Cole Office & Industrial REIT (CCIT III), Inc.

Transcription

1 PROSPECTUS Filed Pursuant to Rule 424(b)(3) Registration No Cole Office & Industrial REIT (CCIT III), Inc. Maximum Offering of $3,500,000,000 in Shares of Common Stock Minimum Offering of $2,500,000 in Shares of Common Stock Cole Office & Industrial REIT (CCIT III), Inc. is a Maryland corporation that intends to invest primarily in single-tenant, incomeproducing, necessity office and industrial properties, which are leased to creditworthy tenants under long-term net leases. We intend to qualify and elect to be taxed as a real estate investment trust (REIT) for federal income tax purposes beginning with the taxable year ending December 31, 2016, or the first year during which we commence material operations. We are externally managed by our advisor, Cole Corporate Income Advisors III, LLC (CCI III Advisors), an affiliate of our sponsor, Cole Capital, which is a trade name used to refer to a group of affiliated entities directly or indirectly controlled by VEREIT, Inc. (VEREIT), a publicly-traded company (NYSE:VER). We are offering up to $2,500,000,000 in shares of our common stock pursuant to our primary offering, consisting of two classes of shares: Class A shares of common stock at a price of up to $10.00 per share (up to $1,250,000,000 in shares) and Class T shares of common stock at a price of up to $9.57 (up to $1,250,000,000 in shares). We are also offering up to $1,000,000,000 in shares of our common stock pursuant to our distribution reinvestment plan at a purchase price during this offering equal to the per share primary offering price net of selling commissions and dealer manager fees, or $9.10 per share for both Class A and Class T shares, assuming a $10.00 per Class A share primary offering price and a $9.57 per Class T share primary offering price. We reserve the right to reallocate the shares offered among the classes of shares and between the primary offering and our distribution reinvestment plan. We will not sell any shares unless we raise a minimum of $2.5 million in subscription proceeds. Shares of our common stock purchased by our directors, officers and other affiliated persons and entities will be included for purposes of determining whether we have received $2.5 million in subscription proceeds. VEREIT, our sole stockholder, has expressed its intent to us that it or one of its affiliates will purchase at least $2.5 million in Class A shares of our common stock in this offering at a price of $9.10 per share, which reflects the per share primary offering price for Class A shares net of selling commissions and dealer manager fees. However, there are no written or other binding commitments with respect to the intended share purchase. We will offer these shares until September 22, 2018, which is two years after the effective date of this offering, unless the offering is extended. In no event will we extend this offering beyond 180 days after the third anniversary of the initial effective date. This offering must be registered, or exempt from registration, in every state in which we offer or sell shares. Generally, such registrations are for one year. Therefore, we may have to stop selling shares in any state in which our registration is not renewed or otherwise extended annually. We reserve the right to terminate this offering at any time prior to the stated termination date. See Risk Factors beginning on page 25 for a description of the principal risks you should consider before buying shares of our common stock. These risks include the following: This is an initial public offering of a newly formed entity with no operating history, and an investment in our shares is speculative. You should consider our prospectus in light of the risks, uncertainties and difficulties frequently encountered by companies that are, like us, in their early stages of development. The amount of distributions we may pay in the future, if any, is uncertain. Due to the risks involved in the ownership of real estate, there is no guarantee of any return on your investment in our common stock, and you may lose your investment. We are a blind pool, as we have no operating history and we have not identified any of the properties we intend to purchase. Your investment will have limited liquidity and we are not required, through our charter or otherwise, to provide for a liquidity event. No public market currently exists, and one may never exist, for shares of our common stock. If you are able to sell your shares, you would likely have to sell them at a substantial discount to your purchase price. We cannot assure you that we will be able to achieve a liquidity event, and market conditions and other factors could cause us to delay any proposed liquidity event. You should consider an investment in our common stock a long-term investment. If we do not successfully implement a liquidity event, you may suffer losses on your investment, or your shares may continue to have limited liquidity. The initial offering price for our shares is not intended to reflect the book value or net asset value of our investments, or our expected operating cash flows. Until our board of directors determines an estimated value of our company, the price of our shares is not intended to reflect the net asset value of our shares. We may pay distributions from sources other than cash flow from operations, including borrowings and proceeds from asset sales or the sale of our securities in this and future offerings, and we have no limits on the amounts we may pay from such other sources. Payments of distributions from sources other than cash flow from operations may reduce the amount of capital we ultimately invest

2 in real estate and may negatively impact the value of your investment. As a result, the amount of distributions paid at any time may not reflect the current performance of our properties or our current operating cash flows. This is a best efforts offering. If we are not able to raise a substantial amount of capital in the near term, we may have difficulties investing in properties and our ability to achieve our investment objectives could be adversely affected. There are substantial conflicts of interest between us and our advisor and its affiliates, including our dealer manager. Key persons associated with our advisor perform similar duties for VEREIT and other programs sponsored by Cole Capital that may use investment strategies similar to ours, creating potential conflicts of interest when allocating investment opportunities among these programs. Because we are externally managed by our advisor and have no employees, we will pay our advisor and its affiliates substantial fees for the services they provide to us, including significant compensation that may be required to be paid to our advisor if our advisor is terminated. Our board of directors may change our investment objectives and certain investment policies without stockholder approval, which could alter the nature of your investment. We expect to incur debt, which could adversely impact your investment if the value of the property securing the debt falls or if we are forced to refinance the debt during adverse economic conditions. If we fail to qualify as a REIT for federal income tax purposes, cash available for distributions to be paid to you could decrease materially. For qualified accounts, if an investment in our common stock constitutes a prohibited transaction under the Employee Retirement Income Security Act of 1974, as amended (ERISA), you may be subject to the imposition of significant excise taxes and penalties with respect to the amount invested. This investment involves a high degree of risk. You should purchase these securities only if you can afford a complete loss of your investment. Neither the Securities and Exchange Commission, the Attorney General of the State of New York, nor any other state securities regulator has approved or disapproved of our common stock, nor determined if this prospectus is truthful or complete or passed on or endorsed the merits or demerits of this offering. Any representation to the contrary is a criminal offense. The use of projections in this offering is prohibited. Any representation to the contrary, and any predictions, written or oral, as to the amount or certainty of any future benefit or tax consequence that may flow from an investment in this program is not permitted. All proceeds from this offering are held in trust until subscriptions are accepted and funds are released. Primary Offering Price to Public (1) Selling Commissions* Dealer Manager Fee* Net Proceeds (Before Expenses) Per Class A Share $ $ 0.70 $ 0.20 $ 9.10 Per Class T Share $ 9.57 $ 0.29 (2) $ 0.19 (2) $ 9.10 (2) Total Minimum $ 2,500,000 $ 125,000 (3) $ 50,000 (3) $ 2,325,000 (3) Total Maximum $ 2,500,000,000 $ 125,000,000 (3) $ 50,000,000 (3) $ 2,325,000,000 (3) Distribution Reinvestment Plan Per Class A Share $ 9.10 $ $ $ 9.10 Per Class T Share $ 9.10 $ $ $ 9.10 Total Maximum $ 1,000,000,000 $ $ $ 1,000,000,000 (1) The price to public assumes no purchase price discounts. We expect our board of directors to determine an estimated net asset value (NAV) per share no later than 150 days following the second anniversary of the date on which we break escrow upon reaching the minimum offering amount. In determining an estimated NAV, our board of directors will consider an estimate provided by a third-party valuation expert of the market value of our real estate assets. If our board of directors determines an estimated per share NAV prior to the conclusion of this offering, our board of directors may determine to modify the offering price to take into account the estimated per share NAV. (2) Figures are approximate and rounding differences may be reflected on stockholder account statements. (3) This table assumes an allocation of 50.0% Class A shares and 50.0% Class T shares will be sold in the minimum and maximum offering. In the event that we sell a greater percentage allocation of Class A shares (which are subject to a 7.0% selling commission), the aggregate amounts will be higher and the aggregate net proceeds (before expenses) will be lower than the amounts shown in the table. VEREIT, our sole stockholder, has expressed its intent to us that it or one of its affiliates will purchase at least $2.5 million in Class A shares of our common stock in this offering at a price of $9.10 per share, which reflects the per share primary offering price for Class A shares net of selling commissions and dealer manager fees. While there are no written or other binding commitments with respect to the intended share purchase, such investment by VEREIT, if any, may be included for purposes of determining whether we have reached the minimum offering amount, and therefore, the minimum offering amount may be reached using only the purchase of Class A shares. No selling commissions or dealer manager fee would be payable in connection with the purchase of Class A shares by VEREIT.

3 * The amount of selling commissions differs among Class A shares and Class T shares. The maximum amount of selling commissions we will pay is 7.0% of the gross offering proceeds in our primary offering for Class A shares and 3.0% of the gross offering proceeds in our primary offering for Class T shares. The maximum amount of dealer manager fees we will pay is 2.0% of the gross offering proceeds in our primary offering for both Class A shares and Class T shares. The selling commissions and, in some cases, the dealer manager fee, will not be charged or may be reduced with regard to shares sold to or for the account of certain categories of purchasers. The reduction in these fees will result in a reduction in the effective per share purchase price, except that shares sold under our distribution reinvestment plan will be sold at a price equal to the per share primary offering price net of selling commissions and dealer manager fees, or $9.10 per share for both Class A and Class T shares, assuming a $10.00 per Class A share primary offering price and a $9.57 per Class T share primary offering price. See Plan of Distribution. We will also pay our dealer manager selling commissions over time as a distribution and stockholder servicing fee for Class T shares, which is not shown in the table above, that will be calculated on a daily basis in the amount of 1/365th of 1.0% of the purchase price per share (or, once reported, the amount of our estimated per share NAV) of Class T shares in our primary offering and will be paid monthly in arrears. The maximum amount of the distribution and stockholder servicing fee we will pay with respect to sales of Class T shares is 4.0% of the gross offering proceeds in our primary offering for Class T shares. Accordingly, if the maximum amount of the distribution and stockholder servicing fees are paid, total maximum selling commissions, dealer manager fees and distribution and stockholder servicing fees paid with respect to the Class T shares will be 9.0% of the gross proceeds in our primary offering for Class T shares. The aggregate amount of underwriting compensation, including selling commissions, dealer manager fees and distribution and stockholder servicing fees and other expenses paid or reimbursed by us, our sponsor or any other source in connection with the offering, will not exceed the 10.0% limitation on underwriting compensation imposed by the Financial Industry Regulatory Authority (FINRA). The dealer manager of this offering, Cole Capital Corporation, a member firm of FINRA, is an affiliate of our advisor and will offer the shares on a best efforts basis. The minimum investment generally is $2,500. See the Plan of Distribution section of this prospectus for a description of compensation that may be received by our dealer manager and other broker-dealers in this offering. We expect that up to 10.0% of our gross offering proceeds, excluding proceeds from our distribution reinvestment plan, will be used to pay selling commissions, dealer manager fees, distribution and stockholder servicing fees and other expenses considered to be underwriting compensation. The date of this prospectus is September 22, 2016

4 SUITABILITY STANDARDS An investment in our common stock is only suitable for persons who have adequate financial means and desire a longterm investment (generally, an investment horizon in excess of seven years). The value of your investment may decline significantly. In addition, the investment will have limited liquidity, which means that it may be difficult for you to sell your shares. Persons who may require liquidity within several years from the date of their investment or seek a guaranteed stream of income should not invest in our common stock. In consideration of these factors, we have established minimum suitability standards for initial stockholders and subsequent purchasers of shares from our stockholders. These minimum suitability standards require that a purchaser of shares have, excluding the value of a purchaser s home, furnishings and automobiles, either: a net worth of at least $250,000; or a gross annual income of at least $70,000 and a net worth of at least $70,000. Certain states have established suitability requirements in addition to the minimum standards described above. Shares will be sold to investors in these states only if they meet the additional suitability standards set forth below: Alabama In addition to the minimum suitability standards described above, this investment will only be sold to Alabama residents that have a liquid net worth of at least ten times their investment in us and any other investment programs sponsored by Cole Capital. California Investors must have either (1) a net worth of at least $250,000, or (2) a gross annual income of at least $75,000 and a net worth of at least $75,000. In addition, the investment must not exceed 10.0% of the net worth of the investor. Iowa Investors must have either (1) a minimum liquid net worth of $100,000 and a minimum gross annual income of $100,000, or (2) a minimum liquid net worth of $350,000. For these purposes, liquid net worth is defined as that portion of an investor s net worth (total assets exclusive of home, home furnishings and automobiles, minus total liabilities) that consists of cash, cash equivalents and readily marketable securities. In addition, an investor s aggregate investment in us, any affiliates of ours and other non-exchange traded direct participation programs cannot exceed 10% of that investor s liquid net worth. Accredited investors in Iowa, as defined in 17 C.F.R , are not subject to this 10% investment limitation. Kansas It is recommended by the office of the Kansas Securities Commissioner that investors in Kansas not invest, in the aggregate, more than 10% of their liquid net worth in this and other non-traded real estate investment trusts. For purposes of this recommendation, liquid net worth is defined as that portion of net worth that consists of cash, cash equivalents and readily marketable securities. Kentucky Investors must have a liquid net worth of at least 10 times their investment in us and any other investment programs sponsored by Cole Capital. For these purposes, liquid net worth shall consist of cash, cash equivalents and readily marketable securities. Maine It is recommended by the Maine Office of Securities that investors in Maine not invest, in the aggregate, more than 10% of their liquid net worth in this and similar direct participation investments. For purposes of this recommendation, liquid net worth is defined as that portion of net worth that consists of cash, cash equivalents and readily marketable securities. Massachusetts Investors may not invest, in the aggregate, more than 10% of their liquid net worth in us and other illiquid direct participation investments. For purposes of this limitation, liquid net worth is defined as that portion of net worth that consists of cash, cash equivalents and readily marketable securities. Michigan and Missouri Investors must have a liquid net worth of at least 10 times their investment in us. Nebraska Investors must have (excluding the value of their home, furnishings and automobiles) either (1) a minimum net worth of $100,000 and an annual income of $70,000, or (2) a minimum net worth of $350,000. In addition, the aggregate investment in us and in the securities of other non-publicly traded real estate investment trusts must not exceed 10% of the investor s net worth. Accredited investors in Nebraska, as defined in 17 C.F.R , are not subject to this limitation. New Jersey Investors must have either, (1) a minimum liquid net worth of at least $100,000 and a minimum annual gross income of not less than $85,000, or (2) a minimum liquid net worth of at least $350,000. For these purposes, liquid net worth is defined as that portion of net worth (total assets exclusive of home, home furnishings, and automobiles, minus total liabilities) that consists of cash, cash equivalents and readily marketable securities. In addition, investors may not invest more than 10.0% of their liquid net worth in us, shares of other investment programs sponsored by Cole Capital, and other non-publicly traded direct investment programs (including real estate investment i

5 trusts, business development companies, oil and gas programs, equipment leasing programs and commodity pools, but excluding unregistered, federally and state exempt private offerings). New Mexico Investors may not invest, in the aggregate, more than 10% of their liquid net worth in us, other investment programs sponsored by Cole Capital and other non-publicly traded real estate investment programs. For purposes of this limitation, liquid net worth is defined as that portion of net worth (total assets exclusive of home, home furnishings and automobiles minus total liabilities) that is comprised of cash, cash equivalents and readily marketable securities. North Dakota and Pennsylvania Investors must have a net worth of at least 10 times their investment in us. Ohio Investors shall not invest, in the aggregate, more than 10% of their liquid net worth in us, any other investment programs sponsored by Cole Capital and other non-publicly traded investment programs. For purposes of this limitation, liquid net worth is defined as that portion of net worth (total assets exclusive of primary residence, home furnishings and automobiles minus total liabilities) that is comprised of cash, cash equivalents and readily marketable securities. Oregon Investors may not invest more than 10.0% of their liquid net worth (exclusive of home, home furnishings and automobiles) in us and any affiliates of ours. Tennessee Investors may not invest more than 10.0% of their liquid net worth (exclusive of home, home furnishings and automobiles) in us. Vermont Non-accredited investors may not invest more than 10% of their liquid net worth in us. For purposes of this limitation, liquid net worth is defined as total assets (exclusive of home, home furnishings and automobiles) minus total liabilities. Accredited investors in Vermont, as defined in 17 C.F.R , are not subject to this investment limitation or the suitability standards provided herein pertaining to the investor s minimum net worth or annual income. Because the minimum offering of our common stock is less than $250,000,000, Pennsylvania investors are cautioned to evaluate carefully our ability to accomplish fully our stated objectives and to inquire as to the current dollar volume of our subscription proceeds. In the case of sales to fiduciary accounts, the minimum suitability standards must be met by the fiduciary account, by the person who directly or indirectly supplied the funds for the purchase of the shares, or by the beneficiary of the account. Our sponsor and our dealer manager, which is an affiliate of our sponsor, are responsible for determining if investors meet our minimum suitability standards and state specific suitability standards for investing in our common stock. In making this determination, our sponsor and our dealer manager will rely on the participating broker-dealers and/or information provided by investors. In addition to the minimum suitability standards described above, each participating broker-dealer, authorized representative or any other person selling shares on our behalf, and our sponsor, is required to make every reasonable effort to determine that the purchase of shares is a suitable and appropriate investment for each investor. It shall be the responsibility of your participating broker-dealer, authorized representative or other person selling shares on our behalf to make this determination, based on a review of the information provided by you, including your age, investment objectives, income, net worth, financial situation and other investments held by you, and consider whether you: meet the minimum income and net worth standards established in your state; can reasonably benefit from an investment in our common stock based on your overall investment objectives and portfolio structure; are able to bear the economic risk of the investment based on your overall financial situation; and have an apparent understanding of: the fundamental risks of an investment in our common stock; the risk that you may lose your entire investment; the lack of liquidity of our common stock; the restrictions on transfer and ownership of our common stock; the background and qualifications of our advisor; and the tax, including ERISA, consequences of an investment in our common stock. Such persons must maintain records for at least six years of the information used to determine that an investment in the shares is suitable and appropriate for each investor. ii

6 Restrictions Imposed by the USA PATRIOT Act and Related Acts In accordance with the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001 (the USA PATRIOT Act) and related acts, the shares offered hereby may not be offered, sold, transferred or delivered, directly or indirectly, to any unacceptable investor, which means anyone who is acting, directly or indirectly: in contravention of any U.S. or international laws and regulations, including without limitation any anti-money laundering or anti-terrorist financing sanction, regulation, or law promulgated by the Office of Foreign Assets Control of the United States Department of the Treasury (OFAC) or any other U.S. governmental entity (such sanctions, regulations and laws, together with any supplement or amendment thereto, are referred to herein as the U.S. Sanctions Laws), such that the offer, sale or delivery, directly or indirectly, would contravene such U.S. Sanctions Laws; or on behalf of terrorists or terrorist organizations, including those persons or entities that are included on the List of Specially Designated Nationals and Blocked Persons maintained by OFAC, as such list may be amended from time to time, or any other lists of similar import as to any non-u.s. country, individual, or entity. iii

7 TABLE OF CONTENTS SUITABILITY STANDARDS QUESTIONS AND ANSWERS ABOUT THIS OFFERING PROSPECTUS SUMMARY RISK FACTORS CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS ESTIMATED USE OF PROCEEDS MANAGEMENT MANAGEMENT COMPENSATION BENEFICIAL OWNERSHIP OF EQUITY SECURITIES CONFLICTS OF INTEREST INVESTMENT OBJECTIVES AND POLICIES MANAGEMENT S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS PRIOR PERFORMANCE SUMMARY DESCRIPTION OF SHARES SUMMARY OF DISTRIBUTION REINVESTMENT PLAN OUR OPERATING PARTNERSHIP AGREEMENT FEDERAL INCOME TAX CONSIDERATIONS INVESTMENT BY TAX-EXEMPT ENTITIES AND ERISA CONSIDERATIONS PLAN OF DISTRIBUTION HOW TO SUBSCRIBE SUPPLEMENTAL SALES MATERIAL LEGAL MATTERS EXPERTS WHERE YOU CAN FIND MORE INFORMATION INDEX TO CONSOLIDATED BALANCE SHEETS APPENDIX A : PRIOR PERFORMANCE TABLES APPENDIX B : INITIAL SUBSCRIPTION AGREEMENT APPENDIX C : ADDITIONAL SUBSCRIPTION AGREEMENT APPENDIX D : DISTRIBUTION REINVESTMENT PLAN Page i FS-1 A-1 B-1 C-1 D-1 iv

8 QUESTIONS AND ANSWERS ABOUT THIS OFFERING Below we have provided some of the more frequently asked questions and answers relating to an offering of this type. Please see Prospectus Summary and the remainder of this prospectus for more detailed information about this offering. Q: What is a REIT? A: In general, a REIT is a company that: pays distributions to investors of at least 90% of its taxable income; avoids the double taxation treatment of income that generally results from investments in a corporation because a REIT generally is not subject to federal corporate income taxes on its net income, provided certain income tax requirements are satisfied; and combines the capital of many investors to acquire a large-scale diversified real estate portfolio under professional management. We intend to qualify and elect to be taxed as a REIT for federal income tax purposes beginning with our taxable year ending December 31, 2016, or the first year during which we commence material operations. Q: What kind of offering is this? A: Through Cole Capital Corporation, our dealer manager, we are offering a maximum of $2,500,000,000 in shares of our common stock in our primary offering, consisting of two classes of shares: Class A shares of common stock at a price of up to $10.00 per share (up to $1,250,000,000 in shares) and Class T shares of common stock at a price of up to $9.57 per share (up to $1,250,000,000 in shares). These shares are being offered on a best efforts basis. We are also offering a maximum of $1,000,000,000 in shares of our common stock pursuant to our distribution reinvestment plan to those stockholders who elect to participate in such plan as described in this prospectus at a price equal to the per share primary offering price net of selling commissions and dealer manager fees, or $9.10 per share for both Class A and Class T shares, assuming a $10.00 per Class A share primary offering price (up to $500,000,000 in shares) and a $9.57 per Class T share primary offering price (up to $500,000,000 in shares). We reserve the right to reallocate the shares of common stock we are offering among classes of shares and between our primary offering and our distribution reinvestment plan. Q: Why are you offering two classes of your common stock, and what are the similarities and differences between the classes? A: We are offering two classes of our common stock in order to provide investors with more flexibility in making their investment in us and to provide participating broker-dealers with more flexibility to facilitate investment in us. Investors can choose to purchase shares of either class of common stock in the offering. Each share of our common stock, regardless of class, will be entitled to one vote per share on matters presented to common stockholders for approval. The differences between each class relate to the fees and selling commissions payable in respect of each class. The following summarizes the differences in fees and selling commissions between the classes of our common stock. 1 Class A Shares Class T Shares Initial offering price per share $ $ 9.57 Selling commissions 7.0% 3.0% Dealer manager fee 2.0% 2.0% Annual distribution and stockholder servicing fee None 1.0% (1) (1) The distribution and stockholder servicing fee will be paid monthly in arrears. We will cease paying the distribution and stockholder servicing fee with respect to the Class T shares sold in this offering at the earliest of: (i) the end of the month in which the transfer agent, on our behalf, determines that total distribution and stockholder servicing fees paid by a stockholder within his or her individual account would be equal to 4.0% of the stockholder s total gross investment amount at the time of the purchase of the primary Class T shares held in such account; (ii) the date on which the aggregate underwriting compensation from all sources equals 10.0% of the gross proceeds from the aggregate sale of Class A shares and Class T shares in our primary offering (i.e., excluding proceeds from sales pursuant to our distribution reinvestment plan); (iii) the fourth anniversary of the last day of the month in which our public offering (excluding the distribution reinvestment plan offering) terminates; (iv) the date such Class T share is no longer outstanding; and (v) the date we effect a liquidity event

9 (such as the sale of our company, the sale of all or substantially all of our assets, a merger or similar transaction, the listing of our shares of common stock for trading on a national securities exchange or an alternative strategy that would result in a significant increase in the opportunities for stockholders to dispose of their shares). If the maximum selling commissions, dealer manager fees and distribution and stockholder servicing fees are paid, the total of such underwriting compensation, including other expenses paid or reimbursed by us, our sponsor or any other source in connection with the offering, would be 10.0% of the gross offering proceeds in the primary offering. Class A Shares An up-front selling commission, which is a one-time fee charged at the time of purchase of the shares, is paid. No distribution and stockholder servicing fee. Assuming (i) a constant primary offering price of $10.00 per Class A share, (ii) that shares are sold through distribution channels associated with the highest possible selling commissions and dealer manager fees and (iii) that none of such shares purchased are redeemed or otherwise disposed of, we expect that with respect to a one-time $10,000 investment in Class A shares, $700 in selling commissions will be paid at the time of the investment and $200 in dealer manager fees will be paid at the time of the investment, for a total of $900 in selling commissions and dealer manager fees. Class T Shares Lower up-front selling commission than Class A shares. For a period of time, which may be approximately four years, as described above, Class T shares purchased in the primary offering will pay selling commissions over time as a distribution and stockholder servicing fee, which will be calculated on a daily basis in the amount of 1/365th of 1.0% of the purchase price per share (or, once reported, the estimated per share NAV) of Class T shares sold in our primary offering and will be paid monthly in arrears. For further clarity, with respect to any Class T share purchased in the primary offering at $9.57, and assuming (i) such share is not redeemed or otherwise disposed of and (ii) distribution and stockholder servicing fees are paid with respect to such share until the aggregate distribution and stockholder servicing fees paid with respect to such share equal 4.0% of the stockholder s total gross investment amount at the time of purchase because none of the other events that would cause the payment of the distribution and stockholder servicing fee to cease have occurred, an aggregate of approximately $0.38 would be paid in distribution and stockholder servicing fees over a period of four years with respect to such Class T share. This estimate of $0.38 per share is the maximum aggregate distribution and stockholder servicing fees payable with respect to a Class T share. The distribution and stockholder servicing fee paid in respect of Class T shares will be allocated to the Class T shares as a class expense and these fees will impact the amount of distributions payable on all Class T shares. Accordingly, the aggregate amount of distributions received by a purchaser of Class T shares may be less than the aggregate amount of distributions received by a purchaser of Class A shares. The distribution and stockholder servicing fee will be paid with respect to ongoing services provided to all of our Class T stockholders by the participating broker-dealer of record, which ongoing services may include (i) offering to meet with the holder of the Class T share no less than annually to provide overall guidance on the stockholder s investment in us, including discussing the mechanics of the distribution reinvestment plan, share redemption program or a tender offer, or to answer questions about their customer account statement or valuations, and (ii) discussing with the holder of the Class T share, upon such stockholder s request, any questions related to the stockholder s investment in us. While we expect that the participating broker-dealer of record for a Class A stockholder may provide some similar services to a Class A stockholder, they are under no obligation to do so and we will not pay a stockholder servicing fee for such services. Assuming (i) a constant primary offering price of $9.57 per Class T share, (ii) that shares are sold through distribution channels associated with the highest possible selling commissions and dealer manager fees and (iii) that none of such shares purchased are redeemed or otherwise disposed of and that distribution and stockholder servicing fees are paid over four years, we expect that with respect to a one-time $10,000 investment in Class T shares, $300 in selling commissions will be paid at the time of the investment, $200 in dealer manager fees will be paid at the time of the investment and approximately $380 in distribution and stockholder servicing fees will be paid, for a total of $880 in selling commissions, dealer manager fees and distribution and stockholder servicing fees. We will not pay selling commissions, the dealer manager fee or distribution and stockholder servicing fees with respect to shares sold pursuant to our distribution reinvestment plan. The fees and expenses listed above will be 2

10 allocated on a class-specific basis. The payment of class-specific expenses will result in different amounts of distributions being paid with respect to each class of shares. Specifically, we expect to reduce the amount of distributions that would otherwise be paid on Class T shares to account for the ongoing distribution and stockholder servicing fees payable on Class T shares. Therefore, distributions on Class T shares are expected to be lower than on the Class A shares while the distribution and stockholder servicing fee is payable. See the Description of Shares and Plan of Distribution sections of this prospectus for further discussion on the differences between our classes of shares. Furthermore, a recent amendment to NASD Rule 2340 requires that our stockholders customer account statements include a per share value that is less than our offering price, because the amendment requires that, if we have not yet disclosed an estimated per share NAV, the value on the customer account statement must be equal to our offering price less up-front underwriting compensation and certain organization and offering expenses. Because Class T shares have a lower up-front selling commission than Class A shares, the difference between the value of Class T shares and the Class T share offering price will be less than the difference between the value of Class A shares and the Class A share offering price on such customer account statements. In the event of any voluntary or involuntary liquidation, dissolution or winding up of us, or any liquidating distribution of our assets, then such assets, or the proceeds therefrom, will be distributed between the holders of Class A shares and Class T shares ratably in proportion to the respective NAV for each class until the NAV for each class has been paid. For such purposes, NAV will be determined on an aggregate basis for the company, from which any differences attributable between the Class A shares and the Class T shares will then be determined. The estimated liability for the future distribution and stockholder servicing fees, which will be accrued at the time each Class T share is sold, will have no effect on the NAV. Each holder of shares of a particular class of common stock will be entitled to receive, ratably with each other holder of shares of such class, that portion of such aggregate assets available for distribution as the number of outstanding shares of such class held by such holder bears to the total number of outstanding shares of such class then outstanding. Until our board of directors determines our first NAV, we intend to use the most recent price paid to acquire a Class A share and a Class T share in this offering (ignoring purchase price discounts for certain categories of purchasers) as the estimated per share value of our Class A and Class T shares, respectively. Factors you should consider when choosing a class of shares include: how long you expect to own the shares; how much you intend to invest; and total expenses associated with owning each class. Only Class A shares are available for purchase in this offering by our executive officers and directors, as well as officers and employees of our advisor and their family members or other affiliates and officers and directors of other programs sponsored by Cole Capital. Additionally, in the event that an investor has engaged the services of a registered investment advisor or other financial advisor paid on a fee for service or assets under management basis by the investor, only Class A shares are eligible for discounts on selling commissions with respect to purchases through such registered investment advisor. Investors should consult with their financial advisor when determining which class of shares to purchase. Q: What is your investment strategy, and what types of properties do you intend to acquire? A: We intend to invest primarily in single-tenant, income-producing, necessity office and industrial properties, which are leased to creditworthy tenants under long-term net leases. We expect that most of the properties will be subject to net leases, whereby the tenant is primarily responsible for the cost of repairs, maintenance, property taxes, utilities, insurance and other operating costs. Further, our sponsor s investment strategy focuses on properties that typically have high occupancy rates (greater than 90%) and low to moderate leverage (0% to 50% loan to value). Our goal is to achieve a relatively predictable and stable stream of income for investors in our common stock and the potential for long-term capital appreciation in the value of our real estate assets. Q: What are necessity office and industrial properties? A: We use the phrase necessity to describe properties that are essential to the business operations of the tenant, typically due to one or more of the following factors: difficulty of replacement or prohibitive cost to relocate; sole or major location for its distribution or office operations; proximity to its distribution, manufacturing, research facilities or customer base; lower labor, transportation and/or operating costs; more stable labor force; optimal access to transportation networks that enable efficient distribution; and/or 3

11 significant amount of tenant-funded capital improvements, such as customized computer systems and information technology infrastructure, racking and sorting systems, and cooling or refrigeration systems. For example, distribution facilities, warehouses, manufacturing plants and corporate or regional headquarters are often considered to be necessity properties where the property is in a strategic location, is difficult to replace, or has other attributes, such as those mentioned above, that would make a tenant s relocation difficult and/or costly. We believe that necessity properties provide a relatively greater level of stability than other property types because they typically involve long-term leases and experience relatively low tenant turnover. We also believe that, as a result of recent and ongoing business developments, such as the role of the internet in the distribution of products, globalization of importing and exporting products and consolidation of businesses requiring office buildings to accommodate a single tenant, there is, and we expect there will continue to be, increasing demand by commercial tenants for necessity properties. Q: What is the experience of your sponsor and your advisor? A: References to Cole Capital, our sponsor, throughout this prospectus refer to a group of affiliated entities directly or indirectly controlled by VEREIT. VEREIT is a widely-held public company whose shares of common stock are listed on the New York Stock Exchange, and is the parent company and indirect owner of our advisor, and the indirect owner of Cole Capital Corporation, our dealer manager, and CREI Advisors, LLC (CREI Advisors), our property manager. Since January 1, 2006, Cole Capital and its affiliates have sponsored nine publicly offered REITs, which are comprised of us; Cole Credit Property Trust, Inc. (CCPT I), which merged with and into a wholly-owned subsidiary of VEREIT in May 2014; Cole Credit Property Trust II, Inc. (CCPT II), which merged with and into a wholly-owned subsidiary of Spirit Realty Capital, Inc. in July 2013; Cole Real Estate Investments, Inc. (Cole) (formerly known as Cole Credit Property Trust III, Inc. (CCPT III)), which merged with and into a wholly owned subsidiary of VEREIT in February 2014; Cole Credit Property Trust IV, Inc. (CCPT IV); Cole Credit Property Trust V, Inc. (CCPT V); Cole Corporate Income Trust, Inc. (CCIT), which merged with and into a wholly-owned subsidiary of Select Income REIT in January 2015; Cole Office & Industrial REIT (CCIT II), Inc. (CCIT II) and Cole Real Estate Income Strategy (Daily NAV), Inc. (Cole Income NAV Strategy). As of December 31, 2015, these programs had raised a total of approximately $13.4 billion from approximately 259,000 investors and purchased 3,038 properties located in 49 states and the U.S. Virgin Islands for an aggregate purchase price of $20 billion. For over three decades, our sponsor has developed and utilized a conservative investment approach that focuses on single-tenant commercial properties, which are leased to creditworthy tenants, subject to long-term net leases. Our sponsor has used this investment strategy primarily in the retail sector and, in recent years, within the office and industrial sector. We expect that our sponsor s prior experience in applying this conservative and disciplined investment strategy in both the retail and corporate sectors will provide us with a competitive advantage, as our advisor, an affiliate of our sponsor, acquires and manages, on our behalf, a portfolio of necessity office and industrial properties. In addition, our sponsor has built an organization of approximately 350 employees, who are experienced in the various aspects of acquiring, financing and managing commercial real estate, and we believe that our access to these resources will also provide us with a competitive advantage. A summary of the public real estate programs managed over the last ten years by our sponsor, including adverse business and other developments, is set forth in the section of this prospectus captioned Prior Performance Summary. Our advisor, CCI III Advisors, is an affiliate of our sponsor that was formed for the purpose of managing our company. The officers and other key personnel of our advisor bring extensive net lease real estate and public company operating experience to our business, highlighted by an in-depth knowledge of the office and industrial sectors. Q: Why should I consider an investment in real estate? A: Our goal is to provide a professionally managed, diversified portfolio of quality commercial real estate to retail investors who generally have had very limited access to such investments in the past. Allocating some portion of your portfolio to a direct investment in quality commercial real estate may provide you with: a reasonably stable level of current income from the investment; diversification of your portfolio, by investing in an asset class that is not correlated with the stock market; and the opportunity for capital appreciation. Q: How is an investment in shares of your common stock different from investing in shares of a listed REIT? A: Investing in REITs whose shares are listed for trading on a national securities exchange can be one alternative for investing in commercial real estate. Shares of listed REITs, however, generally fluctuate in price with the stock market 4

12 as a whole; that is, there may be, over certain periods of time, a correlation between changes in the price of listed REIT shares and changes in the value of the stock market generally. Such correlation suggests that the value of shares of listed REITs may be, over certain periods of time, based on a variety of factors beyond the value of the listed REIT s underlying real estate investments, such as the supply of available shares (number of sellers) and the demand for shares (number of buyers), as well as changes in investors short- or long-term financial market expectations in general. Our objective is to offer an alternative for investing in commercial real estate, where the value of your investment will be based principally on an estimate of the value of our portfolio of real estate and real estate-related assets. In accordance with the rules promulgated by FINRA, no later than 150 days following the second anniversary of the date on which we break escrow in this offering and at least annually thereafter, we will provide an estimate of the value of our shares. As a result, we expect that changes in the value of our shares generally will be more closely correlated, or aligned, with changes in the prices of direct investments in real estate, as compared to changes in the prices of listed REIT shares. Since direct investments in real estate are not highly correlated with the stock market generally, we expect that an investment in our shares will provide a measure of diversification to an investment portfolio that largely consists of stocks traded on a stock exchange. In addition, on average, a direct investment in real estate, as measured by actual transactions, has historically exhibited significantly less volatility or changes in value than an investment in listed REITs. Because we expect that the fair value of our underlying real estate and real estate-related assets and liabilities will be the fundamental factor upon which our board of directors will base its estimated per share NAV, we expect that the value of our shares will fluctuate in value, over time, less than an investment in a listed REIT. Investors should bear in mind that investing in our shares differs from investing in listed REITs in significant ways. An investment in our shares has limited liquidity, as no public market is likely to exist. Therefore, until we undertake a liquidity transaction, your ability to access the value of your investment in our shares will be limited to our share redemption program, which includes a number of restrictions and can be suspended or terminated by our board of directors at any time. The offering price for our shares is fixed and is not based on the expected book value or expected net asset value of our proposed investments, or our expected operating cash flows. In contrast, the offering price for a share of a listed REIT may vary with market fluctuations and factor in book value, net asset value, investments and/or operating cash flows. An investment in a listed REIT is a liquid investment, as shares can be sold on an exchange at any time. Investing in our shares also differs from investing directly in real estate, including our expenses related to this offering and other fees and expenses that are payable by us. Q: Are there risks associated with an investment in your common stock? A: This investment involves a high degree of risk. You should purchase these securities only if you can afford a complete loss of your investment. See Risk Factors beginning on page 25 for a description of the principal risks you should consider before buying shares of our common stock. Q: What other investments might you make within the corporate office and industrial sector? A: In addition to single-tenant, income-producing necessity office and industrial properties, we expect that some of our corporate office and industrial properties will be multi-tenant properties, anchored by one or more principal tenants, who are creditworthy and subject to long-term net leases. We expect that, from time to time, we may also invest in corporate development projects, designed to construct an income-producing property to serve one or more creditworthy tenants. Our goal is to acquire a portfolio of properties that are diversified by way of location and industry, in order to minimize the potential adverse impact of economic slow-downs or downturns in local markets or a specific industry. Q: Will you invest in anything other than office and industrial properties? A: Yes. We also may invest in other income-producing properties, such as retail properties, where the properties share some of the same core characteristics as our office and industrial properties, such as a principal creditworthy tenant, a long-term net lease and a strategic location. Our portfolio also may include other income-producing real estate, as well as real estate-related investments such as mortgage, mezzanine, bridge and other loans and securities related to real estate assets, frequently, but not necessarily always, in the corporate office and industrial sector. Although this is our current target portfolio, we may make adjustments to our target portfolio based on real estate market conditions and investment opportunities. We will not forgo a high quality investment because it does not precisely fit our expected portfolio composition. Thus, to the extent that our advisor presents us with high quality investment opportunities that allow us to meet the REIT requirements under the Internal Revenue Code of 1986, as amended (Internal Revenue Code), our portfolio composition may vary from what we initially expect. Our goal is to assemble a portfolio that is 5