as subscriptions for shares are received, but not less frequently than weekly. This offering will terminate on or before August 29, VII. RISK FACTORS In addition to the new risk factors related to recent market developments, as reported in our Quarterly Report on Form 10-Q for the period ending September 30, 2008, the following modifications are made to the existing risk factors, primarily to reflect that our minimum offering has been met and that properties have been identified for investment: A. Investment Risks Page 7 1. Page 7 This is a blind pool offering because we have not identified any specific real estate to purchase or real estate-related investments to make with the net proceeds we will receive from this offering. If we are unable to find suitable investments, we may not be able to achieve our investment objectives. This second risk factor on Page 7 is deleted in its entirety, including the heading, and is replaced with the following in order to remove the statements that we have not identified specific assets for acquisition: Investors in the offering will be unable to evaluate the manner in which the net proceeds are invested and the economic merits of projects prior to investment. You will not have the opportunity to evaluate the transaction terms or other financial or operational data concerning our real estate and real estate-related investments. You must rely on the investment committee of our advisor to evaluate our investment opportunities, and the investment committee of our advisor may not be able to achieve our investment objectives, may make unwise decisions or may make decisions that are not in our best interest because of conflicts of interest. Further, we cannot assure you that acquisitions of real estate or real estate-related investments made using the net proceeds of this offering will produce a return on our investment or will generate any operating cash flow to enable us to make distributions to our stockholders. 2. Page 8-9 The Board of Directors has significant discretion to modify or expand our investment objectives and policies without shareholder approval. The second paragraph of this risk factor is hereby deleted and is replaced with the following, in response to state securities administrators comments, to clarify that our charter can be amended solely by our shareholders: In general, our charter can be amended if approved by the affirmative vote of a majority of the outstanding shares of our common stock, but the board of directors has the exclusive power to amend or repeal the bylaws and to make new bylaws. 10

13 B. Risks Related to Our Business Page 9 1. Page 9 We and Shopoff Advisors are new companies with no operating histories, and we may not be able to operate successfully. The following sentences are hereby deleted from this risk factor to reflect that we have acquired property: As of the date of this prospectus we have not purchased any real estate or made any other investments. We have not identified any probable transactions. 2. Page 10 We may suffer from delays in locating suitable investments, which could reduce our ability to make distributions to our stockholders and reduce the return on your investment. The following sentence is deleted from this risk factor to reflect that we have acquired property: There may be a substantial period of time before the net proceeds of this offering are invested in real estate or real estate-related investments. 3. Page 10 Because this is a best efforts offering, Shopoff Securities is only required to use its best efforts to sell our shares. If we are unable to raise substantial funds in this offering, we will be limited in the number and type of investments we may make, which will result in a less diversified portfolio. The text of this risk factor is modified to reflect the fact that the minimum offering has been raised and that no assurances can be made as to the amount of additional funds we will be able to raise in this offering: This offering is being made on a best efforts basis, whereby Shopoff Securities is only required to use its best efforts to sell our shares and has no firm commitment or obligation to purchase any of the shares. As a result, we cannot assure you as to the amount of proceeds that will be raised in this offering. If we are unable to raise substantially more than the minimum offering amount, we will have limited diversification in terms of the number of investments owned, the geographic regions in which our investments are located and the types of investments that we make. Your investment in our shares will be subject to greater risk to the extent that we lack a diversified portfolio of investments. In such event, the likelihood of our profitability being significantly affected by the performance of any one of our investments will increase. In addition, if we are unable to raise substantially more than the minimum offering amount, the value of your shares could decline, because the payment of fees and expenses to the Advisor and its affiliates and the operating expenses of the REIT will absorb a greater percentage of the aggregate amount of funds raised, resulting in a lower amount of funds remaining for investment in real estate. C. Risks Associated With Debt Financing Page 20 In the first sentence of the second paragraph under the risk factor We expect to incur mortgage and other indebtedness, which may increase our business risks and impair our ability to make distributions to our stockholders, the following reference to our total assets is deleted and is replaced with the words the aggregate value of our real estate assets, in response to state securities administrators comments. D. Risks Associated with Income Taxes Page Page Failure to qualify as a REIT would reduce our net income (if any) and cash available for distributions. In the first paragraph under this risk factor, the italicized words in this sentence Also, this opinion represents Manatt, Phelps & Phillips legal judgment based on the law in effect as of the date of this prospectus are replaced with the words of its issuance. 2. Page 25 The extent of our use of taxable REIT subsidiaries may affect the value of our common stock relative to the share price of other REITs. This risk factor is hereby revised to reflect the recent passage of HATA, which increases the percentage of assets that may be held in taxable REIT subsidiaries from 20% to 25%. The phrase (25% starting in 2009) is hereby added after the figure 20% in this risk factor. 3. Page 25 We may be required to pay a penalty or may not qualify as a REIT if the value of our taxable REIT subsidiaries exceeds 20% of the value of our total assets at the close of any calendar quarter. Both the heading and the body of this risk factor have been updated to reflect the recent passage of HATA, which increases the percentage of assets that may be held in taxable REIT subsidiaries from 20% to 25%. The 11

14 phrase (25% starting in 2009) is hereby added after the figure 20% in this risk factor and the references to a 20% asset test are hereby deleted. VIII. ESTIMATED USE OF PROCEEDS OF THIS OFFERING Page 30 The table on Page 30 of the Prospectus is hereby replaced with the table below which reflects our best estimates of our offering expenses to date and reflects that our acquisition expenses are undeterminable at this time, and accordingly, are included under Amount Available for Investment. Minimum Offering $16,150,000 Percent of Gross Amount Offering Proceeds Maximum Offering $200,000,000 Percent of Gross Amount Offering Proceeds Gross Offering Proceeds... $16,150, % $200,000, % Less: Selling Commissions(1).... $ 0.0% $ 0.0% Organizational and Offering Expenses... $ 1,994, % $ 5,750, % Amount Available for Investment(2)... $14,156, % 194,250, % Less: Acquisition and Advisory Fees(3).. $ 424, % $ 5,827, % Initial Working Capital Reserve(4).. $ 807, % $ 10,000, % Amount Invested in Real Estate, and Real Estate-Related Investments(5)... $12,923, % $178,422, % (1) Shopoff Securities, Inc., our broker-dealer, will receive no selling commissions in connection with this offering and will only be entitled to a fixed monthly marketing fee of approximately $100,000 paid by our sponsor and reimbursement from us of its sales expenses, such as costs for the preparation of sales materials, sales seminars, and travel and lodging for the sales team. At no time will the fees paid to our broker-dealer exceed 10% of the gross proceeds of the offering. The sponsor may, in its sole and absolute discretion, withhold payment of any portion of the Marketing Fee to the extent that such payment would result in the broker-dealer receiving, more than 10% of the gross proceeds of the offering. (2) Until required in connection with the acquisition of real estate or real estate-related investments, substantially all of the net proceeds of the offering may be invested in short-term, highly-liquid investments including government obligations, bank certificates of deposit, short-term debt obligations and interest-bearing accounts or other authorized investments as determined by our board of directors. (3) For purposes of this table, we have assumed that we will use the full Amount Available for Investment to acquire investments and to pay related expenses and that the acquisition and advisory fees will equal 3% of (1) the purchase price of real estate investments acquired directly by us, including any debt attributable to these investments, or (2) our pro rata share of the gross asset value of real estate investments held by another entity when we make an investment indirectly through another entity. As a result, if we raise the minimum offering and 87.7% of those proceeds are applied to investments and related fees and expenses, acquisition and advisory fees would equal 2.7% of gross offering proceeds. If we raise the maximum offering and 97.1% of those proceeds are applied to investments and related fees and expenses, acquisition fees would equal 2.9% of gross offering proceeds. For purposes of this table we have also assumed that we will not use debt in making investments. If we raise the maximum of $200,000,000 in the offering and all of our investments are 100% leveraged at the time we make them, total acquisition fees would be approximately $12,000,000 (3% of $400,000,000 leveraged amount). In addition, to the extent any joint venture partners contribute funds for investment by joint ventures in which we invest, those funds would increase the maximum amount of our investments and, as a result, the maximum acquisition fees. At this time, we cannot estimate the amounts of funds that may be provided by joint venture partners. 12

15 (4) A portion of the proceeds of this offering will be reserved to meet working capital needs and contingencies associated with our operations. See the Management s Discussion and Analysis of Financial Condition and Results of Operations section of the prospectus for a discussion of the capital plan that we will establish for our investments. (5) Includes amounts anticipated to be invested in acquisition and entitlements of properties net of fees, but including expenses. We estimate that at least a minimum of 80.0% to a maximum of 89.2% of the proceeds received from the sale of shares will be used to acquire and entitle properties. A. Page 32 Other Property Acquisitions. IX. INVESTMENT OBJECTIVES AND CRITERIA The second sentence of the first paragraph under this heading is hereby modified to add that we may acquire partially improved properties in addition to improved properties. B. Page 34 Investment in Securities. The first paragraph under this heading is hereby modified to add, after the second sentence: We may also invest in community facilities district bonds. This modification clarifies the extent of the nature of our intended investments. C. Page 37 Investment Policies. The fifth bullet point on Page 37 is hereby replaced with the following in response to comments from state securities administrators: We do not intend to make distributions-in-kind, except for: distributions of readily marketable securities. distributions of beneficial interests in a liquidating trust established for our dissolution and the liquidation of our assets in accordance with the terms of the Maryland General Corporations Law; or distributions of property which meet all of the following conditions: our board of directors advises each stockholder of the risks associated with direct ownership of the property; our board of directors offers each stockholder the election of receiving in-kind property distributions; and our board of directors distributes in-kind property only to those stockholders who accept the directors offer. D. Page 38 Our Policies With Respect to Borrowing The following two sentences on Page 38 are modified as indicated in italics: Our board of directors will review our aggregate borrowings at least quarterly to ensure that such borrowings are reasonable in relation to the aggregate value of our real estate assets. The amount of such borrowings in relation to the aggregate value of our real estate assets will not exceed 100%. The italicized language is added for clarification purposes and for consistency with the language of our Articles of Incorporation. X. MANAGEMENT OF SHOPOFF PROPERTIES TRUST, INC. Page Tax Consequences of the 2007 Equity Incentive Plan The third sentence under the subheading Incentive Stock Options, is hereby modified, at the end, to delete the words or long-term capital and substitute the word capital. 13