UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

_______________________________________

FORM 10-K

_______________________________________

(Mark One)
x	ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the fiscal year ended December 31, 2013
	For the fiscal year ended December 31, 2014



o	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the transition period from _______ to _______

Commission file number 000-54248

__________________________________

SIGNATURE OFFICE REIT, INC.

(Exact name of registrant as specified in its charter)

__________________________________

Maryland		26-0500668
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification Number)
6200 The Corners Pkwy. Suite 250Norcross, Georgia		30092-3365
6200 The Corners Pkwy. Suite 100Norcross, Georgia		30092-3365
(Address of principal executive offices)		(Zip Code)
Registrant's telephone number, including area code		(770) ~~449~~243-~~7800~~4449



Securities registered pursuant to Section 12 (b) of the Act:
Title of each class	Name of exchange on which registered
NONE	NONE
Securities registered pursuant to Section 12 (g) of the Act:
Common Stock

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.

Yes o No x

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Exchange Act.

Yes o No x

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes x No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Yes x No o

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. x

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

Large accelerated filer o Accelerated filer o Non-accelerated filer o (Do not check if a smaller reporting company) Smaller reporting company x

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No x

Aggregate market value of the voting stock held by non-affiliates: While there is no established market for the registrant's shares of common stock, the registrant has made an offering of its shares of common stock pursuant to a registration statement on Form S-11. In its initial offering, the Registrant sold its shares for $25.00 per share, with discounts available for certain categories of purchasers. The registrant terminated its offering of shares of common stock on June 10, 2013 ~~and~~but iscontinued ~~currently~~to ~~offering~~offer shares of its common stock to existing stockholders pursuant to its distribution reinvestment plan at a purchase price of $23.75 per share ~~pursuant~~until toApril ~~a registration statement on Form S-3D~~2014. The number of shares held by non-affiliates as of June 30, ~~2013~~2014 was approximately 20,~~467~~469,~~375~~448.

Number of shares outstanding of the registrant's only class of common stock, as of February 28, ~~2014~~2015: 20,~~389~~473,~~855~~024 shares

Table of Contents

FORM 10-K

SIGNATURE OFFICE REIT, INC.

TABLE OF CONTENTS

		Page No.
PART I.
Item 1.	Business	4
Item 1A.	Risk Factors	87
Item 1B.	Unresolved Staff Comments	2420
Item 2.	Properties	2521
Item 3.	Legal Proceedings	2823
Item 4.	Mine Safety Disclosures	2824
PART II.
Item 5.	Market for Registrant's Common Equity, Related Stockholder Matters, and Issuer Purchases of Equity Securities	2925
Item 6.	Selected Financial Data	3328
Item 7.	Management's Discussion and Analysis of Financial Condition and Results of Operations	3429
Item 7A.	Quantitative and Qualitative Disclosures About Market Risk	5046
Item 8.	Financial Statements and Supplementary Data	5046
Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	5046
Item 9A.	Controls and Procedures	5046
Item 9B.	Other Information	5248
PART III.
Item 10.	Directors, Executive Officers, and Corporate Governance	5349
Item 11.	Executive Compensation	5752
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Shareholder Matters	6157
Item 13.	Certain Relationships and Related Transactions, and Director Independence	6258
Item 14.	Principal Accountant Fees and Services	6561
PART IV.
Item 15.	Exhibits and Financial Statement Schedules	6763
	Signatures	6864

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CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

Certain statements contained in this Form 10-K of Signature Office REIT, Inc. ("Signature Office REIT," "we," "our," or "us") other than historical facts may be considered forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the "Securities Act"), and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). We intend for all such forward-looking statements to be covered by the applicable safe harbor provisions for forward-looking statements contained in those acts. Such statements include, in particular, statements about our plans, strategies, and prospects and are subject to certain risks and uncertainties, including known and unknown risks, which could cause actual results to differ materially from those projected or anticipated. Such forward-looking statements can generally be identified by our use of forward-looking terminology such as "may," "will," "expect," "intend," "anticipate," "estimate," "believe," "continue," or other similar words. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date this report is filed with the U. S. Securities and Exchange Commission ("SEC"). We do not intend to publicly update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise.

Any such forward-looking statements are subject to risks, uncertainties, and other factors and are based on a number of assumptions involving judgments with respect to, among other things, future economic, competitive, and market conditions, all of which are difficult or impossible to predict accurately. To the extent that our assumptions differ from actual conditions, our ability to accurately anticipate results expressed in such forward-looking statements, including our ability to generate positive cash flow from operations, make distributions to stockholders, ~~and~~ maintain the value of our real estate properties, and complete our proposed merger with a subsidiary of Griffin Capital Essential Asset REIT, Inc., may be significantly hindered. See Item 1A herein for a discussion of some of the risks and uncertainties, although not all risks and uncertainties, that could cause actual results to differ materially from those presented in our forward-looking statements.

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PART I

ITEM 1. BUSINESS

General

~~On January 2, 2014, Wells Core Office Income REIT, Inc. changed its name to~~ Signature Office REIT, Inc. ("Signature Office REIT"). ~~Signature Office REIT~~ is a Maryland corporation that has elected to be taxed as a real estate investment trust ("REIT") for federal income tax purposes. Signature Office REIT engages in the acquisition and ownership of commercial real estate properties located in the United States. Signature Office REIT was formed on July 3, 2007, and commenced operations on September 29, 2010. Signature Office REIT conducts business primarily through Signature Office Operating Partnership, L.P. ("Signature Office OP"), a Delaware limited partnership ~~formerly known as Wells Core Office Income Operating Partnership, L.P.,~~ formed on July 3, 2007. Signature Office REIT is the sole general partner of Signature Office OP. Signature Office Income Holdings, LLC ("Signature Office Holdings"), ~~formerly known as Wells Core Office Income Holdings, LLC,~~ a Delaware limited liability company formed on November 6, 2009, is the sole limited partner of Signature Office OP. Signature Office REIT owns 100% of the interests of Signature Office Holdings and possesses full legal control and authority over the operations of Signature Office OP and Signature Office Holdings. In addition, Signature Office OP formed Wells Core REIT TRS, LLC ("TRS"), a wholly owned subsidiary organized as a Delaware corporation, on December 13, 2011. Through December 31, 2013, Signature Office REIT elected to treat TRS as a taxable REIT subsidiary. On December 9, 2013, Signature Office REIT elected to treat TRS as a disregarded entity, effective January 1, 2014. References to Signature Office REIT herein shall include Signature Office REIT and its subsidiaries, including Signature Office OP, Signature Office Holdings, and TRS, unless stated otherwise.

OnWe ~~June~~operate ~~10,~~a ~~2010,~~diversified weportfolio ~~commenced our initial public offering~~ of upcommercial toreal ~~230,000,000~~estate ~~shares~~consisting primarily of ~~common stock (the "Initial Offering") pursuant to a Registration Statement filed on Form S~~high-~~11 under the Securities Act~~quality, ~~with~~income-generating ~~30,000,000~~office ofproperties ~~those~~located ~~shares~~in ~~being offered through~~ the ~~Distribution~~United ~~Reinvestment~~States ~~Plan~~and ~~("DRP").~~leased ~~Under~~to ~~the~~creditworthy ~~Initial Offering, the primary shares were offered at a price of $25~~companies.00 ~~per~~As ~~share, with discounts available to certain categories~~ of ~~purchasers~~December 31, ~~and DRP shares were offered at a price of $23.75 per share. Effective June 10~~2014, ~~2013,~~ we ~~ceased~~owned ~~offering~~13 ~~shares~~office inproperties ~~the~~consisting ~~primary portion~~ of ~~the~~15 ~~Initial~~buildings ~~Offering. On June 12, 2013, the unsold primary offering shares were deregistered,~~ and onapproximately ~~June~~2.6 ~~13,~~million ~~2013,~~square ~~the registration of the shares issuable pursuant to the DRP was continued pursuant to a Registration Statement on Form S-3~~feet. As of December 31, ~~2013~~2014, wethese ~~had~~office ~~raised~~properties ~~aggregate~~were ~~net~~97.8% ~~offering proceeds of approximately $456~~leased.6 ~~million,~~For ~~including~~additional ~~net~~information ~~offering~~regarding ~~proceeds~~our ~~from~~properties ~~the~~and ~~DRP~~significant ~~of approximately $25.7 million~~tenants, ~~substantially~~see ~~all~~Item ~~of which have been invested in real properties and related assets~~2.

OnFrom ~~March~~June 5,2010 ~~2014~~through June 2013, we raised equity proceeds through our ~~board~~initial public offering of ~~directors~~230.0 ~~elected~~million toshares ~~terminate~~of common stock (the ~~DRP~~"Initial Offering"), ~~effective~~of ~~after~~which ~~the~~30.0 ~~payment~~million ofshares were offered through our Distribution Reinvestment Plan ("DRP"). Under the ~~distribution~~Initial ~~for~~Offering, the ~~first~~primary ~~quarter~~shares ofwere ~~2014.~~offered Asat a ~~result,~~price ~~all~~of ~~distributions~~$25.00 ~~paid~~per ~~after~~share, ~~the~~with ~~first~~discounts ~~quarter~~available ~~will~~to becertain ~~paid~~categories inof ~~cash~~purchasers, and ~~will~~DRP ~~not~~shares bewere ~~reinvested~~offered inat ~~shares~~a price of ~~our~~$23.75 ~~common~~per ~~stock~~share. ~~Also~~We terminated the primary portion of the Initial Offering on ~~March~~June 512, 2013. We continued to raise equity proceeds through the DRP through March 2014, ~~our~~after ~~board~~which ofthe ~~directors~~DRP ~~elected~~was toterminated. ~~terminate~~Our ~~our~~ amended and restated share redemption program (the "Amended SRP") was also terminated, effective April 30, 2014. ~~upon~~We ~~the~~raised ~~redemption~~aggregate ofnet ~~any~~offering ~~shares~~proceeds of ~~common~~approximately ~~stock~~$460.3 ~~properly~~million, ~~submitted~~including ~~for~~net ~~redemption~~offering ~~under~~proceeds ~~the~~from ~~Amended SRP for~~ the ~~month~~DRP of ~~April~~approximately ~~2014~~$29.5 ~~For~~million, ~~additional~~substantially ~~details~~all ~~about the termination~~ of ~~the~~which ~~DRP~~were ~~and~~invested ~~the~~in ~~Amended~~real ~~SRP,~~properties ~~see~~and ~~Item~~related 9Bassets.

WeFrom ~~operate~~our inception through December 31, 2013, we operated as an externally advised REIT pursuant to an advisory agreement, under which Wells Core Office Income REIT Advisory Services, LLC (the "Advisor"), a ~~diversified~~wholly ~~portfolio~~owned subsidiary of ~~commercial~~Wells ~~real~~Real ~~estate~~Estate ~~consisting~~Funds, ~~primarily~~Inc. ("WREF"), performed certain key functions on our behalf, including, among others, the investment of ~~high~~capital proceeds and management of day-~~quality~~to-day operations. The advisory agreement, ~~income-generating~~as ~~office~~amended ~~properties~~and ~~located~~restated, (the "Revised Advised Agreement") was effective beginning on June 11, 2013 and replaced the previous agreement between us and the Advisor in effect through June 10, 2013 (the ~~United~~"Original ~~States~~Advisory Agreement"). The Advisor contracted with Wells Capital, Inc. ("Wells Capital") and ~~leased~~Wells toManagement ~~creditworthy~~Company, ~~companies~~Inc. As("Wells Management"), also wholly owned subsidiaries of WREF, to engage their employees to carry out, among others, the key functions enumerated above on our behalf. On December 31, 2013, we ~~owned~~terminated 13the ~~office~~Revised ~~properties~~Advisory ~~consisting~~Agreement and became a self-managed company on January 1, 2014 (the “Self-Management Transition Date”). In connection with our transition to self-management, we hired employees of ~~approximately~~WREF 2who had previously performed substantial services for us pursuant to the Revised Advisory Agreement.6 ~~million~~These ~~square~~employees ~~feet~~currently manage our day-to-day operations. AsContemporaneous with the termination of ~~December 31,~~the ~~2013~~Revised Advisory Agreement, ~~our~~we ~~office~~entered ~~properties~~into ~~were~~a ~~approximately~~Transition ~~99.3%~~Services ~~leased.~~Agreement ~~For~~(the ~~additional~~"TSA") ~~information~~with ~~regarding~~WREF ~~our~~for ~~properties~~the period from January 1, 2014 through June 30, 2014 pursuant to which WREF and ~~significant~~its ~~tenants~~affiliates provided certain consulting, ~~see~~support ~~Item~~and 2transitional services to us at our direction in order to facilitate our successful transition to self-management. On June 30, 2014, we entered into the first amendment

From our inception through December 31, 2013, we operated as an externally advised REIT pursuant to an advisory agreement, under which Wells Core Office Income REIT Advisory Services, LLC (the "Advisor"), a wholly owned subsidiary of Wells Real Estate Funds, Inc. ("WREF"), performed certain key functions on our behalf, including, among others, the investment of capital proceeds and management of day-to-day operations. The advisory agreement, as amended and restated, (the "Revised Advised Agreement") was effective beginning on June 11, 2013 and replaced the previous agreement between us and the Advisor in effect through June 10, 2013 (the "Original Advisory Agreement"). The Advisor contracted with Wells Capital, Inc. ("Wells Capital") and Wells Management Company, Inc. ("Wells

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~~Management~~to the TSA with WREF (the "TSA Amendment"), ~~also~~which ~~wholly~~extended ~~owned~~the ~~subsidiaries~~expiration date of ~~WREF,~~the toTSA ~~engage~~as ~~their~~it ~~employees~~related to ~~carry~~certain ~~out~~transfer agent and client services functions from June 30, ~~among~~2014 ~~others~~to September 30, 2014. For additional details about our transition to self-management and the ~~key~~TSA, ~~functions~~please ~~enumerated~~refer ~~above~~to onNote ~~our~~10 ~~behalf~~of the accompanying consolidated financial statements.

On November 2621, ~~2013~~2014, we entered into aan ~~Transition~~Agreement toand ~~Self-Management~~Plan ~~Agreement~~of Merger (the “~~TSMA~~Merger Agreement”) with ~~WREF~~Griffin ~~and~~Capital ~~the~~Essential ~~Advisor~~Asset ~~(together with their respective affiliates~~REIT, Inc. (“~~Wells~~Griffin”), ~~pursuant~~and toGriffin ~~which~~SAS, weLLC, ~~began~~a ~~our~~wholly ~~transition~~owned tosubsidiary ~~becoming~~of aGriffin ~~self-managed~~(“Merger ~~company~~Sub”). ~~Subject~~Upon to the terms and conditions ofset forth in the ~~TSMA~~Merger Agreement, we ~~terminated~~will ~~the~~merge ~~Revised~~with ~~Advisory~~and ~~Agreement~~into onMerger ~~December 31~~Sub, ~~2013~~with ~~and~~Merger ~~completed~~Sub ~~our~~surviving ~~transition~~the tomerger ~~self-management~~as ona ~~January~~wholly 1,owned ~~2014~~subsidiary of Griffin (the “~~Self-Management Transition Date~~Merger”). ~~Contemporaneous~~Subject ~~with~~to the ~~termination~~terms and conditions of the ~~Revised~~Merger ~~Advisory~~ Agreement, weat ~~entered~~the ~~into~~date aand ~~Transition~~time ~~Services~~the ~~Agreement~~Merger becomes effective (the “~~TSA~~Merger Effective Time”) ~~with~~each ~~WREF~~share ~~for~~of ~~the~~our ~~period~~common ~~from~~stock ~~January~~issued 1,and ~~2014~~outstanding ~~through~~immediately ~~June~~prior ~~30, 2014 pursuant~~ to ~~which~~the ~~WREF~~Merger ~~and~~Effective ~~its~~Time ~~affiliates~~ will ~~provide~~be ~~certain~~converted ~~consulting,~~into ~~support~~2.04 ~~and transitional services~~ (asthe ~~set~~“Merger ~~forth~~Exchange ~~in the TSA~~Ratio”) toshares usof atcommon ~~our~~stock ~~direction~~of inGriffin ~~order~~(“Griffin toCommon ~~facilitate~~Stock”). ~~our~~The ~~successful~~consummation ~~transition~~of tothe ~~self-management. Other~~Merger ~~than~~is ~~the~~subject ~~services~~ to becertain ~~provided~~customary byclosing ~~WREF~~conditions, ~~under~~including, ~~the~~among ~~TSA~~others, the ~~services~~approval ~~described~~of ~~above~~the ~~will~~Merger ~~be performed~~ by our ~~employees going forward~~stockholders. In ~~For~~addition, ~~additional~~the ~~details~~Merger ~~about~~Agreement ~~our~~may ~~transition~~be toterminated ~~self-management,~~under ~~the~~certain ~~TSMA,~~circumstances ~~and~~by ~~the~~Griffin ~~TSA,~~or ~~please~~us. ~~refer~~We toexpect ~~Note~~the 10Merger ~~and~~to ~~Note~~close ~~13 of~~in the ~~accompanying~~first ~~consolidated~~half ~~financial~~of ~~statements~~2015.

Our stock is not listed on a national securities exchange. ~~However~~Should the Merger with Griffin not be consummated, we will still be subject to the requirement in our charter ~~requires~~ that in the event our stock is not listed on a national securities exchange by July 31, 2020, we must either seek stockholder approval to extend or amend this listing deadline or seek stockholder approval to begin liquidating investments and distributing the resulting proceeds to our stockholders. If we seek stockholder approval to extend or amend this listing date and do not obtain it, we would then be required to seek stockholder approval to liquidate. In this circumstance, if we seek and do not obtain approval to liquidate, we would not be required to list or liquidate and could continue to operate indefinitely as an unlisted company.

Real Estate Investment Objectives

Our primary investment objectives are to provide current income through cash distributions paid to our investors and to preserve and return our investors' capital contributions. We also seek long-term capital appreciation from our investments.

We seek to achieve these objectives by ~~investing in and~~ managing a diverse portfolio of properties. We acquired these investments through a combination of equity and debt financing. Our current portfolio is comprised of high-quality, income-generating commercial office properties located in suburban areas of major U.S. markets and differentiated by geographic locations, tenants, industry groups of tenants, and timing of lease expirations. Approximately 23% and 3231% of our leases (based on ~~percentage~~2014 ~~of 2013~~ annualized base rent ~~represented by such leases~~) are due to expire in 2017 and 2019, respectively. See Item 2 for additional information regarding the diversification of our portfolio as of December 31, ~~2013~~2014.

When evaluating a property for acquisition, we consider various factors including property location attributes, physical quality of the asset, lease terms and creditworthiness of the tenants. We have developed specific standards for determining creditworthiness of tenants of buildings being considered for acquisition or at the time of signing a new lease at an existing building. Creditworthy tenants of the type we target are highly valued in the marketplace and, accordingly, competition for acquiring properties with these creditworthy tenants is intense. WeTo the extent we continue to invest in properties, we remain committed to investing in properties that generate attractive returns over the long- term and improve the overall quality and diversification of our portfolio.

~~Financing~~We ~~Objectives~~generally intend to hold each property we acquire for an extended period. However, subject to limitations set forth in the Merger Agreement, we may sell a property at any time if, in our judgment, the sale of the property is in the best interests of our stockholders. When evaluating a property for disposition, we consider relevant factors, including prevailing economic conditions, other investment opportunities and considerations specific to the condition, value and financial performance of the property.

To date, we have financed our acquisitions through a combination of equity raised in our Initial Offering and debt proceeds. We anticipate using additional third-party borrowings and, if and when applicable, proceeds from the selective sale of our properties, to invest in additional capital expenditures, including improvements to our existing properties, as well as, potential future real estate investments, either directly or through investments in joint ventures, and to satisfy our near-term debt requirements.

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~~Our~~Financing charter limits our borrowings to 100% of our net assets. However, upon showing that a higher level of debt is appropriate, we may borrow in excess of this limitation if such excess is approved by a majority of a committee of all of our independent directors (the "Conflicts Committee") and disclosed to stockholders in our next quarterly report, along with an explanation of such excess. Over the long term, we have a policy of keeping our debt at no more than 50% of the cost of our assets (before depreciation and amortization) and, ideally, at less than this 50% debt-to-real-estate-asset ratio. This conservative leverage goal could reduce the amount of current income we can generate for our stockholders, but it also reduces their risk of loss. We believe that preserving investor capital while generating stable current income is in the best interest of our stockholders. Objectives

~~Our~~To ~~working~~date, ~~capital~~we ~~line~~have offinanced ~~credit~~our ~~provides~~acquisitions ~~flexibility~~through ~~with~~a ~~regard~~combination toof ~~managing~~equity ~~our~~raised ~~capital~~in ~~resources.~~our ~~The~~offerings ~~extent~~and todebt ~~which~~proceeds. weSubject ~~draw~~to onlimitations ~~our~~set ~~credit~~forth ~~facility~~in isthe ~~driven~~Merger ~~primarily~~Agreement, bywe ~~timing~~anticipate ~~differences~~using ~~between~~additional ~~our~~third-party ~~operational~~borrowings ~~payments~~ and, ~~receipts.~~if Weand ~~currently~~when ~~intend~~applicable, toproceeds ~~maintain~~from ~~amounts~~the ~~outstanding~~selective ~~under~~sale of our ~~long-term~~properties, ~~debt~~to ~~arrangement~~invest soin ~~that~~additional wecapital ~~will~~expenditures, ~~have~~including ~~more~~improvements ~~funds~~to ~~available~~our ~~for~~existing ~~working~~properties, ~~capital~~as ~~and~~well as, potential ~~investment~~future ~~in additional~~ real estate ~~properties~~investments, ~~which~~and ~~may~~to ~~allow~~satisfy usour tonear-term ~~further~~debt ~~diversify~~requirements. ~~our~~Over ~~portfolio.~~the ~~However~~long term, ~~our~~we ~~level~~have ofa ~~leverage~~policy ~~will~~of ~~depend~~keeping ~~upon~~our ~~various~~debt ~~factors~~at tono bemore ~~considered~~than in50% of the ~~sole~~cost ~~discretion~~ of our ~~board~~assets or(before ~~directors~~depreciation and amortization) and, ~~including~~ideally, ~~but~~at ~~not~~less ~~limited~~than this 50% debt-to,-real-estate-asset ~~our~~ratio. ~~ability~~This toconservative ~~pay~~leverage ~~distributions,~~goal could reduce the ~~availability~~amount of ~~real~~current ~~estate~~income ~~properties~~we ~~meeting~~can ~~our~~generate ~~investment~~for ~~criteria~~our stockholders, ~~the~~but ~~availability~~it also reduces their risk of ~~debt,~~loss. ~~and~~We ~~changes~~believe that preserving investor capital while generating stable current income is in the ~~cost~~best interest of ~~debt~~our ~~financing~~stockholders.

AsOur ofworking ~~December 31,~~capital ~~2013,~~line ~~all~~ of ~~our~~credit ~~debt~~provides ~~outstanding~~flexibility ~~was~~with ~~under~~regard ~~variable-rate~~to ~~borrowing~~managing ~~instruments.~~our ~~Beginning~~capital ~~September~~resources. ~~26,~~The ~~2013,~~extent ~~the~~to ~~interest~~which ~~rate~~we draw on ~~$75~~our ~~million~~credit offacility ~~our~~is ~~variable-rate~~driven ~~term~~primarily ~~loan~~by ~~was~~timing ~~effectively~~differences ~~fixed~~between ~~through~~our anoperational ~~interest~~payments ~~rate~~and ~~swap~~receipts. We ~~closely~~currently ~~monitor~~intend ~~interest~~to ~~rates~~maintain amounts outstanding under our long-term debt arrangement so that we will have more funds available for working capital and potential investment in additional real estate properties, which may allow us to further diversify our portfolio. However, our level of leverage will ~~continue~~depend upon various factors to ~~consider~~be ~~the~~considered ~~sources~~in ~~and~~the ~~terms~~sole discretion of our ~~borrowing~~board ~~facilities~~of directors, including, but not limited to, ~~determine~~our ~~whether~~ability weto ~~have~~pay ~~appropriately~~distributions, ~~guarded~~the ~~against~~availability of real estate properties meeting our investment criteria, the ~~risk~~costs of ~~increasing~~capital ~~interest~~improvements ~~rates~~required at our existing properties, the availability of debt, and changes in ~~future~~the ~~periods~~cost of debt financing.

~~Our~~As ~~debt-to-net-assets~~of ~~ratio~~December 31, ~~defined~~2014, asall of our ~~total~~ debt asoutstanding awas ~~percentage~~under ofvariable-rate ~~our~~borrowing ~~total~~instruments. ~~gross~~Beginning ~~assets~~September ~~less~~26, ~~total liabilities~~2013, ~~was~~the ~~approximately~~interest ~~38%~~rate ason of$75 ~~December 31,~~million ~~2013.~~of ~~Our~~our ~~debt~~variable-~~to-real-estate-asset~~rate ~~ratio,~~term ~~that~~loan ~~is,~~was ~~the~~effectively ~~ratio~~fixed ofthrough ~~total~~an ~~debt~~interest torate ~~cost~~swap. ~~basis~~We ofclosely ~~real~~monitor ~~estate~~interest ~~assets~~rates ~~prior~~and will continue to ~~deducting~~consider ~~depreciation~~the sources and ~~amortization,~~terms asof our borrowing facilities to determine whether we have appropriately guarded against the risk of ~~December 31,~~increasing ~~2013,~~interest ~~was~~rates ~~approximately~~in ~~28%~~future periods.

Our debt-to-real-estate-asset ratio, that is, the ratio of total debt to cost basis of real estate assets prior to deducting depreciation and amortization, as of December 31, 2014, was approximately 27%.

Operating Objectives

We will continue to focus on the following key operating factors:


•	Actively managing our portfolio to generate sufficient cash flow from operations to meet our required obligations and to provide current income through cash distributions to our investors;


•	Ensuring that we enter into leases at market rents, upon lease expiration or with regard to current or acquired vacant space at our properties, in order to receive the maximum returns on our properties permitted by the market;


•	Considering appropriate actions for future lease expirations to ensure that we can position properties appropriately to retain existing tenants or negotiate lease amendments lengthening the term of the lease, resulting in the receipt of increased rents over the long term as allowed by the market;


•	Controlling administrative operating expenses as a percentage of revenues; and

• ~~Investing~~Subject to limitations set forth in the Merger Agreement, investing capital in both (i) our existing properties to maintain or increase their value and in(ii) additional high-quality, income-producing properties that support a market distribution rate while maintaining a moderate debt-to-real-estate-asset ratio over the long term.

Generally, we are responsible for the repair or replacement of specific structural components of a property such as the roof of the building or the parking lot. However, the majority of our leases include reimbursement provisions that require the tenant to pay, as additional rent, all or a portion of real estate taxes, sales and use taxes, special assessments, utilities, insurance, building repairs, and other building operation and management costs. Such reimbursement ~~provisions mitigate the risks related to rising costs. Upon the expiration of leases at our properties, our objective is to~~

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provisions mitigate the risks related to rising costs. Upon the expiration of leases at our properties, our objective is to negotiate leases that contain similar reimbursement provisions; however, the conditions in each of our markets could dictate different outcomes and may result in less favorable reimbursement provisions.

Conflicts Committee Review of Our Policies

The Conflicts Committee has reviewed our policies and determined that they are in the best interest of our stockholders. Set forth below is a discussion of the basis for that determination.

Investment Policies. We focus our investment efforts on the acquisition of high-quality, income-generating office properties located in the United States and leased to creditworthy tenants. Although we may acquire other types of real estate, including industrial properties, this focus is preferred because we believe it best enables us to achieve our goals of generating current income and preserving investor capital. We have extensive expertise with this type of real estate.

Borrowing Policies. We have a limitation on borrowing that precludes us from borrowing in excess of 100% of the value of our net assets. Net assets for purposes of this calculation is defined to be our total assets (other than intangibles), valued at cost prior to deducting depreciation and amortization, less total liabilities, calculated quarterly by us on a basis consistently applied. A majority of our Conflicts Committee may approve a higher level of borrowing upon determining that substantial justification exists and disclosing such excess to our stockholders in our next quarterly report, along with an explanation for such excess. We may place long-term debt on our existing properties and those properties that we may acquire in the future. The percentage of short-term and long-term debt used in our capital structure will depend on various factors to be considered in the sole discretion of our board of directors, including but not limited to, the availability of properties meeting our investment criteria, the availability of debt, and changes in the cost of debt financing. Over the long term, we have a policy of keeping our debt at no more than 50% of the cost of our assets (before depreciation and amortization) and, ideally, at less than this 50% debt-to-real-estate-asset ratio. This conservative leverage goal could reduce the amount of current income we can generate for our stockholders, but it also reduces their risk of loss. We believe that preserving investor capital while generating stable current income is in the best interest of our stockholders. As of December 31, 2013, our debt-to-net-assets ratio was approximately 38% and our debt-to-real-estate-asset ratio was approximately 28%.

Policies Regarding Operating Expenses. We have the responsibility of limiting total operating expenses to no more than the greater of 2% of our average invested assets or 25% of our net income, as these terms are defined by our charter, unless the Conflicts Committee has determined that such excess expenses were justified based on unusual and non-recurring factors. For the four consecutive quarters ended December 31, 2013, total operating expenses represented 1.5% of average invested assets and 15.5% of net income.

Offering Policies. On June 10, 2013, we concluded our primary public offering of common stock; however, we will continue to offer shares to our existing stockholders through our DRP through the payment of the distribution for the first quarter of 2014. On March 5, 2014, our board of directors elected to terminate the DRP effective after the payment of the distribution for the first quarter of 2014. For the year ended December 31, 2013, the ratio of the costs of raising capital to the amount of capital raised was 9.6%.

Liquidity Event Policy. We believe it is in the best interest of our stockholders for our common shares to remain unlisted on a national exchange at this time. However, we remain open to considering all liquidity event options should favorable opportunities arise. Our charter requires that in the event our stock is not listed on a national securities exchange by July 31, 2020, we must either seek stockholder approval to extend or amend this listing deadline or seek stockholder approval to begin liquidating investments and distributing the resulting proceeds to our stockholders.

Employees

~~From~~As ~~inception~~of ~~through~~ December 31, ~~2013~~2014, ~~employees~~we ofhad ~~Wells~~12 ~~Capital~~employees ~~and~~working ~~Wells~~in ~~Management, affiliates of the Advisor, performed substantially all of the services related to~~ our ~~asset~~corporate ~~management,~~office ~~accounting, investor relations, and other administrative activities that were required under our advisory agreements with the Advisor. As explained~~ in ~~the General section above~~Norcross, ~~as of January 1, 2014, these services will be performed directly by employees of Signature~~ Georgia.

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Office REIT (other than the services to be provided by WREF under the TSA), and as of February 28, 2014, we had 12 employees working in our corporate office in Norcross, Georgia.

Insurance

We believe that our properties are adequately insured.

Competition

Leasing of real estate is highly competitive in the current market, and we experience competition for high-quality tenants from owners and managers of competing projects. As a result, we may experience delays in re-leasing vacant space or we may have to provide rent concessions, incur charges for tenant improvements, or offer other inducements to enable us to timely lease vacant space, all of which may have an adverse impact on our results of operations. Also, as we seek to acquire properties, we are in competition with other potential buyers for the same properties, which may result in an increase in the amount we must pay to acquire a property or may require us to locate another property that meets our investment criteria. At the time we elect to dispose of our properties, we will also be in competition with sellers of similar properties to locate suitable purchasers.

Concentration of Credit Risk

We are dependent upon the ability of our tenants to pay their contractual rental amounts as they become due. The inability of a tenant to pay future rental amounts would have a negative impact on our results of operations. We are not aware of any reason why our current tenants will not be able to pay their contractual rental amounts as they become due in all material respects. Situations preventing our tenants from paying contractual rents could result in a material adverse impact on our results of operations.

Website Address

Access to copies of each of our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, proxy statements, and other documents filed with, or furnished to, the SEC, including amendments to such filings, may be obtained free of charge from our website at www.signaturereit.com or through a link to the SEC website, www.sec.gov. These filings are available promptly after we file them with, or furnish them to, the SEC.


ITEM 1A.	RISK FACTORS

Below are some of the risks and uncertainties that could cause our actual results to differ materially from those presented in our forward-looking statements. The risks and uncertainties described below are not the only ones we face but do represent those risks and uncertainties that we believe are material to our business, operating results, prospects, and financial condition. Additional risks and uncertainties not presently known to us or that we currently deem immaterial may also harm our business. Many of the risks described below will not be applicable if, as we expect, the Merger is consummated. However, although we expect the Merger to close later this year, we can make no assurance that it will do so and, therefore, we include below numerous risks associated with remaining a stand-alone company for the long term. Additionally, certain of these risks may not be applicable as a result of limitations set forth in the Merger Agreement that may prevent us from taking certain actions.

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Risks Related to an Investment in Us

No public market currently exists for our shares of common stock, and we have no current plans to list our shares on an exchange. If a stockholder is able to sell his or her shares, he or she would likely have to sell them at a substantial discount from their public offering price.

There is no current public market for our shares, and we currently have no plans to list our shares on a national securities exchange. A stockholder may not sell his or her shares unless the buyer meets applicable suitability and minimum purchase standards. Any sale of shares must also comply with applicable securities laws. Our charter also prohibits the ownership of more than 9.8% of our stock, unless exempted by our board of directors, which may inhibit large investors from desiring to purchase our stockholders' shares. ~~Moreover~~Therefore, ~~our~~it ~~Amended~~will ~~SRP,~~be ~~includes~~difficult ~~numerous~~for ~~restrictions~~stockholders ~~that~~to ~~limit~~sell ~~the~~their ~~ability~~shares promptly or at all. If a stockholder is able to sell ~~shares~~his toor usher shares, ~~and~~he ~~our~~or ~~board~~she ofwill ~~directors~~likely ~~may~~have ~~amend,~~to ~~suspend,~~sell orthem ~~terminate~~at ~~our~~a ~~Amended~~substantial ~~SRP,~~discount ~~upon~~to 30their ~~days'~~public ~~notice~~offering price. ~~Therefore,~~It itis ~~will~~also belikely ~~difficult~~that ~~for~~shares ~~stockholders~~will tonot ~~sell~~be ~~their~~accepted ~~shares~~as ~~promptly~~the orprimary atcollateral for a loan.

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all. If a stockholder is able to sell his or her shares, he or she will likely have to sell them at a substantial discount to their public offering price. It is also likely that shares will not be accepted as the primary collateral for a loan.

We have a limited operating history, which makes our future performance and the performance of your investment difficult to predict.

Although we were incorporated in July 2007, we have a limited operating history. You should not rely upon the past performance of other Wells-sponsored real estate programs. Such past performance may not predict our future results. Our lack of an extensive operating history significantly increases the risk and uncertainty you face in making an investment in our shares.

If we are unable to find suitable investments or if we pay too much for properties, we may not be able to achieve our investment objectives, and the returns on our investments will be lower than they otherwise would be.

WeTo the extent we invest in additional properties, we may compete for real estate investments with other REITs;, real estate limited partnerships, pension funds and their advisors;, bank and insurance company investment accounts;, individuals;, and other entities. A significant number of entities and resources competing for high-quality office properties support relatively high acquisition prices for such properties, which could put pressure on our profitability and our ability to pay distributions to stockholders. We cannot be sure that we will be successful in obtaining suitable investments on financially attractive terms or that, if we make investments, our objectives will be achieved.

Future economic conditions may cause the creditworthiness of our tenants to deteriorate and occupancy and market rental rates to decline.

Economic conditions may adversely affect the financial condition and liquidity of many businesses, as well as the demand for office space generally. Should such economic conditions occur, our tenants' ability to honor their contractual obligations may suffer. Further, it may become increasingly difficult to maintain our occupancy rate and achieve future rental rates comparable to the rental rates of our currently in-place leases as we seek to re-lease space and/or to renew existing leases.

Our office properties were ~~approximately 99~~97.8% leased at December 31, ~~2013~~2014, and provisions for uncollectible tenant receivables, net of recoveries, were less than 1% of total revenues for the year then ended. As a percentage of ~~2013~~2014 annualized lease revenue, approximately 329% of leases expire in ~~2014~~2015 through ~~2016~~2017, collectively (see Item 2). No assurances can be given that future economic conditions will not have a material adverse effect on our ability to re-lease space at favorable rates or on our ability to maintain our current occupancy rate and our low provisions for uncollectible tenant receivables.

Disruptions in the financial markets and stagnant economic conditions could adversely affect market rental rates, commercial real estate values and our ability to secure debt financing, service debt obligations, or pay distributions to stockholders.

Disruptions in the financial markets and stagnant economic conditions could adversely affect the values of our investments. Turmoil in the capital markets has constrained equity and debt capital available for investment in commercial real estate, resulting in fewer buyers seeking to acquire commercial properties and possible increases in capitalization rates and lower property values. Furthermore, declining economic conditions could negatively impact commercial real estate fundamentals and result in lower occupancy, lower rental rates and declining values in our real estate portfolio, which could have the following negative effects on us:

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•	the values of our investments in office properties could decrease below the amounts we paid for such investments;


•	the value of collateral securing any loan investment that we may make could decrease below the outstanding principal amounts of such loans;

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•	revenues from the properties we own could decrease due to lower rental rates, making it more difficult for us to pay distributions or meet our debt service obligations on future debt financings; and


•	revenues on the properties and other assets underlying any loan investments we may make could decrease, making it more difficult for the borrower to meet its payment obligations to us.

All of these factors could impair our ability to make distributions to our investors and decrease the value of an investment in us.

If we pay distributions from sources other than our cash flow from operations, we may not be able to sustain our distribution rate and our stockholders' overall returns may be reduced.

Our organizational documents permit us to pay distributions from any source, and we have not established limits on the amount of borrowings or cash advances we may use to pay such distributions. If we fund distributions from borrowings or sources other than cash flow from operations, the value of our shares is more likely to fall below the net proceeds per share from the Initial Offering and a stockholder's overall return may be reduced. At times, we may be forced to borrow funds to pay distributions during unfavorable market conditions or during periods when funds from operations are needed to fund capital expenditures and other expenses, which could increase our operating costs. Furthermore, if we cannot cover our distributions with cash flow from operations over the long term, we may be unable to sustain our distribution rate. For the year ended December 31, ~~2013~~2014, ~~approximately~~all ~~82%~~ of our distributions ~~was~~were funded from cash flow from operations (as determined under generally accepted accounting principles (“GAAP”)) ~~and approximately 18% was funded from borrowings~~.

Our net income, Funds From Operations ("FFO"), Modified Funds from Operations (“MFFO”) and Adjusted Funds From Operations ("AFFO") may decrease in the near term as a result of our transition to a self-managed REIT.

Our net income, FFO, MFFO and AFFO may decrease as a result of becoming a self-managed REIT. While we will no longer bear the costs of the various fees and expense reimbursements previously paid to our external advisor, our expenses will include the compensation and benefits of our officers, employees, and consultants, as well as overhead previously paid by our external advisor or its affiliates. There are no assurances that, following our transition to self-management, we will be able to provide those services for the same costs as were previously provided to us by our external advisor, and there may be unforeseen costs, expenses, and difficulties associated with providing those services on a self-advised basis. If the expenses we assume as a result of becoming self-managed are higher than we anticipate, our net income, FFO, MFFO and AFFO may be lower as a result of the transition to self-management than it otherwise would have been.

Our transition to self-management will expose us to risks to which we have not historically been exposed.

Our transition to self-management will expose us to risks to which we have not historically been exposed. Effective January 1, 2014, we directly employed persons who were previously associated with our former advisor or its affiliates. As their employer, we are subject to those potential liabilities that are commonly faced by employers, such as workers' disability and compensation claims, potential labor disputes, and other employee-related liabilities and grievances, and we bear the costs of the establishment and maintenance of any employee compensation plans. Furthermore, these employees will be providing us services historically provided by our external advisor ~~with the support of the TSA~~. There are no assurances that we will be able to provide the same level of services when we are self-advised as were previously provided to us under our agreements with WREF and its affiliates.

We are dependent on our own executive officers and employees.

~~Effective~~We ~~January 1, 2014, we~~ rely on a small number of persons, particularly Douglas P. Williams, Glen F. Smith and Scott P. Brown, to carry out our business and investment strategies. The loss of the services of any of our key management personnel or our inability to recruit and retain qualified personnel in the future, could have an adverse effect on our business and financial results. ~~As we expand, we will continue to try to attract and retain qualified additional senior management, but may not be able to do so on acceptable terms.~~

A material portion of our leases are due to expire around the same period of time, which will likely (i) cause a loss in the value of an investment in us until the affected properties are re-leased, (ii) increase our exposure to downturns in the real estate market during the time that we are trying to re-lease such space and (iii) increase our capital expenditure requirements during the re-leasing period.

Approximately 23% and 31% of our leases (based on 2014 annualized base rent) are due to expire in 2017 and 2019, respectively. Most of this space is in single-tenant buildings. As the date of the expiration of a lease for a single-tenant building approaches, the value of the property generally declines because of the risk that the building may not be re-leased upon expiration of the existing lease or may not be re-leased on terms as favorable as those of the current leases.

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Therefore, if we were to liquidate our portfolio prior to the favorable re-leasing of the space referenced, our stockholders would likely suffer a loss on their investments. Our stockholders may also suffer a loss (and a reduction in distributions) after the expiration of the lease terms if we are not able to re-lease such space on favorable terms. These expiring leases, therefore, increase our risk to real estate downturns during and approaching these periods of concentrated lease expirations. In addition, we are likely to have to spend significant capital in order to ready the space for new tenants. To meet our need for cash at this time, we may have to increase borrowings or reduce our distributions, or both.

Completion of the Merger is subject to many conditions and if these conditions are not satisfied or waived, the Merger will not be completed, which could result in the requirement that we pay certain termination fees or, in certain circumstances, that we pay expenses to Griffin.

The Merger Agreement is subject to many conditions that must be satisfied or waived in order to complete the Merger. The mutual conditions of the parties include, among others: (i) the approval of the Merger by the holders of a majority of our outstanding shares of common stock; (ii) the absence of any law, order or other legal restraint or prohibition that would prohibit, make illegal, enjoin, or otherwise restrict, prevent, or prohibit the Merger or any of the transactions contemplated by the Merger Agreement; and (iii) the effectiveness of the registration statement on Form S-4 filed by Griffin for purposes of registering the Griffin common stock to be issued in connection with the Merger. In addition, each party’s obligation to consummate the Merger is subject to certain other conditions, including, among others: (w) the accuracy of the other party’s representations and warranties (subject to customary materiality qualifiers and other customary exceptions); (x) the other party's compliance with its covenants and agreements contained in the Merger Agreement; (y) the absence of any event, change, or occurrence arising during the period from the date of the Merger Agreement until the effective time of the Merger that, individually or in the aggregate, has had or would reasonably be expected to have a material adverse effect on the other party; and (z) the receipt of an opinion of counsel of each party to the effect that such party has been organized and has operated in conformity with the requirements for qualification and taxation as a REIT.

There can be no assurance that the conditions to closing of the Merger will be satisfied or waived or that the Merger will be completed. Failure to consummate the Merger may adversely affect our results of operations and business prospects for the following reasons, among others: (i) we will incur certain transaction costs, regardless of whether the Merger closes, which could adversely affect our financial condition, results of operations and ability to make distributions to our stockholders; and (ii) the Merger, whether or not it closes, will divert the attention of our management and other key employees from ongoing business activities, including the pursuit of other opportunities that could be beneficial to us. In addition, we or Griffin may terminate the Merger Agreement under certain circumstances, including, among other reasons, if the Merger is not completed by September 30, 2015, and if the Merger Agreement is terminated under certain circumstances specified in the Merger Agreement, we may be required to pay Griffin a termination fee of $20 million. The Merger Agreement also provides that one party may be required to reimburse the other party's transaction expenses, not to exceed $3.0 million, if the Merger Agreement is terminated under certain circumstances.

The pendency of the Merger could adversely affect our business and operations.

Due to operating covenants in the Merger Agreement, we may be unable, during the pendency of the Merger, to take certain actions, even if we believe such actions could otherwise prove to be beneficial to our stockholders.

The Merger Agreement includes restrictions on our ability to make excess distributions to our stockholders, even if we would otherwise have net income and net cash available to make such distributions.

The terms of the Merger Agreement generally prohibit us from making distributions to our stockholders in excess of $1.50 per share of our common stock (determined on an annual basis), unless we obtain the prior written consent of Griffin. While we and Griffin have generally agreed to use our reasonable best efforts to close the Merger in an expeditious manner, factors could cause the delay of the closing, which include obtaining the approval of the Merger from our stockholders. Therefore, even if we have available net income or net cash to make distributions to our stockholders and satisfies any other conditions to make such distributions, the terms of the Merger Agreement could prohibit such action.

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If we decide to list our common stock on a national securities exchange, we may wish to lower our distribution rate in order to optimize the price at which our shares would trade.

Our board of directors has the option to effect a liquidity event by listing our common stock on a national securities exchange. If such an election were to occur, a reduction in our distribution rate could occur with or in advance of a listing, as the public market for listed REITs appears to reward those that have a more conservative distribution policy.

Approximately 23% and 32% of our leases (based on percentage of 2013 annualized base rent represented by such leases) are due to expire in 2017 and 2019, respectively. Most of this space is in single-tenant buildings. As the date of the expiration of a lease for a single-tenant building approaches, the value of the property generally declines because of the risk that the building may not be re-leased upon expiration of the existing lease or may not be re-leased on terms as favorable as those of the current leases. Therefore, if we were to list or liquidate our portfolio prior to the favorable re-leasing of the space referenced, our stockholders would likely suffer a loss on their investments. Our stockholders may also suffer a loss (and a reduction in distributions) after the expiration of the lease terms if we are not able to re-lease such space on favorable terms. These expiring leases, therefore, increase our risk to real estate downturns during and approaching these periods of concentrated lease expirations. In addition, we are likely to have to spend significant capital in order to ready the space for new tenants. To meet our need for cash at this time, we may have to increase borrowings or reduce our distributions, or both.

We may change our targeted investments without stockholder consent.

Our portfolio of investments currently consists of high-quality, income-generating office properties leased to creditworthy companies; however, we may acquire other types of real estate, including industrial properties. We may make adjustments to our target portfolio based on real estate market conditions and investment opportunities, and we may change our targeted investments and investment guidelines at any time without the consent of our stockholders, which could result in our making investments that are different from, and possibly riskier than, the investments described in the prospectus for our Initial Offering. A change in our targeted investments or investment guidelines may increase our exposure to interest rate risk, default risk, and real estate market fluctuations, all of which could adversely affect the value of our common stock and our ability to make distributions to our stockholders.

Risks Related to Our Corporate Structure

No investor may own more than 9.8% of our stock unless exempted by our board of directors, which may discourage a takeover that could otherwise result in a premium price to our stockholders.

Our charter, with certain exceptions, authorizes our directors to take such actions as are necessary and desirable to preserve our qualification as a REIT. Unless exempted by our board of directors, no person may own more than 9.8% of our outstanding common stock. This restriction may have the effect of delaying, deferring, or preventing a change in control of us, including an extraordinary transaction (such as a merger, tender offer, or sale of all or substantially all of our assets) that might provide a premium price for holders of our common stock.

Our charter permits our board of directors to issue stock with terms that may subordinate the rights of our common stockholders or discourage a third party from acquiring us in a manner that could result in a premium price to our stockholders.

Our board of directors may classify or reclassify any unissued common stock or preferred stock and establish the preferences, conversion, or other rights; voting powers; restrictions; and limitations as to distributions, qualifications, and terms or conditions of redemption of any such stock. Thus, our board of directors could authorize the issuance of preferred stock with terms and conditions that could have priority as to distributions and amounts payable upon liquidation over the rights of the holders of our common stock. Such preferred stock could also have the effect of delaying, deferring, or preventing a change in control of us, including an extraordinary transaction (such as a merger, tender offer, or sale of all or substantially all of our assets) that might provide a premium price to holders of our common stock.

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and terms or conditions of redemption of any such stock. Thus, our board of directors could authorize the issuance of preferred stock with terms and conditions that could have priority as to distributions and amounts payable upon liquidation over the rights of the holders of our common stock. Such preferred stock could also have the effect of delaying, deferring, or preventing a change in control of us, including an extraordinary transaction (such as a merger, tender offer, or sale of all or substantially all of our assets) that might provide a premium price to holders of our common stock.

Our stockholders will have limited control over changes in our policies and operations, which increases the uncertainty and risks our stockholders face.

Our board of directors determines our major policies, including our policies regarding investment strategies, financing, REIT qualification, and distributions. Our board of directors may amend or revise these and other policies without a stockholder vote. Under Maryland General Corporation Law and our charter, our stockholders have a right to vote only on limited matters. Our board's broad discretion in setting policies and our stockholders' inability to exert control over those policies increase the uncertainty and risks our stockholders face.

~~Because~~We intend to use the ~~offering~~most recent price inpaid ~~our~~to ~~DRP~~acquire ~~was~~a ~~not~~share ~~established~~ in ~~reliance~~the onprimary aportion ~~valuation~~ of our ~~assets~~Initial ~~and~~Offering ~~liabilities~~as ~~and~~the ~~exceeds~~estimated ~~our net tangible book~~ value ~~per~~of ~~share, investors in~~ our ~~DRP~~shares, ~~will~~which ~~experience~~is ~~immediate~~likely ~~dilution~~greater inthan the ~~net~~amount ~~tangible~~a ~~book~~stockholder ~~value~~would ofreceive ~~their~~upon ~~shares, and~~ the ~~offering~~resale ~~price~~of inhis ~~our~~or ~~DRP~~her ~~may~~shares ~~exceed~~or upon the ~~actual~~liquidation ~~value~~ of ~~shares~~our assets.

Through the payment of the distribution for the first quarter of 2014, we are offering shares in our DRP at $23.75 per share. Our net tangible book value per share is a mechanical calculation using amounts from our consolidated balance sheet, and is calculated as (i) total book value of our assets (ii) minus total liabilities, (iii) divided by the total number of shares of common stock outstanding. It assumes that the value of real estate, and real estate related assets and liabilities diminish predictably over time as shown through the depreciation and amortization of real estate investments. Real estate values have historically risen or fallen with market conditions. Net tangible book value is used generally as a conservative measure of net worth that we do not believe reflects our estimated value per share. It is not intended to reflect the value of our assets upon an orderly liquidation of the company in accordance with our investment objectives. Our net tangible book value reflects dilution in the value of our common stock from the issue price as a result of (i) operating losses, which reflect accumulated depreciation and amortization of real estate investments, (ii) cumulative distributions in excess of earnings, (iii) fees paid in connection with our Initial Offering, including selling commissions and marketing fees re-allowed by our dealer manager to participating broker dealers, (iv) the fees and expenses paid to the Advisor and its affiliates in connection with the selection, acquisition, and management of our investments and (v) general and administrative expenses. As of December 31, 2013, our net tangible book value per share was $18.46.

Our DRP share price was not established on an independent basis and bears no relationship to the net value of our assets. Further, even without depreciation in the value of our assets, the other factors described above with respect to the dilution in the value of our common stock are likely to cause our DRP share price to be higher than the amount an investor would receive per share if we were to liquidate at this time.

We intend to use the most recent price paid to acquire a share in the primary portion of our Initial Offering as the estimated value of our shares until we have completed our offering stage. Should we begin to use other valuation methods to estimate the value of our shares, the value of our shares will be based upon a number of assumptions that may not be accurate or complete.

We established the offering price of our shares on an arbitrary basis. The selling price of our shares bears no relationship to our book or asset values or to any other established criteria for valuing shares. If we were to sell our assets at this time in an orderly liquidation, you would receive substantially less than $25.00 per share and may receive less than our net offering proceeds of $21.63 per share for the following reasons: (i) we paid high up front fees in connection with the issuance of our shares, (ii) a material portion of our leases are due to expire in 2017 and 2019; (iii) we have paid distributions to stockholders in excess of our cash flow from operations; and (iv) we raised fewer offering proceeds than expected, resulting in higher fixed operating expenses as a percentage of our revenue.

12To assist members of the Financial Industry Regulatory Authority (“FINRA”) and their associated persons that participated in the primary portion of our Initial Offering, pursuant to applicable FINRA and NASD Conduct Rules, we disclose in each annual report distributed to stockholders a per share estimated value of our shares, the method by which it was developed, and the date of the data used to develop the estimated value. For this purpose, we estimated the value of our common shares as $25.00 per share as of December 31, 2014. The basis for this valuation is the fact that the last offering price paid to acquire a share of common stock in the primary portion of our Initial Offering was $25.00 per share (ignoring purchase price discounts for certain categories of purchasers).

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To assist members of the Financial Industry Regulatory Authority (“FINRA”) and their associated persons that participated in the primary portion of our Initial Offering, pursuant to FINRA Rule 2310, we disclose in each annual report distributed to stockholders a per share estimated value of our shares, the method by which it was developed, and the date of the data used to develop the estimated value. For this purpose, we estimated the value of our common shares as $25.00 per share as of December 31, 2013. The basis for this valuation is the fact that the last offering price paid to acquire a share of common stock in the primary portion of our Initial Offering was $25.00 per share (ignoring purchase price discounts for certain categories of purchasers). We intend to use the most recent price paid to acquire a share in the primary portion of our Initial Offering (ignoring purchase price discounts for certain categories of purchasers) as the estimated per share value of our shares until we have completed our offering stage. We will consider our offering stage complete when we are no longer publicly offering equity securities - whether through the primary portion of our Initial Offering or follow-on public offerings - and have not done so for up to 18 months. If our board of directors determines that it is in our best interest, we may conduct follow-on offerings. Our charter does not restrict our ability to conduct offerings in the future. (For purposes of this definition, we do not consider a “public equity offering” to include offerings on behalf of selling stockholders or offerings related to a dividend reinvestment plan, employee benefit plan or the redemption of interests in Signature Office OP.)

Although this initial estimated value represents the most recent price at which most investors were willing to purchase shares in the primary portion of our Initial Offering, this reported value is likely to differ from the price that a stockholder would receive in the near term upon a resale of his or her shares or upon a liquidation of the our assets because (i) the Initial Offering involved the payment of underwriting compensation and other directed selling efforts, which payments and efforts were likely to produce a higher sale price than could otherwise have been obtained; (ii) the estimated value does not reflect, and is not derived from the fair market value of our assets and ignores the payment of selling commissions, dealer-manager fees, other organization and offering costs and acquisition and advisory fees and expenses; (iii) there is no public trading market for our shares; (iv) the estimated value does not take into account how market fluctuations affect the value of our investments; (v) the estimated value does not take into account how developments related to individual assets may have increased or decreased the value of our portfolio; (vi) a material portion of our leases are due to expire in 2017 and 2019; (vii) we have paid distributions in excess of our cash flow from operations; and (viii) we raised fewer proceeds in our Initial Offering than we expected, resulting in higher fixed operating expenses as a percentage of our revenue.

After the offering period, should an additional per-share value based on the current value of our portfolio be publicly reported, we, or a firm we choose for that purpose, will estimate the value of our shares based upon a number of assumptions that may not be accurate or complete. Accordingly, these estimates may or may not be an accurate reflection of the fair market value of our investments and will not likely represent the amount of net proceeds that would result from an immediate sale of our assets.

The actual value of shares that we repurchase under our Amended SRP may be substantially less than what we pay.

Under our Amended SRP, shares may be repurchased at varying prices depending on the purchase price paid for the shares. The maximum price that may currently be paid under the program is $22.75 per share, which is 91% of the offering price of our shares of common stock in the primary portion of our Initial Offering (ignoring purchase price discounts for certain categories of purchasers), and is likely to be greater than the price at which a stockholder could resell his or her shares for the reasons discussed in the risk factor above. Thus, when we repurchase shares of our common stock at $22.75 per share, the actual value of the shares that we repurchase may be less, and the repurchase is likely to be dilutive to our remaining stockholders. Even at lower repurchase prices, the actual value of the shares may be substantially less than what we pay and the repurchase may be dilutive to our remaining stockholders.

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Our stockholders will not be able to sell their shares under the Amended SRP subsequent to April 30, 2014. Even if stockholders are able to sell their shares under the Amended SRP prior to April 30, 2014, such stockholders will only be able to redeem a small portion of their shares.

On March 5, 2014, our board of directors elected to terminate the Amended SRP, effective April 30, 2014 upon the redemption of any shares of common stock properly submitted for redemption under the Amended SRP for the month of April 2014. As a result, for stockholder’s shares to be eligible for redemption prior to such termination, we must receive a written redemption request from the stockholder or from an authorized representative of the stockholder in good order and on a form approved by us on or before April 23, 2014.

Even if a stockholder submits a redemption request on or before April 23, 2014, there are significant conditions and limitations that limit our stockholders’ ability to sell their shares under the Amended SRP. Only shares held by the original purchaser or shares transferred other than for value by the original purchaser and all subsequent holders may participate in the Amended SRP prior to its termination. In other words, once a stockholder sells his or her shares, all subsequent transferees of those shares are excluded from participating in the Amended SRP. Except with respect to redemptions sought within two years of a stockholder's death or qualifying disability, a stockholder would need to have held his or her shares for at least one year in order to participate in the Amended SRP. The Amended SRP limits the number of shares that we may redeem under the program as follows:

• We may not redeem shares on any redemption date to the extent that such redemptions would cause the amount paid for "Ordinary Redemptions" (redemptions not sought within two years of an investor's death or qualifying disability) during the 12-month period ending on such redemption date to exceed 70% of the net proceeds from the sale of shares under our distribution reinvestment plan during such 12-month period.

• We will limit all redemptions so that the aggregate of such redemptions during the 12-month period ending on such redemption date does not exceed:

• 100% of the net proceeds from our distribution reinvestment plan during such 12-month period; or

• 5% of the weighted-average number of shares outstanding in such 12-month period.

The price at which we will redeem a share through April 30, 2014 is 91% of the price at which we sold the share, or $22.75 per share for a share issued at $25.00. Additionally, in February 2014, Ordinary Redemption requests exceeded the limits of the Amended SRP and, as such, were prorated pursuant to the terms of the Amended SRP at a rate of approximately 8.5%. Based on the level of Ordinary Redemption requests currently submitted and waiting for processing, we anticipate that Ordinary Redemptions processed prior to the termination of the Amended SRP will be prorated as well. As a result, even if stockholders submit their Ordinary Redemption requests on or before April 23, 2014, we will only be able to redeem a small portion their shares.

Our stockholders' interest in us will be diluted if we issue additional shares, which could reduce the overall value of their investment.

Our stockholders do not have preemptive rights to any shares we issue in the future. Our charter authorizes us to issue 1,010,000,000 shares of capital stock, of which 1,000,000,000 shares are designated as common stock and 10,000,000 are designated as preferred stock. Our board of directors may increase the number of authorized shares of capital stock without stockholder approval. Our board may elect to (1i) sell additional shares in future public offerings; (2ii) issue equity interests in private offerings; (3iii) issue shares of our common stock under an incentive compensation equity award plan to our independent directors or to our employees; or (4iv) issue shares of our common stock to sellers of properties we acquire in connection with an exchange of limited partnership interests of Signature Office OP. To the extent we issue additional equity interests, our stockholders' percentage ownership interest in us will be diluted. Further, depending upon the terms of such transactions, most notably the offering price per share, which may be less than the price paid per share in our Initial Offering, and the value of our properties, existing stockholders may also experience a dilution in the book value of their investment in us.

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If we are unable to obtain funding for future capital needs, cash distributions to our stockholders and the value of our investments could decline.

When tenants do not renew their leases or otherwise vacate their space, we will often need to expend substantial funds for tenant improvements to the vacated space in order to attract replacement tenants. Even when tenants do renew their leases, we may agree to make improvements to their space as part of our negotiation. In addition, although we expect that our leases with tenants will require tenants to pay routine property maintenance costs, we will likely be responsible for any major structural repairs, such as repairs to the foundation, exterior walls, and rooftops.

We do not intend to reserve significant operating cash flows for future capital needs. Accordingly, if we need significant capital in the future to improve or maintain our properties or for any other reason, we will have to obtain financing from other sources, such as cash flow from operations, borrowings, property sales, or future equity offerings. These sources of funding may not be available on attractive terms or at all. If we cannot procure additional funding for capital improvements, our investments may generate lower cash flows or decline in value, or both, which would limit our ability to make distributions to our stockholders and could reduce the value of our stockholders' investment.

Our board of directors has opted out of certain provisions of the Maryland General Corporation Law relating to deterring or defending hostile takeovers. Although we will not currently be afforded this protection, our board of directors could opt into these provisions of Maryland law in the future, which may discourage others from trying to acquire control of us and may prevent our stockholders from receiving a premium price for their stock in connection with a business combination.

Under Maryland law, "business combinations" between a Maryland corporation and certain interested stockholders, or affiliates of interested stockholders, are prohibited for five years after the most recent date on which the interested stockholder becomes an interested stockholder. These business combinations include a merger, consolidation, share exchange, or, in circumstances specified in the statute, an asset transfer or issuance or reclassification of equity securities. Also, under Maryland law, control shares of a Maryland corporation acquired in a control share acquisition have no voting rights except to the extent approved by a vote of two-thirds of the votes entitled to be cast on the matter. Should our board opt into these provisions of Maryland law, it may discourage others from trying to acquire control of us and increase the difficulty of consummating any offer. Similarly, provisions of Title 3, Subtitle 8, of the Maryland General Corporation Law could provide similar anti-takeover protection.

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stockholder becomes an interested stockholder. These business combinations include a merger, consolidation, share exchange, or, in circumstances specified in the statute, an asset transfer or issuance or reclassification of equity securities. Also, under Maryland law, control shares of a Maryland corporation acquired in a control share acquisition have no voting rights except to the extent approved by a vote of two-thirds of the votes entitled to be cast on the matter. Should our board opt into these provisions of Maryland law, it may discourage others from trying to acquire control of us and increase the difficulty of consummating any offer. Similarly, provisions of Title 3, Subtitle 8, of the Maryland General Corporation Law could provide similar anti-takeover protection.

General Risks Related to Investments in Real Estate

Economic, market, and regulatory changes that impact the real estate market generally may cause our operating results to suffer and decrease the value of our properties.

Our operating results will be subject to risks generally incident to the ownership of real estate, including:


•	changes in general or local economic conditions;


•	changes in the supply of or demand for similar or competing properties in an area;


•	changes in interest rates and the availability of permanent mortgage financing, which may render the sale of a property or loan difficult or unattractive;


•	changes in tax, real estate, environmental and zoning laws; and


•	periods of high interest rates and tight money supply.

Any of the above factors, or combination thereof, could result in a decrease in the value of our properties, which would have an adverse effect on our operations, on our ability to pay distributions to our stockholders, and on the value of an investment in us.

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Properties that have significant vacancies could be difficult to sell, which could diminish the return on an investment in us.

A property may incur vacancies either by the continued default of tenants under their leases or the expiration of tenant leases. If vacancies continue for a long period of time, we may suffer reduced revenues, resulting in less cash available to distribute to our stockholders. In addition, because the value of a property's lease has a significant impact on that property's market value, the resale value of a property with high or prolonged vacancies could suffer, which could further reduce our stockholders' returns.

We depend on tenants for our revenue, and lease defaults or terminations by significant tenants could reduce our net income and limit our ability to make distributions to our stockholders.

The success of our investments materially depends on the financial stability of our tenants. A default or termination by a significant tenant on its lease payments to us would cause us to lose the revenue associated with such lease and require us to find an alternative source of revenue to meet mortgage payments and prevent a foreclosure, if the property is subject to a mortgage. In the event of a tenant default or bankruptcy, we may experience delays in enforcing our rights as landlord and may incur substantial costs in protecting our investment and re-leasing our property, ~~particularly in the event the asset is an industrial property,~~ which may not have efficient alternative uses. If a tenant defaults on or terminates a significant lease, we may be unable to lease the property for the rent previously received or sell the property without incurring a loss. These events could cause us to reduce the amount of distributions to our stockholders.

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If we enter into long-term leases with office tenants, those leases may not result in fair value over time.

Long-term leases do not allow for significant changes in rental payments and do not expire in the near-term. If we do not accurately judge the potential for increases in market rental rates when negotiating these long-term leases, significant increases in future property operating costs could result in receiving less than fair value from these leases. Such circumstances would adversely affect our revenues and funds available for distribution.

Our inability to sell a property when we want could limit our ability to pay cash distributions to our stockholders.

General economic conditions, availability of financing, interest rates, and other factors, including supply and demand, all of which are beyond our control, affect the real estate market. We may be unable to sell a property for the price, on the terms, or within the time frame we want. That inability could reduce our cash flow and cause our results of operations to suffer, limiting our ability to pay distributions to our stockholders.

Uninsured losses relating to real property or excessively expensive premiums for insurance coverage could reduce our net income and the return on an investment in us.

There are types of losses, generally catastrophic in nature, such as losses due to wars, acts of terrorism, earthquakes, floods, hurricanes, pollution, or environmental matters that are uninsurable or not economically insurable, or may be insured subject to limitations, such as large deductibles or co-payments. Insurance risks associated with potential terrorist acts could sharply increase the premiums we pay for coverage against property and casualty claims. Additionally, mortgage lenders in some cases have begun to insist that commercial property owners purchase coverage against terrorism as a condition of providing mortgage loans. Such insurance policies may not be available at a reasonable cost, if at all, which could inhibit our ability to finance or refinance our properties. In such instances, we may be required to provide other financial support, either through financial assurances or self-insurance, to cover potential losses. We may not have adequate coverage for such losses. If any of our properties incur a casualty loss that is not fully insured, the value of that asset will be reduced by such uninsured loss. In addition, other than any working capital reserve or other reserves we may establish, or our existing line of credit, we do not have any sources of funding specifically designated for funding repairs or reconstruction of any uninsured damaged property. Also, to the extent we must pay unexpectedly large amounts for insurance, we could suffer reduced earnings that would result in lower distributions to our stockholders.

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Actions of our potential future joint venture partners could reduce the returns on our future joint venture investments and decrease our stockholders' overall return.

We may enter into joint ventures to acquire, develop, or improve properties. Such joint venture arrangements may involve risks not otherwise present with other methods of investment in real estate, including, for example, the following risks:

• the possibility of disputes with our joint venture partners;

• reduced control over our assets, such as an inability to sell an asset when doing so would have been in our best interests; and

• that such co-venturer, co-tenant, or partner may be in a position to take action contrary to our instructions or requests or contrary to our policies or objectives.

Any of the above might subject a property to liabilities in excess of those contemplated and thus reduce our returns on that investment and the value of an investment in us.

Costs imposed pursuant to governmental laws and regulations may reduce our net income and the cash available for distributions to our stockholders.

Real property and the operations conducted on real property are subject to federal, state, and local laws and regulations relating to protection of the environment and human health. We could be subject to liability in the form of fines, penalties, or damages for noncompliance with these laws and regulations. These laws and regulations generally govern wastewater discharges; air emissions; the operation and removal of underground and above-ground storage tanks; the use, storage, treatment, transportation, and disposal of solid and hazardous materials; the remediation of contamination associated with the release or disposal of solid and hazardous materials; the presence of toxic building materials; and other health and safety-related concerns.

Some of these laws and regulations may impose joint and several liability on the tenants, owners, or operators of real property for the costs to investigate or remediate contaminated properties, regardless of fault, whether the contamination occurred prior to purchase, or whether the acts causing the contamination were legal. Our tenants' operations, the condition of properties at the time we buy them, operations in the vicinity of our properties, such as the presence of underground storage tanks, or activities of unrelated third parties may affect our properties.

The presence of hazardous substances, or the failure to properly manage or remediate these substances, may hinder our ability to sell, rent, or pledge such property as collateral for future borrowings. Any material expenditures, fines, penalties, or damages we must pay will reduce our ability to make distributions and may reduce the value of an investment in us.

The costs of defending against claims of environmental liability, of complying with environmental regulatory requirements, of remediating any contaminated property, or of paying personal injury claims could reduce the amounts available for distribution to our stockholders.14

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~~property owners or operators for personal injury or property damage associated with exposure to released hazardous substances.~~ The costs of defending against claims of environmental liability, of complying with environmental regulatory requirements, of remediating any contaminated property, or of paying personal injury claims could reduce the amounts available for distribution to our stockholders. ~~We intend for all of our properties to be subject to Phase I environmental assessments at the time they are acquired.~~

Under various federal, state, and local environmental laws, ordinances, and regulations, a current or previous real property owner or operator may be liable for the cost of removing or remediating hazardous or toxic substances on, under, or in such property. These costs could be substantial. Such laws often impose liability whether or not the owner or operator knew of, or was responsible for, the presence of such hazardous or toxic substances. Environmental laws also may impose liens on property or restrictions on the manner in which property may be used or businesses may be operated, and these restrictions may require substantial expenditures or prevent us from entering into leases with prospective tenants that may be impacted by such laws. Environmental laws provide for sanctions for noncompliance and may be enforced by governmental agencies or, in certain circumstances, by private parties. Certain environmental laws and common law principles could be used to impose liability for the release of and exposure to hazardous substances, including asbestos-containing materials and lead-based paint. Third parties may seek recovery from real property owners or operators for personal injury or property damage associated with exposure to released hazardous substances. The costs of defending against claims of environmental liability, of complying with environmental regulatory requirements, of remediating any contaminated property, or of paying personal injury claims could reduce the amounts available for distribution to our stockholders. We intend for all of our properties to be subject to Phase I environmental assessments at the time they are acquired.

Costs associated with complying with the Americans with Disabilities Act may decrease cash available for distributions.

Our properties may be subject to the Americans with Disabilities Act of 1990, as amended (the "Disabilities Act"). Under the Disabilities Act, all places of public accommodation are required to comply with federal requirements related to access and use by disabled persons. The Disabilities Act has separate compliance requirements for "public accommodations" and "commercial facilities" that generally require that buildings and services be made accessible and available to people with disabilities. The Disabilities Act's requirements could require removal of access barriers and could result in the imposition of injunctive relief, monetary penalties or, in some cases, an award of damages. Any funds used for Disabilities Act compliance will reduce our net income and the amount of cash available for distributions to our stockholders.

Terrorist attacks and other acts of violence or war may affect the markets in which we plan to operate, which could delay or hinder our ability to meet our investment objectives and reduce our stockholders' overall return.

Terrorist attacks or armed conflicts may directly impact the value of our properties through damage, destruction, loss, or increased security costs. We currently own properties located in certain major metropolitan areas. We may not be able to obtain insurance against the risk of terrorism because it may not be available or may not be available on terms that are economically feasible. The terrorism insurance that we obtain may not be sufficient to cover loss for damages to our properties as a result of terrorist attacks. The inability to obtain sufficient terrorism insurance or any terrorism insurance at all could limit our investment options as some mortgage lenders have begun to insist that specific coverage against terrorism be purchased by commercial owners as a condition of providing loans.

Risks Associated with Debt Financing

We have incurred, and are likely to continue to incur, mortgage and other indebtedness, which may increase our business risks.

We have incurred indebtedness and are likely to incur additional indebtedness. We may incur indebtedness to acquire properties, to fund property improvements and other capital expenditures, to ~~redeem shares under our share redemption program, to~~ pay distributions, and for other purposes.

Significant borrowings by us increase the risks of an investment in us. If there is a shortfall between the cash flow from properties and the cash flow needed to service our indebtedness, then the amount available for distributions to our stockholders may be reduced. In addition, incurring mortgage debt increases the risk of loss since defaults on indebtedness secured by a property may result in lenders initiating foreclosure actions. In that case, we could lose the property securing the loan that is in default, thus reducing the value of our stockholders' investment. For tax purposes, a foreclosure of any of our properties would be treated as a sale of the property for a purchase price equal to the outstanding balance of the debt secured by the mortgage. If the outstanding balance of the debt secured by the mortgage exceeds our tax basis in the property, we would recognize taxable income on foreclosure, but we would not receive any cash proceeds. We may give full or partial guarantees to lenders of mortgage debt on behalf of the entities that own our properties. When we give a guaranty on behalf of an entity that owns one of our properties, we will be responsible to the lender for satisfaction of the debt if it is not paid by such entity.

If any mortgages or other indebtedness contain cross-collateralization or cross-default provisions, a default on a single loan could affect multiple properties. Our credit facility includes a cross-default provision that provides that a payment default under any recourse obligation above a negotiated dollar amount or any non-recourse obligation above another 15

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~~negotiated~~our ~~dollar~~stockholders ~~amount~~may be reduced. In addition, incurring mortgage debt increases the risk of loss since defaults on indebtedness secured by usa property may result in lenders initiating foreclosure actions. In that case, ~~Signature~~we ~~Office~~could OPlose the property securing the loan that is in default, orthus reducing the value of our stockholders' investment. For tax purposes, a foreclosure of any of our ~~subsidiaries~~properties ~~will~~would ~~constitute~~be treated as a ~~default~~sale ~~under~~of the ~~credit~~property ~~facility~~for a purchase price equal to the outstanding balance of the debt secured by the mortgage. If the outstanding balance of the debt secured by the mortgage exceeds our tax basis in the property, we would recognize taxable income on foreclosure, but we would not receive any cash proceeds. We may give full or partial guarantees to lenders of mortgage debt on behalf of the entities that own our properties. When we give a guaranty on behalf of an entity that owns one of our properties, we will be responsible to the lender for satisfaction of the debt if it is not paid by such entity.

~~High~~If ~~mortgage~~any ~~rates~~mortgages ~~may~~or ~~make~~other itindebtedness ~~difficult~~contain ~~for~~cross-collateralization usor tocross-default ~~finance~~provisions, ora ~~refinance~~default ~~properties,~~on ~~which~~a ~~could~~single ~~reduce~~loan ~~the~~could ~~number~~affect ofmultiple properties. weOur ~~can~~credit ~~acquire,~~facility ~~our~~includes ~~net~~a ~~income,~~cross-default ~~and~~provision ~~the~~that provides that a payment default under any recourse obligation above a negotiated dollar amount or any non-recourse obligation above another negotiated dollar amount by us, Signature Office OP, or any of ~~cash~~our ~~distributions~~subsidiaries wewill ~~can~~constitute ~~make~~a default under the credit facility.

IfHigh mortgage ~~debt~~interest ~~is unavailable at reasonable~~ rates, we may ~~not~~make beit ~~able~~difficult tofor ~~finance~~us ~~the purchase of properties. If we place mortgage debt on properties, we run the risk of being unable~~ to ~~refinance~~finance ~~the properties when the loans become due,~~ or ~~of being unable to~~ refinance ~~on favorable terms. If interest rates are higher when we refinance the~~ properties, ~~our~~which ~~income~~ could bereduce ~~reduced.~~the Ifnumber ~~any~~ of ~~these~~properties ~~events~~we ~~occur,~~can ~~our cash flow would be reduced. This~~acquire, ~~in turn, would reduce cash available for distribution to~~ our ~~stockholders,~~net ~~may hinder our ability to raise more capital by borrowing more money~~income, and~~/or~~ ~~may~~the ~~force~~amount ~~us to dispose~~ of ~~some~~cash ofdistributions ~~our~~we ~~assets~~can make.

If mortgage debt is unavailable at reasonable interest rates, we may not be able to finance the purchase of properties. If we place mortgage debt on properties, we run the risk of being unable to refinance the properties when the loans become due, or of being unable to refinance on favorable terms. If interest rates are higher when we refinance the properties, our income could be reduced. If any of these events occur, our cash flow would be reduced. This, in turn, would reduce cash available for distribution to our stockholders, may hinder our ability to raise more capital by borrowing more money, and/or may force us to dispose of some of our assets.

Lenders may require us to enter into restrictive covenants relating to our operations, which could limit our ability to make distributions to our stockholders.

When providing financing, a lender may impose restrictions on us that affect our distribution and operating policies and our ability to incur additional debt. Loan documents we enter into may contain covenants that limit our ability to further mortgage the property or discontinue insurance coverage. These or other limitations may limit our flexibility and our ability to achieve our operating plans.

Increases in interest rates or the use of longer-term debt to finance or refinance our properties would increase our costs and decrease the amount of cash available for distributions and could reduce the overall returns to our investors.

To date, we have financed a portion of our acquisitions through short-term debt. Interest rates on short-term debt have been at historic lows and are lower than the rates available on longer-term debt. In the short term, such low-cost financing increases the amount of cash available for distribution to our stockholders. If short-term interest rates increase, or if we determine that it is prudent to use a greater proportion of longer-term debt to finance or refinance our properties, then our costs would increase in comparison to current levels, the overall returns on our stockholders' investments would be lower, and we could have difficulty maintaining the current rate of our stockholder distributions.

We have broad authority to incur debt, and high debt levels could hinder our ability to make distributions and could decrease the value of an investment in us.

Our charter limits us from incurring debt in relation to our net assets in excess of 100% (valued at cost before depreciation and other noncash reserves). However, upon a showing that a higher level of debt is appropriate, a majority of our Conflicts Committee, after determining that a substantial justification exists, may approve such excess in borrowings over the 100% level. High debt levels would cause us to incur higher interest charges, would result in higher debt service payments, and could be accompanied by restrictive covenants. These factors could limit the amount of cash we have available to distribute and could result in a decline in the value of an investment in us.

Federal Income Tax Risks

Our failure to qualify as a REIT for federal income tax purposes would reduce the amount of income we have available for distribution and limit our ability to make distributions to our stockholders.

Our qualification as a REIT depends upon our ability to meet requirements regarding our organization and ownership, distributions of our income, the nature and diversification of our income and assets, and other tests imposed by the Internal Revenue Code of 1986, as amended (the "Code"). If we fail to qualify as a REIT for any taxable year after electing REIT status, we will be subject to federal income tax on our taxable income at corporate rates. In addition, we would generally be disqualified from treatment as a REIT for the four taxable years following the year of losing our REIT status. Losing our REIT status would reduce our net earnings available for investment or distribution to stockholders because of the additional tax liability. In addition, distributions to stockholders would no longer qualify

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our REIT status. Losing our REIT status would reduce our net earnings available for investment or distribution to stockholders because of the additional tax liability. In addition, distributions to stockholders would no longer qualify for the dividends-paid deduction, and we would no longer be required to make distributions. If this occurs, we might be required to borrow funds or liquidate some investments in order to pay the applicable tax.

Additionally, we may from time to time form or acquire interests in subsidiary entities taxable as REITs. If one or more such entities were to fail to qualify as a REIT, our own compliance with the REIT qualification tests may be threatened.

Our stockholders may have current tax liability on distributions they elect to reinvest in our common stock.

If our stockholders participate in our DRP, they will be deemed to have received, and for income tax purposes will be taxed on, the amount reinvested in shares of our common stock to the extent the amount reinvested was not a tax-free return of capital. In addition, they will be treated for tax purposes as having received an additional distribution to the extent the shares are purchased at a discount to fair market value. As a result, unless a stockholder is a tax-exempt entity, he or she may have to use funds from other sources to pay his or her tax liability on the value of the shares of common stock received. On March 5, 2014, our board of directors elected to terminate the DRP, effective after the payment of the distribution for the first quarter of 2014.

Even if we qualify as a REIT for federal income tax purposes, we may be subject to other tax liabilities that reduce our cash flow and our ability to make distributions to our stockholders.

Even if we qualify as a REIT for federal income tax purposes, we may be subject to some federal, state, and local taxes on our income or property. For example:

•

In order to qualify as a REIT, we must distribute annually at least 90% of our REIT taxable income to our stockholders (which is determined without regard to the dividends-paid deduction or net capital gain). To the extent that we satisfy the distribution requirement but distribute less than 100% of our REIT taxable income, we will be subject to federal and state corporate income tax on the undistributed income.


•	We will be subject to a 4% nondeductible excise tax on the amount, if any, by which distributions we pay in any calendar year are less than the sum of 85% of our ordinary income, 95% of our capital gain net income, and 100% of our undistributed income from prior years.


•	If we have net income from the sale of foreclosure property that we hold primarily for sale to customers in the ordinary course of business or other nonqualifying income from foreclosure property, we must pay a tax on that income at the highest corporate income tax rate.


•	If we sell a property, other than foreclosure property, that we hold primarily for sale to customers in the ordinary course of business, our gain would be subject to the 100% "prohibited transaction" tax.


•	We may perform additional, noncustomary services for tenants of our buildings through taxable REIT subsidiaries, including real estate or non-real-estate-related services; however, any earnings related to such services are subject to federal and state income taxes.

To maintain our REIT status, we may be forced to borrow funds during unfavorable market conditions to make distributions to our stockholders, which could increase our operating costs and decrease the value of an investment in us.

To qualify as a REIT, we generally must distribute to our stockholders each year at least 90% of our REIT taxable income (which is determined without regard to the dividends-paid deduction or net capital gain). At times, we may not have sufficient funds to satisfy these distribution requirements and may need to borrow funds to maintain our REIT status and avoid the payment of income and excise taxes. These borrowing needs could result from (i) differences in timing between the actual receipt of cash and inclusion of income for federal income tax purposes; (ii) the effect of nondeductible capital expenditures; (iii) the creation of reserves; or (iv) required debt or amortization payments. We may need to borrow funds at times when market conditions are unfavorable. Such borrowings could increase our costs and reduce the value of our common stock.

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borrow funds at times when market conditions are unfavorable. Such borrowings could increase our costs and reduce the value of our common stock.

To maintain our REIT status, we may be forced to forego otherwise attractive opportunities, which could delay or hinder our ability to meet our investment objectives and lower the return on our stockholders' investments.

To qualify as a REIT, we must satisfy tests on an ongoing basis concerning, among other things, the sources of our income, nature of our assets, and the amounts we distribute to our stockholders. We may be required to make distributions to stockholders at times when it would be more advantageous to reinvest cash in our business or when we do not have funds readily available for distribution. Compliance with the REIT requirements may hinder our ability to operate solely on the basis of maximizing profits and the value of our stockholders' investments.

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funds readily available for distribution. Compliance with the REIT requirements may hinder our ability to operate solely on the basis of maximizing profits and the value of our stockholders' investments.

Complying with REIT requirements may force us to liquidate otherwise attractive investments.

To qualify as a REIT, we must ensure that at the end of each calendar quarter, at least 75.0% of the value of our assets consists of cash, cash items, government securities, and qualified REIT real estate assets, including certain mortgage loans and mortgage-backed securities. The remainder of our investment in securities (other than government securities and qualified real estate assets) generally cannot include more than 10.0% of the outstanding voting securities of any one issuer or more than 10.0% of the total value of the outstanding securities of any one issuer. In addition, in general, no more than 5.0% of the value of our assets (other than government securities and qualified real estate assets) can consist of the securities of any one issuer, and no more than 25.0% of the value of our total assets can be represented by securities of one or more taxable REIT subsidiaries. If we fail to comply with these requirements at the end of any calendar quarter, we must correct the failure within 30 days after the end of the calendar quarter or qualify for certain statutory relief provisions to avoid losing our REIT qualification and suffering adverse tax consequences. As a result, we may be required to liquidate from our portfolio otherwise attractive investments. These actions could have the effect of reducing our income and amounts available for distribution to our stockholders.

Complying with REIT requirements may limit our ability to hedge effectively.

The REIT provisions of the Code may limit our ability to hedge our assets and operations. Under these provisions, any income that we generate from transactions intended to hedge our interest rate, inflation, and/or currency risks will be excluded from gross income for purposes of the REIT 75% and 95% gross income tests if the instrument hedges (i) interest rate risk on liabilities incurred to carry or acquire real estate or (ii) risk of currency fluctuations with respect to any item of income or gain that would be qualifying income under the REIT 75% or 95% gross income tests, and such instrument is properly identified under applicable Treasury Regulations. Income from hedging transactions that does not meet these requirements will generally constitute nonqualifying income for purposes of both the REIT 75% and 95% gross income tests. As a result of these rules, we may have to limit our use of hedging techniques that might otherwise be advantageous, which could result in greater risks associated with interest rate or other changes than we would otherwise incur.

The tax on prohibited transactions will limit our ability to engage in transactions, including certain methods of

securitizing mortgage loans, that would be treated as sales for federal income tax purposes.

A REIT's net income from prohibited transactions is subject to a 100% tax. In general, prohibited transactions are sales or other dispositions of assets, other than foreclosure property, held primarily for sale to customers in the ordinary course of business. Therefore, in order to avoid the prohibited transactions tax, we may choose not to engage in certain sales at the REIT level, and may limit the structures we utilize for our securitization transactions, even though the sales or structures might otherwise be beneficial to us.

~~There~~It ismay abe ~~prohibited~~possible ~~transaction~~to ~~safe~~reduce ~~harbor~~the ~~available~~impact ~~under~~of the ~~Code~~prohibited ~~when~~transaction atax ~~property~~by ~~has~~conducting ~~been~~certain ~~held~~activities ~~for~~through attaxable ~~least~~REIT ~~two~~subsidiaries. ~~years~~However, ~~and~~to ~~certain~~the ~~other~~extent ~~requirements~~that ~~are~~we ~~met.~~engage Itin ~~cannot~~such beactivities ~~assured,~~through ~~however,~~taxable ~~that~~REIT ~~any~~subsidiaries, ~~property~~the ~~sales~~income ~~would~~associated ~~qualify~~with ~~for~~such ~~the~~activities ~~safe harbor. It~~ may ~~also~~ be ~~possible~~subject to ~~reduce~~full ~~the~~corporate ~~impact~~income ~~of the prohibited transaction~~ tax. ~~by conducting certain~~

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activities through taxable REIT subsidiaries. However, to the extent that we engage in such activities through taxable REIT subsidiaries, the income associated with such activities may be subject to full corporate income tax.

The taxation of distributions to our stockholders can be complex; however, distributions that we make to our stockholders generally will be taxable as ordinary income.

Distributions that we make to our taxable stockholders out of current and accumulated earnings and profits (and not designated as capital gain dividends, or qualified dividend income) generally will be taxable as ordinary income. However, a portion of our distributions may (1) be designated by us as capital gain dividends generally taxable as long-term capital gain to the extent that they are attributable to net capital gain recognized by us, (2) be designated by us as qualified dividend income generally to the extent they are attributable to dividends we receive from our taxable REIT subsidiaries, or (3) constitute a return of capital generally to the extent that they exceed our accumulated earnings ~~and profits as determined for U.S. federal income tax purposes. A return of capital is not taxable, but has the effect of reducing the basis of a stockholder's investment in our common stock.~~

~~If we were to pay a "preferential dividend" to certain of our stockholders, our status as a REIT could be adversely affected.~~18

InTable ~~order to qualify as a REIT, we must distribute annually to our stockholders at least 90%~~ of our REIT taxable income (which does not equal net income as calculated in accordance with GAAP), determined without regard to the deduction for dividends paid and excluding net capital gain. In order for distributions to be counted as satisfying the annual distribution requirements for REITs, and to provide us with a REIT-level tax deduction, the distributions must not be "preferential dividends." A dividend is not a preferential dividend if the distribution is pro rata among all outstanding shares of stock within a particular class, and in accordance with the preferences among different classes of stock as set forth in our organizational documents. There is no de minimis exception with respect to preferential dividends; therefore, if the Internal Revenue Service ("IRS") were to take the position that we inadvertently paid a preferential dividend, we may be deemed to have failed the 90% distribution test, and our status as a REIT could be terminated for the year in which such determination is made if we were unable to cure such failure. While we believe that our operations have been structured in such a manner that we will not be treated as inadvertently paying preferential dividends, we can provide no assurance to this effect.Contents

and profits as determined for U.S. federal income tax purposes. A return of capital is not taxable, but has the effect of reducing the basis of a stockholder's investment in our common stock.

If we were considered to actually or constructively pay a "preferential dividend" to certain of our stockholders, our status as a REIT could be adversely affected.

In order to qualify as a REIT, we must distribute annually to our stockholders at least 90% of our REIT taxable income (which does not equal net income as calculated in accordance with GAAP), determined without regard to the deduction for dividends paid and excluding net capital gain. In order for distributions to be counted as satisfying the annual distribution requirements for REITs, and to provide us with a REIT-level tax deduction, the distributions must not be "preferential dividends." A dividend is not a preferential dividend if the distribution is pro rata among all outstanding shares of stock within a particular class, and in accordance with the preferences among different classes of stock as set forth in our organizational documents. There is no de minimis exception with respect to preferential dividends; therefore, if the Internal Revenue Service ("IRS") were to take the position that we inadvertently paid a preferential dividend, we may be deemed to have failed the 90% distribution test, and our status as a REIT could be terminated for the year in which such determination is made if we were unable to cure such failure.

The ability of our board of directors to revoke our REIT qualification without stockholder approval may subject us to U.S. federal income tax and reduce distributions to our stockholders.

Our charter provides that our board of directors may revoke or otherwise terminate our REIT election, without the approval of our stockholders, if it determines that it is no longer in our best interest to continue to qualify as a REIT. While we intend to elect and qualify to be taxed as a REIT, we may not elect to be treated as a REIT or may terminate our REIT election if we determine that qualifying as a REIT is no longer in the best interest of our stockholders. If we cease to be a REIT, we would become subject to U.S. federal income tax on our taxable income and would no longer be required to distribute most of our taxable income to our stockholders, which may have adverse consequences on our total return to our stockholders and on the market price of our common stock.

Potential characterization of distributions or gain on sale may be treated as unrelated business taxable income to tax-exempt investors.

If (a) we are a "pension-held REIT," (b) a tax-exempt stockholder has incurred debt to purchase or hold our common stock, or (c) a holder of common stock is a certain type of tax-exempt stockholder, dividends on, and gains recognized on the sale of, common stock by such tax-exempt stockholder may be subject to U.S. federal income tax as unrelated business taxable income under the Code.

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Retirement Plan Risks

If the fiduciary of an employee pension benefit plan subject to ERISA (such as profit-sharing, Section 401(k), or pension plan) or ~~any~~an ~~other~~owner of a retirement ~~plan~~arrangement orsubject ~~account~~to Section 4975 of the Code fails to meet the fiduciary and other standards under ERISA or the Code as a result of an investment in our stock, the fiduciary could be subject to criminal and civil penalties.

There are special considerations that apply to employee benefit plans subject to ERISA (such as profit-sharing, Section 401(k), or pension plans) and other retirement plans or accounts subject to Section 4975 of the Code (such as an individual retirement account, or "IRA") that are investing in our shares. Fiduciaries and IRA owners investing the assets of such a plan or account in our common stock should satisfy themselves that:


•	the investment is consistent with their fiduciary and other obligations under ERISA and the Code;


•	the investment is made in accordance with the documents and instruments governing the plan or IRA, including the plan's or account's investment policy;

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•	the investment satisfies the prudence and diversification requirements of Sections 404(a)(1)(B) and 404(a)(1)(C) of ERISA and other applicable provisions of ERISA and the Code;


•	the investment in our shares, for which no trading market may exist, is consistent with the liquidity needs of the plan or IRA;


•	the investment will not produce an unacceptable amount of "unrelated business taxable income" for the plan or IRA;


•	our stockholders will be able to comply with the requirements under ERISA and the Code to value the assets of the plan or IRA annually; and


•	the investment will not constitute a prohibited transaction under Section 406 of ERISA or Section 4975 of the Code.

InFailure ~~order~~ to ~~assist~~satisfy ~~fiduciaries~~the offiduciary ~~employee~~standards ~~benefit~~of ~~plans~~conduct orand ~~any~~ other ~~retirement~~applicable ~~plan or account with their annual valuation~~ requirements ~~under~~of ERISA orand the Code, wemay ~~expect~~result toin ~~provide~~the animposition ~~estimated value~~ of ~~our~~civil ~~shares~~and ~~until~~criminal wepenalties, ~~have~~and ~~completed~~can ~~our~~subject ~~offering~~the ~~stage.~~fiduciary Weto ~~will~~claims ~~consider~~for ~~our~~damages ~~offering~~or ~~stage~~for ~~complete~~equitable ~~when~~remedies. weIn ~~are~~addition, noif ~~longer~~an ~~publicly~~investment ~~offering~~in ~~equity~~our ~~securities~~shares -constitutes ~~whether~~a ~~through~~prohibited ~~the~~transaction ~~primary~~under ~~portion~~ERISA ~~of our Initial Offering~~ or ~~follow-on~~the ~~public~~Code, ~~offerings~~the -fiduciary ~~and~~or ~~have~~IRA ~~not~~owner ~~done~~who soauthorized ~~for~~or updirected tothe 18investment ~~months.~~may ~~Until~~be upsubject to 18the ~~months~~imposition ~~have passed without a sale in a public offering~~ of ~~our~~excise ~~common~~taxes ~~stock,~~with ~~not~~respect ~~including any offerings on behalf of selling stockholders or offerings related~~ to ~~any~~the ~~distribution~~amount ~~reinvestment~~invested. ~~plan,~~In ~~employee benefit plan, or~~ the ~~issuance~~case of ~~shares~~a ~~upon~~prohibited ~~redemption~~transaction ofinvolving ~~interests~~an inIRA ~~Signature Office OP~~owner, ~~we expect to use~~ the ~~gross~~IRA ~~offering~~may ~~price~~be ofdisqualified aand ~~share~~all of ~~common stock in~~ the ~~primary~~assets ~~portion~~ of ~~our~~the ~~most~~IRA ~~recent~~may ~~offering~~be asdeemed ~~the~~distributed ~~per-share~~and ~~estimated~~subjected ~~value~~to ~~thereof~~tax.

~~This~~If ~~estimated value is not likely to reflect the proceeds~~ a stockholder ~~would~~invested ~~receive~~in ~~upon~~ our ~~liquidation or upon the sale of your~~ shares. ~~Accordingly,~~through we can make no assurances that such estimated value will satisfy the applicable annual valuation requirements under ERISA and the Code. The Department of Labor or the IRS may determine that a plan fiduciary or an IRA ~~custodian~~or isother ~~required~~retirement ~~to take further steps to determine the value of our common shares. In the absence of an appropriate determination of value~~plan, ahe ~~plan fiduciary~~ or anshe ~~IRA~~will ~~custodian may~~ be ~~subject~~unable to ~~damages,~~withdraw ~~penalties,~~required orminimum ~~other sanctions~~distributions.

~~Failure~~If toa ~~satisfy~~stockholder ~~the~~established ~~fiduciary~~an ~~standards~~IRA ofor ~~conduct and~~ other ~~applicable~~retirement ~~requirements~~plan ofthrough ~~ERISA~~which ~~and~~he ~~the~~or ~~Code~~she ~~may~~invested ~~result~~ in ~~the~~our ~~imposition~~shares, offederal ~~civil~~law ~~and~~may ~~criminal~~require ~~penalties,~~him ~~and~~or ~~can~~her ~~subject~~to ~~the~~withdraw ~~fiduciary~~required tominimum ~~claims~~distributions ~~for~~("RMDs") ~~damages~~from orsuch ~~for~~plan ~~equitable~~in ~~remedies~~the future. InOur ~~addition,~~board ifof andirectors ~~investment~~terminated in our ~~shares~~share ~~constitutes~~redemption aprogram ~~prohibited~~effective ~~transaction~~April ~~under~~30, ~~ERISA~~2014. orAs ~~the~~a ~~Code~~result, ~~the~~he ~~fiduciary~~ or ~~IRA~~she ~~owner~~will ~~who authorized or directed the investment may~~ be ~~subject~~unable to ~~the~~redeem ~~imposition~~his ofor ~~excise~~her ~~taxes~~shares ~~with~~at ~~respect~~a totime ~~the~~in ~~amount~~which ~~invested.~~he Inor ~~the~~she ~~case~~needs ofliquidity ato ~~prohibited~~satisfy ~~transaction involving an IRA owner,~~ the ~~IRA~~RMD ~~may~~requirements beunder ~~disqualified~~his ~~and~~or ~~all~~her ofIRA ~~the~~or ~~assets~~other ofretirement ~~the~~plan. ~~IRA~~If ~~may~~he beor ~~deemed~~she ~~distributed~~fails ~~and subjected~~ to ~~tax.~~withdraw ~~ERISA~~RMDs ~~plan~~from ~~fiduciaries~~the ~~and~~ IRA ~~custodians~~or ~~should~~other ~~consult~~retirement ~~with~~plan, ~~counsel~~he ~~before~~or ~~making~~she anmay ~~investment~~be insubject ~~our~~to ~~common~~certain ~~shares~~tax penalties.

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If a stockholder invested in our shares through an IRA or other retirement plan, he or she may be limited in his or her ability to withdraw required minimum distributions.

If a stockholder established an IRA or other retirement plan through which he or she invested in our shares, federal law may require him or her to withdraw required minimum distributions ("RMDs") from such plan in the future. Any share redemptions requested to satisfy these RMD requirements will be considered requests for "Ordinary Redemptions," as defined in our share redemption program, as amended. Our share redemption program, as amended limits the amount of Ordinary Redemptions that can be made in a given year. Additionally, such stockholder will not be eligible to receive Ordinary Redemptions until he or she has held his or her shares for at least one year. As a result, he or she may not be able to redeem his or her shares at a time in which he or she needs liquidity to satisfy the RMD requirements under his or her IRA or other retirement plan. Even if he or she is able to redeem his or her shares, such redemptions will be at a price less than the price at which the shares were initially purchased. If he or she fails to withdraw RMDs from the IRA or other retirement plan, he or she may be subject to certain tax penalties.


ITEM 1B.	UNRESOLVED STAFF COMMENTS

Not applicable.

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ITEM 2. PROPERTIES

Overview

As of December 31, ~~2013~~2014, we owned 13 office properties consisting of 15 buildings and located in eight states. At December 31, ~~2013~~2014, our office properties were approximately 9997.38% leased with an average lease term remaining of approximately ~~six~~five years. The table set forth below shows information relating to the properties we owned as of December 31, ~~2013~~2014.

Properties	Location	% Leased as of December 31, ~~2013~~2014			RentableSquare Feet	TotalPurchasePrice(1)		% ofTotalAssets		AnnualizedBase Rent(2)		AverageAnnualizedBase Rent perSquare Foot
Royal Ridge V Building	Irving, TX	100.0	%	(3)	119,611	$	18,134,588	2.78	%	$	2,~~482~~534,~~089~~780	$	2021.7519
333 East Lake Street Building	Bloomingdale, IL	97.9	%		71,053	11,710,764		1.78	%	1,~~956~~994,~~452~~854		$	2728.5408
Westway One Building	Houston, TX	100.0	%		143,961	31,000,000		4.68	%	4,~~740~~588,~~722~~598		$	3231.9387
Duke Bridges I & II Buildings	Frisco, TX	100.0	%		284,198	49,000,000		7.27	%	6,~~310~~352,~~543~~620		$	22.2035
Miramar Centre II Building	Miramar, FL	100.0	%		96,394	20,921,636		3.13	%	2,~~879~~828,~~854~~735		$	29.8835
7601 Technology Way Building	Denver, CO	100.0	%		182,875	41,500,000		6.15	%	45,~~885~~466,~~866~~792		$	2629.7289
Westway II Building	Houston, TX	100.0	%		242,374	70,313,406		1011.40	%	89,~~934~~286,~~580~~732		$	3638.8632
Franklin Center Building	Columbia, MD	~~100~~85.04	%	(4)	200,593	65,000,000		910.62	%	65,~~375~~696,~~728~~486		$	3128.7840
South Lake Building	Herndon, VA	100.0	%		268,240	90,900,000		1314.52	%	9,~~568~~897,~~645~~708		$	3536.6790
Four Parkway North Building	Deerfield, IL	100.0	%		171,~~524~~750	41,144,691		6.14	%	5,~~242~~333,~~585~~431		$	3031.5605
2275 Cabot Drive Building	Lisle, IL	100.0	%		94,375	17,993,058		2.78	%	2,~~517~~599,~~679~~687		$	2627.6855
4650 Lakehurst Court Building	Columbus, OH	100.0	%		164,639	24,727,760		3.79	%	3,~~335~~692,~~855~~511		$	2022.2643
64 & 66 Perimeter Center Buildings	Atlanta, GA	9795.2	%		583,690	95,297,762		14.19	%	12,~~256~~518,~~368~~720		$	21.0045
Total Portfolio		9997.38	%		2,623,~~527~~753	$	577,643,665	8590.53	%	$	7172,~~486~~791,~~966~~654


⁽¹⁾	Purchase price is presented net of adjustments and exclusive of closing costs and acquisition fees and has been allocated to tangible assets, consisting of land, building and site improvements, and identified intangible assets and liabilities, including the value of in-place leases, based in each case on estimates of their fair values.

(2) Represents the monthly contractual base rent and recoveries from tenants under existing leases as of December 31, ~~2013~~2014, multiplied by 12 months. The amount reflects total rent before rent abatements.

25(3) JP Morgan exercised an early lease termination option for a portion of its space and subsequently entered into an agreement to terminate the remaining floor of its lease at the Royal Ridge V Building, effective January 23, 2015. In January 2015, we entered into a 10-year lease agreement with NEC Corporation of America to lease the entire space previously occupied by JP Morgan, effective December 1, 2015.


⁽⁴⁾	Leidos exercised an early lease termination option for 29,280 square feet of its space in the Franklin Center Building, effective December 31, 2014.

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Property Statistics

The following table shows the tenant diversification of our office properties as of December 31, ~~2013~~2014.

Tenant	~~2013~~2014 Annualized Base Rent (1)		Percentage ~~of2013~~of2014 AnnualizedBase Rent
State Farm Mutual Auto Insurance Co.	$	10,~~208~~710,~~075~~169	1415	%
Time Warner Cable	9,~~542~~870,~~262~~351		1314	%
GE Oil & Gas, Inc.	67,~~965~~134,~~725~~629		10	%
Leidos	6,329,205		9	%
T-Mobile West Corporation	5,746,308		8	%
T-Mobile West Corporation	5,696,163		8	%
Leidos	5,647,690		8	%
Jackson National Life Insurance Company	45,~~885~~466,~~865~~792		7	%
Cameron Solutions	4,~~282~~133,~~421~~071		6	%
Qwest Communications Company, LLC	3,~~335~~692,~~855~~511		5	%
Humana Medical Plan, Inc.	2,~~879~~828,~~854~~735		4	%
CF Industries	2,~~591~~633,~~215~~045		4	%
McCain Foods USA, Inc.	2,~~517~~599,~~679~~687		34	%
JP Morgan Chase Bank	2,~~482~~534,~~089~~780		3	%
Lundbeck	2,~~151~~410,~~615~~956		3	%
Other(2)	7,~~618~~382,~~943~~930		119	%
	$	7172,~~486~~791,~~966~~654	100	%

(1) Represents the monthly contractual base rent and recoveries from tenants under existing leases as of December 31, ~~2013~~2014, multiplied by 12 months. The amount reflects total rent before rent abatements.


⁽²⁾	No more than 3% is attributable to any individual tenant.

The following table shows the tenant industry diversification of our office properties as of December 31, ~~2013~~2014.

Industry	~~2013~~2014 Annualized Base Rent (1)		Rentable Square Feet	Percentage ~~of2013~~of2014 AnnualizedBase Rent
Communication	$19,309,171	~~18,574,280~~	688,310	2627	%
Insurance Carriers	1719,~~973~~005,~~794~~696		780,970	2526	%
Business Services	87,~~090~~401,~~720~~617		~~255~~226,~~768~~488	1110	%
Electronic And Other Electric Equipment	67,~~965~~134,~~725~~629		186,957	10	%
Chemicals And Allied Products	45,~~958~~044,~~592~~001		162,~~283~~509	7	%
Industrial Machinery And Equipment	4,~~282~~133,~~421~~071		128,645	6	%
Depository Institutions	2,~~642~~698,~~912~~968		123,855	4	%
Food And Kindred Products	2,~~517~~599,~~679~~687		94,375	3	%
Other(2)	5,~~480~~464,~~843~~814		~~184~~172,~~739~~867	87	%
Vacant	—		1758,~~625~~777	—	%
	$	7172,~~486~~791,~~966~~654	2,623,~~527~~753	100	%


⁽²⁾	No more than 3% is attributable to any individual industry.

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The following table shows lease expirations of our office properties as of December 31, ~~2013~~2014, and during each of the next 10 years and thereafter. This table assumes no exercise of renewal or contraction options or termination rights that have not been received prior to December 31, 2014.

Year of Lease Expiration	~~2013~~2014 AnnualizedBase Rent(1)		Rentable SquareFeet Expiring	Percentage ~~of2013~~of2014 AnnualizedBase Rent
Vacant	$	—	1758,~~625~~777	—	%
2014	262,525		11,872	0	%
2015	3,957,899		159,399	5	%
2015	1,600,785		46,535	2	%
2016	455,527		15,316	1	%
2016	458,301		15,316	1	%
2017	17,281,192		649,151	23	%
2017	16,667,478		649,151	23	%
2018	6,377,932		204,497	9	%
2018	6,474,213		204,497	9	%
2019	22,380,241		615,646	31	%
2019	22,445,158		644,926	32	%
2020	48,798		8,057	—	%
2020	2,548,502		127,668	4	%
2021	3,727,348		123,631	5	%
2021	3,610,357		123,631	5	%
2022	4,766,731		192,526	7	%
2022	6,526,834		262,378	9	%
2023	11,385,030		519,928	16	%
2023	10,892,813		519,928	15	%
2024	—		—	—	%
Thereafter	—2,410,956		—76,825	—3	%
	$	7172,~~486~~791,~~966~~654	2,623,~~527~~753	100	%

The following table shows the geographic diversification by metropolitan statistical area ("MSA") of our office properties as of December 31, ~~2013~~2014.

MSA	~~2013~~2014 AnnualizedBase Rent(1)		RentableSquare Feet	Percentage ~~of2013~~of2014 AnnualizedBase Rent
Houston	$13,875,328	~~13,675,302~~	386,335	19	%
Atlanta	12,~~256~~518,~~368~~719		583,690	17	%
Chicago	9,~~716~~927,~~716~~972		~~336~~337,~~952~~178	14	%
Northern Virginia	9,~~568~~897,~~645~~708		268,240	1314	%
Dallas	8,~~792~~887,~~633~~401		403,809	12	%
Baltimore	65,~~375~~696,~~728~~488		200,593	98	%
Denver	45,~~885~~466,~~865~~792		182,875	7	%
Columbus	3,~~335~~692,~~855~~511		164,639	5	%
Fort Lauderdale	2,~~879~~828,~~854~~735		96,394	4	%
	$	7172,~~486~~791,~~966~~654	2,623,~~527~~753	100	%

Other Property-Specific Information

Certain of our properties are held as collateral for debt. Refer to Schedule III listed in the index of Item 15(a) of this report, which details such properties as of December 31, 2013.

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ITEM 3.	LEGAL PROCEEDINGS

From time to time, we are party to legal proceedings, which arise in the ordinary course of our business. We are not currently involved in any legal proceedings of which the outcome is reasonably likely to have a material adverse effect on our results of operations or financial condition, nor are we aware of any such legal proceedings contemplated by governmental authorities.

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ITEM 4.	MINE SAFETY DISCLOSURES

Not applicable.

2824

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PART II


ITEM 5.	MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS, AND ISSUER PURCHASES OF EQUITY SECURITIES

Market Information

As of February 28, ~~2014~~2015, we had approximately 20.45 million shares of common stock outstanding held of record by a total of 10,~~982~~935 stockholders. The number of stockholders is based on the records of DST Systems Inc., who serves as our registrar and transfer agent. There is no established public trading market for our common stock. Under our charter, certain restrictions are imposed on the ownership and transfer of shares.

To assist FINRA members who participated in our public offering of common stock, we disclose in each annual report distributed to stockholders a per-share estimated value of our common stock, the method by which it was developed, and the date of the data used to develop the estimated value. In addition, we prepare annual statements of estimated share values to assist both fiduciaries of retirement plans subject to the annual reporting requirements of ERISA and custodians of IRAs in the preparation of their reports relating to an investment in our shares. For these purposes, our estimated value of a share of our common stock is $25.00 per share as of December 31, ~~2013~~2014. The basis for this estimated valuation is the fact that the last price paid to acquire a share in our ~~public~~Initial ~~primary~~Offering ~~offering, which terminated on June 10, 2013,~~ was $25.00 per share (~~ignoring~~excluding purchase price discounts for certain categories of purchasers). ~~This~~The ~~estimated~~$25.00 ~~value is likely to be higher than the price at which you could resell your shares or the price you would receive~~ per share ifestimated wevalue ~~were~~is tonot ~~liquidate~~based ~~because~~on ~~(1) the~~an ~~Initial~~appraisal ~~Offering involved the payment~~ of ~~underwriting~~our ~~compensation and other directed selling efforts~~properties, ~~organization~~ and ~~offering costs and acquisition and advisory fees and expenses; (2)~~ there is no ~~public~~true ~~trading~~ “market value” for our shares; ~~(3)~~because the ~~estimated~~shares ~~value~~are ~~does~~illiquid ~~not~~and ~~take~~no ~~into~~public ~~account~~trading ~~how~~ market ~~fluctuations~~for ~~affect the value of~~ our ~~investments;~~shares ~~(4)~~exists ~~the~~at ~~estimated~~this value does not take into account how developments related to individual assets (such as the impending expiration of a large portion of our leases in 2017 and 2019) may have increased or decreased the value of our portfolio; and (5) we have paid distributions in excess of our cash flow from operationstime. There can be no assurance that ~~the~~our ~~valuation~~stockholders wewould ~~have~~be ~~provided~~able ~~will~~to ~~satisfy~~receive ~~the~~$25.00 ~~valuation~~per ~~requirements~~share ~~applicable~~upon toliquidating ~~ERISA~~their ~~plans~~investments ~~and~~if ~~IRAs~~any such market did exist.

~~The~~This ~~Initial~~estimated ~~Offering~~value ~~expired~~is onlikely ~~June 30, 2013; however, we will continue~~ to ~~sell~~be ~~shares~~higher ofthan ~~our~~the ~~common~~price ~~stock~~at towhich ~~existing~~you ~~investors~~could ~~through~~resell ~~our~~your ~~DRP~~shares ~~through~~or the ~~payment~~price ofyou ~~the~~would ~~distribution~~receive ~~for~~per ~~the~~share ~~first~~if ~~quarter~~we ofwere ~~2014. We expect~~ to ~~continue~~liquidate tobecause ~~use~~ (i) the ~~most~~Initial ~~recent~~Offering ~~primary~~involved ~~public~~the ~~offering~~payment ~~price per share~~ of ~~our~~underwriting ~~common~~compensation ~~stock~~and ~~($25.00)~~other asdirected ~~the~~selling ~~publicly~~efforts, ~~reported~~organization ~~estimated~~and ~~per-share~~offering ~~value~~costs ofand ~~our~~acquisition ~~common~~and ~~stock~~advisory ~~until~~fees weand ~~have~~expenses; ~~completed~~(ii) ~~our~~there ~~offering~~is ~~stage.~~no Wepublic ~~will~~trading ~~consider~~market for our ~~offering~~shares; ~~stage~~(iii) ~~complete~~the ~~when~~estimated wevalue ~~are~~does nonot ~~longer~~take ~~publicly~~into ~~offering~~account ~~equity~~how ~~securities~~market -fluctuations ~~whether~~affect ~~through~~ the ~~primary~~value ~~portion~~ of our ~~Initial~~investments; ~~Offering~~(iv) orthe ~~follow-on~~estimated ~~public~~value ~~offerings~~does -not ~~and~~take ~~have~~into ~~not~~account ~~done~~how sodevelopments ~~for~~related up to 18individual ~~months.~~assets ~~After~~(such as the ~~offering~~impending ~~period,~~expiration ~~should~~of ana ~~additional~~large ~~per-share~~portion ~~value based on the current value~~ of our ~~portfolio~~leases bein ~~publicly~~2017 ~~reported,~~and ~~such~~2019) ~~estimated~~may ~~per-share~~have ~~value~~increased isor ~~expected~~decreased tothe bevalue ~~determined based on estimates~~ of ~~the~~our ~~current~~portfolio; ~~values~~and of(v) ~~our~~we ~~assets,~~have ~~net~~paid ofdistributions ~~current~~in ~~values~~excess of our ~~liabilities;~~cash ~~thus,~~flow ~~the~~from ~~estimate~~operations.There ~~should~~can ~~not~~ be ~~viewed~~no asassurance anthat ~~estimate of~~ the ~~amount~~valuation ofwe ~~net~~have ~~proceeds~~provided ~~per~~will ~~share~~satisfy ~~that~~the ~~would~~valuation ~~result~~requirements ~~from~~applicable ato ~~sale~~ERISA ofplans ~~our~~and ~~properties at that time~~IRAs.

We previously disclosed that 18 months after the last sale in the primary portion of the Initial Offering, we expected to provide an estimated value per share of our common stock based on estimates of the values of our assets net of our liabilities (a “net asset value”). As the primary portion of the Initial Offering terminated in June 2013, we were scheduled to disclose a net asset value per share by December 10, 2014. However, on November 21, 2014, we entered into the Merger Agreement with Griffin and the Merger Sub, pursuant to which we will merge with the Merger Sub. Given that the consideration in the Merger is a fixed number of shares of Griffin common stock, and given the financial analysis performed in connection with our financial advisor's determination that the Merger consideration is fair, which analysis will be described in the proxy statement/prospectus that will be mailed in the coming months, we have not determined a net asset value per share as previously anticipated.

Distributions

We intend to make distributions each taxable year equal to at least 90% of our REIT taxable income. One of our primary goals is to pay regular quarterly distributions to our stockholders. The amount of distributions paid and the taxable portion in prior periods are not necessarily indicative of amounts anticipated in future periods.

When evaluating the amount of cash available to fund distributions to stockholders, we consider net cash provided by operating activities (as presented in accordance with GAAP in the accompanying consolidated statements of cash flows), adjusted to exclude certain costs that were incurred for the purpose of generating future earnings and appreciation in value over the long term, including acquisition-related costs. As provided in the prospectus for the Initial Offering, ~~acquisition-related costs were funded with cash generated from the sale of common stock in the Initial Offering and the DRP and, therefore, are not funded with cash generated from operations.~~

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~~Quarterly~~and ~~distributions~~the ~~paid~~DRP, toacquisition-related costs were funded with cash generated from the ~~stockholders~~sale ~~during~~of ~~2013~~common stock in the Initial Offering and ~~2012~~the DRP and, therefore, were asnot ~~follows:~~funded with cash generated from operations.

Quarterly distributions paid to the stockholders during 2014 and 2013 were as follows:



	2014
	First Quarter		Second Quarter		Third Quarter		Fourth Quarter		Total
Total Cash Distributed	$	7,646,192	$	7,677,385	$	7,677,385	$	7,677,386	$	30,678,348

Per-Share Investment Income⁽¹⁾	$	0.298	$	0.298	$	0.298	$	0.298	$	1.192
Per-Share Return of Capital⁽²⁾	$	0.077	$	0.077	$	0.077	$	0.077	$	0.308
Total Per-Share Distribution	$	0.375	$	0.375	$	0.375	$	0.375	$	1.500



	2013
	First Quarter		Second Quarter		Third Quarter		Fourth Quarter		Total
Total Cash Distributed	$	6,663,546	$	7,422,316	$	7,624,404	$	7,617,924	$	29,328,190

Per-Share Investment Income⁽¹⁾	$	0.151	$	0.152	$	0.153	$	0.153	$	0.609
Per-Share Return of Capital⁽²⁾	$	0.219	$	0.222	$	0.222	$	0.222	$	0.885
Total Per-Share Distribution	$	0.370	$	0.374	$	0.375	$	0.375	$	1.494

	2012
	First Quarter		Second Quarter		Third Quarter		Fourth Quarter		Total
Total Cash Distributed	$	3,629,276	$	4,572,182	$	5,500,052	$	6,153,151	$	19,854,661
Per-Share Investment Income(1)	$	0.121	$	0.121	$	0.122	$	0.122	$	0.486
Per-Share Return of Capital(2)	$	0.253	$	0.253	$	0.256	$	0.256	$	1.018
Total Per-Share Distribution	$	0.374	$	0.374	$	0.378	$	0.378	$	1.504


⁽¹⁾	Approximately 80% and 41% of the distributions paid during the years ended December 31, 2014 and 2013, respectively, were taxable to the investor as ordinary income.

(12) Approximately 4120% and 3259% of the distributions paid during the years ended December 31, ~~2013~~2014 and ~~2012~~2013, respectively, were ~~taxable~~characterized ~~to the investor~~ as ~~ordinary income~~tax-deferred.

~~(2)~~Our ~~Approximately~~board ~~59%~~of ~~and~~directors ~~68%~~has ofdeclared a distribution for the ~~distributions~~first ~~paid~~quarter ~~during~~of ~~the~~2015 ~~years~~to ~~ended~~stockholders ~~December~~of ~~31,~~record ~~2013~~as ~~and~~of ~~2012~~March 13, ~~respectively,~~2015 ~~were~~in ~~characterized~~the asamount ~~tax-deferred~~of $0.375 per share (or a 6.0% annualized yield on a $25.00 original share price). We expect to pay these distributions in March 2015.

Distributions paid in the fourth quarter of 2013 were paid to stockholders of record as of December 13, 2013. Our board of directors has declared distributions for stockholders of record as of March 15, 2014 in the amount of $0.375 per share (or a 6.0% annualized yield on a $25.00 original share price). We expect to pay these distributions in March 2014.

Redemption of Common Stock

WeOur ~~currently~~board ~~maintain~~of directors previously adopted the Amended SRP, which ~~allows~~allowed stockholders ~~who have held their shares for more than one year~~ to redeem those shares, subject to certain limitations and penalties. OnThe ~~March~~Amended 5SRP was terminated, ~~2014~~effective April 30, ~~our~~2014. ~~board~~All ofredemption ~~directors~~requests ~~elected~~submitted prior to ~~terminate~~the termination of the Amended SRP, ~~effective~~were ~~April~~subject ~~30,~~to ~~2014~~the ~~upon~~limits on the ~~redemption~~dollar ofvalue ~~any~~and ~~shares~~number of ~~common~~shares ~~stock~~that ~~properly~~could ~~submitted~~be ~~for~~redeemed ~~redemption~~ under the terms of the Amended SRP. ~~for~~In ~~the~~February, ~~month~~March ofand April 2014., Asrequests afor ~~result,~~redemption ~~for~~of shares that were not sought within two years of a stockholder's ~~shares~~death toor bequalifying ~~eligible~~disability ~~for~~or ~~redemption~~in ~~prior~~connection towith ~~termination~~a ofstockholder ~~the~~(or ~~Amended~~a ~~SRP,~~stockholder's wespouse) ~~must~~qualifying ~~receive~~for afederal ~~written~~assistance ~~redemption~~for ~~request~~confinement ~~from~~to ~~the~~a ~~stockholder~~long-term orcare ~~from~~facility an("Ordinary ~~authorized~~Redemptions") ~~representative~~exceeded the limits of the ~~stockholder~~Amended inSRP ~~good~~and, ~~order~~as ~~and~~such, onwere aprorated ~~form~~pursuant ~~approved~~to bythe usterms onof orthe ~~before~~Amended ~~April~~SRP 23at a rate of approximately 8.5%, ~~2014~~29.2% Weand ~~will~~7.0%, berespectively. ~~unable~~As toof ~~process~~the ~~redemption~~termination ~~requests~~of ~~received~~the ~~after~~Amended ~~April~~SRP, 23approximately 141,424 ~~2014.~~shares ~~Any~~of ~~redemption~~our ~~requests~~common ~~submitted~~stock ~~will~~were ~~continue~~tendered tofor beredemption ~~subject~~and tonot redeemed as a result of the ~~limits~~limit on the dollar value ~~and number~~ of shares that ~~may~~could be redeemed under the terms of the Amended SRP. InThese ~~February~~shares ~~2014,~~tendered ~~Ordinary~~for ~~Redemption~~redemption ~~requests~~that ~~exceeded~~could ~~the~~not ~~limits~~be ofredeemed ~~the~~prior ~~Amended SRP and, as such, were prorated pursuant~~ to the ~~terms~~termination of the Amended SRP ~~at a rate of approximately 8.5%. Based~~ on ~~the~~April ~~level~~30, of2014 ~~Ordinary~~are ~~Redemptions~~no ~~requests~~longer ~~currently~~held ~~submitted,~~in wequeue ~~anticipate~~for ~~that~~redemption ~~Ordinary~~at ~~Redemptions~~a ~~processed~~later ~~prior~~date tounder the ~~termination of the~~ Amended SRP ~~will~~or ~~be prorated as well~~otherwise.

Shares redeemed pursuant to the Amended SRP are accounted for as common stock. The program ~~contains~~contained different rules for redemptions sought within two years of a stockholder's death, qualifying disability or qualification for federal assistance in connection with the payment of the costs of confinement to a long-term care facility. WeShares ~~refer~~redeemed as Ordinary Redemptions were required to ~~redemptions~~be ~~that~~held dofor ~~not~~at ~~occur~~least one year prior to redemption. Redemptions sought within two years of a stockholder's death, qualifying disability, or qualification for federal assistance in connection with the payment of the costs of confinement to a long-term care facility asdid ~~"Ordinary~~not ~~Redemptions."~~require ~~Redemptions sought within two years of~~ a ~~stockholder's~~one-year ~~death,~~holding ~~qualifying~~period. ~~disability, or qualification~~

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The Amended SRP provided that the redemption price for all redemptions, including redemptions sought within two years of a stockholder's death, qualifying disability or qualification for federal assistance in connection with the payment of the costs of confinement to a long-term care facility, dowere ~~not~~to ~~require~~be calculated in the same manner. Specifically, the redemption price per share was 91% of the price at which we sold the share, or $22.75 per share for a ~~one-year~~share ~~holding~~issued ~~period~~at $25.00. Prior to October 1, 2012, the redemption price for redemptions sought within two years of the stockholder's death, qualifying disability, or qualification for federal assistance in connection with the payment of the costs of confinement to a long-term care facility was the amount paid for the shares.

~~The~~In ~~Amended~~addition ~~SRP~~to ~~provides that~~ the ~~redemption~~one-year ~~price~~holding period for ~~all~~Ordinary ~~redemptions~~Redemptions, ~~including~~through ~~redemptions~~its ~~sought~~termination, ~~within~~effective ~~two~~April ~~years~~30, ~~of a stockholder's death~~2014, ~~qualifying disability or qualification for federal assistance in connection with~~ the ~~payment~~Amended ofSRP ~~the~~was ~~costs~~subject ~~of confinement~~ to ~~a long-term care facility, will be calculated in~~ the ~~same~~following ~~manner.~~limitations ~~Specifically,~~on the ~~redemption~~number ~~price per share will be 91%~~ of ~~the~~shares ~~price~~that ~~at which~~ we ~~sold~~could ~~the share, or $22.75 per share for a share issued at $25.00.~~ redeem:

In• ~~addition~~We todid ~~the~~not ~~one-year~~redeem ~~holding~~shares ~~period~~on ~~for~~any ~~Ordinary~~day ~~Redemptions,~~to ~~through~~the ~~its~~extent ~~termination,~~that ~~effective~~such ~~April~~redemptions ~~30,~~would ~~2014,~~cause the ~~Amended~~amount ~~SRP~~of isOrdinary ~~subject~~Redemptions toduring the ~~following~~12-month ~~limitations~~period ending on ~~the~~such ~~number~~day to exceed 70% of ~~shares~~the ~~that~~net weproceeds ~~may~~from ~~redeem:~~the DRP during the same 12-month period.

• We ~~will~~limited ~~not~~all ~~redeem~~redemptions ~~shares~~so onthat ~~any day to~~ the ~~extent~~aggregate ~~that~~of such redemptions ~~would cause the amount of Ordinary Redemptions~~ during the 12-month period ending on such ~~day~~redemption todate ~~exceed~~did ~~70%~~not ~~of the net proceeds from the DRP during the same 12-month period.~~exceed:

• We will limit all redemptions so that the aggregate of such redemptions during the 12-month period ending on such redemption date does not exceed:


•	100% of the net proceeds from our DRP during such 12-month period; or


•	5% of the weighted-average number of shares outstanding in such 12-month period.

WeThe ~~will~~Amended SRP did not ~~redeem~~allow for the redemption of any share that ~~has~~had been transferred for value by a stockholder. After a transfer for value, the transferee and all subsequent holders of the share ~~are~~were not eligible to participate in the Amended SRP with respect to the shares so transferred.

~~All~~During of the ~~shares~~year ~~that~~ended weDecember 31, ~~redeemed~~2014, ~~pursuant~~approximately to127,451 ~~our~~shares ~~Amended~~of ~~SRP~~common ~~during~~stock ~~the~~were ~~quarter~~redeemed ~~ended~~under ~~December 31,~~the ~~2013~~Amended ~~are~~SRP ~~provided~~for ~~below:~~approximately $2.9 million.

Period	Total Numberof SharesRedeemed(1)	Average PricePaid per Share	Total Number of Shares Purchased as Part of a Publicly Announced Planor Program(2)	Approximate Dollar Value of Shares Available That May Yet Be Redeemed Under the Program
October 2013	28,547	$22.69	28,547	(3)
November 2013	40,426	$22.73	40,426	(3)
December 2013	31,132	$22.29	31,132	(3)

(1) All purchases of our equity securities by us in the three months ended December 31, 2013 were made pursuant to our Amended SRP.

(2) We announced the commencement of the share redemption program on June 10, 2010, and it was subsequently amended on November 8, 2011, August 13, 2012, and August 22, 2013. On March 5, 2014, the Amended SRP was terminated effective April 30, 2014.

(3) We currently limit the dollar value and number of shares that may yet be redeemed under the Amended SRP as described above.

During the year ended December 31, 2013, approximately 434,334 shares of common stock were redeemed under the Amended SRP for approximately $9.9 million. As of December 31, 2013, all eligible shares tendered for redemption had been redeemed.

Use of Initial Public Offering Proceeds

On June 10, 2010, our Registration Statement on Form S-11 (File No. 333-163411), covering a public offering of up to 230,000,000 shares of common stock, was declared effective under the Securities Act. We commenced operations on September 29, 2010. We offered 200,000,000 shares of common stock in our primary offering at an aggregate

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offering price of up to $5.0 billion, or $25.00 per share, with discounts available to certain categories of purchasers. The 30,000,000 shares offered under the DRP are initially being offered at an aggregate offering price of $712.5 million, or $23.75 per share. On June 10, 2013, we ceased offering shares in the primary portion of the Initial Offering. On June 12, 2013, the unsold primary offering shares were deregistered, and on June 13, 2013, the registration of the shares issuable pursuant to the DRP was continued pursuant to a Registration Statement on Form S-3. On March 5, 2014, our board of directors elected to terminate the DRP effective after the payment of the distribution for the first quarter of 2014.

Through December 31, 2013, we had sold approximately 21.0 million shares for gross offering proceeds of approximately $524.0 million, including shares sold through the DRP. As of December 31, 2013, we had incurred selling commissions, dealer-manager fees, and organization and other offering costs in the amounts set forth below. The dealer-manager re-allowed all of the selling commissions and a portion of the dealer-manager fees to participating broker/dealers.

Selling commissions, net of discounts	$	34,146,127
Dealer-manager fees, net of discounts	12,416,871
Other offering costs	10,301,358
Total fees and costs	$	56,864,356

From the commencement of the Initial Offering through December 31, 2013, the net offering proceeds to us, after deducting the total expenses incurred as described above and acquisition fees of approximately $10.5 million, were approximately $456.6 million, including net offering proceeds from the DRP of approximately $25.7 million, substantially all of which have been invested in real properties and related assets. As of December 31, 2013, we have used the net proceeds from our Initial Offering to partially fund approximately $592.3 million in real estate and real-estate-related investments, to make repayments of acquisition-related debt, to fund approximately $15.0 million of acquisition fees and expenses, to redeem approximately $14.2 million of our common stock, and to fund approximately $7.1 million in deferred financing costs. We expect that our primary use of the net proceeds from the DRP for the first quarter of 2014 will be to fund redemptions of shares of our common stock under our Amended SRP through its termination, effective April 30, 2014.

Unregistered Issuance of Securities

During ~~2013~~2014, we did not issue any securities that were not registered under the Securities Act.

Securities Authorized for Issuance under Equity Compensation Plans

The following table provides information regarding our 2010 Long-Term Incentive Plan as of December 31, ~~2013~~2014:



Plan Category	Number of securities to be issued upon exercise of outstanding options, warrants, and rights	Weighted-average exercise price of outstanding options, warrants, and rights	Number of securities remaining available for future issuance under equity compensation plans
Equity compensation plans approved by security holders	—	—	500,000	*
Equity compensation plans not approved by security holders	—	—	—
Total	—	—	500,000	*


*	To date, no awards have been granted under the 2010 Long-Term Incentive Plan. For more information regarding our 2010 Long-Term Incentive Plan, please see Item 11. "Executive Compensation."

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ITEM 6. SELECTED FINANCIAL DATA

The following selected financial data for the years ended December 31, 2014, 2013, 2012, 2011, ~~2010,~~ and ~~2009~~2010 should be read in conjunction with the accompanying consolidated financial statements and related notes in Item 8 hereof:

	December 31, 2013			December 31, 2012			December 31, 2011			December 31, 2010			December 31, 2009
	December 31, 2014			December 31, 2013			December 31, 2012			December 31, 2011			December 31, 2010
Total assets	$	~~675~~639,~~539~~591,~~446~~535		$	~~697~~675,~~817~~539,~~542~~446		$	~~314~~697,~~170~~817,~~975~~542		$	35314,~~420~~170,~~561~~975		$	~~200~~35,~~000~~420,561
Total stockholders' equity	$	~~373~~353,~~347~~261,~~793~~739		$	~~335~~373,~~842~~347,~~389~~793		$	~~179~~335,~~334~~842,~~927~~389		$	16179,~~500~~334,~~755~~927		$	~~200~~16,~~000~~500,755
Outstanding debt	$	~~167~~156,~~400~~000,000		$	~~220~~167,~~900~~400,000		$	~~120~~220,~~954~~900,~~895~~000		$	17120,~~275~~954,~~000~~895		$	—17,275,000
Outstanding long-term debt	$	~~142~~100,~~500~~000,000		$	~~220~~142,~~900~~500,000		$	~~109~~220,900,000		$	11109,~~100~~900,000		$	—11,100,000
Obligations under capital leases	$	115,000,000		$	115,000,000		$	—115,000,000		$	—		$	—
	Years ended December 31,
	2013			2012			2011			2010			2009
	2014			2013			2012			2011			2010
Total revenues	$	6976,~~267~~937,~~549~~020		$	4869,~~011~~267,~~115~~549		$	1848,~~519~~011,~~397~~115		$	~~755~~18,~~389~~519,397		$	—755,389
Net loss	$	(993,132	)	$	(8,484,523	)	$	(10,071,668	)	$	(1,543,623	)	$	—
Net income (loss)	$	6,051,481		$	(993,132	)	$	(8,484,523	)	$	(10,071,668	)	$	(1,543,623	)
Net cash provided by (used in) operating activities	$	2440,~~041~~342,~~955~~395		$	1624,~~042~~041,~~583~~955		$	216,~~288~~042,~~530~~583		$	~~(696~~2,~~120~~288,530	)	$	—(696,120	)
Net cash used in investing activities	$	(141,~~053~~446,~~558~~210	)	$	(~~270~~14,~~814~~053,~~664~~558	)	$	(~~278~~270,~~043~~814,~~529~~664	)	$	(29278,~~426~~043,~~144~~529	)	$	—(29,426,144	)
Net cash (used in) provided by financing activities	$	(18,549,314	)	$	266,037,111		$	276,012,857		$	34,355,272		$	—
Net cash (used in) provided by financing activities(1)	$	(41,231,212	)	$	(18,549,314	)	$	266,037,111		$	276,012,857		$	34,355,272
Distributions paid	$	(2930,~~328~~678,~~190~~348	)	$	(1929,~~854~~328,~~661~~190	)	$	(619,~~130~~854,~~747~~661	)	$	(866,~~367~~130,747	)	$	—(86,367	)
Proceeds raised through issuance of our common stock(1)	$	82,424,667		$	215,977,971		$	205,282,643		$	20,322,428		$	200,000
Proceeds raised through issuance of our common stock(2)	$	3,735,858		$	82,424,667		$	215,977,971		$	205,282,643		$	20,322,428
Net debt (repayments) proceeds(1)	$	(53,500,000	)	$	99,945,105		$	103,679,895		$	17,275,000		$	—
Net debt (repayments) proceeds(2)	$	(11,400,000	)	$	(53,500,000	)	$	99,945,105		$	103,679,895		$	17,275,000
Investments in real estate(1)	$	(8,943,433	)	$	(269,490,488	)	$	(277,245,814	)	$	(29,426,144	)	$	—
Investments in real estate(2)	$	(318,007	)	$	(8,943,433	)	$	(269,490,488	)	$	(277,245,814	)	$	(29,426,144	)
Per weighted-average common share data:
Net loss – basic and diluted	$	(0.05	)	$	(0.63	)	$	(2.26	)	$	(13.48	)	$	—
Net income (loss) – basic and diluted	$	0.30		$	(0.05	)	$	(0.63	)	$	(2.26	)	$	(13.48	)
Distributions declared	$	1.4350		$	1.5043		$	1.4650		$	01.2646		$	—0.26
Weighted-average common shares outstanding	1920,~~736~~464,~~887~~863			1319,~~542~~736,~~837~~887			413,~~452~~542,~~157~~837			~~114~~4,~~526~~452,157			8114,~~000~~526
Funds from Operations Data(2):
Funds from Operations Data(3):
Net loss	$	(993,132	)	$	(8,484,523	)	$	(10,071,668	)	$	(1,543,623	)	$	—
Net income (loss)	$	6,051,481		$	(993,132	)	$	(8,484,523	)	$	(10,071,668	)	$	(1,543,623	)
Depreciation of real estate assets	1718,~~768~~549,~~543~~515			1217,~~422~~768,~~906~~543			412,~~484~~422,~~518~~906			~~252~~4,~~225~~484,518			—252,225
Amortization of lease-related costs	11,~~292~~982,~~059~~320			711,~~695~~292,~~172~~059			27,~~480~~695,~~235~~172			882,~~795~~480,235			—88,795
Funds From Operations(2)	$	28,067,470		$	11,633,555		$	(3,106,915	)	$	(1,202,603	)	$	—
Funds From Operations(3)	$	36,583,316		$	28,067,470		$	11,633,555		$	(3,106,915	)	$	(1,202,603	)
Additional amortization of lease costs	23,~~885~~172,~~695~~561			2,~~159~~885,~~349~~695			12,~~019~~159,~~736~~349			221,~~000~~019,736			—22,000
Straight-line rental income	(71,~~876~~060,~~148~~472		)	(37,~~056~~876,~~134~~148		)	(~~793~~3,~~750~~056,134		)	(38793,~~515~~750		)	—(38,515		)
Real estate acquisition-related costs	~~1,674,094~~—			51,~~912~~674,~~302~~094			65,~~784~~912,~~605~~302			~~668~~6,~~855~~784,605			—668,855
Noncash interest expense	1,~~205~~154,~~927~~865			21,~~092~~205,~~435~~927			12,~~199~~092,~~324~~435			~~152~~1,~~990~~199,324			—152,990
Master lease proceeds	9504,~~937,273~~986			19,~~324~~937,~~949~~273			~~535~~1,~~038~~324,949			—535,038			—
Adjusted Funds From Operations(2)	$	35,894,311		$	20,066,456		$	5,638,038		$	(397,273	)	$	—
Adjusted Funds From Operations(3)	$	40,355,256		$	35,894,311		$	20,066,456		$	5,638,038		$	(397,273	)

(1) ~~Activity~~Includes isdistributions ~~presented on a cash basis~~paid. Please refer to our accompanying consolidated statements of cash flows.

(2) ~~See~~Activity ~~“Management's~~is ~~Discussion~~presented ~~and~~on ~~Analysis~~a ofcash ~~Financial~~basis. ~~Condition~~Please ~~and~~refer ~~Results~~to ofour ~~Operations~~accompanying -consolidated ~~Funds~~statements From Operations, Modified Funds From Operations and Adjusted Funds From Operations” for the definition and information regarding why we present Adjusted Funds from Operations and for a reconciliation of ~~this~~cash ~~non-GAAP financial measure to net loss~~flows.

33(3) See “Management's Discussion and Analysis of Financial Condition and Results of Operations - Funds From Operations and Adjusted Funds From Operations” for the definition and information regarding why we present Funds from Operations and Adjusted Funds from Operations and for a reconciliation of these non-GAAP financial measures to net income (loss).

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Signature Office REIT commenced active operations on September 29, 2010 and acquired properties from October 2010 through December 2012. Accordingly, the selected historical financial information presented above for the years ended December 31, 2010, 2011, and 2012 is not directly comparable.


ITEM 7.	MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis should be read in conjunction with the Selected Financial Data in Item 6 and our accompanying consolidated financial statements and notes thereto. See also Cautionary Note Regarding Forward-Looking Statements preceding Part I.

Overview

We operate a diversified portfolio of commercial real estate ~~primarily~~ consisting of high-quality, income-producing office properties primarily leased to creditworthy entities located in major metropolitan areas throughout the United States. As Portfolio ofdata ~~December 31, 2013, we owned 13 real estate properties consisting of approximately 2.6 million square feet. These office properties were approximately 99.3% leased~~ as of December 31, ~~2013.~~2014 ~~We have elected to be taxed as a REIT for federal income tax purposes~~ and ~~have~~2013 ~~operated~~is as ~~such beginning with our taxable year ended December 31, 2010.~~follows:

We began receiving investor proceeds from the sale of common stock under our Initial Offering in July 2010. On September 29, 2010, we raised our minimum offering of $2.5 million and commenced active operations. We acquired our first real estate asset in October 2010. Effective June 10, 2013, we ceased offering shares in the primary portion of our Initial Offering. On June 12, 2013, the unsold primary offering shares were deregistered, and on June 13, 2013, the registration of the shares issuable pursuant to our DRP was continued pursuant to a Registration Statement on Form S-3. As of December 31, 2013, we had raised gross offering proceeds of approximately $524.0 million through the issuance of common stock in our Initial Offering, including proceeds from our DRP, and we have used those proceeds, net of fees, to invest in real estate and repay borrowings used to acquire real estate properties in advance of raising equity proceeds. These activities caused fluctuations in the results of our operations and in interest expense. In addition, as required under GAAP, we expense costs incurred in connection with the acquisition of real estate assets, including acquisition fees of 2.0% of gross offering proceeds raised under our Initial Offering.



	December 31,
	2014	2013
Total number of properties/buildings	13 / 15	13 /15
Total square feet	2,623,753	2,623,527
Percent of total square feet leased	97.8%	99.3%

OnWe ~~March~~have ~~5, 2014, our board of directors~~ elected to ~~terminate~~be ~~the~~taxed ~~DRP,~~as ~~effective~~a ~~after~~REIT ~~the payment of the distribution~~ for ~~the~~federal ~~first~~income ~~quarter~~tax ofpurposes ~~2014. As a result, all distributions paid after the first quarter will be paid in cash~~ and ~~will~~have ~~not~~operated beas ~~reinvested~~such inbeginning ~~shares~~with of our ~~common~~taxable ~~stock.~~year ~~Also~~ended ~~on March 5~~December 31, 2014, our board of directors elected to terminate the Amended SRP, effective April 30, 2014 upon the redemption of any shares of common stock properly submitted for redemption under the Amended SRP for the month of April 20142010. ~~For additional details about the termination of the DRP and the Amended SRP, see Item 9B.~~

From ~~inception~~June 2010 through ~~December~~June ~~31,~~ 2013, we ~~had~~raised nogross ~~paid~~offering ~~employees~~proceeds ~~and~~of ~~were~~approximately ~~externally~~$527.7 ~~advised~~million ~~and~~through ~~managed by~~ the ~~Advisor~~issuance ~~and~~of ~~Wells~~common ~~Management,~~stock ~~wholly~~under ~~owned~~our ~~subsidiaries~~Initial ~~of WREF. In 2013~~Offering, weincluding ~~established~~proceeds afrom ~~plan to transition~~ our ~~externally~~DRP, ~~advised~~and ~~management~~we ~~platform~~have toused athose ~~self-managed structure~~proceeds, ~~which~~net ~~culminated~~of ~~on January 1~~fees, ~~2014,~~to ~~upon~~invest ~~the~~in ~~termination~~real ofestate ~~the Revised Advisory Agreement~~ and ~~the~~repay ~~hiring~~borrowings ofused ~~the~~to ~~employees~~acquire ~~necessary~~real toestate ~~perform~~properties ~~the~~in ~~requisite~~advance ~~corporate~~of ~~functions~~raising ~~previously~~equity ~~performed~~proceeds. byWe ~~the~~continued ~~Advisor~~to ~~and~~raise ~~its~~equity ~~affiliates.~~proceeds ~~From~~through ~~January~~the 1,DRP ~~2014~~ through ~~June~~March ~~30,~~ 2014, weafter ~~will~~which ~~receive certain services from WREF, as specified in~~ the ~~TSA,~~DRP towas ~~assist in our transition to becoming a self-managed company~~terminated. As a result ~~of these transactions~~, westarting ~~expect~~with ~~our~~the ~~general~~second ~~and~~quarter ~~administrative expenses will increase as a result~~ of ~~the~~2014, ~~employment-related~~all ~~costs~~distributions ~~and~~have ~~other~~been ~~costs~~or weare ~~will~~expected ~~incur~~to asbe apaid ~~self-managed company. Such an increase~~ in ~~general~~cash and ~~administrative~~will ~~expenses~~not ~~is expected to~~ be ~~offset~~reinvested byin ~~the~~shares ~~elimination~~ of ~~the~~our ~~payment~~common ofstock. ~~related-party~~In ~~asset~~addition, ~~management fees to~~ the ~~Advisor,~~Amended ~~resulting~~SRP inwas aterminated ~~net~~effective ~~cost~~April ~~savings to us. For additional details~~30, ~~please refer to Note 10 and Note 13 of the accompanying consolidated financial statements~~2014.

AsFrom inception through December 31, 2013, we ~~transition~~had ~~from~~no ~~our~~paid ~~fundraising~~employees and ~~acquisition~~were ~~phases,~~externally weadvised ~~continue~~and tomanaged ~~concentrate~~by ~~our~~the ~~efforts~~Advisor onand ~~actively~~Wells ~~managing~~Management, ~~our~~wholly ~~assets~~owned ~~and~~subsidiaries ~~exploring~~of aWREF. ~~variety~~On January 1, 2014, upon the termination of ~~strategic~~the ~~opportunities~~Revised ~~focused~~Advisory onAgreement ~~enhancing~~and the ~~composition~~hiring of ~~our~~the ~~portfolio~~employees necessary to perform the requisite corporate functions previously performed by the Advisor and its ~~total~~affiliates, ~~return~~we ~~potential~~completed ~~for~~ our ~~stockholders~~transition to a self-managed company. InFrom ~~doing~~January so1, 2014 through June 30, 2014, we ~~may~~received ~~elect~~certain toservices ~~make~~from ~~strategic~~WREF, ~~acquisitions~~as ~~and~~specified ~~dispositions~~in the TSA, ~~and~~to ~~may~~assist ~~look~~in our transition to ~~enter~~becoming a self-managed company. On June 30, 2014, we entered into ~~favorable~~the ~~debt~~TSA ~~transactions.~~Amendment, ~~Our~~which ~~operating~~extended ~~strategy~~the ~~entails~~expiration ~~actively~~date ~~managing~~of ~~our~~the ~~portfolio~~TSA as it relates to ~~generate~~certain ~~sufficient~~transfer ~~cash~~agent ~~flow~~and client services functions from ~~operations~~June 30, 2014 to ~~meet~~September ~~our~~30, ~~required~~2014. ~~obligations~~These transactions have resulted in, and are expected to ~~provide~~continue ~~current~~to ~~income~~result in, ~~the~~increased ~~form~~general ofand ~~cash~~administrative ~~distributions~~expenses due to ~~our~~the ~~investors;~~employment-related ~~managing~~costs ~~lease~~and ~~expirations~~other ~~with~~costs we incur as a ~~goal~~self-managed company. Such increases in general and administrative expenses were offset by the elimination of ~~achieving~~the ~~diversified~~payment ~~lease~~of ~~expiration~~related-party ~~dates;~~asset ~~maintaining~~management afees ~~moderate~~to ~~leverage~~the ~~profile;~~Advisor, ~~considering~~resulting ~~appropriate~~in ~~actions~~a net cost savings to us for ~~future~~the ~~lease~~year ended December 31, 2014. For additional details, please refer to Note 10 of the accompanying consolidated financial statements.

34Following our initial fundraising and acquisition phases, we have continued to concentrate our efforts on actively managing our assets, including enhancing the composition of our portfolio and its total return potential for our stockholders. In addition, we have more recently focused on the exploration of strategic options which could result in the execution of a transaction well in advance of July 31, 2020, the date by which we must have listed on a national securities exchange or sought stockholder approval to (i) extend or amend this listing deadline or (ii) begin liquidation. In connection with our exploration of strategic options, on November 21, 2014, we entered into the Merger Agreement

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~~expirations~~with ~~resulting~~Griffin. inSubject ~~receipt~~to ofthe ~~increased~~terms ~~rents~~and ~~over~~conditions ~~longer~~of ~~terms;~~the ~~and~~Merger ~~controlling~~Agreement, ~~administrative~~upon ~~operating~~consummation ~~expenses~~of asthe aMerger, ~~percentage~~each share of ~~revenues.~~our ~~With~~common ~~our~~stock ~~goals~~issued ofand ~~providing~~outstanding ~~current~~immediately ~~income~~prior to ~~our~~the ~~stockholders~~Merger ~~and~~Effective ~~preserving~~Time ~~their~~will ~~capital,~~be weconverted ~~view~~into ~~our~~2.04 ~~most~~shares ~~significant~~of ~~challenges~~common asstock ~~(i)~~of ~~addressing~~Griffin ~~the~~Common ~~risks~~Stock. In ~~associated~~evaluating ~~with~~the Merger Agreement, our ~~lease~~board ~~expiration~~of ~~dates,~~directors ~~specifically~~consulted inwith ~~2017~~our senior management and ~~2019~~legal, business and ~~(ii)~~financial ~~repaying~~advisors orand ~~refinancing~~considered ~~our~~several ~~outstanding~~factors ~~borrowings~~that it viewed as ~~they~~supporting ~~become~~its ~~due~~decision to enter into the Merger Agreement with Griffin.

~~Per~~Subject to limitations set forth in the ~~terms~~Merger ofAgreement, our ~~charter,~~operating westrategy ~~presently~~entails ~~intend~~actively managing our portfolio to ~~effect~~generate asufficient ~~transaction~~cash byflow ~~July~~from ~~31,~~operations ~~2020~~to ~~that~~meet ~~will~~our ~~provide~~required ~~liquidity~~obligations and to ~~all~~provide current income in the form of cash distributions to our ~~stockholders,~~investors; ~~although~~managing welease ~~will~~expirations ~~explore~~with ~~other~~a ~~liquidity~~goal ~~options~~of asachieving ~~favorable~~diversified ~~opportunities~~lease ~~arise.~~expiration ~~However,~~dates; maintaining a ~~transaction~~moderate ~~well~~leverage profile; considering appropriate actions for future lease expirations resulting in ~~advance~~receipt of ~~2020~~increased ~~may~~rents beover inlonger ~~our~~terms; ~~best~~and ~~interest~~controlling administrative operating expenses as a percentage of revenues. ~~Notwithstanding~~With ~~the~~our ~~execution~~goals of ~~such~~providing acurrent ~~transaction,~~income to our ~~shares~~stockholders ~~remain~~and ~~illiquid,~~preserving ~~and~~their capital, we ~~may~~view ~~not~~our ~~effect~~most significant challenges as (i) a ~~liquidity~~projected ~~event~~reduction ~~before~~in oroperating ~~even~~cash flows in 2015 due to vacancy created by the early lease terminations exercised in 2014 by Leidos and JP Morgan, which were effective January 2015, (ii) addressing the risks associated with our ~~original~~lease ~~targeted~~expiration ~~date~~dates, ofspecifically ~~July~~in 312017 and 2019, ~~2020~~and (iii) repaying or refinancing our outstanding borrowings as they become due. Each of these challenges was considered in our evaluation of the terms of the Merger Agreement.

General Economic Conditions and Real Estate Market Commentary

Management reviews a number of economic forecasts and market commentaries in order to evaluate general economic conditions and to formulate a view of the current environment's effect on the real estate markets in which we operate.

As measured by the U.S. real gross domestic product (“real GDP”), the U.S. economy increased by 12.92% in ~~2013~~2014, according to estimates, ~~compared~~ toconsistent anwith the increase ~~of 2.8%~~ in ~~2012~~2013. The growth of the U.S. economy in ~~2013~~2014 primarily reflected positive contributions from personal consumption expenditures, nonresidential fixed investment, exports, ~~residential~~private ~~fixed~~inventory investment, ~~nonresidential~~state ~~fixed~~and ~~investment~~local government spending, and ~~private~~residential ~~inventory~~fixed investment that were partly offset by a negative contribution from federal government spending. While there are still challenges to the U.S. economic expansion, management believes the U.S. ~~economic~~economy ~~indicators~~will ~~across~~remain ~~the~~on ~~board~~an upward track as there are several signs of positive momentum heading into 2015, including ~~employment~~high consumer confidence largely attributable to low interest rates and falling oil prices, ~~output~~improved corporate earnings, and ~~housing~~increased foreign investment driven by a strengthening U.S. dollar. Questions regarding monetary policy, ~~point~~specifically when the Federal Reserve will begin to ~~sustained~~increase ~~growth~~interest ~~and~~rates, ~~continued~~have ~~recovery~~become atincreasingly acommon ~~moderate~~as ~~pace~~the economy begins to move towards pre-recession levels. Given the trend of improving economic data observed at the end of ~~2013~~2014, we are cautiously optimistic that ~~2014~~2015 will deliver a real GDP growth number ~~above~~greater 2%than the growth experienced in the prior two years and that ~~job~~corporate ~~growth~~America will ~~accelerate~~seek to reinvest its cash in the hiring of new employees as well as higher quality and growing office space.

~~Real~~The ~~estate~~overall ~~market~~strengthening ~~fundamentals~~of ~~underlying~~ the U.S. ~~office~~economy ~~markets~~in ~~mirrored~~2014 ~~the~~was ~~overall~~reflected ~~U.S.~~in ~~economy,~~real ~~displaying~~estate ~~signs~~market ~~of broader~~fundamentals, ~~more~~with ~~consistent~~major ~~growth~~market ~~and~~indicators ~~modest~~showing ~~improvements~~the inspeed of the ~~major~~recovery ~~indicators~~picking inup ~~2013~~aggressively. Net absorption was 1522.64 million square feet in the fourth quarter and 5171.67 million square feet for the year, which is aan ~~slight~~ increase as compared to the 5051.16 million square feet of net absorption in ~~2012~~2013 and makes 2014 the strongest year of demand since 2006. More than 8070% of metropolitan areas experienced occupancy gains in both ~~2012~~2013 and ~~2013~~2014. As a result of the additional space absorbed, vacancy levels declined to 1211.15% in the fourth quarter of ~~2013~~2014, an improvement from a 12.72% vacancy rate at the end of ~~2012~~2013, with 4856 out of 8280 metropolitan areas (5970%) showing declines in vacancy rates. ~~Although~~As ~~vacancy~~expansionary isactivity ~~currently~~took ~~lower~~place ~~than~~across ~~its~~markets ~~recessionary~~in ~~peak~~2014, itvacancy ~~remains~~rates ~~slightly~~for ~~higher~~all ~~than~~classes ~~its~~of ~~historical~~office ~~average.~~space ~~With~~declined, ~~vacancy~~with ~~declining~~Class inA ~~the~~vacancy ~~majority~~recording ~~of areas of~~ the ~~country,~~sharpest ~~rental~~year-over-year ~~rates~~decline. ~~are~~Although ~~beginning~~vacancy tois ~~trend~~down ~~upward~~significantly ~~and,~~from ~~despite~~its arecessionary ~~recent~~peak ~~trend~~in ~~towards office space efficiency~~2010, ~~demand~~it ~~for~~is ~~office~~still ~~space~~slightly ~~exceeded~~higher ~~new~~than ~~supply~~its ~~for~~pre-recession ~~the~~low ~~second~~in ~~straight year~~2008. ~~Approximately~~With ~~82%~~vacancy ofdeclining ~~markets displayed higher rent~~ in the ~~fourth~~majority ~~quarter~~of areas of ~~2013~~the ~~compared~~country, toboth ~~the~~rental ~~fourth~~rates ~~quarter~~and ofdevelopment ~~2012~~activity ~~with~~trended ~~average~~upward. Average quoted rental rates of the total office market ~~seeing~~saw an increase from $23.1267 per square foot toin ~~$23.69~~the ~~per~~fourth ~~square~~quarter ~~foot~~of ~~over~~2013 ~~this~~to ~~period~~$24.42 ~~Similar~~per tosquare ~~2012,~~foot ofin the ~~total~~fourth ~~net~~quarter ~~absorption~~of in2014. ~~2013, almost two-thirds occurred in~~ Class A ~~office~~and ~~space,~~Class ~~which~~B issuburban ~~above~~office ~~its~~rents ~~35%~~posted ~~share of~~ the ~~office~~highest ~~market,~~year-over-year ~~indicating~~increases. aAlthough ~~continued~~tenants’ ~~trend~~desire tofor ~~quality~~Class ~~assets~~A byspace ~~tenants.~~has ~~Economic~~slowed ~~prospects~~in ~~throughout~~comparison to the ~~country~~early ~~have~~recovery, ~~improved~~it ~~with~~is ~~more~~still ~~industries~~evident ~~and~~that ~~more~~tenants ~~markets~~prefer ~~participating~~quality inoffice ~~the~~space ~~recovery,~~even ~~something~~as ~~not~~rental ~~seen~~rates ~~from~~increase. ~~2010~~Consistent ~~through~~with ~~2012.~~the ~~Early~~prior ~~2014~~two ~~economic~~years, ~~indicators~~of ~~are~~the ~~suggesting~~total ~~another~~net ~~year~~absorption ofin at2014, ~~least~~almost ~~modest growth.~~

The upward trend in transaction volume continued for office properties in 2013. The fourth quarter of 2013 marked the best fourth quarter performance for the office sector since the 2007 peak year with sales volume for office transactions of approximately $44.0 billion. U.S. office transaction volumes increased 45% in the fourth quarter of 2013 and 36% for the full year in 2013 as compared to the same respective periods in 2012. As the economic recovery extends across assets and markets, competition remained strong in secondary markets, while high-end deals continued to contribute significantly to stronger primary market activity during the fourth quarter of 2013. Office transaction volumes continued to grow in secondary markets, which contributed approximately 40% of the investment sales activity for the year. As we enter 2014, we expect the investment sales momentum seen in 2013 to continue, with estimated growth in office investment sales volume to exceed 20% for the year. 30

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~~Job~~60% ~~growth~~occurred ~~was positive~~ in ~~2013,~~Class ~~with~~A ~~the unemployment rate declining from 7.9% at the beginning of the year to 6.7% at the end of the year. Essential to the commercial real estate sector,~~ office~~-using~~ ~~employment continues to improve with the U.S. creating 721~~space,~~000~~ ~~office-using~~which ~~jobs~~is inabove ~~2013,~~its up35% ~~from 696,000 in 2012 and 570,000 in 2011. We expect these trends will continue in 2014; however, diversified and non-niche markets will likely be responsible for an increasing~~ share of ~~job growth as they recover from~~ the ~~economic downturn. This projected job growth combined with a lack of new supply coming into the market in 2014-2015 should continue to produce strong~~ office ~~net absorption and declining office vacancy rates and push leverage in landlords’ favor until additional supply~~market, inindicating ~~the~~a ~~form~~continued oftrend ~~new construction, is delivered across markets in the mid-2015~~ to ~~early-2016~~quality ~~time~~assets ~~frame.~~by ~~This will likely result in continued increases in rental rents and declines in landlord concessions offered to~~ tenants. Although tech-heavy and energy-rich markets such as Seattle-Bellevue, San Francisco, Silicon Valley, Houston and Dallas, continue to lead the overall markets with the most aggressive upward rent trends due to high demand and decreasing availability, landlord confidence has begun to spread across other markets as well. Through 2014, once-lagging markets like Atlanta, Philadelphia, Los Angeles, Chicago and other heavily diversified tenant markets are likely to see rents grow at a faster pace due to an economic recovery that finally appears firm.

Development activity continues to increase across the U.S. as tenant expansions and strengthening fundamentals further justify new construction. Only 10 of 48 major U.S. office markets are without construction activity, further affirming the economy's and office market’s expansion and positive outlook. If continued, this increase in development could lead to a shift in fundamentals from a landlord-favorable market to a more neutral or tenant-favorable market sometime in the next 36 months. At year-end, office investment sales volumes were up 21%. With $121.5 billion of deal volume in the U.S., 2014 marked the highest level of activity since 2007, although still 37% below prior peak levels in 2007. While strong office investment sale activity in primary markets continues to capture domestic capital flows, transacted square footage in secondary markets is representative of the expanding desire for these products in the market. In 2014, secondary markets comprised 53% of transacted square feet as compared to 43% in 2013. While not at the same level as primary markets, sales pricing for core, Class A product in top secondary markets grew between 15% and 25% year-over-year on a per square foot basis. As we enter 2015, we expect the investment sales momentum seen in 2014 to continue, thus resulting in further volume growth and capital appreciation. Growing domestic economic prospects and favorable lending conditions provide further optimism for the U.S. office property market.

Job growth was positive in 2014, with the unemployment rate declining more than one full percentage point to 5.6% at the end of the year. Essential to the commercial real estate sector, office-using employment continued to improve with the U.S. creating 873,000 office-using jobs, up from 721,000 in 2013, and 696,000 in 2012. Economic growth throughout 2014 has become more robust across markets and industries. We expect these trends will continue in 2015. This projected job growth combined with strong corporate profitability and increased foreign investment in the U.S. due to global uncertainties, could potentially prolong the office market recovery by creating sustained demand for space. Anticipated increases in employee headcount and expansionary leasing activity across markets will likely result in continued increases in absorption and rising rental rates until new development delivers in 18 to 24 months and, as a result, rent growth is projected to plateau. Although supply-constrained, tech-heavy markets such as Boston, San Francisco, Portland and New York continue to lead with the most aggressive upward rent trends, landlord confidence has spread across other markets as well with more than 75% of markets considered to be landlord-favorable by the end of 2014. One exception to the strong performance trends seen at the end of 2014 is the slowdown in the energy industry as a result of the recent decline in oil prices. While consumers and most businesses have responded favorably to the decline in oil prices, it has caused oil producers and related industries to see profits diminish and short-term investment plans delayed, and it will likely yield a slower demand environment in vulnerable markets, including Houston.

Impact of Economic Conditions on our Portfolio

As of December 31, ~~2013~~2014, our portfolio was 9997.38% leased and only 36% of our leases, measured asby a2014 ~~percentage of 2013~~ annualized ~~lease~~rents ~~revenue~~and recoveries, expire prior to December 2016. As such, current general economic and real estate market conditions are less likely to have an immediate impact on the operations of our portfolio than future economic conditions closer to the time of significant lease expirations. AIn ~~significant portion of areas across the country~~2014, ~~including~~ a majority of the MSAs in which our properties are located, ~~are~~continued ~~currently~~to ~~experiencing~~experience improvements in office ~~place~~space fundamentals, ~~including~~and ashifted ~~reduction~~towards inbeing landlord-favorable. ~~concessions~~We ~~and a compression of vacancy rates, and we~~ expect these office ~~marketplace~~market fundamentals to continue to improve with modest growth forecasted in the U.S. economy. A potential challenge to our portfolio comes from the recent decline in oil prices, as 19% of our 2014 annualized base rent originated from the energy dependent market of Houston. Although this market may not see rapid near-term growth equivalent to prior years due to the recent decline in oil prices, we expect that growth across other sectors will produce overall positive trends in the market. Our portfolio is also less vulnerable to the impacts of short-term fluctuations in energy prices, as the weighted-average remaining lease term at our Houston properties is in excess of four years with no major tenant's space requiring re-leasing before January 2018. Although our lease expirations over the next ~~three~~two years are minimal, ~~should~~we have greater lease exposure beginning in 2017. As the expected improvements in office property fundamentals materialize in our markets, we may consider certain strategic options for our current roster of leases, including early lease renewals, in order to extend and diversify the years of our current lease expirations, particularly as its relates to 2017 and 2019. As of December 31, ~~2013~~2014, our portfolio had a debt-to-real-estate-asset ratio of approximately 2827%, which is lower than the average ratio for our industry and sector. We believe that our moderate leverage, coupled with ample borrowing capacity under our unsecured credit facility ($~~159~~145.0 million available as of February 28, 2014), provides considerable financial flexibility, which enables us to respond quickly to unanticipated funding needs and opportunities. Although we believe that our portfolio is well-positioned to weather current market conditions, we are not immune to the adverse effects of another downturn in the economy, weak real estate fundamentals, or disruption in the credit markets. If these conditions return, they would likely adversely affect the value of our portfolio, our results of operations, and our liquidity.

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February 28, 2015), provides considerable financial flexibility, which enables us to respond quickly to unanticipated funding needs and opportunities. Although we believe that our portfolio is well-positioned to weather current market conditions, we are not immune to the adverse effects of another downturn in the economy, weak real estate fundamentals, or disruption in the credit markets. If these conditions return, they would likely adversely affect the value of our portfolio, our results of operations, and our liquidity.

Liquidity and Capital Resources

Overview

During 2014, we continued to actively manage our real estate portfolio in order to maximize cash flow from operations, to meet our required obligations and to provide current income in the ~~year~~form ~~ended~~of cash distributions to our investors. We anticipate that our primary sources of future capital will be derived from operating cash flows from our real estate portfolio and draws from our credit facility. The Signature Unsecured Debt Facility is comprised of the $200 million Signature Revolving Facility and the $100 million Signature Term Loan, which mature on September 26, 2015 and September 26, 2017, respectively. As of December 31, ~~2013~~2014, we ~~raised~~had ~~proceeds~~outstanding ~~under~~balances ~~our~~on ~~Initial~~the ~~Offering~~Signature Revolving Facility and the Signature Term Loan of $56 million and $100 million, ~~net~~respectively. We do not expect the results of ~~payments~~operations to provide sufficient cash flow to pay off the Signature Revolving Facility. We have the option to extend the Signature Revolving Facility for ~~commissions,~~two ~~dealer-manager~~periods ~~fees,~~of ~~other~~12 ~~offering~~months ~~costs~~each ~~and~~subject ~~redemptions~~to satisfaction of ~~common~~certain ~~stock~~conditions, including (i) no existence of ~~approximately~~default, ~~$64.3~~(ii) ~~million~~no material adverse effect has occurred in our financial condition, ~~substantially~~(iii) ~~all~~compliance with covenants set forth in the Signature Unsecured Debt Facility, and (iv) payment of ~~which~~an ~~was~~extension ~~used~~fee equal to ~~repay~~0.25% ~~funds~~of ~~borrowed~~the inamount ~~connection~~committed ~~with~~under the ~~acquisition~~Signature Revolving Facility. To the extent necessary, we intend to either refinance the Signature Unsecured Debt Facility prior to the maturity of ~~real~~the ~~estate~~Signature ~~properties~~Revolving Facility in ~~advance~~September 2015 or to exercise the first of ~~raising~~two ~~equity~~12-month ~~proceeds~~extension ~~and~~options ~~fund~~available ~~acquisition~~to ~~fees~~us.

WeSubject ~~entered~~to ~~into~~limitations anset ~~unsecured~~forth ~~credit~~in ~~facility (~~the ~~"Signature~~Merger ~~Unsecured Debt Facility") on September 26~~Agreement, ~~2012,~~we ~~which~~expect ~~replaced~~that ~~the~~our ~~credit~~primary ~~facility~~uses ~~dated as~~ of ~~June~~capital ~~29,~~will ~~2011~~continue ~~(the~~to ~~"Amended~~include ~~Regions~~stockholder ~~Credit~~distributions ~~Facility").~~and ~~Under~~funding ~~the~~capital ~~Signature~~improvements ~~Unsecured Debt Facility, we may borrow up~~ to aour ~~total~~existing ~~of $300 million~~properties, ~~subject~~as towell ~~availability.~~as ~~The~~potential ~~Signature~~future ~~Unsecured~~acquisitions ~~Debt Facility is comprised~~ of a ~~revolving~~real ~~credit~~estate ~~facility~~properties. inStockholder andistributions ~~amount~~will upbe tolargely ~~$200~~dependent ~~million (the "Signature Revolving Facility") and a term loan facility in an amount up to $100 million (the "Signature Term Loan")~~upon, ~~which~~among ~~mature~~other ~~on September 26~~things, ~~2015 and September 26, 2017, respectively. We have~~ the ~~option~~amount ~~to extend the Signature Revolving Facility for two periods~~ of 12cash ~~months~~generated ~~each~~from ~~subject~~our tooperating ~~satisfaction~~activities, ofour ~~certain~~determination ~~conditions and payment~~ of annear-term ~~extension~~cash ~~fee~~needs ~~equal~~for tocapital ~~0.25%~~expenditures ~~of the amount committed under the Signature Revolving Facility. We may borrow under the Signature Unsecured Debt Facility~~ at ~~rates~~our ~~equal~~properties toand ~~(1)~~debt ~~LIBOR~~repayments, ~~plus~~and ~~the~~our ~~applicable~~expectations ~~LIBOR~~of ~~margin~~future oroperating ~~(2)~~cash ~~the~~flow ~~greater~~generated offrom ~~(a)~~our ~~the~~ properties.

36In determining how and when to allocate cash resources in the future, we will initially consider the source of the cash. Substantially all cash raised from operations, after payments of periodic operating expenses and certain capital expenditures required for our properties, is anticipated to be used to pay distributions to stockholders. Therefore, to the extent that cash flows from operations are lower, distributions are anticipated to be lower as well. In addition, distributions may be lower to the extent that operating cash flow is reserved to fund future capital expenditures for our existing portfolio in order to achieve our investment objectives. Substantially all net proceeds generated from debt financing will be available to fund capital improvement to our existing properties, as well as potential future acquisitions of real estate properties, and to pay down outstanding borrowings.

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prime rate announced by Regions Bank ("Regions"), (b) the Federal Funds Effective Rate plus 0.50% or (c) the one-month LIBOR (adjusted daily) plus 1.00%, plus the applicable base rate margin. The applicable LIBOR margin under the Signature Revolving Facility and Signature Term Loan may vary from 1.75% to 2.50% and from 1.65% to 2.40%, respectively, and the applicable base rate margin under the Signature Revolving Facility and Signature Term Loan may vary from 0.75% to 1.50% and 0.65% to 1.40%, respectively, based on our then current leverage ratio. Beginning September 26, 2013, we effectively fixed the interest rate on $75 million of the Signature Term Loan at 0.891%, plus a margin of 1.65% to 2.40%, based on our then current leverage ratio, with an interest rate swap executed contemporaneously with the Signature Term Loan. Under the terms of the Signature Unsecured Debt Facility, we generally are required to make interest-only payments. We may prepay the Signature Unsecured Debt Facility in whole or in part at any time, subject to reimbursement of breakage and redeployment costs incurred in connection with LIBOR borrowings; however, amounts repaid on the Signature Term Loan may not be reborrowed.

We anticipate that our primary sources of future capital will be derived from operating cash flows and draws from the Signature Revolving Facility. We expect that our primary uses of capital will continue to include stockholder distributions and funding capital improvements to our existing properties, as well as potential future acquisitions of real estate properties. Stockholder distributions will be largely dependent upon, among other things, the amount of cash generated from our operating activities, our determination of near-term cash needs for capital expenditures at our properties and debt repayments, and our expectations of future operating cash flow generated from our properties.

Short-Term Liquidity and Capital Resources

During the year ended December 31, ~~2013~~2014, net cash provided by operating activities was approximately $2440.03 million, which consisted primarily of rental receipts and tenant reimbursements in excess of payments for property operating costs, ~~acquisition-related costs, asset and~~ property management fees, and general and administrative costs, such as salaries, legal, accounting and other professional fees. During the year ended December 31, ~~2013~~2014, acquisition-related costs paid, which were funded with cash generated from the sale of common stock under the Initial Offering and DRP, but which under GAAP reduced net cash from operating activities, were approximately $1.9 million. During the year ended December 31, 2013, we paid total distributions to stockholders, including amounts reinvested in our common stock pursuant to the DRP, of approximately $2930.37 million, which were fully funded with net cash provided by operating activities. We expect to use the majority of our future net cash flow from operating activities to fund distributions to stockholders (please refer to the Distributions section below for additional information). To the extent that future net cash flow from operating activities exceeds distributions to stockholders, we intend to make repayments on the Signature Revolving Facility.

During the year ended December 31, ~~2013~~2014, net cash used for additions to our existing real estate assets was approximately $80.93 million ~~and net cash used for deferred lease costs was approximately $5.1 million~~, ~~both of which~~ primarily related to ~~funding~~capital aimprovements ~~majority of our tenant improvement obligations~~ at the 64Duke &Bridges 66Buildings, ~~Perimeter~~and ~~Center~~net ~~Buildings.~~cash

Net cash used in financing activities for the year ended December 31, 2013 was approximately $18.5 million. During the year ended December 31, 2013, we generated net proceeds from the sale of common stock under our public offerings, net of payments for commissions, dealer-manager fees, other offering costs and share redemptions, of approximately $64.3 million, substantially all of which was used to pay down debt and fund acquisition fees. During the year ended December 31, 2013, we received gross debt proceeds of approximately $14.5 million from the Signature Revolving Facility, which were used to fund a portion of our tenant improvement obligations at the 64 & 66 Perimeter Center Buildings and to fund common stock redemptions under the Amended SRP. We repaid approximately $68.0 million on the Signature Revolving Facility during the year ended December 31, 2013. 32

We expect to utilize the residual cash balance of approximately $7.4 million as of December 31, 2013 to satisfy current and future liabilities.

Our board of directors has declared a distribution to stockholders of record as of March 15, 2014 in an amount equal to $0.375 per share (or a 6.0% annualized yield on a $25.00 original share price). We expect to pay this distribution in March 2014. We intend to utilize operating cash flow to fund this stockholder distribution; however, if necessary, we may also utilize other sources of cash to fund a portion of this distribution.

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used for deferred lease costs was approximately $1.1 million, primarily related to costs associated with a lease extension with Lundbeck at the Four Parkway North Building.

Net cash used in financing activities for the year ended December 31, 2014 was approximately $41.2 million. During the year ended December 31, 2014, we paid total distributions to stockholders, including amounts reinvested in our common stock pursuant to the DRP, of approximately $30.7 million. During the year ended December 31, 2014, we received gross debt proceeds of approximately $34.7 million from the Signature Revolving Facility, which were primarily used to repay the $24.9 million balance of the Technology Way Loan in full upon its maturity on June 27, 2014. During the year ended December 31, 2014, we funded redemptions of our common stock under the Amended SRP of $2.9 million. During the year ended December 31, 2014, we made total debt repayments of approximately $46.1 million, consisting of $24.9 million on the Technology Way Loan and approximately $21.2 million on the Signature Revolving Facility.

We expect to utilize the residual cash balance of approximately $5.1 million as of December 31, 2014 to satisfy current and future liabilities. We believe that we have adequate liquidity and capital resources to meet our current obligations as they come due. As of February 28, 2015, we had access to the borrowing capacity under the Signature Unsecured Debt Facility of $145.0 million.

Our board of directors has declared a distribution for the first quarter of 2015 to stockholders of record as of March 13, 2015 in an amount equal to $0.375 per share (or a 6.0% annualized yield on a $25.00 original share price). We expect to pay this distribution in March 2015. We intend to utilize operating cash flow to fund this stockholder distribution; however, if necessary, we may also utilize other sources of cash to fund a portion of this distribution.

Debt Covenants

As of December 31, ~~2013~~2014, the Signature Unsecured Debt Facility contained, among others, the following restrictive covenants, as defined by the credit agreement:

		Actual Performance
	Covenant Level	December 31, ~~2013~~2014
Fixed-charge coverage ratio	Greater than 1.75x	610.5749
Total debt relative to total asset value	Less than 55%	2826%
Secured debt relative to consolidated tangible assets	Less than 40%	60%
Secured debt, excluding non-recourse debt, relative to consolidated tangible assets	Less than 15%	0%
Tangible net worth	Greater than approximately $317.17 million(1)	$~~434~~440.48 million
Net distributions paid relative to funds from operations	Less than 90%(2)	46%
Net distributions paid relative to funds from operations("Restricted Payments Covenant")	Less than 90%(2)	68%


⁽¹⁾	Our tangible net worth must be greater than $233.8 million, plus 72.25% of the gross cash proceeds, net of redemptions paid, of all of our equity issuances consummated after September 26, 2012.

⁽²⁾

Total distributions for each fiscal year, less amounts reinvested pursuant to the DRP, cannot exceed the greater of (1) 90% of funds from operations, as defined in the Signature Unsecured Debt Facility, as long as total distributions, less amounts reinvested pursuant to the DRP, for any two consecutive quarters do not exceed 100% of funds from operations, as defined, or (2) the minimum amount required to continue to qualify as a REIT.

As of December 31, ~~2013~~2014, we believe we were in compliance and expect to remain in compliance with these, and all other, restrictive covenants of the Signature Unsecured Debt Facility. We ~~also~~Although ~~believe that~~ we ~~have~~expect ~~adequate~~to ~~liquidity~~comply ~~and~~with ~~capital~~these ~~resources~~covenants tofor ~~meet~~the ~~our~~duration ~~current~~of ~~obligations~~the asterm ~~they~~of ~~come~~the ~~due.~~Signature AsUnsecured ofDebt ~~February 28~~Facility, ~~2014,~~depending weon ~~had~~our ~~access~~future tooperating ~~the~~performance ~~borrowing~~and ~~capacity~~distribution ~~under~~payments, ~~the~~we ~~Signature~~cannot ~~Unsecured~~assure ~~Debt~~such ~~Facility~~compliance. ofIn ~~$159.0~~the ~~million.~~event that we project future non-

~~Long-Term Liquidity and Capital Resources~~33

Over the long term, we expect that our primary source of capital will include proceeds from secured or unsecured financings from banks and other lenders and net cash flows from operations, including proceeds from strategic property sales. We anticipate funding distributions to our stockholders from net cash flows from operations; however, we may continue to borrow funds to fund distributions as well.

We expect that our principal demands for capital will include operating expenses, including interest expense on any outstanding indebtedness; funding capital improvements to our existing properties, as well as potential future acquisitions of real estate properties; repayment of debt; and distributions.

In determining how and when to allocate cash resources in the future, we will initially consider the source of the cash. Substantially all cash raised from operations, after payments of periodic operating expenses and certain capital expenditures required for our properties, is anticipated to be used to pay distributions to stockholders. Therefore, to the extent that cash flows from operations are lower, distributions are anticipated to be lower as well. In addition, distributions may be lower to the extent that operating cash flow is reserved to fund future capital expenditures for our existing portfolio in order to achieve our investment objectives and maintain our operating strategy. Substantially all net proceeds generated from debt financing will be available to fund capital improvements to our existing properties, as well as potential future acquisitions of real estate properties, and to pay down outstanding borrowings.

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~~properties,~~compliance aswith ~~well~~the asRestricted ~~potential~~Payments ~~future acquisitions of real estate properties. Additionally~~Covenant, we ~~may place long-term debt on our existing properties and any properties acquired in the future. We currently intend to maintain amounts outstanding under our long-term debt arrangement so that we will~~ have more funds available for working capital and potential investment in additional real estate properties, which will allow us to further diversify our portfolio. However, our level of leverage will depend upon various factors to be considered in the ~~sole discretion of our board of directors, including, but not limited to, our~~ ability to ~~pay~~remain ~~distributions, the availability of real estate properties meeting our investment criteria, the availability of debt, and changes~~ in ~~the~~compliance ~~cost~~by ofreducing ~~debt~~future ~~financing.~~distribution ~~Over the long term, we intend to maintain debt levels less than the 50% debt-to-real-estate-asset ratio~~payments. This conservative leverage goal could reduce the amount of current income we can generate for our stockholders, but it also reduces their risk of loss. We believe that preserving investor capital while generating stable current income is in the best interest of our stockholders. As of December 31, 2013, our debt-to-real-estate-asset ratio was approximately 28%. Our charter limits us from incurring debt in relation to our net assets in excess of 100%; however, we may temporarily exceed this limit upon the approval of a majority of our Conflicts Committee. Our board of directors may determine that it is in our best interest to pursue leveraged acquisitions. In accordance with our charter, if our board of directors and our Conflicts Committee approve any borrowing in excess of our leverage limitation, we will disclose such approval to our stockholders in our next quarterly report, along with an explanation for such excess.

Long-Term Liquidity and Capital Resources

Subject to limitations set forth in the Merger Agreement, over the long term, we expect that our primary sources of capital will include proceeds from secured or unsecured financings from banks and other lenders and net cash flows from operations, including proceeds from strategic property sales. We anticipate funding distributions to our stockholders from net cash flows from operations; however, we may borrow funds to fund distributions as well.

We expect that our principal demands for capital will include operating expenses, including interest expense on any outstanding indebtedness; funding capital improvements and leasing costs with respect to our existing properties, as well as potential future acquisitions of real estate properties; repayment of debt; and distributions.

We have a policy of keeping our debt at no more than 50% of the cost of our assets (before depreciation), referred to as the debt-to-real-estate-asset ratio; however, we may borrow in excess of this threshold under some circumstances. Our working capital line of credit provides flexibility with regard to managing our capital resources. Over the short term, we expect to temporarily draw on the Signature Revolving Facility to fund capital improvements and leasing costs with respect to our existing properties, as well as potential future acquisitions of real estate properties. Additionally, we may place long-term debt on our existing properties and any properties acquired in the future. We currently intend to maintain amounts outstanding under our long-term debt arrangement so that we will have more funds available for working capital and potential investment in additional real estate properties, which will allow us to further diversify our portfolio. However, our level of leverage will depend upon various factors to be considered in the sole discretion of our board of directors, including, but not limited to, our ability to pay distributions, the availability of real estate properties meeting our investment criteria, the availability of debt, and changes in the cost of debt financing. Over the long term, we intend to maintain debt levels less than the 50% debt-to-real-estate-asset ratio. This conservative leverage goal could reduce the amount of current income we can generate for our stockholders, but it also reduces their risk of loss. We believe that preserving investor capital while generating stable current income is in the best interest of our stockholders. As of December 31, 2014, our debt-to-real-estate-asset ratio was approximately 27%. Prior to its amendment in August 2014, our charter limited us from incurring debt in relation to our net assets in excess of 100%, unless borrowings in excess of this limit were approved by a majority of our board of directors and disclosed in our next quarterly report. During the periods presented, our debt-to-net asset ratio did not exceed 100%.

Contractual Obligations and Commitments

As of December 31, 2014, our contractual obligations were as follows:

	Payments Due By Period
Contractual Obligations	Total		~~2014~~2015		~~2015-~~2016-2017		~~2017-~~2018-2019		Thereafter
Debt obligations	$	~~167~~159,~~400~~000,000	$	2459,~~900~~000,000	$	42100,~~500~~000,000	$	~~100,000,000~~—	$	—
Estimated interest on debt obligations(1)	107,~~502~~253,~~974~~748		3,~~440~~153,~~253~~158		54,~~322~~100,~~881~~590		~~1,739,840~~—		—
Capital lease obligations(2)	115,000,000		—		—		—		115,000,000
Tenant allowances	~~547~~2,~~032~~235,020		~~547~~2,~~032~~235,020		—		—		—
Total	$	~~293~~283,~~450~~488,~~006~~768	$	2864,~~887~~388,~~285~~178	$	47104,~~822~~100,~~881~~590	$	~~101,739,840~~—	$	115,000,000


⁽¹⁾	Interest obligations on variable-rate debt are measured at the rate at which they are effectively fixed with interest rate swaps (where applicable). Interest obligations on all other debt are measured at the contractual rate.

(2) Amounts include principal obligations only. We will incur an additional $9184.45 million in interest expense on these obligations over the term of the leases. The principal obligation and related interest expense will be completely offset by our investments in development authority bonds and their corresponding interest income (see Note 2 and Note 6 to the accompanying consolidated financial statements).

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Merger-Related Contingencies

The consummation of the Merger is subject to certain customary closing conditions, including, among others, the approval of the Merger by our stockholders. The Merger Agreement may be terminated under certain circumstances by Griffin or us. Upon termination, if such termination occurs under certain specified circumstances, we may be required to pay Griffin a termination fee of $20 million. The Merger Agreement also provides that one party may be required to reimburse the other party's transaction expenses, not to exceed $3 million, if the Merger Agreement is terminated under certain circumstances.

In connection with entering into the Merger Agreement with Griffin, our board of directors adopted the Retention and Transaction Award Plan to establish guidelines for rewarding eligible employees with certain cash retention bonus payments in connection with their continued employment through the closing of the Merger. Pursuant to the Retention and Transaction Award Plan, each participant will be eligible to receive payment of a cash retention bonus in an amount determined in the sole discretion of the Compensation Committee. The award pool as established by the Retention and Transaction Award Plan is up to $2.2 million. Upon the closing of the Merger, we are obligated to fund these cash retention bonus payments; however, the consummation of the Merger is subject to certain customary closing conditions, including, among others, the approval of the Merger by our stockholders. Should the Merger with Griffin not be completed, we will not be obligated to fund these cash retention bonus payments.

Distributions

~~During~~Our ~~the Initial Offering period, our~~ board of directors ~~typically~~declares declared distributions to common stockholders in advance of a period spanning approximately one quarter using daily record dates. Beginning in the third quarter of 2013, following the expiration of the Initial Offering, quarterly distributions ~~are~~ based on a single record date at the end of the quarterly period. In determining the rate of stockholder distributions, our board considers a number of factors, including the current and future levels of cash available to fund stockholder distributions, which is dependent upon the operations of our properties, our current and future projected financial condition, our capital expenditure requirements, our expectations of future sources of liquidity, and the annual distribution requirements necessary to maintain our status as a REIT under the Code. When evaluating the amount of current and future cash available to fund distributions to stockholders, we consider net cash provided by operating activities (as presented in accordance with GAAP in the accompanying consolidated statements of cash flows). We also consider certain costs that were incurred for the purpose of generating future earnings and appreciation in value over the long term, including acquisition-related costs. In accordance with Accounting Standards Codification Topic 805 Business Combinations ("ASC 805"), we expense all acquisition-related costs as incurred. Acquisition-related costs include customary third-party costs, such as legal fees and expenses; costs of appraisals; accounting fees and expenses; title insurance premiums; and other closing costs. Generally, our policy is to pay distributions based on current and projected cash flow from operations after giving consideration to certain amounts excluded from cash flow from operations under GAAP. Over the long term, we expect to fund stockholder distributions principally with cash flow from operations; however, we may also use borrowings to fund stockholder distributions.

~~When~~Our ~~evaluating~~board ~~the amount~~ of ~~current~~directors ~~and~~declared ~~future~~quarterly ~~cash available to fund~~ distributions toin ~~stockholders,~~the weamount ~~consider~~of ~~net~~$0.375 ~~cash~~per ~~provided~~share ~~by operating activities~~ (asa ~~presented~~6.0% inannualized ~~accordance~~yield ~~with~~on ~~GAAP~~a in$25.00 ~~the~~original ~~accompanying~~share ~~consolidated statements of cash flows~~price). Wefor ~~also~~stockholders ~~consider~~of ~~certain~~record ~~costs~~as ~~that~~of ~~were~~March ~~incurred~~14, ~~for~~2014, ~~the~~June ~~purpose~~13, of2014, ~~generating~~September ~~future~~15, ~~earnings~~2014 and ~~appreciation~~December ~~in value over the long term~~15, ~~including acquisition-related costs~~2014. InThese ~~accordance~~distributions ~~with~~were ~~Accounting~~paid ~~Standards~~in ~~Codification~~March, ~~Topic~~June, ~~805~~September ~~Business~~and ~~Combinations~~December ~~("ASC~~of ~~805")~~2014, werespectively. ~~expense all acquisition-related costs as~~

39For the year ended December 31, 2014, we paid total distributions to stockholders, including amounts reinvested in our common stock pursuant to our distribution reinvestment plan, of approximately $30.7 million. During the same period, net cash provided by operating activities was approximately $40.3 million. As a result, the distributions paid to common stockholders for the year ended December 31, 2014, as described above, were fully funded with cash provided by operating activities.

On March 4, 2015, our board of directors declared a distribution to stockholders for the first quarter of 2015 in the amount of $0.375 per share on the outstanding shares of common stock payable to stockholders of record as of March 13, 2015. This rate equates to a 6.0% annualized yield on a $25.00 original share price and is consistent with the quarterly distribution rates declared since the second quarter of 2011. We expect to pay this distribution in March 2015.

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incurred. Acquisition-related costs include acquisition fees payable to the Advisor (see Note 10 to our accompanying consolidated financial statements); customary third-party costs, such as legal fees and expenses; costs of appraisals; accounting fees and expenses; title insurance premiums; and other closing costs. As provided in the prospectus for the Initial Offering, acquisition-related costs are funded with cash generated from the sale of common stock in the Initial Offering and the DRP and, therefore, are not funded with cash generated from operations.

Generally, our policy is to pay distributions based on current and projected cash flow from operations after giving consideration to amounts excluded from cash flow from operations under GAAP but paid for out of proceeds from our public offerings, such as acquisition-related expenses. Over the long term, we expect to fund stockholder distributions principally with cash flow from operations (reflecting the impact of ASC 805); however, we may also use borrowings to fund stockholder distributions.

Our board of directors declared distributions in an amount equal to $0.004110 (0.4110 cents) per day, per share (a 6.0% annualized yield on a $25.00 original share price) for stockholders of record from December 16, 2012 through and including June 15, 2013, and $0.375 per share (a 6.0% annualized yield on a $25.00 original share price) for stockholders of record as of September 15, 2013 and December 13, 2013. These distributions were paid in March, June, September and December of 2013.

For the year ended December 31, 2013, we paid total distributions to stockholders, including amounts reinvested in our common stock pursuant to our distribution reinvestment plan, of approximately $29.3 million. During the same period, net cash provided by operating activities was approximately $24.0 million, including approximately $1.9 million of acquisition-related costs paid with proceeds from our public offerings, but which under GAAP reduced net cash from operating activities. As a result, the distributions paid to common stockholders for the year ended December 31, 2013, as described above, were funded with approximately $24.0 million (reflecting the impact of ASC 805 as described above) from cash provided by operating activities, and the remaining amount of approximately $5.3 million was funded from our borrowings. Borrowings have been used to fund distributions to the extent that (i) net cash provided by operating activities was lower as result of the abatement of State Farm’s rent and operating expense reimbursements at the 64 & 66 Perimeter Center Buildings and (ii) acquisition-related costs reduced net cash provided by operating activities.

On March 5, 2014, our board of directors declared a distribution to stockholders for the first quarter of 2014 in the amount of $0.375 per share on the outstanding shares of common stock payable to stockholders of record as of March 15, 2014. This rate equates to a 6.0% annualized yield on a $25.00 original share price and is consistent with the quarterly distribution rates declared since the second quarter of 2011. We expect to pay this distribution in March 2014.

Results of Operations

Overview

We commenced active operations on September 29, 2010 and acquired two properties during the year ended December 31, 2010, six properties during the year ended December 31, 2011, and five properties during the year ended December 31, 2012. We did not acquire any additional properties during the ~~year~~years ended December 31, 2013 or December 31, 2014, bringing our total portfolio to 13 properties as of December 31, ~~2013~~2014. Accordingly, the results of operations presented for the ~~years~~year ended December 31, ~~2013,~~ 2012, ~~and~~is ~~2011 are~~ not directly comparable to the other periods presented.

Our real estate operating results improved infor ~~2013,~~the asyear ~~compared~~ended toDecember 31, ~~2012~~2014, ~~primarily~~as ~~due~~compared to ~~owning~~ the ~~properties~~same ~~acquired~~period in ~~2012 for an entire year in~~ 2013, ~~a reduction in acquisition fees and expenses~~ primarily due to the ~~closing~~expiration of the primary portion of the Initial Offering on June 10, 2013, and the execution of the Revised Advisory Agreement. Our results of operations are not indicative of those expected in future periods, as we expect that real estate operating results will continue to improve in 2014 as a ~~result~~majority of ~~an anticipated increase in tenant reimbursements due to the expiration of~~ State Farm's operating expense reimbursement ~~abatement~~abatements at the 64 & 66 Perimeter Center Buildings and athe ~~decrease~~elimination inof related-party advisory fees and expenses related to our transition to self-management, partially offset by an increase in general and administrative expenses due to employment-related costs and other costs we ~~will~~ incur as a self-managed company and costs incurred in connection with the exploration of strategic options, including the Merger.

40Comparison of the year ended December 31, 2014 versus the year ended December 31, 2013

The following table sets forth data from our consolidated statements of operations for the year ended December 31, 2014 and 2013, respectively, as well as each balance as a percentage of total revenues for the same periods presented:



	Year ended December 31, 2014			% of Revenues		Year ended December 31, 2013			% of Revenues		$ Increase (Decrease)			% Increase (Decrease)
Revenues:
Rental income	$	52,689,430		69	%	$	53,023,714		77	%	$	(334,284	)	(1	)%
Tenant reimbursements	21,759,047			28	%	16,207,310			23	%	5,551,737			34	%
Other property income	2,488,543			3	%	36,525			—	%	2,452,018			N/M
Total revenues	76,937,020			100	%	69,267,549			100	%	7,669,471			11	%
Expenses:
Property operating costs	25,922,181			34	%	23,469,100			34	%	2,453,081			10	%
Asset and property management fees:
Related-party	—			—	%	5,495,142			8	%	(5,495,142		)	(100	)%
Other	1,050,900			1	%	1,011,405			1	%	39,495			4	%
Depreciation	18,555,419			24	%	17,768,543			26	%	786,876			4	%
Amortization	11,982,320			16	%	11,292,059			16	%	690,261			6	%
General and administrative	7,897,682			10	%	3,800,454			5	%	4,097,228			108	%
Acquisition fees and expenses	—			—	%	1,674,094			3	%	(1,674,094		)	(100	)%
Total expenses	65,408,502			85	%	64,510,797			93	%	897,705			1	%
Real estate operating income	11,528,518			15	%	4,756,752			7	%	6,771,766			142	%
Other income (expense):
Interest expense	(12,256,606		)	(16	)%	(12,446,785		)	(18	)%	(190,179		)	(2	)%
Interest and other income	6,937,437			9	%	6,900,454			10	%	36,983			1	%
Income (loss) before income tax expense	6,209,349			8	%	(789,579		)	(1	)%	6,998,928			886	%
Income tax expense	(157,868		)	0	%	(203,553		)	0	%	(45,685		)	(22	)%
Net income (loss)	$	6,051,481		8	%	$	(993,132	)	(1	)%	$	7,044,613		709	%
Per-share net income (loss) - basic and diluted	$	0.30				$	(0.05	)			$	0.35		700	%

*N/M - Not Meaningful

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~~Comparison of the year ended December 31, 2013 versus the year ended December 31, 2012~~Revenues

~~Rental~~Tenant ~~income and tenant~~ reimbursements increased to $535.06 million, ~~and~~or ~~$16.2 million~~34%, ~~respectively,~~ for the year ended December 31, ~~2013,~~2014 ~~from~~compared ~~approximately~~to ~~$38.2 million and $9.8 million, respectively, for~~ the ~~year~~same ~~ended~~period ~~December 31,~~in ~~2012~~2013, primarily as a result of ~~owning~~(i) the ~~properties~~expiration ~~acquired~~of ina ~~2012~~majority ~~for~~of anState ~~entire~~Farm's ~~year~~operating inexpense ~~2013.~~reimbursement ~~Absent~~abatements ~~any additional acquisitions, we expect rental income to remain~~ at athe ~~similar~~64 ~~level~~& as66 ~~compared~~Perimeter toCenter ~~the~~Buildings ~~year~~in ~~ended~~ December ~~31,~~ 2013. Weand ~~expect~~(ii) ~~tenant~~an ~~reimbursements to~~ increase asin ~~compared~~property tooperating ~~the year ended December 31~~costs, ~~2013,~~ as adescribed ~~result~~below, of ~~the~~which ~~expiration~~a ofportion ~~State~~is ~~Farm's~~reimbursed ~~operating~~by ~~expense~~our ~~reimbursement abatement at the 64 & 66 Perimeter Center Buildings in 2014~~tenants.

~~Property~~Other ~~operating costs and asset and~~ property ~~management~~income ~~fees~~ increased ~~to approximately~~ $232.5 million ~~and $6.5 million, respectively,~~ for the year ended December 31, 2014 compared to the same period in 2013, ~~from~~due ~~approximately~~to ~~$14.9~~(i) ~~million~~an ~~and~~early ~~$4.0~~lease ~~million,~~termination ~~respectively,~~option ~~for~~exercised ~~the~~by ~~year~~Leidos, ~~ended~~effective December 31, ~~2012~~2014, ~~primarily~~for asapproximately a29,000 ~~result~~square feet of ~~owning~~its space in the ~~properties~~Franklin ~~acquired~~Center inBuilding ~~2012~~and ~~for~~(ii) an ~~entire~~agreement ~~year~~reached inwith ~~2013.~~JP ~~Property~~Morgan ~~operating~~to ~~costs~~terminate ~~and~~the ~~management~~remaining ~~fees~~floor asof aits ~~percentage~~lease ofat ~~total~~the ~~revenues~~Royal ~~increased~~Ridge toBuilding ~~approximately~~effective ~~43%~~January ~~for~~23, ~~the~~2015. ~~year~~These ~~ended~~lease ~~December 31,~~terminations ~~2013~~resulted in total termination penalty fees from Leidos and JP Morgan of approximately ~~39%~~$1.0 ~~for~~million ~~the~~and ~~year~~$1.8 ~~ended~~million, ~~December 31~~respectively, ~~2012~~paid asto us and recognized on a ~~result~~straight-line ofbasis from the ~~abatement~~early oftermination ~~State~~notice ~~Farm's~~dates ~~operating~~through ~~expense~~December ~~reimbursements~~2014 inand ~~2013~~January 2015, respectively. ~~Absent~~This ~~any~~lease ~~additional~~termination ~~acquisitions,~~income ~~property~~is ~~operating~~offset ~~costs~~by inadditional ~~future~~depreciation ~~periods~~and ~~are~~amortization ~~expected~~related to ~~remain~~the atacceleration aof ~~similar~~depreciation ~~level,~~and asamortization ~~measured~~of inthe ~~gross~~remaining ~~dollars,~~tangible and ~~decrease,~~intangible aslease ~~measured~~assets asassociated awith ~~percentage~~the ofearly ~~total~~lease ~~revenues,~~terminations. asOn ~~compared~~January to27, ~~the year ended December 31~~2015, ~~2013.~~we Asentered into a ~~result~~10-year oflease ~~our~~agreement ~~transition~~with toNEC ~~self-management~~Corporation ~~and~~of ~~termination~~America ofto lease the ~~Revised~~entire ~~Advisory~~space ~~Agreement~~previously ~~effective~~occupied ~~December~~by ~~31,~~JP ~~2013,~~Morgan weat ~~will~~the noRoyal ~~longer~~Ridge ~~incur~~Building, ~~related-party~~effective ~~asset~~December ~~management~~1, ~~fees~~2015. ~~Please~~We ~~refer~~continue to ~~Note~~market 10the ofvacant ~~our~~space ~~accompanying~~in ~~consolidated~~the ~~financial~~Franklin ~~statements~~Center Building for ~~further explanation~~lease.

~~Depreciation~~Rental ofincome ~~real~~is ~~estate~~expected ~~and~~to ~~amortization~~decrease ofin ~~lease~~2015 ~~costs~~as ~~increased~~a toresult ~~approximately~~of ~~$17.8~~the ~~million~~Leidos and ~~$11.3~~JP ~~million,~~Morgan ~~respectively,~~early ~~for~~lease ~~the year ended December 31~~terminations, ~~2013,~~which ~~from~~were ~~approximately~~effective ~~$12~~January 2015.4 ~~million~~Also ~~and~~in ~~$7.7 million~~2015, ~~respectively,~~other ~~for~~property ~~the~~income ~~year~~is ~~ended~~expected ~~December 31,~~to ~~2012,~~return ~~primarily~~to pre-2014 levels as a result of ~~owning~~not ~~the~~recognizing ~~properties~~lease ~~acquired~~termination inincome ~~2012~~equal ~~for~~to anthat ~~entire~~recognized ~~year~~ in ~~2013.~~2014 ~~Absent~~related ~~any~~to ~~additional~~the ~~acquisitions,~~Leidos ~~depreciation~~ and ~~amortization~~JP inMorgan ~~future~~early ~~periods~~lease ~~are expected to remain at a similar level as compared to the year ended December 31, 2013~~terminations.

General and administrative expenses decreased to approximately $3.8 million for the year ended December 31, 2013 from approximately $4.8 million for the year ended December 31, 2012, primarily as a result of entering into the Revised Advisory Agreement, effective June 11, 2013, which eliminated (i) the payment of the debt financing fee and (ii) the reimbursement of costs and expenses the Advisor incurred in fulfilling its duties as the asset manager, including wages and salaries of its employees. General and administrative expenses, as a percentage of total revenues, decreased to approximately 5% for the year ended December 31, 2013 from approximately 10% for the year December 31, 2012. We expect general and administrative expenses, as measured in gross dollars and as a percentage of total revenues, to increase in future periods as a result of the employment-related costs and other costs we will incur as a self-managed company. The increase in general and administrative expenses is expected to be offset by the elimination of the advisory fees and expenses we paid to the Advisor as an externally managed company resulting in net cost savings to us. Please refer to Note 10 of our accompanying consolidated financial statements for further explanation. Expenses

~~Acquisition~~Property ~~fees~~operating ~~and~~costs ~~expenses~~increased ~~decreased to approximately~~ $12.75 million, or 10%, for the year ended December 31, ~~2013~~2014 ~~from~~compared ~~approximately~~to ~~$5.9 million for~~ the ~~year~~same ~~ended~~period ~~December 31,~~in ~~2012~~2013, primarily ~~due~~as toa result of an increase in (i) ~~the~~real ~~absence~~estate oftax ~~non-recurring~~expenses ~~costs~~at ~~paid~~the to4650 ~~third~~Lakehurst ~~parties~~Court Building, ~~including~~the ~~transfer~~Westway ~~taxes~~II Building, inand ~~connection~~the ~~with~~64 ~~property~~& ~~acquisitions,~~66 ~~and~~Perimeter Center Buildings, (ii) arepairs ~~decrease~~and inmaintenance ~~the~~work ~~amount~~completed ofat ~~equity~~several ~~proceeds~~properties, ~~raised~~(iii) ~~under~~utility ~~our~~and ~~Initial~~maintenance ~~Offering~~expenses ~~during~~at ~~2013~~the as64 ~~compared~~& 66 Perimeter Center Buildings due to ~~2012.~~an ~~During~~increase ~~the~~in ~~periods~~occupancy ~~presented~~in 2014, weand ~~incurred~~(iv) ~~acquisition~~seasonal ~~fees~~maintenance ~~equal~~costs toat 2%several ofproperties ~~gross~~due ~~offering~~to ~~proceeds~~extreme ~~raised.~~weather ~~Except~~conditions ~~for~~experienced ~~fees~~in ~~and~~early ~~expenses~~2014. ~~specifically~~Property ~~related~~operating toexpenses, ~~any~~net ~~additional~~of ~~acquisitions~~tenant reimbursements, weare doexpected ~~not~~to ~~expect~~increase in 2015 due to ~~incur~~(i) ~~any~~increases ~~future~~in ~~acquisition~~property ~~fees~~taxes and ~~expenses~~utilities inand ~~2014.~~(ii) ~~Please~~a ~~refer~~reduction toin ~~Note~~tenant 10reimbursements as a result of ~~our~~the ~~accompanying~~vacancy ~~consolidated~~created ~~financial~~by ~~statements~~the ~~for~~early ~~further~~lease ~~explanation~~terminations of Leidos and JP Morgan.

~~Interest~~Asset ~~expense~~and ~~increased~~property tomanagement ~~approximately~~fees decreased $125.45 million, or 84%, for the year ended December 31, ~~2013~~2014 ~~from~~compared ~~approximately~~to ~~$6.7 million for~~ the ~~year~~same ~~ended~~period ~~December 31,~~in ~~2012~~2013, ~~primarily~~as ~~due~~a toresult ~~incurring~~of ~~interest~~no ~~expense~~longer incurring related-party toasset ~~capital~~management ~~lease~~fees ~~obligations~~due ~~assumed~~to inour ~~connection~~transition ~~with~~to ~~the~~self-management ~~acquisition~~and termination of the 64Revised &Advisory 66Agreement ~~Perimeter~~effective ~~Center Buildings in~~ December ~~2012~~31, 2013. ~~The~~Property ~~increase~~operating incosts ~~interest~~and ~~expense~~management ~~related~~fees torepresented ~~capital~~approximately ~~lease~~35% ~~obligations is completely offset by an increase in interest~~ and ~~other~~43% ~~income~~of ~~from~~total ~~related~~revenues ~~investments~~for inthe ~~development~~year ~~authority~~ended ~~bonds.~~December 31, ~~Future~~2014 ~~levels~~and ofDecember 31, ~~interest expense will vary~~2013, respectively.

41General and administrative expenses increased $4.1 million, or 108%, for the year ended December 31, 2014 compared to the same period in 2013, representing 10% and 5% of revenues, respectively, primarily as a result of the employment-related costs and other costs we incur as a self-managed company and costs incurred in connection with the exploration of strategic options, including the Merger. The increase in general and administrative expenses was offset by the elimination of the advisory fees and expenses previously paid to the Advisor as an externally managed company, resulting in net cost savings to us of approximately $1.3 million, or 14%, for the year ended December 31, 2014. During the year ended December 31, 2014, we incurred $1.2 million of costs in connection with the exploration of strategic options, including the Merger, which contributed to the increase in general and administrative expenses described above. Due to the Merger, we anticipate that we will continue to incur Merger-related expenses throughout 2015.

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~~primarily~~Acquisition ~~based~~fees ~~on the amounts of future borrowings~~ and ~~the~~expenses ~~costs~~decreased ~~of borrowings~~$1.7 ~~Future borrowings will be used primarily to invest in additional capital expenditures~~million, ~~including~~or ~~improvements to our existing properties~~100%, asfor ~~well~~the asyear ~~potential~~ended ~~future acquisitions of real estate properties. Absent any additional acquisitions~~December 31, we2014 ~~expect~~compared ~~future interest expense~~ to ~~increase slightly due to~~ the ~~interest~~same ~~rate~~period ~~swap~~in ~~executed contemporaneously with the Signature Term Loan, which beginning September 26,~~ 2013, ~~effectively~~as ~~fixed~~a ~~our~~result ~~interest rate on $75.0 million~~ of the ~~Signature~~expiration ~~Term~~of ~~Loan~~our atInitial aOffering ~~rate~~on ~~higher~~June ~~than~~10, ~~the~~2013. ~~current~~Absent ~~variable~~any ~~rate~~additional ~~that~~acquisitions, ~~would~~we ~~otherwise~~do ~~apply~~not toexpect ~~the borrowings under the Signature Term Loan. Please refer~~ to ~~Note~~incur 5any offuture ~~our~~acquisition ~~accompanying~~fees ~~consolidated~~and ~~financial~~expenses ~~statements~~in ~~for~~future ~~further explanation~~periods.

~~Interest~~Other ~~and~~Income other income increased to approximately $6.9 million for the year ended December 31, 2013 from $0.1 million for the year ended December 31, 2012, primarily due to recognizing interest income related to investments in development authority bonds assumed in connection with the acquisition of the 64 & 66 Perimeter Center Buildings in December 2012. The increase in interest and other income from related investments in development authority bonds is completely offset by an increase in interest expense related to capital lease obligations. We anticipate interest and other income will remain relatively stable, as compared to the year ended December 31, 2013, in future periods.(Expense)

~~Our~~Interest ~~net~~expense ~~loss~~remained ~~decreased~~relatively tostable ~~approximately $1.0 million~~ for the year ended December 31, ~~2013~~2014 ~~from~~compared ~~approximately $8.5 million for the year ended December 31, 2012, primarily due~~ to ~~an increase in our real estate operating income of $6.4 million as a result of owning~~ the ~~properties~~same ~~acquired~~period in ~~2012 for an entire year in~~ 2013 ~~and a reduction in acquisition fees and expenses~~. WeFuture ~~sustained~~levels ~~a net loss for the year ended December 31, 2013 as a result~~ of ~~incurring~~ interest expense, ~~net~~will ~~of interest income~~vary, ofprimarily ~~approximately~~based ~~$5.5~~on ~~million,~~the ~~which~~amounts ~~was~~of ~~incurred~~future ~~in connection with~~ borrowings ~~used~~and ~~to finance~~ the ~~purchase~~costs of ~~real estate properties~~borrowings. ~~Our~~Any ~~net~~future ~~loss~~borrowings ~~per~~will ~~share~~be ~~improved~~used primarily to ~~$0.05~~invest ~~for~~in ~~the~~additional ~~year~~capital ~~ended December 31~~expenditures, ~~2013~~including ~~from~~improvements ~~approximately $0.63 for the year ended December 31, 2012 due~~ to ~~the decrease in~~ our ~~net~~existing ~~loss~~properties, ~~and~~as anwell ~~approximate~~as ~~increase~~potential infuture ~~weighted-average~~acquisitions ~~shares outstanding~~ of ~~6.2~~real ~~million~~estate ~~shares~~properties. We expect ~~future~~interest ~~net~~expense ~~income (loss) and net income (loss) per share will improve as compared~~ to ~~the~~increase ~~year~~in ~~ended~~2015 ~~December 31, 2013,~~ as a result of ~~the~~(i) ~~expiration~~anticipated ofincreases ~~State~~in ~~Farm's~~the ~~operating~~balance ~~expense~~of ~~reimbursement~~our ~~abatement~~outstanding atdebt ~~the~~related 64to &re-leasing 66costs ~~Perimeter~~within ~~Center~~our ~~Buildings~~portfolio inand ~~2014,~~(ii) asprojected ~~well~~increases asin ~~the~~our ~~elimination~~cost of ~~advisory~~borrowings ~~fees~~due ~~and expenses we paid~~ to ~~the~~increases ~~Advisor~~in asLIBOR. anWe ~~externally~~expect ~~managed~~that ~~company,~~interest ~~partially offset by the increase in employment-related costs~~ and other ~~costs~~income we will ~~incur~~remain asrelatively astable ~~self-managed~~as ~~company,~~compared ~~resulting in net cost savings~~ to us2014.

~~Comparison~~Net ofIncome ~~the year ended December 31, 2012 versus the year ended December 31, 2011~~(Loss)

~~Rental~~Our net income ~~and tenant reimbursements~~ increased to ~~approximately~~ $386.21 million ~~and $9.8 million, respectively,~~ for the year ended December 31, ~~2012~~2014 from ~~approximately~~a ~~$13.5~~net ~~million~~loss ~~and~~of $51.0 million, ~~respectively,~~ for the year ended December 31, ~~2011~~2013, primarily due to an increase in our real estate operating income of $6.8 million as a result of the ~~growth~~expiration of a majority of State Farm's operating expense reimbursement abatements at the 64 & 66 Perimeter Center Buildings in December 2013, and the ~~portfolio~~elimination ~~during~~of ~~2012~~advisory fees and ~~owning~~expenses previously paid to the ~~properties~~Advisor ~~acquired~~as an externally managed company, partially offset by the increase in ~~2011~~general and administrative expenses related to employment-related costs and other costs incurred as a self-managed company, and costs incurred in connection with the exploration of strategic options, including the Merger. Our net income per share improved to $0.30 for the year ended December 31, 2014 from a ~~full~~net loss per share of $0.05 for the year ended December 31, 2013 due to the improvement in our net income discussed above.

~~Property~~We ~~operating~~anticipate ~~costs~~that ~~and~~our ~~asset~~net ~~and~~income ~~property management fees increased to approximately $14.9 million~~ and ~~$4.0~~net ~~million,~~income ~~respectively,~~per ~~for~~share ~~the~~in ~~year~~2015 ~~ended~~will ~~December 31,~~decrease ~~2012~~ from ~~approximately~~2014 ~~$6.6 million and $1.4 million, respectively, for the year ended December 31, 2011, primarily~~ as a result of the ~~growth~~expected decrease in ~~the~~rental ~~portfolio~~income ~~during 2012~~ and ~~owning~~increases ~~the properties acquired~~ in ~~2011~~property ~~for a full year. Property~~ operating ~~costs~~expenses, ~~and~~net ~~management~~of ~~fees~~tenant ~~represented~~reimbursements, ~~approximately 39%~~ and ~~43%~~interest ~~of total revenues for the years ended December 31~~expense, ~~2012~~as ~~and~~described ~~2011, respectively~~above.

Depreciation of real estate and amortization of lease costs increased to approximately $12.4 million and $7.7 million, respectively, for the year ended December 31, 2012 from approximately $4.5 million and $2.5 million, respectively, for the year ended December 31, 2011, primarily as a result of the growth in the portfolio during 2012 and owning the properties acquired in 2011 for a full year. Amortization increased at a higher rate than depreciation primarily because the period of amortization for lease assets is the respective lease term, which is generally shorter than the useful life over which buildings and improvements are depreciated.38

General and administrative expenses increased to approximately $4.8 million for the year ended December 31, 2012 from approximately $2.9 million for the year ended December 31, 2011, primarily due to increases in salary expense reimbursements payable to the Advisor as a result of acquiring additional properties during 2011 and 2012. General

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~~and~~Comparison ~~administrative expenses, as a percentage~~ of ~~total revenues, decreased to approximately 10% for~~ the year ended December 31, ~~2012~~2013 ~~from~~versus ~~approximately 16% for~~ the year ended December 31, ~~2011.~~ 2012

~~Acquisition~~The ~~fees~~following ~~and~~table ~~expenses~~sets ~~decreased~~forth todata ~~approximately~~from ~~$5.9~~our ~~million~~consolidated ~~for~~statements ~~the~~of ~~year~~operations ~~ended December 31, 2012 from approximately $6.8 million~~ for the year ended December 31, ~~2011,~~2013 ~~primarily~~and ~~due to a reduction in costs paid to third parties~~2012, ~~including transfer taxes~~respectively, inas ~~connection~~well ~~with~~as ~~the~~each ~~closing~~balance ~~of five properties acquired in 2012~~ as ~~compared~~a topercentage ~~six properties acquired in 2011, partially offset by an increase in the amount~~ of ~~equity~~total ~~proceeds~~revenues ~~raised under our Initial Offering during 2012. We incurred acquisition fees equal to 2% of gross offering proceeds raised. Please refer to Note 10 of our accompanying consolidated financial statements~~ for ~~additional~~the ~~details.~~same periods presented:

Interest expense increased to approximately $6.7 million for the year ended December 31, 2012 from approximately $3.8 million for the year ended December 31, 2011, primarily due to (i) an increase in our average outstanding borrowings in connection with the acquisition of properties during 2011 and 2012, (ii) incurring non-cash interest related to the Amended Regions Credit Facility and the Signature Unsecured Debt Facility, and (iii) and the write-off of approximately $408,000 of deferred financing costs related to the extinguishment of debt in connection with the closing of the Signature Unsecured Debt Facility in September 2012.



	Year ended December 31, 2013			% of Revenues		Year ended December 31, 2012			% of Revenues		$ Increase (Decrease)			% Increase (Decrease)
Revenues:
Rental income	$	53,023,714		77	%	$	38,199,442		80	%	$	14,824,272		39	%
Tenant reimbursements	16,207,310			23	%	9,771,959			20	%	6,435,351			66	%
Other property income	36,525			—	%	39,714			—	%	(3,189		)	(8	)%
Total revenues	69,267,549			100	%	48,011,115			100	%	21,256,434			44	%
Expenses:
Property operating costs	23,469,100			34	%	14,887,050			31	%	8,582,050			58	%
Asset and property management fees:
Related-party	5,495,142			8	%	3,600,057			7	%	1,895,085			53	%
Other	1,011,405			1	%	354,890			1	%	656,515			185	%
Depreciation	17,768,543			26	%	12,422,906			26	%	5,345,637			43	%
Amortization	11,292,059			16	%	7,695,172			16	%	3,596,887			47	%
General and administrative	3,800,454			5	%	4,814,146			10	%	(1,013,692		)	(21	)%
Acquisition fees and expenses	1,674,094			3	%	5,912,302			12	%	(4,238,208		)	(72	)%
Total expenses	64,510,797			93	%	49,686,523			103	%	14,824,274			30	%
Real estate operating income (loss)	4,756,752			7	%	(1,675,408		)	(3	)%	6,432,160			384	%
Other income (expense):
Interest expense	(12,446,785		)	(18	)%	(6,708,077		)	(14	)%	5,738,708			86	%
Interest and other income	6,900,454			10	%	73,278			—	%	6,827,176			N/M
Income before income tax expense	(789,579		)	(1	)%	(8,310,207		)	(17	)%	7,520,628			90	%
Income tax expense	(203,553		)	—	%	(174,316		)	(1	)%	29,237			17	%
Net income (loss)	$	(993,132	)	(1	)%	$	(8,484,523	)	(18	)%	$	7,491,391		88	%
Per-share net income - basic and diluted	$	(0.05	)			$	(0.63	)			$	0.58		92	%

~~Our~~*N/M net loss decreased to approximately $8.5 million for the year ended December 31, 2012 from approximately $10.1 million for the year ended December 31, 2011, primarily due to a decrease in our real estate operating loss of approximately $4.5 million as a result of the growth in the portfolio during 2011 and 2012, offset by an increase in our interest expense of approximately $2.9 million. We sustained a net loss for the year ended December 31, 2012 as a result of incurring a real estate operating loss of approximately $1.7 million and interest expense of approximately $6.7 million. Our real estate operating loss was primarily due to incurring acquisition fees and expenses of approximately $5.9 million, which were funded with proceeds raised from the sale of our common stock under the Initial Offering. Interest expense was incurred in connection with borrowings used to finance the purchase of real estate properties in 2011 and 2012. We leveraged our real estate acquisitions with substantial short-~~term~~ ~~and~~Not medium-term borrowings as a result of consummating the acquisitions in advance of raising investor proceeds under our Initial Offering. Our net loss per share improved to $0.63 for the year ended December 31, 2012 from approximately $2.26 for the year ended December 31, 2011 due to an approximate decrease in net loss of $1.6 million and an approximate increase in weighted-average shares outstanding of 9.1 million shares. Meaningful

Revenues

Rental income and tenant reimbursements increased $14.8 million, or 39%, and $6.4 million, or 66%, respectively, for the year ended December 31, 2013 compared to the same period in 2012, primarily as a result of owning the properties acquired in 2012 for an entire year in 2013.

Expenses

Property operating costs and asset and property management fees increased $8.6 million, or 58%, and $2.6 million,or 65%, respectively, for the year ended December 31, 2013 compared to the same period in 2012, primarily as a result of owning the properties acquired in 2012 for an entire year in 2013 and entering into the Revised Advisory Agreement, effective June 11, 2013, which increased the asset management percentage from 0.75% to 1.0%. Please refer to Note 10 of our accompanying consolidated financial statements for further explanation. Property operating costs and management fees as a percentage of total revenues increased to approximately 43% for the year ended December 31, 2013 from approximately 39% for the year ended December 31, 2012 as a result of the abatement of State Farm's operating expense reimbursements in 2013.

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Depreciation of real estate and amortization of lease costs increased $5.3 million, or 43%, and $3.6 million, or 47%, respectively, for the year ended December 31, 2013 compared to the same period in 2012, primarily as a result of owning the properties acquired in 2012 for an entire year in 2013.

General and administrative expenses decreased $1.0 million, or 21%, for the year ended December 31, 2013 compared to the same period in 2012, representing 5% and 10% of revenues, respectively, primarily as a result of entering into the Revised Advisory Agreement, effective June 11, 2013, which eliminated (i) the payment of the debt financing fee and (ii) the reimbursement of costs and expenses the Advisor incurred in fulfilling its duties as the asset manager, including wages and salaries of its employees, in exchange for an increase in the asset management fee percentage from 0.75% to 1.0%. Please refer to Note 10 of our accompanying consolidated financial statements for further explanation.

Acquisition fees and expenses decreased $4.2 million, or 72%, for the year ended December 31, 2013 compared to the same period in 2012, primarily due to (i) the absence of non-recurring costs paid to third parties, including transfer taxes, in connection with property acquisitions, and (ii) a decrease in the amount of equity proceeds raised under our Initial Offering during 2013 as compared to 2012. We incurred acquisition fees equal to 2% of gross offering proceeds raised. Please refer to Note 10 of our accompanying consolidated financial statements for additional details.

Other Income (Expense)

Interest expense increased $5.7 million, or 86%, for the year ended December 31, 2013 compared to the same period in 2012, primarily due to incurring interest expense related to capital lease obligations assumed in connection with the acquisition of the 64 & 66 Perimeter Center Buildings in December 2012. The increase in interest expense related to capital lease obligations is completely offset by an increase in interest and other income from related investments in development authority bonds.

Interest and other income increased $6.8 million for the year ended December 31, 2013 compared to the same period in 2012, primarily due to recognizing interest income related to investments in development authority bonds assumed in connection with the acquisition of the 64 & 66 Perimeter Center Buildings in December 2012. The increase in interest and other income from related investments in development authority bonds is completely offset by an increase in interest expense related to capital lease obligations.

Net Loss

Our net loss decreased $7.5 million, or 88%, for the year ended December 31, 2013 compared to the same period in 2012, primarily due to an increase in our real estate operating income of $6.4 million as a result of owning the properties acquired in 2012 for an entire year in 2013 and a reduction in acquisition fees and expenses. We sustained a net loss for the year ended December 31, 2013 as a result of incurring interest expense, net of interest income, of $5.3 million, which was incurred in connection with borrowings used to finance the purchase of real estate properties. Our net loss per share improved $0.58 for the year ended December 31, 2013 compared to the same period in 2012, due to the decrease in our net loss and an approximate increase in weighted-average shares outstanding of 6.2 million shares.

Funds From Operations, Modified Funds From Operations and Adjusted Funds From Operations

Funds from Operations ("FFO"), as defined by the National Association of Real Estate Investment Trusts ("NAREIT"), is a non-GAAP financial measure considered by some equity REITs in evaluating operating performance. We compute FFO isin ~~computed~~accordance with NAREIT's definition as GAAP net income (loss), adjusted to exclude: ~~extraordinary items,~~ gains (or losses) ~~from~~on ~~property~~ sales ~~(including deemed sales and settlements~~ of ~~pre-existing~~real ~~relationships)~~estate, ~~depreciation~~impairments ~~and amortization~~ of real estate assets, ~~impairment~~real ~~write~~estate-~~downs~~related ~~for~~depreciation ~~depreciable~~and ~~real~~amortization ~~estate,~~ and adjustments for ~~earnings~~unconsolidated ~~allocated~~partnerships toand ~~noncontrolling~~joint ~~interests in consolidated partnerships~~ventures. We ~~believe~~consider itFFO isa useful tomeasure ~~consider~~of ~~GAAP~~our ~~net~~performance ~~income,~~because ~~adjusted~~it toprincipally ~~exclude~~adjusts for the ~~above-mentioned~~effects ~~items,~~of ~~when~~GAAP ~~assessing~~depreciation ~~our~~and ~~performance~~amortization ~~because~~of ~~excluding~~real ~~the~~estate ~~above-described~~assets, ~~adjustments~~which ~~highlights~~assumes that the ~~impact~~value onof ~~our~~real ~~operations~~estate ~~from~~diminishes ~~trends~~predictably inover ~~occupancy~~time. ~~rates,~~Since ~~rental~~real ~~rates,~~estate ~~operating~~values ~~costs,~~have ~~general~~historically ~~and~~risen ~~administrative~~or ~~expenses,~~fallen ~~and~~with ~~interest~~market ~~costs~~conditions, ~~which~~we ~~may~~believe ~~not~~that beFFO ~~readily~~provides ~~apparent from~~a ~~GAAP~~meaningful ~~net~~supplemental ~~income~~measure ~~alone~~of our performance. We believe that the use of FFO, combined with the required GAAP presentations, is beneficial in improving our investors'

We do not, however, believe that FFO is the best measure of the sustainability of our operating performance. Changes in GAAP accounting and reporting rules that were put into effect after the establishment of NAREIT's definition of FFO in 1999 result in the inclusion of a number of items in FFO that do not correlate with the sustainability of our operating performance (e.g., acquisition expenses and amortization of certain in-place lease intangible assets and liabilities, among others). Therefore, in addition to FFO, we present the additional supplemental measures described below.40

The Investment Program Association ("IPA"), an industry trade group, has standardized a measure known as modified funds from operations ("MFFO"), which the IPA has recommended as a supplemental measure for publicly registered,

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~~non-listed~~understanding ~~REITs. Because MFFO excludes costs that are considered more reflective~~ of investing activities and other non-operating items included in FFO and also excludes acquisition fees and expenses that affect operations only in periods in which properties are acquired, MFFO can provide, on a going-forward basis, an indication of the sustainability of operating performance after the period in which properties are acquired. By providing MFFO, we believe we are presenting useful information that assists investors and analysts to better assess the sustainability of our operating ~~performance~~results ~~after our Initial Offering has been completed~~ and ~~our~~allowing ~~properties~~for ~~have~~comparisons ~~been~~among acquired. We also believe that MFFO is a recognized measure of sustainable operating performance by the non-listed REIT industry. Further, we believe MFFO is useful in comparing the sustainability of our operating performance after our offering and acquisition stages are completed with the sustainability of the operating performance of other ~~real estate~~ companies ~~that~~who ~~are~~define ~~not~~FFO as ~~involved~~we ~~in acquisition activities~~do.

We ~~define~~do ~~MFFO~~not, ahowever, ~~non-GAAP~~believe that FFO is the only measure, ~~consistent~~of ~~with~~the sustainability of our operating performance. Changes in GAAP accounting and reporting rules that were put into effect after the ~~IPA~~establishment of NAREIT's ~~Guideline~~definition ~~2010~~of FFO in 1999 result in the inclusion of a number of items in FFO that do not correlate with the sustainability of our operating performance (e.g., acquisition expenses and amortization of certain in-01place lease intangible assets and liabilities, ~~Supplemental~~among ~~Performance~~others). ~~Measure~~Therefore, ~~for~~in ~~Publicly~~addition ~~Registered~~to FFO, ~~Non-Listed~~we ~~REITs:~~present ~~Modified~~Adjusted Funds from Operations ("AFFO"), ora ~~the~~non-GAAP ~~Practice~~measure. ~~Guideline,~~AFFO ~~issued~~is calculated by adjusting FFO to exclude the ~~IPA~~income inand ~~November~~expenses ~~2010.~~that ~~Our~~we ~~MFFO~~believe ~~calculation~~are ~~complies~~not ~~with~~reflective of the ~~IPA's~~sustainability ~~Practice~~of ~~Guideline~~our ~~and~~ongoing ~~excludes~~operating ~~the~~performance, ~~following~~as ~~income~~further ~~and~~explained ~~expenses~~below:

• Additional amortization of lease assets (liabilities). GAAP implicitly assumes that the value of intangible lease assets (liabilities) diminishes predictably over time and, thus, requires these charges to be recognized ratably over the respective lease terms. Such intangible lease assets (liabilities) arise from the allocation of acquisition price related to the value of opportunity costs associated with lost rentals, the value of tenant relationships, and the value of effective rental rates of in-place leases that are above or below market rates of comparable leases at the time of acquisition. Like real estate values, market lease rates in aggregate have historically risen or fallen with local market conditions. As a result, management believes that, by excluding these charges, ~~MFFO~~AFFO provides useful supplemental information that is reflective of the performance of our real estate investments and that is useful in assessing the sustainability of our operations.

• Straight-line rental income. In accordance with GAAP, rental payments are recognized as income on a straight-line basis over the terms of the respective leases. Thus, for any given period, straight-line rental income represents the difference between the contractual rental billings for that period and the average rental billings over the lease term for the same length of time. This application results in income recognition that can differ significantly from the current contract terms. By adjusting for this item, we believe ~~MFFO~~AFFO provides useful supplemental information reflective of the realized economic impact of our leases, which is useful in assessing the sustainability of our operating performance.

• Real estate acquisition-related costs. Acquisition expenses are incurred for investment purposes (i.e., to promote portfolio appreciation and generation of future earnings over the long term) and, therefore, do not correlate with the ongoing operations of our portfolio. We believe that excluding these items from ~~MFFO~~AFFO provides supplemental information indicative of the sustainability of our operations. This exclusion also improves comparability of our reporting periods and of our company with other real estate operators.

~~Publicly~~• ~~registered,~~Noncash non-listed REITs typically have a significant amount of acquisition activity and are substantially more dynamic during their initial years of investment and operation than they are during the period after their capital raising activities have ceased. As disclosed in the prospectus for the Initial Offering, we used the proceeds raised under the Initial Offering to acquire properties, repay indebtedness used to acquire properties, and increase our borrowing capacity. We opted to use substantial short-term and medium-term borrowings to acquire properties in advance of raising equity proceeds under the Initial Offering in order to more quickly build a larger and more diversified portfolio. In conjunction with certain acquisitions, we may enter into a master lease agreement with the seller, whereby the seller is obligated to pay us rent pertaining to certain spaces impacted by existing rental abatements. As such, in addition to the above items prescribed by IPA's Practice Guideline, we also adjust for noncash interest expense ~~and master lease proceeds~~. ~~Noncash~~This ~~interest~~item ~~expense~~ represents amortization of financing costs paid toin ~~secure~~connection ~~short-term~~with ~~and~~executing ~~medium-term~~our ~~borrowings~~debt instruments. GAAP requires these items to be recognized over the remaining term of the respective debt instrument, which may not correlate with the ongoing operations of our real estate portfolio. InBy ~~accordance~~excluding ~~with~~these ~~GAAP~~items, ~~master~~we ~~lease~~believe proceeds are recorded as an adjustment to the basis of real estate assets at the time of acquisition, and, accordingly, are not included in revenues, net income, or FFO. This application results in income recognition that ~~can~~AFFO ~~differ~~provides ~~significantly~~supplemental ~~from~~information ~~current contract terms. Management believes~~ that ~~the~~allows ~~measure resulting from an adjustment to MFFO~~ for ~~noncash~~better ~~interest~~comparability ~~expense~~of ~~and~~reporting ~~master lease proceeds~~periods, which weis ~~refer~~useful toin asassessing ~~adjusted~~the ~~funds~~sustainability ~~from~~of ~~operations~~our ~~("AFFO"),~~ operations.

44• Master lease proceeds. In conjunction with certain acquisitions, we may enter into a master lease agreement with a seller, whereby the seller is obligated to pay us rent pertaining to certain spaces impacted by existing rental abatements. In accordance with GAAP, master lease proceeds are recorded as an adjustment to the basis of real estate assets at the time of acquisition, and, accordingly, are not included in revenues, net income, or FFO. This application results in income recognition that can differ significantly from current contract terms. By adjusting for this item, we believe AFFO is reflective of the realized economic impact of our leases (including master leases) that is useful in assessing the sustainability of our operating performance.

Presentation of this information is intended to provide useful information to investors as they compare the operating performance of different REITs, although it should be noted that not all REITs calculate FFO and AFFO the same way, so comparisons with other REITs may not be meaningful. FFO and AFFO should not be considered alternatives to GAAP net income. Rather, these measures should be reviewed in conjunction with GAAP measurements, including

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~~provides~~GAAP ~~supplemental~~net ~~information~~income, ~~that~~as ~~(i)~~an ~~allows~~indication ~~for better comparability~~ of ~~reporting periods and (ii) is reflective of the realized economic impact of~~ our ~~leases (including master leases) that is useful in assessing the sustainability of our operating~~ performance. WeFFO ~~also~~and ~~believe that~~ AFFO isdo ~~useful~~not inrepresent ~~comparing~~amounts ~~the~~available ~~sustainability~~for ofmanagement's ~~our~~discretionary ~~operating~~use ~~performance~~because ~~after~~of ~~our~~needed ~~offering~~capital ~~and~~replacement ~~acquisition~~or ~~stages~~expansion, ~~are~~debt ~~completed~~service ~~with~~obligations ~~the~~or ~~sustainability~~other ofcommitments ~~the~~and ~~operating~~uncertainties, ~~performance~~nor ofis ~~other~~either ~~real~~measure ~~estate~~indicative ~~companies~~of ~~that~~funds ~~are~~available ~~not~~to asfund ~~involved~~our incash ~~significant~~needs, ~~acquisition~~including ~~and~~our ~~short-term~~ability ~~borrowing~~to ~~activities~~make distributions.

~~Presentation~~Reconciliations of ~~this~~our ~~information~~net isincome ~~intended~~(loss) to ~~provide~~FFO ~~useful~~and ~~information~~AFFO tofor ~~investors as they compare~~ the ~~operating~~years ~~performance~~ended ~~of different REITs~~December 31, ~~although it should be noted that not all REITs calculate FFO~~2014, ~~MFFO~~2013, and ~~AFFO~~2012 ~~the~~are ~~same~~provided ~~way, so comparisons with other REITs may not be meaningful. FFO, MFFO and AFFO should be reviewed in conjunction with other GAAP measurements as an indication of our performance.~~below:

Reconciliations of our net loss to FFO, MFFO and AFFO for the years ended December 31, 2013, 2012, and 2011 are provided below:



	Years ended December 31,
	2014			2013			2012
Reconciliation of Net Income (Loss) to FFO and AFFO:
Net income (loss)	$	6,051,481		$	(993,132	)	$	(8,484,523	)
Adjustments:
Depreciation of real estate assets	18,549,515			17,768,543			12,422,906
Amortization of lease-related costs	11,982,320			11,292,059			7,695,172
Total Funds From Operations adjustments	30,531,835			29,060,602			20,118,078
Funds From Operations	36,583,316			28,067,470			11,633,555

Other income (expenses) included in net income (loss) that do not correlate with our operations:
Additional amortization of lease assets	3,172,561			2,885,695			2,159,349
Straight-line rental income	(1,060,472		)	(7,876,148		)	(3,056,134		)
Real estate acquisition-related costs	—			1,674,094			5,912,302
Noncash interest expense	1,154,865			1,205,927			2,092,435
Master lease proceeds	504,986			9,937,273			1,324,949
Adjusted Funds From Operations	$	40,355,256		$	35,894,311		$	20,066,456

Weighted-average common shares outstanding – basic and diluted	20,464,863			19,736,887			13,542,837

FFO per common share - basic and diluted	$	1.79		$	1.42		$	0.86
AFFO per common share - basic and diluted	$	1.97		$	1.82		$	1.48

	Years ended December 31,
	2013			2012			2011
Reconciliation of Net Loss to FFO, MFFO and AFFO:
Net loss	$	(993,132	)	$	(8,484,523	)	$	(10,071,668	)
Adjustments:
Depreciation of real estate assets	17,768,543			12,422,906			4,484,518
Amortization of lease-related costs	11,292,059			7,695,172			2,480,235
Total Funds From Operations adjustments	29,060,602			20,118,078			6,964,753
Funds From Operations	28,067,470			11,633,555			(3,106,915		)
Other income (expenses) included in net loss that do not correlate with our operations:
Additional amortization of lease assets	2,885,695			2,159,349			1,019,736
Straight-line rental income	(7,876,148		)	(3,056,134		)	(793,750		)
Real estate acquisition-related costs	1,674,094			5,912,302			6,784,605
Total Modified Funds From Operations adjustments	(3,316,359		)	5,015,517			7,010,591
Modified Funds From Operations	24,751,111			16,649,072			3,903,676
Noncash interest expense	1,205,927			2,092,435			1,199,324
Master lease proceeds	9,937,273			1,324,949			535,038
Adjusted Funds From Operations	$	35,894,311		$	20,066,456		$	5,638,038

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Portfolio Information

As of December 31, ~~2013~~2014, we owned 13 office properties consisting of 15 buildings and located in eight states. As of December 31, ~~2013~~2014, our office properties were approximately 9997.38% leased, with an average lease term remaining of approximately ~~six~~five years. For more information on our portfolio, see Item 2.

As of December 31, 2013, our highest tenant concentrations were as follows:

Tenant	2013 AnnualizedBase Rent(1)		Percentage of2013 AnnualizedBase Rent
State Farm Mutual Auto Insurance Co.	$	10,208,075	14	%
Time Warner Cable	9,542,262		13	%
GE Oil & Gas, Inc.	6,965,725		10	%
Leidos	6,329,205		9	%
T-Mobile West Corporation	5,696,163		8	%
	$	38,741,430	54	%

(1) Represents the monthly contractual base rent and recoveries from tenants under existing leases as of December 31, 2013, multiplied by 12 months. The amount reflects total rent before rent abatements.

As of December 31, 2013, our highest tenant industry concentrations were as follows:

Industry	2013 AnnualizedBase Rent(1)		Rentable Square Feet	Percentage of2013 AnnualizedBase Rent
Communication	$	18,574,280	688,310	26	%
Insurance Carriers	17,973,794		780,970	25	%
Business Services	8,090,720		255,768	11	%
Electronic And Other Electric Equipment	6,965,725		186,957	10	%
Chemicals And Allied Products	4,958,592		162,283	7	%
	$	56,563,111	2,074,288	79	%

As of December 31, 2013, our highest geographic concentrations by MSA were as follows:

MSA	2013 AnnualizedBase Rent(1)		RentableSquare Feet	Percentage of2013 AnnualizedBase Rent
Houston	$	13,675,302	386,335	19	%
Atlanta	12,256,368		583,690	17	%
Chicago	9,716,716		336,952	14	%
Northern Virginia	9,568,645		268,240	13	%
Dallas	8,792,633		403,809	12	%
	$	54,009,664	1,979,026	75	%

For more information on our portfolio, see Item 2.

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Election as a REIT

We have elected to be taxed as a REIT under the Code and have operated as such beginning with our taxable year ended December 31, 2010. To qualify as a REIT, we must meet certain organizational and operational requirements, including a requirement to distribute at least 90% of our adjusted taxable income, as defined in the Code, to our stockholders, computed without regard to the dividends-paid deduction and by excluding our net capital gain. As a REIT, we generally will not be subject to federal income tax on income that we distribute to our stockholders. If we fail to qualify as a REIT in any taxable year, we will then be subject to federal income taxes on our taxable income for that year and for the four years following the year during which qualification is lost, unless the IRS grants us relief under certain statutory provisions. Such an event could materially adversely affect our net income and net cash available ~~for distribution to our stockholders. However, we believe that we are organized and operate in such a manner as to qualify for treatment as a REIT for federal income tax purposes.~~

TRS is a wholly owned subsidiary of Signature Office REIT that is organized as a Delaware limited liability company. For the years ended December 31, 2013, 2012, and 2011, we elected to treat TRS as a taxable REIT subsidiary. We may perform additional, noncustomary services for tenants of buildings that we own through TRS, including any real estate or non-real-estate-related services; however, any earnings related to such services are subject to federal and state income taxes. In addition, for us to continue to qualify as a REIT, we must limit our investments in taxable REIT subsidiaries to 25% of the value of our total assets. 42

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for distribution to our stockholders. However, we believe that we are organized and operate in such a manner as to qualify for treatment as a REIT for federal income tax purposes.

We may perform additional, noncustomary services for tenants of buildings that we own through taxable REIT subsidiaries, including any real estate or non-real-estate-related services; however, any earnings related to such services are subject to federal and state income taxes. In addition, for us to continue to qualify as a REIT, we must limit our investments in taxable REIT subsidiaries to 25% of the value of our total assets. TRS is a wholly owned subsidiary of Signature Office REIT that is organized as a Delaware limited liability company. Through December 31, 2013, we elected to treat TRS as a taxable REIT subsidiary. On December 9, 2013, we elected to treat TRS as a disregarded entity, effective January 1, 2014.

Deferred tax assets and liabilities are established for temporary differences between the financial reporting basis and the tax basis of assets and liabilities at the enacted rates expected to be in effect when the temporary differences reverse. Deferred tax expense or benefits are recognized in the financial statements according to the changes in deferred tax assets or liabilities between years. Valuation allowances are established to reduce deferred tax assets when it becomes more likely than not that such assets, or portions thereof, will not be realized. No provision for federal income taxes has been made in our accompanying consolidated financial statements, other than the provision relating to TRS, as we made distributions in excess of taxable income for the periods presented.

We are subject to certain state and local taxes related to property operations in certain locations, which have been provided for in our accompanying consolidated financial statements. We record interest and penalties related to uncertain tax positions, if any, as general and administrative expense in the accompanying consolidated statements of operations.

Inflation

We are exposed to inflation risk, as income from long-term leases is ~~intended to be~~ the primary source of our cash flows from operations. There are provisions in the majority of our tenant leases that are intended to protect us from, and mitigate the risk of, the impact of inflation. These provisions include rent steps; reimbursement billings for operating expense pass-through charges; real estate tax and insurance reimbursements; or in some cases, annual reimbursement of operating expenses above a certain allowance. However, due to the long-term nature of the leases, the leases may not reset frequently enough to fully cover inflation.

Application of Critical Accounting Policies

Our accounting policies have been established to conform with GAAP. The preparation of financial statements in conformity with GAAP requires management to use judgment in the application of accounting policies, including making estimates and assumptions. These judgments affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the dates of the financial statements and the reported amounts of revenue and expenses during the reporting periods. If our judgment or interpretation of the facts and circumstances relating to various transactions had been different, it is possible that different accounting policies would have been applied, thus resulting in a different presentation of the financial statements. Additionally, other companies may utilize different estimates that may impact the comparability of our results of operations to those of companies in similar businesses.

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The critical accounting policies outlined below have been discussed with members of the audit committee of the board of directors.

Investment in Real Estate Assets

We are required to make subjective assessments as to the useful lives of our depreciable assets. We consider the period of future benefit of the assets to determine the appropriate useful lives. These assessments have a direct impact on net income. The estimated useful lives of our assets by class are as follows:

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Buildings	40 years
Building improvements	5-25 years
Site improvements	15 years
Tenant improvements	Shorter of lease term or economic life
Furniture, fixtures, and equipment	3-5 years
Intangible lease assets	Lease term

Evaluating the Recoverability of Real Estate Assets

We continually monitor events and changes in circumstances that could indicate that the carrying amounts of the real estate and related intangible assets of ~~both~~ operating properties ~~and properties under construction~~ in which we have an ownership interest, ~~either directly or through investments in joint ventures,~~ may not be recoverable.

When indicators of potential impairment are present that suggest that the carrying amounts of real estate assets and related intangible assets may not be recoverable, we assess the recoverability of these assets by determining whether the respective carrying values will be recovered through the estimated undiscounted future operating cash flows expected from the use of the assets and their eventual disposition. In the event that such expected undiscounted future cash flows do not exceed the carrying values, we adjust the carrying value of the real estate assets and related intangible assets to the estimated fair values, pursuant to the property, plant, and equipment accounting standard for the impairment or disposal of long-lived assets, and recognize an impairment loss. Estimated fair values are calculated based on the following information, in order of preference, depending upon availability: (i) recently quoted market price(s) for the subject property, or highly comparable properties, under sufficiently active and normal market conditions, or (ii) the present value of future cash flows, including estimated residual value. We have determined that there has been no impairment in the carrying value of our real estate assets and related intangible assets to date.

Projections of expected future operating cash flows require that we estimate future market rental income amounts subsequent to the expiration of current lease agreements, property operating expenses, the number of months it takes to re-lease the property, and the number of years the property is held for investment, among other factors. The subjectivity of assumptions used in the future cash flow analysis, including discount rates, could result in an incorrect assessment of the property's fair value and could result in the misstatement of the carrying value of our real estate assets and related intangible assets and net income (loss).

Allocation of Purchase Price of Acquired Assets

Upon the acquisition of real properties, we allocate the purchase price of properties to tangible assets, consisting of land and building, site improvements, and identified intangible assets and liabilities, including the value of in-place leases, based in each case on our estimate of their fair values.

The fair values of the tangible assets of an acquired property (which includes land and building) are determined by valuing the property as if it were vacant, and the "as-if-vacant" value is then allocated to land and building based on our determination of the relative fair value of these assets. We determine the as-if-vacant fair value of a property using methods similar to those used by independent appraisers. Factors we consider in performing these analyses include an estimate of carrying costs during the expected lease-up periods considering current market conditions and costs to execute similar leases, including leasing commissions and other related costs. In estimating carrying costs, we include real estate taxes, insurance, and other operating expenses during the expected lease-up periods based on current market demand.

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real estate taxes, insurance, and other operating expenses during the expected lease-up periods based on current market demand.

Intangible Assets and Liabilities Arising from In-Place Leases Where We Are the Lessor

As further described below, in-place leases where we are the lessor may have values related to direct costs associated with obtaining a new tenant, opportunity costs associated with lost rentals that are avoided by acquiring an in-place lease, tenant relationships, and effective contractual rental rates that are above or below market rates:

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•

Direct costs associated with obtaining a new tenant, including commissions, tenant improvements, and other direct costs, are estimated based on management's consideration of current market costs to execute a similar lease. Such direct costs are included in intangible lease origination costs in the accompanying consolidated balance sheets and are amortized to expense over the remaining terms of the respective leases.

•

The value of opportunity costs associated with lost rentals avoided by acquiring an in-place lease is calculated based on the contractual amounts to be paid pursuant to the in-place leases over a market absorption period for a similar lease. Such opportunity costs are included in intangible lease assets in the accompanying consolidated balance sheets and are amortized to expense over the remaining terms of the respective leases.


•	The value of tenant relationships is calculated based on the expected renewal of a lease or the likelihood of obtaining a particular tenant for other locations. Values associated with tenant relationships are included in intangible lease assets in the accompanying consolidated balance sheets and are amortized to expense over the remaining terms of the respective leases.

•

The value of effective rental rates of in-place leases that are above or below the market rates of comparable leases is calculated based on the present value (using a discount rate that reflects the risks associated with the leases acquired) of the difference between (i) the contractual amounts to be received pursuant to the in-place leases and (ii) management's estimate of fair market lease rates for the corresponding in-place leases, measured over a period equal to the remaining terms of the leases. The capitalized above-market and below-market lease values are recorded as intangible lease assets or liabilities and are amortized as an adjustment to rental income over the remaining terms of the respective leases.

See Note 2 to our accompanying consolidated financial statements included herein for a tabular presentation of our intangible in-place lease assets and liabilities and related amortization expense.

Evaluating the Recoverability of Intangible Assets and Liabilities

The values of intangible lease assets and liabilities are determined based on assumptions made at the time of acquisition and have defined useful lives, which correspond with the lease terms. There may be instances in which intangible lease assets and liabilities become impaired, and we are required to expense the remaining asset or liability immediately or over a shorter period of time. Lease ~~restructurings~~modifications, including, but not limited to, lease terminations and lease extensions, may impact the value and useful life of in-place leases. ~~In-place~~Such ~~leases that are~~lease ~~terminated, partially terminated, or modified~~modifications will be evaluated for impairment if the original in-place lease terms have been modified. InFor ~~situations~~lease modifications where the tenant exercises an early lease termination option, the related unamortized intangible lease assets and liabilities are amortized over the shortened lease term. For lease terminations that are effective immediately, we recognize an impairment loss. For other lease modifications where the discounted cash flows of the modified in-place lease stream are less than the discounted cash flows of the original in-place lease stream, we reduce the carrying value of the intangible lease assets to reflect the modified lease terms and recognize an impairment loss. For lease extensions of in-place leases that are executed more than one year prior to the original lease expiration date, the useful life of the intangible lease assets and liabilities will be extended over the new lease term with the exception of those components, such as lease commissions and tenant allowances, which have been renegotiated for the extended term. Renegotiated in-place lease components, such as lease commissions and tenant allowances, will be amortized over the shorter of the useful life of the asset or the new lease term. We have determined that there has been no impairment in the carrying value of our intangible assets to date.; however, during the year ended December 31, 2014, we did accelerate the amortization of the related intangible lease assets in connection with the early lease terminations exercised.

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Related-Party Transactions and Agreements

During ~~the~~2012 ~~periods~~and ~~presented~~2013, we were party to agreements with the Advisor, Wells Investment Securities, Inc. ("WIS"), and Wells Management whereby we paid certain fees and reimbursements to the Advisor, WIS, and Wells Management for acquisition fees, selling commissions, dealer-manager fees, property management fees, asset management fees, reimbursement of other offering costs, and reimbursement of operating costs. In connection with the closing of the primary portion of our Initial Offering and our transition to self-management, we terminated the related agreements on or before December 31, 2013. See Note 10 to our accompanying consolidated financial statements included herein for a discussion of the various related-party agreements and the related transactions, fees, and reimbursements. For the year ended December 31, 2013, the aggregate amount of fees and expense reimbursements incurred by us pursuant to related-party transactions and agreements with the Advisor, WIS, Wells Management, and their affiliates (including fees or changes paid to the Advisor, WIS, Wells Management, and their affiliates by third parties doing business with us) was approximately $16.6 million, of which approximately $5.6 million was re-allowed to participating broker/dealers by WIS.

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on or before December 31, 2013. For the period from January 1, 2014 through June 30, 2014, we were party to the TSA with WREF, a former related party, pursuant to which WREF and its affiliates provided certain consulting, support and transitional services to us in order to facilitate our successful transition to self-management. From July 1, 2014 through September 30, 2014, we were party to the TSA Amendment, which extended services under the TSA as it related to certain transfer agent and client services functions. During the year ended December 31 2014, the aggregate amount of fees paid to WREF pursuant to the TSA and TSA Amendment was approximately $0.4 million. Effective June 27, 2014, we entered into an agreement with Wells REF - 6200 The Corners Parkway Owner, LLC, a subsidiary of WREF, to lease 4,221 square feet of the 6200 The Corners Parkway Building to serve as our corporate headquarters. This lease does not indicate any other business relationship between us and WREF except one of a landlord and tenant. See Note 10 to our accompanying consolidated financial statements included herein for a discussion of the various related-party agreements and the related transactions, fees, and reimbursements.

Commitments and Contingencies

We are subject to certain commitments and contingencies with regard to certain transactions. Refer to Note 6, Note 8 and Note 10 of our accompanying consolidated financial statements for further explanation. Examples of such commitments and contingencies include:

• obligations under capital leases; and


•	commitments under existing lease agreements; and

• the ~~Transition~~Corporate ~~Services~~Office Lease Agreement.

Subsequent Events

See Note 13 to our consolidated financial statements and Part II, Item 9B - Other Information for details of events and transactions occurring after the year ended December 31, ~~2013~~2014.


ITEM 7A.	QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

Omitted pursuant to Regulation S-K, Item 305(e).


ITEM 8.	FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

The financial statements and supplementary data filed as part of this report are set forth beginning on page F-1 of this report.


ITEM 9.	CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

There were no disagreements with our independent registered public accountants during the years ended December 31, ~~2013~~2014, ~~2012~~2013, or ~~2011~~2012.


ITEM 9A.	CONTROLS AND PROCEDURES

Management's Conclusions Regarding the Effectiveness of Disclosure Controls and Procedures

We carried out an evaluation, under the supervision and with the participation of management, including the Principal Executive Officer and Principal Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures pursuant to Rule 13a-15(e) under the Exchange Act as of the end of the period covered by this report. Based upon that evaluation, the Principal Executive Officer and Principal Financial Officer concluded that our disclosure controls and procedures were effective as of the end of the period covered by this annual report in providing a reasonable level of assurance that information we are required to disclose in reports that we file or submit under the Exchange Act is recorded, processed, summarized, and reported within the time periods in SEC rules and

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our disclosure controls and procedures were effective as of the end of the period covered by this annual report in providing a reasonable level of assurance that information we are required to disclose in reports that we file or submit under the Exchange Act is recorded, processed, summarized, and reported within the time periods in SEC rules and forms, including providing a reasonable level of assurance that information required to be disclosed by us in such reports is accumulated and communicated to our management, including our Principal Executive Officer and our Principal Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

Internal Control Over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act, as a process designed by, or under the supervision of, the Principal Executive Officer and Principal Financial Officer and effected by our management and other personnel to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with GAAP and includes those policies and procedures that:


•	pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and disposition of our assets;


•	provide reasonable assurance that the transactions are recorded as necessary to permit preparation of financial statements in accordance with GAAP, and that our receipts and expenditures are being made only in accordance with authorizations of management and/or members of the board of directors; and


•	provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of our assets that could have a material effect on the financial statements.

Because of the inherent limitations of internal control over financial reporting, including the possibility of human error and the circumvention or overriding of controls, material misstatements may not be prevented or detected on a timely basis. In addition, projections of any evaluation of effectiveness to future periods are subject to the risks that controls may become inadequate because of changes and conditions or that the degree of compliance with policies or procedures may deteriorate. Accordingly, even internal controls determined to be effective can provide only reasonable assurance that the information required to be disclosed in reports filed under the Exchange Act is recorded, processed, summarized, and represented within the time periods required.

Our management has assessed the effectiveness of our internal control over financial reporting at December 31, ~~2013~~2014. To make this assessment, we used the criteria for effective internal control over financial reporting described in Internal Control – Integrated Framework (~~1992~~2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on this assessment, our management believes that our system of internal control over financial reporting met those criteria, and therefore our management has concluded that we maintained effective internal control over financial reporting as of December 31, ~~2013~~2014.

This report does not include an attestation report of our registered public accounting firm regarding internal control over financial reporting. Management's report was not subject to attestation by our registered public accounting firm pursuant to rules of the Securities and Exchange Commission that permit us to provide only management's report in this report.

Changes in Internal Control Over Financial Reporting

There were no changes in our internal control over financial reporting that occurred during the quarter ended December 31, ~~2013~~2014 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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ITEM 9B.	OTHER INFORMATION

For the quarter ended December 31, ~~2013~~2014, all items required to be disclosed under Form 8-K were reported under Form 8-K.

Declaration of Distributions

On March 54, ~~2014~~2015, our board of directors declared a distribution to stockholders for the first quarter of ~~2014~~2015 in the amount of $0.375 per share (a 6.0% annualized yield on a $25.00 original share price) on the outstanding shares of common stock payable to stockholders of record as of March 1513, ~~2014~~2015. Such distributions will be paid in March ~~2014~~2015.

~~Termination of the DRP and Amended SRP~~48

On March 5, 2014, our board of directors elected to terminate the DRP, effective after the payment of the distribution for the first quarter of 2014. As a result, all distributions paid after the first quarter will be paid in cash and will not be reinvested in shares of our common stock. Also on March 5, 2014, our board of directors elected to terminate the Amended SRP, effective April 30, 2014 upon the redemption of any shares of common stock properly submitted for redemption under the Amended SRP for the month of April 2014. As a result, in order for a stockholder to redeem his or her shares prior to the termination of the Amended SRP, we must receive a written redemption request from the stockholder or from an authorized representative of the stockholder in good order and on a form approved by us on or before April 23, 2014. We will be unable to process redemption requests received after April 23, 2014. Any redemption requests submitted will continue to be subject to the limits on the dollar value and number of shares that may be redeemed under the terms of the Amended SRP. In February 2014, Ordinary Redemption requests exceeded the limits of the Amended SRP and, as such, were prorated pursuant to the terms of the Amended SRP at a rate of approximately 8.5%. Based on the level of Ordinary Redemptions requests currently submitted and waiting for processing, we anticipate that Ordinary Redemptions processed prior to the termination of the Amended SRP will be prorated as well. All shares tendered for redemption that cannot be redeemed prior to April 30, 2014 will not continue to be held in queue for redemption at a later date under the Amended SRP or otherwise.

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PART III


ITEM 10.	DIRECTORS, EXECUTIVE OFFICERS, AND CORPORATE GOVERNANCE

Nomination of Directors

General

We do not have a standing nominating committee. ~~However,~~Our ~~our~~board ~~Conflicts~~of ~~Committee~~directors, which isconsists ~~composed~~solely of ~~all~~"independent" ofdirectors ~~our~~as ~~independent~~defined ~~directors~~by the New York Stock Exchange (“NYSE”), is responsible for identifying and nominating replacements for vacancies among our independent director positions. Our board of directors believes that the primary reason for creating a standing nominating committee is to ensure that candidates for director positions can be identified and their qualifications assessed under a process free from conflicts of interest with us. Because our board of directors consists solely of independent directors, our board of directors has determined that the creation of a standing nominating committee is not necessary. We do not have a charter that governs the director nomination process.

Board Membership Criteria

The board of directors annually reviews the appropriate experience, skills, and characteristics required of board members in the context of the then-current membership of the board. This assessment includes, in the context of the perceived needs of the board at that time, issues of knowledge, experience, judgment, and skills such as an understanding of commercial real estate, capital markets, commercial banking, insurance, business leadership, accounting, and financial management. No one person is likely to possess deep experience in all of these areas. Therefore, the board of directors has sought a diverse board of directors whose members collectively possess these skills and experiences. Other considerations include the candidate's independence from conflict with us and the ability of the candidate to attend board meetings regularly and to devote an appropriate amount of effort in preparation for those meetings. It also is expected that independent directors nominated by the board of directors shall be individuals who possess a reputation and hold (or have held) positions or affiliations befitting a director of a large publicly held company and are (or have been) actively engaged in their occupations or professions or are otherwise regularly involved in the business, professional, or academic community. Moreover, as required by our charter, at least one of our independent directors must have at least three years of relevant real estate experience, and each director who is not an independent director must have at least three years of relevant experience demonstrating the knowledge and experience required to acquire and manage successfully the type of assets we acquire and manage.

Selection of Directors

The board of directors ~~and~~is ~~Conflicts Committee are~~ responsible for selecting ~~their~~its own nominees and recommending them for election by the stockholders. ~~Pursuant~~The ~~to our charter, however, the~~ independent directors, ~~through the Conflicts Committee,~~ must nominate replacements for any vacancies among the independent director positions. All director nominees then stand for election by the stockholders annually.

In order to be considered by the board of directors ~~or the Conflicts Committee~~, recommendations made by stockholders must be submitted within the timeframe required to request a proposal to be included in the proxy materials. In evaluating the persons recommended as potential directors, the board of directors ~~and the Conflicts Committee~~ will consider each candidate without regard to the source of the recommendation and take into account those factors that the board of directors ~~and the Conflicts Committee~~ determine are relevant. Stockholders may directly nominate potential directors (without the recommendation of the board of directors ~~or the Conflicts Committee~~) by satisfying the procedural requirements for such nomination as provided in Article II, Section 2.12, of our bylaws. Any stockholder may request a copy of our bylaws free of charge by calling our Shareholder Services team at 1-855-328-0109.

Executive Officers and Directors

We have provided below certain information about our executive officers and directors. Each director will serve until the next annual meeting of our stockholders or until his successor has been duly elected and qualified. The next election of our board members is anticipated to be held at our annual meeting in ~~2014~~2015.

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Name	Position(s)	Age	Year First Became a Director
Douglas P. Williams	Executive Vice President, Secretary, Treasurer, and Chief Operating Officer	6364	N/A
Glen F. Smith	Senior Vice President and Chief Financial Officer	3738	N/A
Frank M. Bishop	Chairman of the Board and Director	7071	2010
Stephen J. LaMontagne	Director	5253	2013
Harvey E. Tarpley	Director	7374	2010

Effective February 27, 2013, Randall D. Fretz resigned as our Senior Vice President. Mr. Fretz served as our Senior Vice President since July 2007. Mr. Fretz did not have any disagreements with management on any matters related to our operations, polices or practices.

Effective September 18, 2013, Brian M. Davis resigned as our Senior Vice President and Chief Financial Officer. Mr. Davis served as our Senior Vice President and Chief Financial Officer since March 2013. Mr. Davis did not have any disagreements with management on any matters related to our operations, polices or practices.

Effective December 31, 2013, Leo F. Wells, III resigned as our President, Chairman of the Board and Director. Mr. Wells served as our President and a director since our inception in July 2007 and as Chairman of the Board since July 2010. Mr. Wells did not have any disagreements with management on any matters related to our operations, polices or practices.

Douglas P. Williams has served as our Executive Vice President, Secretary, and Treasurer since our inception in July 2007 and as Chief Operating Officer since January 1, 2014. He also served as one of our directors from July 2007 to June 2010.

Mr. Williams was the Executive Vice President, Secretary, and Treasurer of Columbia Property Trust, Inc. (“Columbia”), a public REIT previously sponsored by WREF, from 2003 until February 28, 2013, and served as a director of Columbia from 2003 until May 17, 2013. Mr. Williams served as the Executive Vice President, Secretary, and Treasurer of CatchMark Timber Trust, Inc. (“CatchMark”), a public REIT previously sponsored by WREF, from September 2005 until December 11, 2013. Mr. Williams served as a director of CatchMark from September 2005 to June 2007. He also served as a Senior Vice President of the Advisor from its inception in July 2007 until December 31, 2013. Mr. Williams served as Vice President of WREF and Vice President and Secretary of Wells Asset Management, Inc. since 1999 until December 31, 2013. Mr. Williams served as a Vice President, Chief Financial Officer, and Treasurer of WIS, our former dealer-manager. He was a director of WIS from 1999 to 2012. From 2000 to 2007, Mr. Williams served as Executive Vice President, Secretary, and Treasurer and a director of Piedmont Office Realty Trust, Inc., a public REIT previously sponsored by WREF. From 2006 to 2008, Mr. Williams also served as Executive Vice President, Secretary, Treasurer, and a director of Institutional REIT, a prior public program sponsored by WREF.

From 1996 until joining WREF in 1999, Mr. Williams served as Vice President and Controller of OneSource, Inc., a leading supplier of janitorial and landscape services, where he was responsible for corporate-wide accounting activities and financial analysis. Mr. Williams was employed by ECC International Inc., a supplier to the paper industry and to the paint, rubber, and plastic industries, from 1982 to 1995. While at ECC, Mr. Williams served in a number of key accounting positions, including: Corporate Accounting Manager, U.S. Operations; Division Controller, Americas Region; and Corporate Controller, America/Pacific Division. Prior to joining ECC and for one year after leaving ECC, Mr. Williams was employed by Lithonia Lighting, a manufacturer of lighting fixtures, as a Cost and General Accounting Manager and Director of Planning and Control. Mr. Williams started his professional career as an auditor for a predecessor firm of KPMG LLP. Mr. Williams is a member of the American Institute of Certified Public Accountants and the Georgia Society of Certified Public Accountants ~~and is licensed with FINRA as a Financial and Operations Principal (Series 27 and 63)~~. Mr. Williams received a Bachelor of Arts degree from Dartmouth College and a Masters of Business Administration degree from Amos Tuck School of Graduate Business Administration at Dartmouth College.

Glen F. Smith ~~was~~has ~~appointed~~served as our Senior Vice President and Chief Financial Officer onsince September 18, 2013. Mr. Smith served as Chief Accounting Officer for WREF from April 2011 through December 2013, where he oversaw our accounting and reporting functions. He served as Senior Vice President of WREF from March 2013 through December 2013 and he served as Vice President from March 2012 through March 2013. From June 2007 to April 2011, Mr. Smith served as Director of Financial Reporting for WREF, in which capacity he was responsible for the internal and external reporting functions for various public REITs sponsored by WREF.

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accounting and reporting functions. He served as Senior Vice President of WREF from March 2013 through December 2013 and he served as Vice President from March 2012 through March 2013. From June 2007 to April 2011, Mr. Smith served as Director of Financial Reporting for WREF, in which capacity he was responsible for the internal and external reporting functions for various public REITs sponsored by WREF.

From 1999 until joining WREF in 2002, Mr. Smith was an associate at Arthur Andersen in the firm's Atlanta office, working with various publicly traded and privately held companies, with a focus on the real estate, transportation and telecommunications industries. Mr. Smith holds a Certified Public Accountant (CPA) designation from the Georgia State Board of Accountancy and is a member of the American Institute of Certified Public Accountants and the Georgia Society of Certified Public Accountants. Mr. Smith received his Bachelor of Science in Accounting and Master of Accountancy from Auburn University.

Frank M. Bishop has served as one of our directors since June 2010 and as the Chairman of the board of directors since January 1, 2014. Since 2001, Mr. Bishop has served as the General Partner of AL III Management Co., an investment partnership with a focus on venture funds. From 1987 until 2001, Mr. Bishop served as a member of the senior management that built INVESCO into one of the largest publicly traded global investment management companies, with shareholder equity valued at approximately $4.5 billion at the time of his retirement in 2001. During Mr. Bishop's tenure at INVESCO, he served as the President and Chief Executive Officer of both INVESCO Capital Management and INVESCO, Inc., the North American operating subsidiary of AMVESCAP, PLC, which later became INVESCO, Ltd. (NYSE: IVZ). In his role at INVESCO, Mr. Bishop served as a director to multiple INVESCO management and advisory companies, including INVESCO Realty Advisors, INVESCO Management & Research, and PRIMCO Capital Management.50

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Frank M. Bishop has served as one of our directors since June 2010 and as the Chairman of the board of directors since January 1, 2014. Since 2001, Mr. Bishop has served as the General Partner of AL III Management Co., an investment partnership with a focus on early stage investments. From 1987 until 2001, Mr. Bishop served as a member of the senior management that built INVESCO into one of the largest publicly traded global investment management companies, with shareholder equity valued at approximately $4.5 billion at the time of his retirement in 2001. During Mr. Bishop's tenure at INVESCO, he served as the President and Chief Executive Officer of both INVESCO Capital Management and INVESCO, Inc., the North American operating subsidiary of AMVESCAP, PLC, which later became INVESCO, Ltd. (NYSE: IVZ). In his role at INVESCO, Mr. Bishop served as a director to multiple INVESCO management and advisory companies, including INVESCO Realty Advisors, INVESCO Management & Research, and PRIMCO Capital Management.

Since June 2007, Mr. Bishop has served as a director of Factor Trust, Inc., a global credit reporting agency company. Since February 2010, he has served as a director of Neothermal Energy, a start-up energy venture company. He also currently serves on the advisory boards of several companies, including the following: since January 2005, iP2BIZ, an early-stage investment company focusing on proprietary intellectual property; since June 2005, the Quality Group, a software training company; since 2004, Engent, Inc., a specialized hi-tech company; and since July 2009, the Seraph Group, an angel fund investment company. In addition to Mr. Bishop's extensive financial services experience, from 2001 to June 2005, Mr. Bishop served as an adjunct professor at Clemson University and the acting Chief Investment Officer for the Clemson University Endowment. Mr. Bishop received his Bachelor of Science degree in Engineering with honors from Clemson University and has completed the Financial Executive Program at the Darden Business School of the University of Virginia.

Among the most important factors that led to the board of directors' recommendation that Mr. Bishop serve as one of our directors are Mr. Bishop's leadership skills, integrity, judgment, investment expertise, public company director experience, and independence from management.

Stephen J. LaMontagne has served as one of our directors since October 2013. Mr. LaMontagne is partner-in-charge of the real estate practice of Moore Colson, an Atlanta-based accounting and consulting firm, having joined the firm in December 2007. Prior to joining Moore Colson, Mr. LaMontagne held various positions with KPMG LLP from May 1983 until December 2007, including serving over ten years as an assurance partner and the southeast real estate practice leader, as well as serving on several of the firm's national committees. While at KPMG and Moore Colson, Mr. LaMontagne's focus has included real estate finance, financial accounting and reporting, mergers and acquisitions and audit matters. Mr. LaMontagne has also served as a director of Global Income Trust, Inc., a public REIT, since November 2009. Mr. LaMontagne received a Bachelor of Science degree in accounting and a minor in finance from Florida State University in 1983. Mr. LaMontagne is a CPA.

Among the most important factors that led to the board of directors' recommendation that Mr. LaMontagne serve as one of our directors are Mr. LaMontagne's leadership skills, integrity, judgment, public company director experience, accounting and real estate expertise, and independence from management.

Harvey E. Tarpley has served as one of our directors since June 2010. From 1978 to 2010, Mr. Tarpley was a partner at Tarpley & Underwood, an accounting firm that he co-founded in 1978. Mr. Tarpley retired from Tarpley & Underwood in December 2010. At Tarpley & Underwood, he focused primarily on profit enhancement analysis, consulting on management matters, and assisting with income and estate tax matters. From 1978 to 1990, Mr. Tarpley managed the accounting and auditing practice, where he was engaged by manufacturing, distribution, construction, retail, service, and nonprofit companies. In 2011, Tarpley & Underwood merged with Windham Brannon, with the expanded firm continuing as Windham Brannon, P.C., CPAs.

55Mr. Tarpley was a member of the Council of the American Institute for Certified Public Accountants from 1992 to 1995. From 1991 to 1992, he served as President of the Georgia Society of CPAs ("GSCPA"). Prior to that, Mr. Tarpley served as the Treasurer, Vice President, Director-at-Large, and President-Elect for the GSCPA from 1987 to 1991. From 1980 to 2006, he served on various task forces and committees of the GSCPA, including the following: the Uniform Accountancy Act Task Force; the Task Force on Restructuring the GSCPA; the Accounting Career Awareness committee; the Accounting and Auditing Review committee; the Insurance Advisory committee; the Personnel committee; and the Meritorious Service Award committee. In June 2009, Mr. Tarpley was awarded the GSCPA's

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~~management~~Meritorious ~~matters~~Service Award, ~~and~~the ~~assisting~~highest ~~with~~award ~~income~~given ~~and~~by ~~estate~~the ~~tax matters~~GSCPA. ~~From~~Since ~~1978~~June ~~to 1990~~2008, Mr. Tarpley ~~managed~~has served as a member of the ~~accounting~~board ~~and~~of ~~auditing~~directors ~~practice,~~of ~~where~~the heGSCPA ~~was~~Educational ~~engaged~~Foundation byand ~~manufacturing,~~served ~~distribution,~~as ~~construction,~~the ~~retail,~~President ~~service,~~from ~~and~~June ~~nonprofit~~2011 ~~companies~~through May 2012. Additionally, Infrom ~~2011~~1992 to 2000, Mr. Tarpley &served ~~Underwood~~as ~~merged~~a ~~with~~member ~~Windham~~of ~~Brannon,~~the ~~with~~board of directors of the ~~expanded~~Accountants ~~firm~~Professional ~~continuing~~Liability asInsurance ~~Windham~~Group ~~Brannon~~of Monterey, PCalifornia, serving as President of that board from 1997 to 2000.C Mr., ~~CPAs~~Tarpley holds a Bachelor of Business Administration degree (concentration in accounting) from The University of Georgia.

Mr. Tarpley was a member of the Council of the American Institute for Certified Public Accountants from 1992 to 1995. From 1991 to 1992, he served as President of the Georgia Society of CPAs ("GSCPA"). Prior to that, Mr. Tarpley served as the Treasurer, Vice President, Director-at-Large, and President-Elect for the GSCPA from 1987 to 1991. From 1980 to 2006, he served on various task forces and committees of the GSCPA, including the following: the Uniform Accountancy Act Task Force; the Task Force on Restructuring the GSCPA; the Accounting Career Awareness committee; the Accounting and Auditing Review committee; the Insurance Advisory committee; the Personnel committee; and the Meritorious Service Award committee. In July 2009, he began his second term as a member of the Meritorious Service Award committee. In June 2009, Mr. Tarpley was awarded the GSCPA's Meritorious Service Award, the highest award given by the GSCPA. Since June 2008, Mr. Tarpley has served as a member of the board of directors of the GSCPA Educational Foundation and served as the President from June 2011 through May 2012. Additionally, from 1992 to 2000, Mr. Tarpley served as a member of the board of directors of the Accountants Professional Liability Insurance Group of Monterey, California, serving as President of that board from 1997 to 2000. Mr. Tarpley holds a Bachelor of Business Administration degree (concentration in accounting) from The University of Georgia.

Among the most important factors that led to the board of directors' recommendation that Mr. Tarpley serve as one of our directors are Mr. Tarpley's leadership skills, integrity, judgment, accounting and financial management expertise, and independence from management.

Section 16(a) Beneficial Ownership Reporting Compliance

Under U.S. securities laws, directors, executive officers, and any persons beneficially owning more than 10% of our common stock are required to report their initial ownership of the common stock and most changes in that ownership to the SEC. The SEC has designated specific due dates for these reports, and we are required to identify in this annual report on Form 10-K those persons who did not file these reports when due. Based solely on our review of copies of the reports filed with the SEC and written representations of our directors and executive officers, we believe all persons subject to these reporting requirements filed the reports on a timely basis in ~~2013~~2014.

Code of Ethics

We have adopted a Code of Ethics that applies to all of our executive officers and directors, including but not limited to, our principal executive officer and principal financial officer. Our Code of Ethics may be found at www.signaturereit.com.

Audit Committee

Our board of directors has a separately designated standing audit committee established in accordance with Section 3(a)(58)(A) of the Exchange Act. The Audit Committee's primary function is to assist our board of directors in fulfilling its responsibilities by selecting the independent auditors to audit our financial statements; reviewing with the independent auditors the plans and results of the audit engagement, approving the audit and overseeing our independent auditors; reviewing the financial information to be provided to our stockholders and others; reviewing the independence of the independent public accountants; considering the adequacy of fees; and reviewing the system of internal control over financial reporting which our management has established, and our audit and financial reporting process. The Audit Committee also is responsible for overseeing our compliance with applicable laws and regulations and for establishing procedures for the ethical conduct of our business. Our audit committee currently consists of Harvey E. Tarpley (Chairman), Frank M. Bishop and Stephen J. LaMontagne. Each of the members of the Audit Committee is “independent” as defined by the ~~New York Stock Exchange (“~~NYSE”). The board has determined that Mr. Tarpley qualifies as the Audit Committee “financial expert” within the meaning of SEC rules.

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ITEM 11.	EXECUTIVE COMPENSATION

Compensation of Executive Officers

During the year ended December 31, 2013, our executive officers did not receive compensation directly from us for services rendered to us. During the year ended December 31, 2013, our executive officers were also officers and/or employees of the Advisor and its affiliates and were compensated by these entities, in part, for their services to us. Under the terms of the Revised Advisory Agreement, the Advisor was responsible for providing our day-to-day management, subject to the authority of our board of directors. See Item 13 for a discussion of the fees paid and expenses reimbursed to the Advisor and its affiliates in connection with managing our operations.

Pursuant to the Original Advisory Agreement, we reimbursed the Advisor for expenses incurred on our behalf, including the salaries of certain of our executive officers allocated to us based on time spent by such executive officers providing services to us. Messrs. Williams, Fretz, and Davis' efforts on our behalf were only part of their responsibilities as employees of WREF and its affiliates, and consequently their salaries were allocated among several programs for reimbursement purposes. When reimbursing the Advisor for organization and offering expenses, subject to the limitation described below, we first reimbursed all costs incurred to third parties to date; once all third-party costs had been reimbursed, we then reimbursed the Advisor for personnel expenses, including expenses related to our allocable portion of the salaries of our executive officers incurred to date. However, we were only required to reimburse the Advisor for organization and offering costs in an amount up to 2.0% of gross offering proceeds under the advisory agreement. For the years ended December 31, 2013, 2012 and 2011, no portion of our executive officers' salaries related to offering-related activities was reimbursed by us, as offering expenses incurred by the Advisor were in excess of 2.0% of gross offering proceeds and third-party costs were reimbursed first. See Note 10 to the accompanying consolidated financial statements for a more information on the amount of organizational and offering expenses incurred by us and the Advisor. Prior to 2012, portions of our executive officers' salaries were allocated to us based only on time spent providing services to us for offering-related activities, which were classified as organizational and offering expenses. However, beginning in 2012, we began reimbursing the Advisor for portions of the salaries of our executive officers for time spent providing services for our operating-related activities. For the year ended December 31, 2013, we reimbursed $13,006 and $50,304 of Messrs. Williams and Davis' salaries, respectively, which were allocated to us by the Advisor pursuant to the Original Advisory Agreement in effect through June 10, 2013, based on time spent as our principal financial officer providing services for operating-related activities. Reimbursement for Messrs. Williams and Davis' salaries included a blended mark-up of 30% that the Advisor and its affiliates applied uniformly to all salary reimbursements it sought from us to cover benefits such as health and life insurance paid by the Advisor and its affiliates.

The Compensation Committee

Our Compensation Committee currently consists of Frank M. Bishop (Chairman), Stephen J. LaMontagne and Harvey E. Tarpley, all of whom are independent directors. The primary responsibilities of our Compensation Committee are to review and approve corporate goals and objectives relevant to compensation of the executive officers, conduct an annual review and evaluation of the performance of the executive officers in light of those goals and objectives, and propose to the board of directors the compensation level of the the executive officers based on such evaluation. The Compensation Committee will also make recommendations to the board of directors with respect to non-executive officer compensation, and incentive-compensation and equity-based plans that are subject to board approval. In addition, the Compensation Committee will review the compensation and benefits of the members of the board of directors annually and, when it deems appropriate, recommend to the board of directors changes in such compensation ~~and benefits. Finally, the Compensation Committee produces an annual report on executive compensation for inclusion in our proxy statement after reviewing our compensation discussion and analysis.~~

The Compensation Committee was formed by the board of directors on November 6, 2013 upon the recommendation of the board of directors in connection with our transition to self-management. The Compensation Committee held one meeting in 2013 to approve the base salaries and severance plan for our employees, effective January 1, 2014, in preparation for our transition to self-management. 52

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~~compensation levels~~ and ~~the programs to implement~~benefits. ~~The~~Finally, the Compensation Committee ~~worked~~produces ~~with~~an ~~FPL~~annual ~~Associates~~report toon ~~identify~~executive ~~components of our employee~~ compensation ~~program. As part of their engagement, FPL Associates, among other things, has provided competitive market compensation data and has made recommendations~~ for ~~the~~inclusion ~~base~~in ~~salaries for~~ our ~~employees.~~proxy ~~FPL~~statement ~~Associates~~after ~~has~~reviewing ~~not been engaged by~~ our ~~executive~~compensation ~~officers~~discussion ~~to perform any work on their behalf~~ and ~~we consider FPL Associates to be an independent compensation consultant~~analysis.

~~FPL~~The ~~Associates~~Compensation ~~provided~~Committee ~~competitive~~was ~~market~~formed ~~compensation~~by ~~data~~the ~~for~~board aof ~~peer~~directors ~~group~~on November 6, ~~which~~2013 ~~was~~upon ~~selected~~the ~~primarily~~recommendation ~~based~~of onthe ~~total~~board ~~capitalization~~of ~~that~~directors isin ~~similar~~connection with our transition to ~~ours,~~self-management. ~~consisting~~The ofCompensation Committee held one meeting in 2013 to approve the ~~following~~base 12salaries ~~companies:~~and severance plan for our employees, effective January 1, 2014, in preparation for our transition to self-management. The Compensation Committee held six meetings in 2014.

In November 2013, the board of directors engaged the services of FPL Associates, L.P., a nationally recognized compensation consulting firm specializing in the real estate industry, to assist us in determining competitive compensation levels and the programs to implement. The Compensation Committee worked with FPL Associates to identify components of our employee compensation program. As part of their engagement, FPL Associates, among other things, has provided competitive market compensation data and has made recommendations for the base salaries for our employees. FPL Associates has not been engaged by our executive officers to perform any work on their behalf and we consider FPL Associates to be an independent compensation consultant.

As part of its 2013 engagement, FPL Associates provided competitive market compensation data for a peer group, which was selected primarily based on total capitalization that is similar to ours, consisting of the following 12 companies:



Agree Realty Corporation	Excel Trust, Inc.	Summit Hotel Properties, Inc.
Associated Estates Realty Corporation	Hudson Pacific Properties, Inc.	Terreno Realty Corporation
Campus Crest Communities, Inc.	One Liberty Properties	UMH Properties, Inc.
Chatham Lodging Trust	STAG Industrial, Inc.	Urstadt Biddle Properties Inc.

Using market data and information it received from FPL Associates, the Compensation Committee, with input from management and the full board of directors, established the base salaries for our employees, effective January 1, 2014. In establishing the base salaries for our employees, the Compensation Committee did not target compensation levels at any specific point or percentile against the peer group data; however, it did look to ensure that overall base salaries approximated the market median, based on the peer groups presented by FPL Associates, unless substantial performance occurs.

Compensation of Executive Officers

Employment Agreements

In January 2014, we entered into employment agreements with each of our executive officers. These agreements were approved by our board of directors based upon the recommendation of the Compensation Committee. The Compensation Committee reviewed market materials related to executive contracts and retained its own legal counsel and independent compensation consultant, FPL Associates, to, among other things, negotiate the terms of the agreements.

Compensation. During the ~~initial~~ term of each employment agreement, we will pay each executive an annual base salary, aswhich ~~set~~will ~~forth~~be inreviewed ~~the~~annually ~~table~~and ~~below~~may be increased. In addition, during the term of each employment agreement, each executive is eligible to receive a discretionary bonus of $50,000 as well as participate in all benefit, incentive, savings and retirement plans and programs available to our employees. The following table sets forth information concerning total compensation for our executive officers for the year ended December 31, 2014.

Name and Principal Position	~~Annual Base~~ Salary		Incentive Payment(1)		Bonus(2)		All Other Compensation(3)		Total
Douglas P. Williams(1)	$	300,000
Douglas P. Williams	$	300,000	$	90,000	$	50,000	$	9,337	$	449,337
Chief Operating Officer
Glen F. Smith(2)	$	300,000
Glen F. Smith	$	300,000	$	90,000	$	50,000	$	6,685	$	446,685
Chief Financial Officer

~~(1) Mr. Williams' contract extends through December 31, 2015 and provides for a one-year renewal period.~~53

(2) Mr. Smith's contract extends through December 31, 2016 and provides for a one-year renewal period.

Payments Upon Termination or a Change of Control. The employment agreements provide for certain severance benefits if employment is terminated by us without “cause” or if the executive resigns for “good reason” (each as defined in the respective employment agreements), as follows:

(a) continuation of salary payments at the executive's then-current monthly base salary for a period of 12 months for Mr. Williams and 24 months for Mr. Smith following the effective termination date, or, if the termination occurs during the period commencing 60 days prior to a “change in control” of Signature Office REIT (as defined in the employment agreement) and concluding on the one-year anniversary of a “change in control,” severance equal to one times Mr. Williams' then-current annual base salary and two times Mr. Smith's then-current annual base salary, payable in a single lump sum; and

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⁽¹⁾ Represents incentive payments approved by the Compensation Committee pursuant to our annual incentive plan as further discussed below.

⁽²⁾ Represents discretionary bonuses approved by the Compensation Committee as provided for in our executive officers' employment agreements.

⁽³⁾ Includes amounts paid for long-term and short-term disability insurance and matching of 401(k) contributions.

Term. Messrs. Williams and Smith's employment agreements extend through December 31, 2015 and 2016, respectively, and provide for one-year renewal periods.

Payments Upon Termination or a Change of Control. Messrs. Williams and Smith's employment agreements provide for certain severance benefits if employment is terminated by us without “cause” or if the executive resigns for “good reason” (each as defined in the respective employment agreements), as follows:

(a)

continuation of salary payments at the executive's then-current monthly base salary for a period of 12 months for Mr. Williams and 24 months for Mr. Smith following the effective termination date, or, if the termination occurs during the period commencing 60 days prior to a “change in control” of Signature Office REIT (as defined in the employment agreement) and concluding on the one-year anniversary of a “change in control,” severance equal to one times Mr. Williams' then-current annual base salary and two times Mr. Smith's then-current annual base salary, payable in a single lump sum; and


(b)	expiration of any restrictions on any outstanding equity awards that expire solely on the executive's continuous service with Signature Office REIT, and immediate vesting of any outstanding equity awards that vest based solely on continuous service with Signature Office REIT.

In the event the executive’s employment terminates due to death or disability during the term of the employment agreement, then the executive will receive accelerated vesting of his outstanding equity awards as described in subsection (b) above, but will not receive any severance payments.

Other Terms and Conditions. During the term of the employment agreements and for a period of one year thereafter, the executives have agreed to certain non-competition and non-solicitation provisions. In addition, the executives have agreed to certain non-disclosure provisions and intellectual property right provisions, applicable both during and after his employment with us.

Annual Incentive Plan

Our annual incentive plan (the "Incentive Plan") establishes guidelines for rewarding eligible employees, including our executive officers, for their contribution towards the success of our company. Participants in the Incentive Plan are eligible to receive cash incentive awards contingent upon the achievement of certain corporate goals outlined in the Incentive Plan. The Compensation Committee has complete discretion as to the amount and timing of any awards granted under the Incentive Plan. Our executive officers’ cash incentive opportunities for 2014 under the Incentive Plan are set forth below:



Name and Principal Position	Threshold (10% of 2014 salary)		Target (20% of 2014 salary)		Maximum (30% of 2014 salary)
Douglas P. Williams	$	30,000	$	60,000	$	90,000
Glen F. Smith	$	30,000	$	60,000	$	90,000

In determining the cash incentive awards for the executive officers, the Compensation Committee reviewed the performance of the company to determine if awards would be granted under the Annual Incentive Plan and the amount of any such awards. Individual performance assessments were not components of the calculation of awards granted to our executive officers.

The 2014 corporate goals were established with a focus on (i) the successful completion of our transition to self-management, (ii) expense management, particularly as it relates to portfolio general and administrative expenses, (iii) budgeted performance, and (iv) individual performance and contributions as determined by each employee's direct

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and indirect supervisors. Payments under the Incentive Plan are dependent on our current and prospective business needs or other criteria as determined in the sole discretion of the Compensation Committee. The amount of incentive awards paid in 2014 were calculated as a percentage of the participant’s salary based on the degree to which we limited our portfolio and administrative expenses during 2014.

Retention and Transaction Award Plan

On November 21, 2014, the our board of directors adopted the Retention and Transaction Award Plan to establish guidelines for rewarding eligible employees, including our executive officers, with certain cash retention bonus payments in connection with their continued employment through the closing of the Merger. Pursuant to the Retention and Transaction Award Plan, each participant will be eligible to receive payment of a cash retention bonus in an amount determined in the sole discretion of the Compensation Committee. The award pool as established by the Retention and Transaction Award Plan is up to $2,200,000. The amount allocated to be received by each of Mr. Williams and Mr. Smith upon consummation of the Merger pursuant to the Retention and Transaction Award Plan is $497,702.

Compensation Prior to 2014

Prior to January 1, 2014, our executive officers did not receive compensation directly from us for services rendered to us, as they were officers and/or employees of the Advisor and its affiliates and were compensated by these entities, in part, for their services to us. Under the terms of the Revised Advisory Agreement, the Advisor was responsible for providing our day-to-day management, subject to the authority of our board of directors. For the year ended December 31, 2013, no portion of our executive officers' salaries related to offering-related activities was reimbursed by us, as offering expenses incurred by the Advisor were in excess of 2.0% of gross offering proceeds and third-party costs were reimbursed first. See Item 13 for a more information on the amount of organizational and offering expenses incurred by us and the Advisor. For the year ended December 31, 2013, we reimbursed $13,006 and $50,304 of Douglas P. Williams' and Brian M. Davis' salaries, respectively, which were allocated to us by the Advisor pursuant to the Original Advisory Agreement in effect through June 10, 2013, based on time spent as our principal financial officer providing services for operating-related activities. Brian M. Davis served as our Chief Financial Officer from March 11, 2013 until September 18, 2013. Reimbursement for Messrs. Williams' and Davis' salaries included a blended mark-up of 30% that the Advisor and its affiliates applied uniformly to all salary reimbursements it sought from us to cover benefits such as health and life insurance paid by the Advisor and its affiliates. See Item 13 for a discussion of the fees paid and expenses reimbursed to the Advisor and its affiliates in connection with managing our operations.

Compensation of Directors

We have provided below certain information regarding compensation paid to or earned by our directors during the ~~2013~~2014 fiscal year.

Name	Fees Earnedor Paid in Cash ($)		Total ($)
Leo F. Wells, III(1)	—		—
Frank M. Bishop	$	139,250	$	139,250
Frank M. Bishop	$	61,000	$	61,000
Stephen J. LaMontagne	$	122,500	$	122,500
Stephen J. LaMontagne(2)	$	25,500	$	25,500
Harvey E. Tarpley	$	124,500	$	124,500
Harvey E. Tarpley	$	62,500	$	62,500

(1) Directors who are also our executive officers do not receive compensation for services rendered as a director. Effective December 31, 2013, Leo F. Wells, III resigned from our board of directors. Mr. Wells did not have any disagreements with management on any matters related to our operations, polices or practices.

(2) Stephen J. LaMontagne was appointed as an independent director effective October 1, 2013.

Cash Compensation

We pay each of our independent directors:


•	an annual retainer of $32,000;


•	$2,500 per each regularly scheduled board meeting attended;


•	$2,500 per each regularly scheduled Audit Committee meeting attended (the Audit Committee chairman receives an additional $500 for each meeting attended in person);

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•	$1,500 per each regularly scheduled meeting of other committees attended (the chairman of each committee receives an additional $500 for each meeting attended in person); and

• $250 per each special board meeting or other committee meetings attended whether held in person or by telephone conference.

On October 10, 2014, the board of directors declared an additional one-time cash retainer of $65,000 per director, plus an additional 25% payable to the chairman of the board of directors. This additional cash retainer was declared as a result of the extraordinary amount of time and effort the board of directors spent on our transition to self-management in 2014, as well as the exploration of various strategic options, including the Merger. This payment is included in the amounts listed in the compensation table above.

In addition, we have reserved 500,000 shares of common stock for future issuance pursuant to awards that may be granted under the 2010 Long-Term Incentive Plan (described below). All directors receive reimbursement of reasonable out-of-pocket expenses incurred in connection with attendance at meetings of the board of directors.

2010 Long-Term Incentive Plan

We have adopted a 2010 Long-Term Incentive Plan, which includes the 2010 Independent Directors Compensation Plan. The incentive plan is intended to attract and retain officers, directors, advisors, and consultants considered essential to our long-range success by offering these individuals an opportunity to participate in our growth through awards in the form of, or based on, our common stock. The incentive plan authorizes the granting of awards in the following forms:

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the form of, or based on, our common stock. The incentive plan authorizes the granting of awards in the following forms:


•	options to purchase shares of our common stock, which may be nonstatutory stock options or incentive stock options under the Code;


•	stock appreciation rights, or SARs, which give the holder the right to receive the difference between the fair market value per share of common stock on the date of exercise over the SAR grant price;


•	performance awards, which are payable in cash or stock upon the attainment of specified performance goals;


•	restricted stock, which is subject to restrictions on transferability and other restrictions set by the Compensation Committee;


•	restricted stock units, which give the holder the right to receive shares of stock, or the equivalent value in cash or other property, in the future, which right is subject to certain restrictions and to risk of forfeiture;


•	deferred stock units, which give the holder the right to receive shares of stock, or the equivalent value in cash or other property, at a future time;


•	dividend equivalents, which entitle the participant to payments equal to any dividends paid on the shares of stock underlying an award; and


•	other stock-based awards at the discretion of the Compensation Committee, including unrestricted stock grants.

All awards must be evidenced by a written agreement with the participant, which will include the provisions specified by the Compensation Committee. We may not issue options or warrants to purchase our capital stock to our directors or officers, or any of their affiliates, except on the same terms as such options or warrants are sold to the general public. We may not issue options or warrants at exercise prices less than the fair market value of the underlying securities on the date of grant and not for consideration (which may include services) that in the judgment of the Compensation Committee has a market value less than the value of such option or warrant on the date of grant. Any options or warrants we issue to our directors or officers, or any of their affiliates shall not exceed an amount equal to 10% of our outstanding capital stock on the date of grant.

~~The~~Subject to limitations set forth in the Merger Agreement, the Compensation Committee will administer the incentive plan, with ~~sole~~ authority to select participants, determine the types of awards to be granted, and all of the terms and conditions of the awards, including whether the grant, vesting, or settlement of awards may be subject to the attainment of one or more performance goals. Awards will not be granted under the incentive plan if the grant, vesting, or exercise of the awards would jeopardize our status as a REIT under the Code or otherwise violate the ownership and transfer restrictions imposed under our charter. Unless otherwise determined by the Compensation Committee, no award granted under the incentive plan will be transferable except through the laws of descent and distribution or (except in the case of an incentive stock option) pursuant to a qualified domestic relations order.

We have reserved an aggregate number of 500,000 shares for issuance pursuant to awards that may be granted under the incentive plan. In the event of a transaction between us and our stockholders that causes the per-share value of our common stock to change (including, without limitation, any stock distribution, stock split, spin-off, rights offering, or large nonrecurring cash dividend), the share authorization limits under the incentive plan will be adjusted proportionately, and the Compensation Committee must make such adjustments to the incentive plan and awards as it deems necessary, in its sole discretion, to prevent dilution or enlargement of rights immediately resulting from such transaction. In the event of a stock split, a stock dividend, or a combination or consolidation of the outstanding shares of common stock into a lesser number of shares, the authorization limits under the incentive plan will automatically be adjusted proportionately, and the shares then subject to each award will automatically be adjusted proportionately without any change in the aggregate purchase price.56

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of the ~~termination.~~awards, ~~The~~including ~~board~~whether ~~of directors or~~ the ~~Compensation~~grant, ~~Committee may amend the incentive plan at any time~~vesting, ~~but~~or nosettlement ~~amendment~~of toawards ~~the~~may ~~incentive plan will~~ be ~~effective~~subject ~~without~~to the ~~approval~~attainment of ~~our~~one ~~stockholders if such approval is required by any law, regulation,~~ or ~~rule~~more ~~applicable~~performance ~~to the incentive plan~~goals. Awards Nowill ~~termination~~not orbe ~~amendment~~granted ofunder the incentive plan ~~may,~~if ~~without~~ the ~~written~~grant, ~~consent of the participant~~vesting, ~~reduce~~ or ~~diminish~~exercise ~~the value~~ of anthe ~~outstanding~~awards ~~award.~~would ~~The~~jeopardize ~~Compensation~~our ~~Committee~~status ~~may~~as ~~amend~~a orREIT ~~terminate~~under ~~outstanding~~the ~~awards,~~Code ~~but~~or ~~such~~otherwise ~~amendment~~violate orthe ~~termination~~ownership ~~may~~and ~~require~~transfer ~~consent~~restrictions ofimposed ~~the~~under ~~participant.~~our charter. Unless ~~approved~~otherwise determined by ~~our~~the ~~stockholders~~Compensation Committee, ~~the~~no ~~original~~award ~~term~~granted ofunder anthe ~~option~~incentive ~~may~~plan ~~not~~will be ~~extended.~~transferable ~~Unless~~except ~~permitted~~through by the ~~anti-dilution~~laws ~~provisions~~ of ~~the~~descent ~~incentive~~and ~~plan,~~distribution ~~the~~or ~~exercise~~(except ~~price~~in the case of an ~~outstanding~~incentive stock option) ~~may~~pursuant ~~not~~to bea ~~reduced,~~qualified ~~directly~~domestic orrelations ~~indirectly, without approval by our stockholders~~order.

NoWe have reserved an aggregate number of 500,000 shares for issuance pursuant to awards ~~have~~that ~~been~~may ~~issued~~be granted under the incentive plan,. In the event of a transaction between us and weour ~~currently~~stockholders ~~have~~that nocauses ~~plans~~the per-share value of our common stock to ~~issue~~change (including, without limitation, any stock distribution, stock split, spin-off, rights offering, or large nonrecurring cash dividend), the share authorization limits under the incentive plan will be adjusted proportionately, and the Compensation Committee must make such adjustments to the incentive plan and awards as it deems necessary, in its sole discretion, to prevent dilution or enlargement of rights immediately resulting from such transaction. In the event of a stock split, a stock dividend, or a combination or consolidation of the outstanding shares of common stock into a lesser number of shares, the authorization limits under the incentive plan will automatically be adjusted proportionately, and the shares then subject to each award will automatically be adjusted proportionately without any change in the aggregate purchase price.

The term of the incentive plan is 10 years. The board of directors or the Compensation Committee may terminate the incentive plan at any time, but termination will have no adverse impact on any award that is outstanding at the time of the termination. The board of directors or the Compensation Committee may amend the incentive plan at any time, but no amendment to the incentive plan will be effective without the approval of our stockholders if such approval is required by any law, regulation, or rule applicable to the incentive plan. No termination or amendment of the incentive plan may, without the written consent of the participant, reduce or diminish the value of an outstanding award. The Compensation Committee may amend or terminate outstanding awards, but such amendment or termination may require consent of the participant. Unless approved by our stockholders, the original term of an option may not be extended. Unless permitted by the anti-dilution provisions of the incentive plan, the exercise price of an outstanding option may not be reduced, directly or indirectly, without approval by our stockholders.

No awards have been issued under the incentive plan, and we currently have no plans to issue any awards under the incentive plan. Any future issuance of awards under the incentive plan will be subject to limitations set forth in the Merger Agreement.


ITEM 12.	SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED SHAREHOLDER MATTERS

Equity Compensation Plan Information

We have adopted the 2010 Long-Term Incentive Plan, which includes the 2010 Independent Directors Compensation Plan and which, collectively, we refer to as the incentive plan. The incentive plan is intended to attract and retain officers, directors, employees, advisors, and consultants considered essential to our long-range success by offering these individuals an opportunity to participate in our growth through awards in the form of, or based on, our common stock. We have reserved an aggregate number of 500,000 shares for issuance pursuant to awards that may be granted under the incentive plan. The incentive plan was approved prior to commencement of the Initial Offering by our board of directors and sole stockholder on June 7, 2010. No awards have been issued under the incentive plan, and we currently have no plans to issue any awards under the incentive plan.

Security Ownership of Certain Beneficial Owners

The following table shows, as of February 28, ~~2014~~2015, the amount of our common stock beneficially owned (unless otherwise indicated) by (1) any person who is known by us to be the beneficial owner of more than 5% of the outstanding shares of common stock, (2) our directors, (3) our executive officers, and (4) all of our directors and executive officers as a group.

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Name and Address of Beneficial Owner⁽¹⁾	Amount and Nature of Beneficial Ownership⁽²⁾	Percentage
Douglas P. Williams	221	*
Glen F. Smith	—	—
Frank M. Bishop	3,355	*
Stephen J. LaMontagne	—	—
Harvey E. Tarpley	—	—
All officers and directors as a group⁽³⁾	3,576	*

* Less than 1% of the outstanding common stock.

(1) Address of each named beneficial owner is c/o Signature Office REIT, Inc., 6200 The Corners Parkway. Suite ~~250~~100, Norcross, Georgia 30092-3365.


⁽²⁾	None of the shares are pledged as security.

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ITEM 13.	CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

Transactions with Related Persons

As discussed in Item 1. Business, during 2013, we established and carried out a plan to transition our external management platform to a self-managed structure. ~~Effective~~Beginning January 1, 2014, services previously provided by the Advisor ~~will~~were be provided by our employees (other than the services provided by WREF pursuant to the TSA). ~~Our~~Prior to the amendment of our charter ~~requires~~in August 2014, our ~~Conflicts~~charter ~~Committee~~required our board of directors to review and approve all transactions involving our affiliates and us. Prior to entering into a transaction with an affiliate, a majority of the ~~Conflicts~~board ~~Committee~~of ~~must~~directors was required to conclude that the transaction iswas fair and reasonable to us and on terms and conditions not less favorable to us than those available from unaffiliated third parties. InOur ~~addition, our~~ Code of Ethics lists examples of types of transactions with affiliates that would create prohibited conflicts of interest. Under the Code of Ethics, our officers and directors are required to bring potential conflicts of interest to the attention of the chairman of our Audit Committee promptly. The ~~Conflicts~~board ~~Committee~~of directors reviewed the material transactions between our affiliates and us since the beginning of ~~2013~~2014. Set forth below is a description of such transactions and the committee's report on their fairness.

Our Relationship with WREF and the Advisor

Transition Services Agreement

We entered into the TSA and TSA Amendment with WREF and its subsidiaries for the period from January 1, 2014 through June 30, 2014 and July 1, 2014 through September 30, 2014, respectively. Pursuant to the TSA, WREF and its affiliates provided certain consulting, support and transitional services to us at our direction in order to facilitate our successful transition to self-management. In return, pursuant to the TSA, we were obligated to pay WREF a monthly consulting fee of $51,267 (the “Consulting Fee”). In addition, we paid directly or reimbursed WREF for third-party expenses paid or incurred by WREF and its affiliates on our behalf in connection with the services provided pursuant to the TSA; provided, however, that (i) WREF obtained written approval from us prior to incurring any third-party expenses for the account of, or reimbursable by, us and (ii) we were not required to reimburse WREF for any administrative service expenses, including WREF's overhead, personnel costs and costs of goods used in the performance of services under the TSA. In addition, the TSA also provided that WREF provide us a portion of the office space used and occupied by WREF commencing on January 1, 2014 and terminating on June 30, 2014 for monthly rent of $4,552. The TSA Amendment extended the expiration date of the TSA as it related to certain transfer agent and client services functions from June 30, 2014 to September 30, 2014. Pursuant to the TSA Amendment, WREF and its affiliates continued to provide support for the transfer agent and client services functions to us through September 30, 2014 in exchange for a monthly consulting fee of $6,500 (the "Amended Consulting Fee"). All other transitional services described in the TSA expired on June 30, 2014, in accordance with its terms. There were no payments made under the TSA or TSA Amendment prior to January 1, 2014.

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Advisory Agreement

From our inception through December 31, 2013, prior to the completion of our transition to self-management, the Advisor provided our day-to-day management. Among the services provided by the Advisor under the terms of the Revised Advisory Agreement were the following:


•	real estate acquisition services;


•	asset management services;


•	real estate disposition services;


•	property management oversight services; and


•	administrative services.

The Advisor was at all times subject to the supervision of our board of directors and had only such authority as we delegated to it as our agent. The Revised Advisory Agreement was terminated on December 31, 2013 in connection with our transition to self-management.

From January 1, 2013 through December 31, 2013, we compensated the Advisor as set forth below.

•

We incurred acquisition fees payable to the Advisor equal to 2.0% of gross proceeds from our public offerings of common stock for services in connection with the selection, purchase, development, or construction of real property. We incurred such acquisition fees upon receipt of proceeds from the sale of shares. Acquisition fees from January 1, 2013 through December 31, 2013, totaled approximately $1.6 million.

•

Under the Revised Advisory Agreement effective June 11, 2013 through December 31, 2013, for asset management services, we generally paid monthly asset management fees equal to one-twelfth of 1.00% of the cost of all of our properties and our investments in joint ventures plus our allocable share of additional capital improvements made by the joint venture (“Adjusted Cost”), for so long as the Adjusted Cost was less than or equal to $605,000,000 and (b) 0.50% of Adjusted Cost over $605,000,000. Prior to June 11, 2013, under the Original Advisory Agreement, the monthly asset management fee was equal to one-twelfth of 0.75% of the cost of all of our properties and our investments in joint ventures. Asset management fees incurred from January 1, 2013 through December 31, 2013, totaled approximately $5.4 million.

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•

Under the terms of the Original Advisory Agreement, we were obligated to reimburse the Advisor for organization and offering costs, including legal, accounting, printing, personnel expenses, and other accountable offering costs, equal to the lesser of actual costs incurred or 2.0% of the total gross offering proceeds raised in the Initial Offering. The Advisor incurred aggregate organization and offering expenses on our behalf of approximately $20.1 million. Cumulative other offering costs of approximately $10.3 million were incurred and charged to additional paid-in capital related to the Initial Offering, which represents approximately 2.0% of cumulative gross proceeds raised under the Initial Offering. Upon the expiration of the primary portion of the Initial Offering on June 10, 2013, the remaining $9.8 million was expensed by the Advisor and is not subject to reimbursement.

• Additionally, under the Original Advisory Agreement, we reimbursed the Advisor for all costs and expenses it incurred in fulfilling its asset management and administrative duties, which included wages, salaries, taxes, insurance, benefits, information technology, legal and travel, and other out-of-pocket expenses of employees engaged in ongoing management, administration, operations, and marketing functions on our behalf. We did not, however, reimburse the Advisor for personnel costs in connection with services for which the Advisor received acquisition fees or real estate commissions. Administrative reimbursements from January 1, 2013 through June 10, 2013, totaled approximately $1.3 million. We also paid the Advisor a debt financing fee equal to 0.20% annually of the total capacity of all third-party financing arrangements (whether or not drawn) originated, obtained, or otherwise assumed by or for us, not to exceed, in the aggregate, 0.50% of the amount ~~available under any particular financing arrangement or refinancing of such arrangements. Debt financing fees from January 1, 2013 through June 10, 2013, totaled approximately $0.3 million.~~

In addition to the Advisory Agreement, we have also entered into the TSA with WREF and its subsidiaries for the period from January 1, 2014 through June 30, 2014, pursuant to which WREF and its affiliates will provide certain consulting, support and transitional services (as set forth in the TSA) to us at our direction in order to facilitate our successful transition to self-management. Pursuant to the TSA, we are obligated to pay WREF a monthly consulting fee of of $51,267 (the “Consulting Fee”). In addition, we will pay directly or reimburse WREF for any third-party expenses paid or incurred by WREF and its affiliates on our behalf in connection with the services provided pursuant to the TSA; provided that (1) WREF obtains our written approval prior to incurring such third-party expenses and (2) we will not be required to reimburse WREF for any administrative service expenses, including WREF's overhead, personnel costs and costs of goods used in the performance of services under the TSA. In addition, the TSA also provides that WREF will provide us a portion of the office space currently used and occupied by WREF commencing on January 1, 2014 and terminating on June 30, 2014 for monthly rent of $4,552. There were no payments made under the TSA from January 1, 2013 through December 31, 2013.59

The Conflicts Committee considers our relationship with the Advisor and WREF during 2013 to be fair. The Conflicts Committee evaluated the performance of the Advisor and the compensation paid to the Advisor in connection with its decision to renew our advisory agreement through December 31, 2013 and its decision to enter into the TSA. The Conflicts Committee believed that the amounts paid to the Advisor under the Revised Advisory Agreement were similar to those paid by other publicly offered, unlisted, externally advised REITs and that this compensation was appropriate in order for the Advisor to provide the desired level of services to us and our stockholders. The Conflicts Committee based its evaluation of the Advisor on factors such as (a) the amount of the fees paid to the Advisor in relation to the size, composition, and performance of our portfolio; (b) the success of the Advisor in generating opportunities that meet our investment objectives; (c) rates charged to other REITs and to investors other than REITs by advisors performing the same or similar services; (d) additional revenues realized by the Advisor and its affiliates through their relationship with us, including loan administration, underwriting or broker commissions, servicing, engineering, inspection, and other fees; (e) the quality and extent of service and advice furnished by the Advisor; (f) the performance of our portfolio, including income, conservation or appreciation of capital, frequency of problem investments, and competence in dealing with distress situations; and (g) the quality of our portfolio relative to the investments generated by the Advisor for its own account.

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available under any particular financing arrangement or refinancing of such arrangements. Debt financing fees from January 1, 2013 through June 10, 2013, totaled approximately $0.3 million.

Our Relationship with WIS

From inception through December 16, 2013, we were party to a dealer-manager agreement with WIS, which is 100% indirectly owned by MrLeo F. Wells, a former member of our board of directors who resigned on December 31, 2013. WIS was generally entitled to receive selling commissions of 7% of aggregate gross offering proceeds, except that no selling commissions were paid in connection with the sale of our shares under the DRP. WIS re-allowed 100% of these selling commissions to broker/dealers participating in the Initial Offering. From January 1, 2013 through June 10, 2013, the date on which the Initial Offering terminated, we incurred selling commissions, net of discounts, of approximately $4.7 million to WIS, of which approximately 100% was re-allowed to participating broker/dealers.

WIS also generally earned a dealer-manager fee of 2.5% of aggregate gross offering proceeds. WIS could re-allow to participating broker/dealers up to 1.5% of aggregate gross offering proceeds. There was no dealer-manager fee for shares sold under the DRP. WIS earned dealer-manager fees, net of discounts, from us of approximately $1.7 million from January 1, 2013 through through June 10, 2013, the date on which the Initial Offering terminated, of which approximately $0.9 million was re-allowed to participating broker/dealers. The dealer-manager agreement was terminated on December 16, 2013 in connection with WIS ceasing its participation in the DRP.

The Conflicts Committee believes that this arrangement with WIS was fair. The compensation paid to WIS reflected our belief that such selling commissions and dealer-manager fees would maximize the likelihood that we would be able to achieve our goal of acquiring a diversified, moderately-leveraged portfolio of high-quality, income-producing properties.

Our Relationship with Wells Management

From August 11, 2010 through December 31, 2013, we were party to a property management, leasing, and construction management agreement with Wells Management. Mr. Wells indirectly owns 100% of Wells Management. In consideration for supervising the management, leasing, and construction activities of certain of our properties, we were obligated to pay the following fees and reimbursements to Wells Management:


•	property management fees negotiated for each property managed by Wells Management; typically, this fee was equal to a percentage of the gross monthly income collected for that property for the preceding month;

•

leasing commissions for new, renewal, or expansion leases entered into with respect to any property for which Wells Management served as leasing agent equal to a percentage as negotiated for that property of the total base rental and operating expenses paid to us during the applicable term of the lease, provided, however, that no commission was payable as to any portion of such term beyond 10 years;


•	construction management fees for projects overseen by Wells Management such as capital projects, new construction, and tenant improvements, which fees were to be market-based and negotiated for each property managed by Wells Management; and


•	other fees as negotiated with the addition of each specific property covered under the agreement.

The Conflicts Committee believes that these arrangements with Wells Management were fair and reasonable and on terms and conditions no less favorable to us than those available from unaffiliated third parties. Property management, leasing, and construction fees incurred from January 1, 2013 through December 31, 2013 were approximately $0.1 million. The management agreement with Wells Management was terminated on December 31, 2013, in connection with our transition to self-management. All of our properties are currently managed by third-party providers.

~~Director~~Indemnification ~~Independence~~Agreements

~~Although~~On ~~our~~November ~~shares~~21, ~~are~~2014, ~~not~~we ~~listed~~entered ~~for~~into ~~trading~~indemnification onagreements ~~any~~with ~~national~~Douglas ~~securities~~P. ~~exchange~~Williams, ~~all~~Glen F. Smith, and each of our directors ~~are~~(the ~~"independent"~~“indemnitees”) asin ~~defined~~order byto ~~the~~provide ~~NYSE. The~~additional ~~NYSE~~clarity ~~standards~~with ~~provide~~respect ~~that~~ to ~~qualify~~certain asprocedures anrelating ~~independent~~to ~~director,~~obligations inunder ~~addition~~our charter (i) to ~~satisfying~~indemnify ~~certain~~our ~~bright-line~~officers ~~criteria~~and directors, to the ~~board~~maximum ofextent ~~directors~~permitted ~~must~~by ~~affirmatively~~Maryland ~~determine~~law, ~~that~~against aall ~~director~~judgments, ~~has~~penalties, nofines ~~material~~and ~~relationship~~amounts ~~with~~paid usin ~~(either~~settlement ~~directly~~and orall asexpenses aactually ~~partner,~~and ~~stockholder,~~reasonably orincurred ~~officer~~by ofthe anindemnitees ~~organization~~or ~~that~~on ~~has~~their abehalf ~~relationship~~in connection with uscertain matters and (ii). ~~The~~to ~~board~~advance ofreasonable ~~directors~~expenses ~~has~~incurred ~~determined~~by ~~that~~the ~~Frank~~indemnitees M.or ~~Bishop,~~on ~~Stephen~~their J.behalf ~~LaMontagne~~in ~~and~~connection ~~Harvey~~with E.such ~~Tarpley~~matters to the maximum extent permitted by Maryland law.

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~~each~~Director ~~satisfies the bright-line criteria and that none of them has a relationship with us that would interfere with such person's ability to exercise independent judgment as a member of the board.~~Independence

Although our shares are not listed for trading on any national securities exchange, all of our directors are "independent" as defined by the NYSE. The NYSE standards provide that to qualify as an independent director, in addition to satisfying certain bright-line criteria, the board of directors must affirmatively determine that a director has no material relationship with us (either directly or as a partner, stockholder, or officer of an organization that has a relationship with us). The board of directors has determined that Frank M. Bishop, Stephen J. LaMontagne and Harvey E. Tarpley each satisfies the bright-line criteria and that none of them has a relationship with us that would interfere with such person's ability to exercise independent judgment as a member of the board.


ITEM 14.	PRINCIPAL ACCOUNTANT FEES AND SERVICES

Independent Auditors

During the year ended December 31, ~~2013~~2014, Deloitte & Touche LLP served as our independent auditor and Deloitte Tax LLP provided certain domestic tax and other services. Deloitte & Touche LLP has served as our independent auditor since our formation.

Preapproval Policies

The Audit Committee's charter imposes a duty on the Audit Committee to preapprove all auditing services performed for us by our independent auditors, as well as all permitted nonaudit services (including the fees and terms thereof) in order to ensure that the provision of such services does not impair the auditors' independence. Unless a type of service to be provided by the independent auditors has received "general" preapproval, it will require "specific" preapproval by the Audit Committee.

All requests or applications for services to be provided by the independent auditor that do not require specific preapproval by the Audit Committee will be submitted to management and must include a detailed description of the services to be rendered. Management will determine whether such services are included within the list of services that have received the general preapproval of the Audit Committee. The Audit Committee will be informed on a timely basis of any such services rendered by the independent auditors.

Requests or applications to provide services that require specific preapproval by the Audit Committee will be submitted to the Audit Committee by both the independent auditors and our principal financial officer, and must include a joint statement as to whether, in their view, the request or application is consistent with the SEC's rules on auditor independence. The Chairman of the Audit Committee has been delegated the authority to specifically preapprove all services not covered by the general preapproval guidelines up to an amount not to exceed $75,000 per occurrence. Amounts requiring preapproval in excess of $75,000 per occurrence require specific preapproval by all members of the Audit Committee prior to engagement of our independent auditors. All amounts specifically preapproved by the Chairman of the Audit Committee in accordance with this policy are to be disclosed to the full Audit Committee at the next regularly scheduled meeting.

All services rendered by Deloitte & Touche LLP and Deloitte Tax LLP for the year ended December 31, ~~2013~~2014, were preapproved in accordance with the policies and procedures described above.

Principal Auditor Fees

The Audit Committee reviewed the audit and nonaudit services performed by our principal auditor, as well as the fees charged by the principal auditor for such services. In its review of the nonaudit service fees, the Audit Committee considered whether the provision of such services is compatible with maintaining the independence of the principal auditor. The aggregate fees ~~billed~~paid ~~to us~~ for professional accounting services, including the audit of our annual financial statements by our principal auditor, for the years ended December 31, ~~2013~~2014 and ~~2012~~2013, are set forth in the table below.

	2013		2012
Audit fees	$	399,000	$	360,000
Audit-related fees	—		—
Tax fees	54,680		38,525
All other fees	—		—
Total fees	$	453,680	$	398,525

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	2014		2013
Audit fees	$	276,000	$	399,000
Audit-related fees	—		—
Tax fees	51,508		54,680
All other fees	—		—
Total fees	$	327,508	$	453,680

For purposes of the preceding table, the principal auditor's professional fees are classified as follows:

• Audit fees – These are fees for professional services performed for the audit of our annual financial statements and the required review of quarterly financial statements and other procedures performed by the principal auditor in order for them to be able to form an opinion on our consolidated financial statements. These fees also cover services that are normally provided by independent auditors in connection with statutory and regulatory filings or engagements, including reviews of our financial statements included in the registration statements, as amended, related to our public offerings of common stock. ~~Audit fees are presented for the period to which the audit work relates.~~

•

Audit-related fees – These are fees for assurance and related services that traditionally are performed by independent auditors that are reasonably related to the performance of the audit or review of the financial statements, such as due diligence related to acquisitions and dispositions, attestation services that are not required by statute or regulation, internal control reviews, and consultation concerning financial accounting and reporting standards.

•

Tax fees – These are fees for all professional services performed by professional staff in our independent auditor's tax division, except those services related to the audit of our financial statements. These include fees for tax compliance, tax planning, and tax advice, including federal, state, and local issues. Services also may include assistance with tax audits and appeals before the IRS and similar state and local agencies, as well as federal, state, and local tax issues related to due diligence. Tax fees are presented for the period in which the services were provided.


•	All other fees – These are fees for any services not included in the above-described categories, including assistance with internal audit plans and risk assessments.

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PART IV


ITEM 15.	EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

(a) 1. A list of the financial statements contained herein is set forth on page F-1 hereof.

(a) 2. Schedule III – Real Estate Assets and Accumulated Depreciation

Information with respect to this item begins on page S-1 hereof. Other schedules are omitted because of the absence of conditions under which they are required or because the required information is given in the financial statements or notes thereto.


(a) 3.	The Exhibits filed in response to Item 601 of Regulation S-K are listed on the Exhibit Index attached hereto.

(b) See (a) 3 above.

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SIGNATURES

Pursuant to the requirements of Sections 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

		Signature Office REIT, Inc.
		(Registrant)
Dated:	March 56, ~~2014~~2015	By:	/s/ Douglas P. Williams
			Douglas P. Williams
			Executive Vice President, Secretary, and Treasurer

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacity as and on the date indicated.

Signature	Title	Date
/s/ Frank M. Bishop	Independent Director
Frank M. Bishop		March 56, ~~2014~~2015
/s/ Stephen J. LaMontagne	Independent Director
Stephen J. LaMontagne		March 56, ~~2014~~2015
/s/ Harvey E. Tarpley	Independent Director
Harvey E. Tarpley		March 56, ~~2014~~2015
/s/ Douglas P. Williams	Executive Vice President, Secretary, and Treasurer (Principal Executive Officer)
Douglas P. Williams		March 56, ~~2014~~2015
/s/ Glen F. Smith	Senior Vice President and Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer)
Glen F. Smith		March 56, ~~2014~~2015

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EXHIBIT INDEX TO

~~2013~~2014 FORM 10-K OF

SIGNATURE OFFICE REIT, INC.

The following documents are filed as exhibits to this report. Exhibits that are not required for this report are omitted.

Exhibit No.		Description
3.1		Articles of Amendment and Restatement (incorporated by reference to Exhibit 3.1 to the Company's Current Report on Form 8-K dated July 20, 2010 and filed July 26, 2010)
2.1		Agreement and Plan of Merger by and among Griffin Capital Essential Asset REIT, Inc., Griffin SAS, LLC and Signature Office REIT, Inc. (incorporated by reference to Exhibit 2.1 to the Company's Current Report on Form 8-K filed November 24, 2014)
3.2		Amended and Restated Bylaws (incorporated by reference to Exhibit 3.2 to the Company's Current Report on Form 8-K filed February 22, 2011)
3.1		Second Articles of Amendment and Restatement (incorporated by reference to Exhibit 3.1 to the Company's Quarterly Report on Form 10-Q filed with the commission on August 7, 2014)
3.3		Articles of Amendment (incorporated by reference to Exhibit 3.3 to the Company's Post-Effective Amendment No. 5 to the Registration Statement on Form S-11 (No. 333-163411) filed October 11, 2011)
3.2		Second Amended and Restated Bylaws (incorporated by reference to Exhibit 3.2 to the Company's Quarterly Report on Form 10-Q filed with the commission on August 7, 2014)
3.4		Articles of Amendment (incorporated by reference to Exhibit 3.1 to the Company's Form 8-K filed January 3, 2014)
4.1		Form of Subscription Agreement (incorporated by reference to Appendix B to the Company's prospectus filed as part of the Company's Post-Effective Amendment No. 11 to the Registration Statement on Form S-11 (No. 333-163411) filed March 28, 2013)
4.2		Statement regarding restrictions on transferability of shares of common stock (to appear on stock certificate or to be sent upon request and without charge to stockholders issued shares without certificates) (incorporated by reference to Exhibit 4.2 to the Company's Pre-Effective Amendment No. 4 to the Registration Statement on Form S-11 (No. 333-163411) filed June 4, 2010)
4.3		Amended and Restated Distribution Reinvestment Plan dated December 16, 2013 (incorporated by reference to Exhibit 99.1 to the Company's Form 8-K filed December 18, 2013)
10.1*		~~Advisory~~2010 ~~Agreement~~Long-Term ~~between~~Incentive ~~the~~Plan ~~Company~~adopted ~~and~~by ~~Wells~~the ~~Core~~Company ~~Office~~on ~~Income~~June ~~REIT Advisory Services~~7, ~~LLC~~2010 ~~dated September 19, 2012~~ (incorporated by reference to Exhibit 10.12 to the Company's Quarterly Report on Form 10-Q filed ~~with~~August ~~the Commission on November 6~~11, ~~2012~~2010)
10.2*		Advisory Agreement between the Company and Wells Core Office Income REIT Advisory Services, LLC dated June 11, 2013 (incorporated by reference to Exhibit 10.1 to the Company's Quarterly Report on Form 10-Q filed with the Commission on August 12, 2013)
10.2		Transition to Self-Management Agreement, dated as of November 26, 2013, by and among the Company, Signature Office Operating Partnership, L.P., Wells Real Estate Funds, Inc., and Wells Core Office Income REIT Advisory Services, LLC (incorporated by reference to Exhibit 10.1 to the Company's Form 8-K filed November 26, 2013)
10.3*		2010 Long-Term Incentive Plan adopted by the Company on June 7, 2010 (incorporated by reference to Exhibit 10.2 to the Company's Quarterly Report on Form 10-Q filed August 11, 2010)
10.3		Transition Services Agreement by and among the Company, Signature Office Operating Partnership, L.P. and Wells Real Estate Funds, Inc., effective January 1, 2014 (incorporated by reference to Exhibit 10.7 to the Company's Annual Report on Form 10-K filed with the Commission on March 7, 2014)
10.4*		~~Master~~Employment ~~Property~~Agreement ~~Management,~~dated ~~Leasing~~January ~~and~~1, ~~Construction~~2014 ~~Management~~among ~~Agreement between~~ the Company and ~~Wells~~Douglas ~~Management Company, Inc~~P. ~~dated~~Williams ~~August 11, 2010~~ (incorporated by reference to Exhibit 10.28 to the Company's ~~Quarterly~~Annual Report on Form 10-QK filed ~~November~~with 9the Commission on March 7, ~~2010~~2014)
10.5*		~~Letter~~Employment Agreement dated ~~August~~January 1224, ~~2011~~2014 ~~between~~among the Company and ~~Wells~~Glen ~~Core~~F. ~~Office~~Smith ~~Income Advisory Services, LLC~~ (incorporated by reference to Exhibit 10.279 to the Company's ~~Post-Effective~~Annual ~~Amendment~~Report ~~No. 5 to the Registration Statement~~ on Form S10-11K ~~(No.~~filed ~~333-163411)~~with ~~filed~~the ~~October~~Commission 11on March 7, ~~2011~~2014)
10.6		Transition to Self-Management Agreement, dated as of November 26, 2013, by and among the Company, Signature Office Operating Partnership, L.P., Wells Real Estate Funds, Inc., and Wells Core Office Income REIT Advisory Services, LLC (incorporated by reference to Exhibit 10.1 to the Company's Form 8-K filed November 26, 2013)
10.6*		Form of Indemnification Agreement to be entered with Frank M. Bishop, Harvey E. Tarpley, Stephen J. LaMontagne, Douglas P. Williams and Glen F. Smith (incorporated by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K filed November 24, 2014)
10.7+		Transition Services Agreement by and among the Company, Signature Office Operating Partnership, L.P. and Wells Real Estate Funds, Inc., effective January 1, 2014
10.7*		Retention and Transaction Award Plan Document (incorporated by reference to Exhibit 10.2 to the Company's Current Report on Form 8-K filed November 24, 2014)
10.8+		Employment Agreement dated January 1, 2014 among the Company and Douglas P. Williams
10.9+		Employment Agreement dated January 24, 2014 among the Company and Glen F. Smith
21.1		Subsidiaries of the Company (incorporated by reference to Exhibit 21.1 to the Company's Annual Report on Form 10-K filed with the Commission on March 11, 2013)
23.2+		Consent of Deloitte & Touche LLP
31.1+		Certification of the Principal Executive Officer of the Company, pursuant to Securities Exchange Act Rules 13a-14(a) as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2+		Certification of the Chief Financial Officer of the Company, pursuant to Securities Exchange Act Rules 13a-14(a) as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1+		Certification of the Principal Executive Officer and Chief Financial Officer of the Company, pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
99.1		Fourth Amended and Restated Share Redemption Program (incorporated by reference to Exhibit 99.1 to the Company's Form 10-Q filed with the Commission on November 14, 2013)
101.INS+		XBRL Instance Document.
101.SCH+		XBRL Taxonomy Extension Schema.
101.CAL+		XBRL Taxonomy Extension Calculation Linkbase.
101.DEF+		XBRL Taxonomy Extension Definition Linkbase.
101.LAB+		XBRL Taxonomy Extension Label Linkbase.
101.PRE+		XBRL Taxonomy Extension Presentation Linkbase.

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Exhibit No.		Description
101.INS+		XBRL Instance Document.
101.SCH+		XBRL Taxonomy Extension Schema.
101.CAL+		XBRL Taxonomy Extension Calculation Linkbase.
101.DEF+		XBRL Taxonomy Extension Definition Linkbase.
101.LAB+		XBRL Taxonomy Extension Label Linkbase.
101.PRE+		XBRL Taxonomy Extension Presentation Linkbase.



+	Filed herewith.
*	Represents management contract or compensatory plan or arrangement.

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INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

Financial Statements		Page
Report of Independent Registered Public Accounting Firm		F-2
Consolidated Balance Sheets as of December 31, 2013 and 2012		F-3
Consolidated Balance Sheets as of December 31, 2014 and 2013		F-3
Consolidated Statements of Operations for the Years Ended December 31, 2013, 2012, and 2011		F-4
Consolidated Statements of Operations for the Years Ended December 31, 2014, 2013, and 2012		F-4
Consolidated Statements of Comprehensive Income (Loss) for the Years Ended December 31, 2013, 2012, and 2011		F-5
Consolidated Statements of Comprehensive Income (Loss) for the Years Ended December 31, 2014, 2013, and 2012		F-5
Consolidated Statements of Stockholders' Equity for the Years Ended December 31, 2013, 2012, and 2011		F-6
Consolidated Statements of Stockholders' Equity for the Years Ended December 31, 2014, 2013, and 2012		F-6
Consolidated Statements of Cash Flows for the Years Ended December 31, 2013, 2012, and 2011		F-7
Consolidated Statements of Cash Flows for the Years Ended December 31, 2014, 2013, and 2012		F-7
Notes to Consolidated Financial Statements		F-8

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Table of Contents

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders of

Signature Office REIT, Inc.:

We have audited the accompanying consolidated balance sheets of Signature Office REIT, Inc. ~~(formerly Wells Core Office Income REIT, Inc.)~~ and subsidiaries (the "Company") as of December 31, ~~2013~~2014 and ~~2012~~2013, and the related consolidated statements of operations, comprehensive income (loss), stockholders' equity, and cash flows for each of the three years in the period ended December 31, ~~2013~~2014. Our audits also included the ~~consolidated~~ financial statement schedule listed in ~~the Index at~~ Item 15~~(a)2~~. These financial statements and ~~the~~ financial statement schedule are the responsibility of the Company's management. Our responsibility is to express an opinion on ~~the~~ financial statements and the financial statement schedule based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, such consolidated financial statements present fairly, in all material respects, the financial position of Signature Office REIT, Inc. and subsidiaries as of December 31, ~~2013~~2014 and ~~2012~~2013, and the results of their operations and their cash flows for each of the three years in the period ended December 31, ~~2013~~2014, in conformity with accounting principles generally accepted in the United States of America. Also, in our opinion, such financial statement schedule, when considered in relation to the basic consolidated financial statements taken as a whole, presents fairly in all material respects the information set forth therein.

/s/ Deloitte & Touche LLP

Atlanta, Georgia

March 56, ~~2014~~2015

F- 2

Table of Contents

SIGNATURE OFFICE REIT, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

	December 31, 2013			December 31, 2012
	December 31, 2014			December 31, 2013
Assets:
Real estate assets, at cost:
Land	$	55,733,041		$	55,733,041
Buildings and improvements, less accumulated depreciation of $34,488,062 and $17,103,968 as of December 31, 2013 and 2012, respectively	406,067,891			414,793,340
Buildings and improvements, less accumulated depreciation of $51,212,159 and $34,488,062 as of December 31, 2014 and 2013, respectively	387,731,127			406,067,891
Intangible lease assets, less accumulated amortization of $19,294,426 and $9,912,360 as of December 31, 2013 and 2012, respectively	46,734,316			56,791,405
Intangible lease assets, less accumulated amortization of $25,726,318 and $19,294,426 as of December 31, 2014 and 2013, respectively	36,188,591			46,734,316
Construction in progress	—13,770			~~23,137~~—
Total real estate assets	~~508~~479,~~535~~666,~~248~~529			~~527~~508,~~340~~535,~~923~~248
Cash and cash equivalents	75,~~394~~059,~~979~~952			157,~~955~~394,~~896~~979
Tenant receivables, net of allowance for doubtful accounts of $63,736 and $22,890 as of December 31, 2013 and 2012, respectively	13,385,314			4,184,620
Tenant receivables, net of allowance for doubtful accounts of $158,654 and $63,736 as of December 31, 2014 and 2013, respectively	14,098,561			13,385,314
Prepaid expenses and other assets	1,~~641~~254,~~381~~619			~~678~~1,~~421~~641,381
Deferred financing costs, less accumulated amortization of $3,485,202 and $2,279,275 as of December 31, 2013 and 2012, respectively	2,479,378			3,685,305
Deferred financing costs, less accumulated amortization of $4,340,323 and $3,485,202 as of December 31, 2014 and 2013, respectively	1,324,513			2,479,378
Intangible lease origination costs, less accumulated amortization of $6,584,549 and $3,176,459 as of December 31, 2013 and 2012, respectively	20,357,957			23,904,560
Intangible lease origination costs, less accumulated amortization of $9,314,242 and $6,584,549 as of December 31, 2014 and 2013, respectively	16,402,544			20,357,957
Deferred lease costs, less accumulated amortization of $1,197,248 and $352,176 as of December 31, 2013 and 2012, respectively	6,745,189			7,067,817
Deferred lease costs, less accumulated amortization of $2,149,853 and $1,197,248 as of December 31, 2014 and 2013, respectively	6,784,817			6,745,189
Investments in development authority bonds	115,000,000			115,000,000
Total assets	$	~~675~~639,~~539~~591,~~446~~535		$	~~697~~675,~~817~~539,~~542~~446
Liabilities:
Line of credit	$	4256,~~500~~000,000		$	9642,~~000~~500,000
Notes payable	~~124~~100,~~900~~000,000			124,900,000
Accounts payable and accrued expenses	89,~~091~~134,~~277~~243			8,~~238~~091,~~360~~277
Accrued capital expenditures and deferred lease costs	~~487~~86,~~825~~625			5487,~~385,438~~825
Due to affiliates	—			715,303
Deferred income	5,150,410			5,919,573
Distributions payable	—			1,075,114
Intangible lease liabilities, less accumulated amortization of $839,856 and $493,613 as of December 31, 2014 and 2013, respectively	958,518			1,304,761
Deferred income	5,919,573			3,929,626
Intangible lease liabilities, less accumulated amortization of $493,613 and $147,370 as of December 31, 2013 and 2012, respectively	1,304,761			1,651,004
Obligations under capital leases	115,000,000			115,000,000
Total liabilities	~~298~~286,~~203~~329,~~436~~796			~~356~~298,~~894~~203,~~845~~436
Commitments and Contingencies (Note 6)
Redeemable Common Stock	~~3,988,217~~—			53,~~080~~988,~~308~~217
Stockholders' Equity:
Common stock, $0.01 par value; 1,000,000,000 shares authorized; 20,443,176 and 17,548,812 shares issued and outstanding as of December 31, 2013 and 2012, respectively	204,432			175,488
Common stock, $0.01 par value; 1,000,000,000 shares authorized; 20,473,024 and 20,443,176 shares issued and outstanding as of December 31, 2014 and 2013, respectively	204,730			204,432
Additional paid-in capital	~~452~~453,~~981~~828,~~513~~351			~~388~~452,~~347~~981,~~427~~513
Cumulative distributions in excess of earnings	(76101,~~492~~119,~~911~~778		)	(4776,~~246~~492,~~703~~911		)
Redeemable common stock	~~(3,988,217~~—		)	(53,~~080~~988,~~308~~217		)
Accumulated other comprehensive income (loss)	642,976			(353,515		)
Accumulated other comprehensive income	348,436			642,976
Total stockholders' equity	~~373~~353,~~347~~261,~~793~~739			~~335~~373,~~842~~347,~~389~~793
Total liabilities, redeemable common stock and stockholders' equity	$	~~675~~639,~~539~~591,~~446~~535		$	~~697~~675,~~817~~539,~~542~~446

See accompanying notes.

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Table of Contents

SIGNATURE OFFICE REIT, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

	Years ended December 31,
	2013			2012			2011
	2014			2013			2012
Revenues:
Rental income	$	5352,~~023~~689,~~714~~430		$	3853,~~199~~023,~~442~~714		$	1338,~~520~~199,~~603~~442
Tenant reimbursements	1621,~~207~~759,~~310~~047			916,~~771~~207,~~959~~310			49,~~998~~771,~~794~~959
Other property income	362,~~525~~488,543			3936,~~714~~525			—39,714
	69,267,549			48,011,115			18,519,397
	76,937,020			69,267,549			48,011,115
Expenses:
Property operating costs	2325,~~469~~922,~~100~~181			1423,~~887~~469,~~050~~100			614,~~566~~887,~~757~~050
Asset and property management fees:
Related-party	~~5,495,142~~—			35,~~600~~495,~~057~~142			13,~~280~~600,~~985~~057
Other	1,~~011~~050,~~405~~900			~~354~~1,~~890~~011,405			~~157~~354,~~122~~890
Depreciation	1718,~~768~~555,~~543~~419			1217,~~422~~768,~~906~~543			412,~~484~~422,~~518~~906
Amortization	11,~~292~~982,~~059~~320			711,~~695~~292,~~172~~059			27,~~480~~695,~~235~~172
General and administrative	37,~~800~~897,~~454~~682			43,~~814~~800,~~146~~454			24,~~943~~814,~~673~~146
Acquisition fees and expenses	~~1,674,094~~—			51,~~912~~674,~~302~~094			65,~~784~~912,~~605~~302
	64,510,797			49,686,523			24,697,895
	65,408,502			64,510,797			49,686,523
Real estate operating income (loss)	411,~~756~~528,~~752~~518			(14,~~675~~756,~~408~~752		)	(61,~~178~~675,~~498~~408		)
Other income (expense):
Interest expense	(12,~~446~~256,~~785~~606		)	(612,~~708~~446,~~077~~785		)	(36,~~804~~708,~~185~~077		)
Interest and other income	6,~~900~~937,~~454~~437			736,~~278~~900,454			373,~~289~~278
	(5,546,331		)	(6,634,799		)	(3,800,896		)
	(5,319,169		)	(5,546,331		)	(6,634,799		)
Loss before income tax expense	(789,579		)	(8,310,207		)	(9,979,394		)
Income (loss) before income tax expense	6,209,349			(789,579		)	(8,310,207		)
Income tax expense	(~~203~~157,~~553~~868		)	(~~174~~203,~~316~~553		)	(92174,~~274~~316		)
Net loss	$	(993,132	)	$	(8,484,523	)	$	(10,071,668	)
Net income (loss)	$	6,051,481		$	(993,132	)	$	(8,484,523	)
Per-share net loss – basic and diluted	$	(0.05	)	$	(0.63	)	$	(2.26	)
Per-share net income (loss) – basic and diluted	$	0.30		$	(0.05	)	$	(0.63	)
Weighted-average common shares outstanding – basic and diluted	1920,~~736~~464,~~887~~863			1319,~~542~~736,~~837~~887			413,~~452~~542,~~157~~837

See accompanying notes.

F- 4

Table of Contents

SIGNATURE OFFICE REIT, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

	Years ended December 31,
	2013			2012			2011
	2014			2013			2012
Net loss	$	(993,132	)	$	(8,484,523	)	$	(10,071,668	)
Net income (loss)	$	6,051,481		$	(993,132	)	$	(8,484,523	)
Other comprehensive income (loss):
Market value adjustment to interest rate swap	~~996~~(294,~~491~~540		)	~~(353~~996,~~515~~491		)	—(353,515		)
Comprehensive income (loss)	$	35,~~359~~756,941		$	(83,~~838,038~~359	)	$	(108,~~071~~838,~~668~~038	)

See accompanying notes.

F- 5

Table of Contents

SIGNATURE OFFICE REIT, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

FOR THE YEARS ENDED DECEMBER 31, ~~2013~~2014, ~~2012~~2013, AND ~~2011~~2012

	Common Stock					AdditionalPaid-InCapital			Cumulative Distributions in Excess of Earnings			Redeemable Common Stock			Accumulated Other Comprehensive Income (Loss)			TotalStockholders'Equity
	Shares		Amount
Balance, December 31, 2010	821,995		$	8,220		$	18,205,771		$	(1,670,533	)	$	(42,703	)	$	—		$	16,500,755
Issuance of common stock	8,233,021		82,330			205,591,435			—			—			—			205,673,765
Redemption of common stock	(11,427	)	(114		)	(285,527		)	—			—			—			(285,641		)
Increase in redeemable common stock	—		—			—			—			(2,495,464		)	—			(2,495,464		)
Distributions to common stockholders ($1.46 per share)	—		—			—			(6,673,741		)	—			—			(6,673,741		)
Commissions and discounts on stock sales and related dealer-manager fees	—		—			(19,265,055		)	—			—			—			(19,265,055		)
Other offering costs	—		—			(4,048,024		)	—			—			—			(4,048,024		)
Net loss	—		—			—			(10,071,668		)	—			—			(10,071,668		)
Balance, December 31, 2011	9,043,589		$	90,436		$	200,198,600		$	(18,415,942	)	$	(2,538,167	)	$	—		$	179,334,927
Issuance of common stock	8,671,042		86,710			216,195,320			—			—			—			216,282,030
Redemption of common stock	(165,819	)	(1,658		)	(4,012,675		)	—			—			—			(4,014,333		)
Increase in redeemable common stock	—		—			—			—			(2,542,141		)	—			(2,542,141		)
Distributions to common stockholders ($1.50 per share)	—		—			—			(20,346,238		)	—			—			(20,346,238		)
Commissions and discounts on stock sales and related dealer-manager fees	—		—			(19,654,903		)	—			—			—			(19,654,903		)
Other offering costs	—		—			(4,378,915		)	—			—			—			(4,378,915		)
Net loss	—		—			—			(8,484,523		)	—			—			(8,484,523		)
Market value adjustment to interest rate swap	—		—			—			—			—			(353,515		)	(353,515		)
Balance, December 31, 2012	17,548,812		$	175,488		$	388,347,427		$	(47,246,703	)	$	(5,080,308	)	$	(353,515	)	$	335,842,389
Issuance of common stock	3,328,698		33,287			82,430,397			—			—			—			82,463,684
Redemption of common stock	(434,334	)	(4,343		)	(9,853,092		)	—			—			—			(9,857,435		)
Decrease in redeemable common stock	—		—			—			—			1,092,091			—			1,092,091
Distributions to common stockholders ($1.43 per share)	—		—			—			(28,253,076		)	—			—			(28,253,076		)
Commissions and discounts on stock sales and related dealer-manager fees	—		—			(6,473,522		)	—			—			—			(6,473,522		)
Other offering costs	—		—			(1,469,697		)	—			—			—			(1,469,697		)
Net loss	—		—			—			(993,132		)	—			—			(993,132		)
Market value adjustment to interest rate swap	—		—			—			—			—			996,491			996,491
Balance, December 31, 2013	20,443,176		$	204,432		$	452,981,513		$	(76,492,911	)	$	(3,988,217	)	$	642,976		$	373,347,793
Issuance of common stock	157,299		1,573			3,734,285			—			—			—			3,735,858
Redemption of common stock	(127,451	)	(1,275		)	(2,887,350		)	—			—			—			(2,888,625		)
Decrease in redeemable common stock	—		—			—			—			3,988,217			—			3,988,217
Distributions to common stockholders ($1.50 per share)	—		—			—			(30,678,348		)	—			—			(30,678,348		)
Other offering costs	—		—			(97		)	—			—			—			(97		)
Net income	—		—			—			6,051,481			—			—			6,051,481
Market value adjustment to interest rate swap	—		—			—			—			—			(294,540		)	(294,540		)
Balance, December 31, 2014	20,473,024		$	204,730		$	453,828,351		$	(101,119,778	)	$	—		$	348,436		$	353,261,739

See accompanying notes.

F- 6

Table of Contents

SIGNATURE OFFICE REIT, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

	Years ended December 31,
	2013			2012			2011
	2014			2013			2012
Cash Flows from Operating Activities:
Net loss	$	(993,132	)	$	(8,484,523	)	$	(10,071,668	)
Net income (loss)	$	6,051,481		$	(993,132	)	$	(8,484,523	)
Adjustments to reconcile net loss to net cash provided by operating activities:
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Straight-line rental income	(71,~~876~~060,~~148~~472		)	(37,~~056~~876,~~134~~148		)	(~~793~~3,~~750~~056,134		)
Depreciation	1718,~~768~~555,~~543~~419			1217,~~422~~768,~~906~~543			412,~~484~~422,~~518~~906
Amortization	1415,~~177~~154,~~754~~881			914,~~854~~177,~~521~~754			39,~~499~~854,~~971~~521
Noncash interest expense	1,~~205~~154,~~927~~865			21,~~092~~205,~~435~~927			12,~~199~~092,~~324~~435
Changes in assets and liabilities, net of acquisitions:
(Increase) decrease in other tenant receivables, net	(1,786,235		)	665,248			(941,708		)
Decrease (increase) in other tenant receivables, net	126,100			(1,786,235		)	665,248
(Increase) decrease in prepaid expenses and other assets	(319,984		)	135,796			(445,070		)
Decrease (increase) in prepaid expenses and other assets	86,318			(319,984		)	135,796
Increase in accounts payable and accrued expenses	~~288~~1,~~249~~042,966			~~659~~288,~~165~~249			3659,~~137,331~~165
(Decrease) increase in due to affiliates	(412,966		)	(49,305		)	242,789
Decrease in due to affiliates	—			(412,966		)	(49,305		)
Increase in deferred income	1,989,947			1,802,474			1,976,793
(Decrease) increase in deferred income	(769,163		)	1,989,947			1,802,474
Net cash provided by operating activities	2440,~~041~~342,~~955~~395			1624,~~042~~041,~~583~~955			216,~~288~~042,~~530~~583
Cash Flows from Investing Activities:
Additions to real estate assets	(8318,~~943,433~~007		)	(18,~~156~~943,~~660~~433		)	(1,~~103~~156,~~771~~660		)
Acquisition of real estate assets	—			~~(268,333,828~~—		)	(~~276~~268,~~142~~333,~~043~~828		)
Deferred lease costs paid	(51,~~110~~128,~~125~~203		)	(15,~~324~~110,~~176~~125		)	(~~797~~1,~~715~~324,176		)
Net cash used in investing activities	(141,~~053~~446,~~558~~210		)	(~~270~~14,~~814~~053,~~664~~558		)	(~~278~~270,~~043~~814,~~529~~664		)
Cash Flows from Financing Activities:
Due to affiliates	—			—			(293,543		)
Deferred financing costs paid	—			—			(2,448,723		)
Deferred financing costs paid	—			(2,448,723		)	(3,450,543		)
Proceeds from lines of credit and notes payable	34,650,000			14,500,000			373,931,984
Proceeds from lines of credit and notes payable	14,500,000			373,931,984			252,250,000
Repayments of lines of credit and notes payable	(46,050,000		)	(68,000,000		)	(273,986,879		)
Repayments of lines of credit and notes payable	(68,000,000		)	(273,986,879		)	(148,570,105		)
Issuance of common stock	3,735,858			82,424,667			215,977,971
Issuance of common stock	82,424,667			215,977,971			205,282,643
Redemptions of common stock	(2,888,625		)	(9,939,252		)	(3,932,516		)
Redemptions of common stock	(9,939,252		)	(3,932,516		)	(285,641		)
Distributions paid to stockholders	(26,942,490		)	(15,006,639		)	(10,466,302		)
Distributions paid to stockholders	(15,006,639		)	(10,466,302		)	(3,249,310		)
Distributions paid to stockholders and reinvested in shares of our common stock	(3,735,858		)	(14,321,551		)	(9,388,359		)
Distributions paid to stockholders and reinvested in shares of our common stock	(14,321,551		)	(9,388,359		)	(2,881,437		)
Commissions on stock sales and related dealer-manager fees paid	—			(6,648,460		)	(19,302,306		)
Commissions on stock sales and related dealer-manager fees paid	(6,648,460		)	(19,302,306		)	(18,779,979		)
Other offering costs paid	(97		)	(1,558,079		)	(4,347,759		)
Other offering costs paid	(1,558,079		)	(4,347,759		)	(4,009,228		)
Net cash (used in) provided by financing activities	(41,231,212		)	(18,549,314		)	266,037,111
Net cash (used in) provided by financing activities	(18,549,314		)	266,037,111			276,012,857
Net change in cash and cash equivalents	(2,335,027		)	(8,560,917		)	11,265,030
Net change in cash and cash equivalents	(8,560,917		)	11,265,030			257,858
Cash and cash equivalents, beginning of period	7,394,979			15,955,896			4,690,866
Cash and cash equivalents, beginning of period	15,955,896			4,690,866			4,433,008
Cash and cash equivalents, end of period	$	5,059,952		$	7,394,979		$	15,955,896
Cash and cash equivalents, end of period	$	7,394,979		$	15,955,896		$	4,690,866

See accompanying notes.

F- 7

Table of Contents

SIGNATURE OFFICE REIT, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, ~~2013~~2014, ~~2012~~2013 AND ~~2011~~2012


1.	Organization

OnSignature ~~January~~Office 2REIT, ~~2014,~~Inc. ~~Wells~~("Signature ~~Core~~ Office ~~Income~~ REIT,") ~~Inc.~~is ~~changed~~a ~~its~~Maryland ~~name~~corporation that has elected to be taxed as a real estate investment trust ("REIT") for federal income tax purposes and engages in the acquisition and ownership of commercial real estate properties. Signature Office REIT,'s ~~Inc~~stock is not listed on a national securities exchange. ("Signature Office REIT") was formed in 2007 and commenced operations in 2010. Substantially all of Signature Office REIT's business is conducted through Signature Office Operating Partnership, L.P. ("Signature Office OP"), a Delaware limited partnership ~~formerly known as Wells Core Office Income Operating Partnership, L~~.~~P.,~~ ~~formed on July 3, 2007.~~ Signature Office REIT is the sole general partner of Signature Office OP. Signature Office Income Holdings, LLC ("Signature Office Holdings"), ~~formerly known as Wells Core Office Income Holdings, LLC,~~ a Delaware limited liability company ~~formed on November 6~~, ~~2009,~~ is the sole limited partner of Signature Office OP. Signature Office REIT owns 100% of the interests of Signature Office Holdings and possesses full legal control and authority over the operations of Signature Office OP and Signature Office Holdings. ~~In addition, Signature Office OP formed Wells Core REIT TRS, LLC ("TRS"), a wholly owned subsidiary organized as a Delaware corporation, on December 13, 2011 (see Note 2).~~ References to Signature Office REIT herein shall include Signature Office REIT and its subsidiaries, including Signature Office OP, and Signature Office Holdings ~~and TRS~~, unless stated otherwise.

~~On June 10, 2010,~~ Signature Office REIT ~~commenced~~operates ~~its initial public offering of up to 230,000,000 shares of common stock (the "Initial Offering") pursuant to~~ a ~~Registration~~diversified ~~Statement~~portfolio ~~filed on Form S-11 under the Securities Act~~ of ~~1933,~~commercial asreal ~~amended,~~estate ~~with~~consisting ~~30,000,000~~primarily of ~~those shares being offered through the Signature Office REIT Distribution Reinvestment Plan ("DRP"). Under the Initial Offering~~high-quality, ~~shares~~income-generating ofoffice ~~common~~properties ~~stock~~located in the ~~primary~~United ~~offering~~States ~~were~~and ~~offered~~leased atto acreditworthy ~~price of $25~~companies.00 ~~per~~As ~~share, with discounts available to certain categories~~ of ~~purchases~~December 31, ~~and DRP shares were offered at a price of $23.75 per share. Effective June 10~~2014, ~~2013,~~ Signature Office REIT ~~ceased~~owned ~~offering~~13 ~~shares~~office inproperties ~~the~~consisting ~~primary portion~~ of ~~the~~approximately ~~Initial Offering~~2.6 Onmillion ~~June~~square 12, 2013, the unsold primary offering shares were deregistered, and on June 13, 2013, the registration of the shares issuable pursuant to the DRP was continued pursuant to a Registration Statement on Form S-3feet. As of December 31, ~~2013~~2014, ~~approximately~~these ~~28.9~~office ~~million~~properties ~~shares~~were ~~remain available for sale under the DRP~~97.8% leased.

AsFrom ofJune ~~December 31,~~2010 through June 2013, Signature Office REIT ~~had~~ raised ~~offering~~equity proceeds ~~under~~through its initial public ~~offerings~~offering of(the ~~approximately~~"Initial ~~$524~~Offering") of 230.0 million ~~from~~shares ~~the~~of ~~sale~~common stock, of ~~approximately~~which 2130.0 million shares ofwere ~~common~~offered ~~stock.~~through ~~After~~the ~~deductions~~Signature ~~from~~Office ~~such~~REIT ~~gross~~Distribution ~~offering~~Reinvestment ~~proceeds~~Plan ~~for~~("DRP"). ~~selling~~Under ~~commissions~~the ~~and~~Initial ~~dealer-manager~~Offering, ~~fees~~shares of ~~approximately~~common stock in the primary offering were offered at a price of $4625.600 ~~million~~per share, ~~acquisition~~with ~~fees~~discounts ofavailable ~~approximately~~to ~~$10.5~~certain ~~million~~categories of purchasers, and ~~other~~DRP ~~offering~~shares ~~expenses~~were ofoffered ~~approximately~~at a price of $1023.375 ~~million~~per share. Signature Office REIT terminated the primary portion of the Initial Offering on June 12, 2013. Signature Office REIT ~~had~~continued to raise equity proceeds through the DRP through March 2014, after which the DRP was terminated. Signature Office REIT raised aggregate net offering proceeds of approximately $~~456~~460.63 million, including net offering proceeds from the DRP of approximately $2529.75 million~~. As of December 31~~, ~~2013,~~ substantially all of ~~Signature~~which ~~Office~~were ~~REIT's net offering proceeds have been~~ invested in real properties and related assets.

OnFrom ~~March~~its 5inception through December 31, ~~2014~~2013, Signature Office REIT's ~~board~~operated ofas ~~directors~~an ~~elected~~externally advised REIT pursuant to ~~terminate~~an ~~the~~advisory ~~DRP~~agreement, ~~effective~~under ~~after~~which Wells Core Office Income REIT Advisory Services, LLC (the ~~payment~~"Advisor"), a subsidiary of ~~the~~Wells ~~distribution~~Real ~~for~~Estate Funds, Inc. ("WREF"), performed certain key functions on behalf of Signature Office REIT, including, among others, the ~~first~~investment ~~quarter~~of capital proceeds and management of ~~2014~~day-to-day operations. AsThe aadvisory ~~result~~agreement, ~~all~~as ~~distributions~~amended ~~paid~~and ~~after~~restated (the ~~first~~"Revised ~~quarter~~Advisory ~~will~~Agreement"), bewas ~~paid~~effective inbeginning ~~cash~~on June 11, 2013 and ~~will~~replaced ~~not~~the beprevious ~~reinvested~~agreement between Signature Office REIT and the Advisor in ~~shares~~effect through June 10, 2013 (the "Original Advisory Agreement"). The Advisor contracted with Wells Capital, Inc. ("Wells Capital") and Wells Management Company, Inc. ("Wells Management"), also wholly owned subsidiaries of WREF, to engage their employees to carry out, among others, the key functions enumerated above on behalf of Signature Office REIT's. ~~common~~On ~~stock.~~December ~~Also~~31, 2013, Signature Office REIT terminated the Revised Advisory Agreement and became a self-managed company on ~~March~~January 51, 2014 (the “Self-Management Transition Date”). As a result, management of day-to-day operations is now performed by employees of Signature Office REIT's. ~~board~~Contemporaneous with the termination of ~~directors~~the ~~elected~~Revised toAdvisory ~~terminate~~Agreement, ~~its~~Signature ~~share~~Office ~~redemption~~REIT ~~program~~entered into a Transition Services Agreement (the "TSA") with WREF for the period from January 1, ~~effective~~2014 ~~April~~through June 30, 2014 pursuant ~~upon~~to which WREF and its affiliates provided certain consulting, support and transitional services (as set forth in the ~~redemption~~TSA) ofto ~~any~~Signature ~~shares~~Office ofREIT ~~common~~at ~~stock~~its ~~properly~~direction ~~submitted~~in ~~for~~order ~~redemption~~to ~~under~~facilitate its successful transition to self-management. On June 30, 2014, Signature Office REIT entered into the ~~share~~first ~~redemption~~amendment ~~program~~to ~~for~~the TSA with WREF (the ~~month~~"TSA Amendment"), which extended the expiration date of ~~April~~the TSA as it related to certain transfer agent and client services functions from June 30, 2014 to September 30, 2014. For additional details about ~~the~~Signature ~~termination~~Office ofREIT's ~~the~~transition ~~DRP~~to self-management and the ~~share~~TSA, ~~redemption~~please ~~program,~~refer ~~see~~to Note 1310.

Signature Office REIT operates a diversified portfolio of commercial real estate consisting primarily of high-quality, income-generating office properties located in the United States and leased to creditworthy companies. As of December 31, 2013, Signature Office REIT owned 13 office properties consisting of approximately 2.6 million square feet. As of December 31, 2013, these office properties were 99.3% leased.

From its inception through December 31, 2013, Signature Office REIT operated as an externally advised REIT pursuant to an advisory agreement, under which Wells Core Office Income REIT Advisory Services, LLC (the "Advisor"), a subsidiary of Wells Real Estate Funds, Inc. ("WREF"), performed certain key functions on behalf of Signature Office

F- 8

Table of Contents

~~REIT~~On November 21, ~~including~~2014, ~~among~~Signature ~~others,~~Office ~~the~~REIT ~~investment~~entered ofinto ~~capital~~an ~~proceeds~~Agreement and ~~management~~Plan of ~~day-to-day~~Merger ~~operations. The advisory agreement, as amended and restated~~ (the ~~"Revised~~“Merger ~~Advisory~~ Agreement"”), ~~was~~with ~~effective~~Griffin ~~beginning~~Capital onEssential ~~June~~Asset 11REIT, ~~2013~~Inc. (“Griffin”) and ~~replaced~~Griffin ~~the~~SAS, ~~previous~~LLC, ~~agreement~~a ~~between~~wholly ~~Signature~~owned ~~Office~~subsidiary ~~REIT~~of ~~and~~Griffin ~~the~~(“Merger ~~Advisor~~Sub”). inUpon ~~effect~~the ~~through~~terms ~~June~~and ~~10,~~conditions ~~2013~~set ~~(the~~forth ~~"Original~~in ~~Advisory~~the Merger Agreement~~").~~, ~~The~~Signature ~~Advisor~~Office ~~contracted~~REIT ~~with~~will ~~Wells~~merge ~~Capital,~~with ~~Inc.~~and ~~("Wells~~into ~~Capital")~~Merger ~~and~~Sub, ~~Wells~~with ~~Management~~Merger ~~Company,~~Sub ~~Inc.~~surviving ~~("Wells~~the ~~Management"),~~merger ~~also~~as a wholly owned ~~subsidiaries~~subsidiary of ~~WREF,~~Griffin to(the ~~engage~~“Merger”). ~~their~~Subject ~~employees~~ to ~~carry out, among others,~~ the ~~key~~terms ~~functions~~and ~~enumerated~~conditions ~~above on behalf~~ of ~~Signature~~the ~~Office~~Merger ~~REIT. On November 26~~Agreement, ~~2013,~~at ~~Signature~~the ~~Office~~date ~~REIT~~ and ~~Signature~~time ~~Office~~the OPMerger ~~entered~~becomes ~~into~~effective ~~a Transition to Self-Management Agreement~~ (the “~~TSMA~~Merger Effective Time”) ~~with~~each ~~WREF~~share ~~and~~of ~~the~~common ~~Advisor~~stock ~~(together~~of ~~with~~Signature ~~their~~Office ~~respective~~REIT ~~affiliates,~~issued ~~“Wells”),~~and ~~pursuant~~outstanding toimmediately ~~which~~prior ~~Signature~~to ~~Office~~the ~~REIT~~Merger ~~began~~Effective ~~its~~Time ~~transition~~will tobe ~~becoming~~converted ainto ~~self-managed company~~2.04 ~~Subject to~~ (the ~~terms~~“Merger ~~and~~Exchange ~~conditions~~Ratio”) shares of ~~the~~common ~~TSMA,~~stock ~~Signature~~of ~~Office~~Griffin ~~REIT~~(“Griffin ~~completed~~Common ~~its~~Stock”). ~~transition~~The toconsummation ~~self-management~~of onthe ~~January~~Merger 1,is ~~2014~~subject ~~(the~~to ~~“Self-Management~~certain ~~Transition~~customary ~~Date”).~~closing ~~Leo~~conditions, ~~F. Wells~~including, ~~III~~among ~~resigned~~others, asthe ~~Chairman~~approval of the ~~Board~~Merger ~~and~~by ~~President of~~ Signature Office REIT's onstockholders. ~~December~~In 31addition, ~~2013,~~the ~~and~~Merger ~~Frank~~Agreement M.may ~~Bishop~~be ~~was~~terminated ~~appointed~~under ~~Chairman~~certain ofcircumstances ~~the~~by ~~Board,~~Griffin ~~effective~~or ~~January~~Signature 1,Office ~~2014~~REIT. ~~For~~Signature ~~additional~~Office ~~details~~REIT ~~about~~expects the ~~TSMA,~~Merger ~~please~~to ~~refer~~close toin ~~Note~~the 10first half of 2015.

Signature Office REIT's stock is not listed on a national securities exchange. ~~However~~Should the Merger with Griffin not be consummated, Signature Office REIT will still be subject to its current charter requirement to execute a liquidity transaction by July 31, 2020. Signature Office REIT's charter requires that in the event that Signature Office REIT's stock is not listed on a national securities exchange by July 31, 2020, Signature Office REIT must either seek stockholder approval to extend or amend this listing deadline or seek stockholder approval to begin liquidating investments and distributing the resulting proceeds to the stockholders. If Signature Office REIT seeks stockholder approval to extend or amend this listing date and does not obtain it, Signature Office REIT would then be required to seek stockholder approval to liquidate. In this circumstance, if Signature Office REIT seeks and does not obtain approval to liquidate, Signature Office REIT would not be required to list or liquidate and could continue to operate indefinitely as an unlisted company.


2.	Summary of Significant Accounting Policies

Basis of Presentation and Principles of Consolidation

The consolidated financial statements of Signature Office REIT have been prepared in accordance with U.S. generally accepted accounting principles ("GAAP") and include the accounts of Signature Office REIT, Signature Office OP, Signature Office Holdings, ~~TRS,~~ and any variable interest entity ("VIE") in which Signature Office REIT, Signature Office OP, or Signature Office Holdings, ~~or TRS,~~ was deemed the primary beneficiary. With respect to entities that are not VIEs, Signature Office REIT's consolidated financial statements shall also include the accounts of any entity in which Signature Office REIT, Signature Office OP, Signature Office Holdings, ~~TRS,~~ or its subsidiaries own a controlling financial interest and any limited partnership in which Signature Office REIT, Signature Office OP, Signature Office Holdings, ~~TRS,~~ or its subsidiaries own a controlling general partnership interest. In determining whether Signature Office REIT, Signature Office OP, or Signature Office Holdings, ~~or TRS~~ has a controlling interest, the following factors are considered, among other things: the ownership of voting interests, protective rights, and participatory rights of the investors.

All intercompany balances and transactions have been eliminated in consolidation.

Recent Accounting Pronouncements

In ~~February~~April ~~2013~~2014, the Financial Accounting Standards Board (the "FASB") issued Accounting Standards Update ~~2013~~2014-0208, ~~Comprehensive~~Reporting ~~Income~~Discontinued ~~Topic~~Operations ~~Reporting~~and Disclosures of ~~Amounts~~Disposals ~~Reclassified~~of ~~Out~~Components of ~~Accumulated~~an ~~Other~~Entity ~~Comprehensive Income~~ ("ASU ~~2013~~2014-0208"). ASU ~~2013~~2014-0208 ~~requires~~changes anthe ~~entity~~criteria for transactions that qualify to ~~disclose~~be ~~information~~reported ~~about~~as ~~the~~discontinued ~~amounts~~operations, ~~reclassified~~and ~~out~~enhances ofdisclosures ~~accumulated~~for ~~other~~transactions ~~comprehensive~~that ~~income~~meet bythe ~~component.~~new Incriteria ~~addition,~~in anthis ~~entity~~area. isASU ~~required~~2014-08 tolimits ~~disclose~~discontinued ~~significant~~operations ~~amounts~~reporting ~~reclassified~~to ~~out~~disposals of ~~accumulated~~components ~~other~~of ~~comprehensive~~an ~~income~~entity bythat ~~the~~represent strategic ~~respective~~shifts ~~line~~that ~~items~~have of(or ~~net~~will ~~income~~have) ifa major effect on the ~~amount~~entity’s ~~reclassified~~operations toand ~~net~~financial ~~income~~results. inASU ~~its~~2014-08 ~~entirety~~requires inexpanded ~~the~~disclosures ~~same~~for ~~reporting~~discontinued ~~period~~operations isincluding ~~required~~more ~~under~~information ~~GAAP.~~about ~~For~~the ~~amounts~~assets, ~~that~~liabilities, ~~are~~revenues, ~~not~~and ~~required~~expenses ~~under~~of ~~GAAP~~discontinued tooperations. beASU ~~reclassified~~2014-08 inalso ~~their~~requires ~~entirety~~an entity to ~~net~~disclose ~~income,~~the anpretax ~~entity~~profit isor ~~required~~loss toof ~~cross-reference~~an toindividually ~~other~~significant ~~disclosures~~component ~~required~~of ~~under~~an ~~GAAP~~entity that ~~provide~~does ~~additional~~not ~~detail~~qualify ~~about~~for ~~those~~discontinued ~~amounts~~operations reporting. ASU ~~2013~~2014-0208 ~~was~~is effective for the period beginning on January 1, 2015; however, early adoption is permitted. Signature Office REIT ~~for~~adopted the ~~period~~amendments ~~beginning~~in onASU 2014-08 effective January 1, ~~2013~~2014; however, Signature Office REIT did not dispose of any real estate assets during the year ended December 31, 2014. The adoption of ASU ~~2013~~2014-0208 has not had a material impact on Signature Office REIT's consolidated financial statements or disclosures.

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In ~~July~~May ~~2013~~2014, the FASB issued Accounting Standards Update ~~2013~~No. 2014-1009, ~~Derivatives~~Revenue ~~and~~from ~~Hedging~~Contracts ~~Topic~~with ~~Inclusion~~Customers of("ASU ~~the~~2014-09"). ~~Fed~~ASU ~~Funds~~2014-09 ~~Effective~~changes ~~Swap~~the ~~Rate~~criteria ~~(or~~for ~~Overnight~~the ~~Index~~recognition ~~Swap~~of ~~Rate)~~revenue asto adepict ~~Benchmark~~the ~~Interest~~transfer ~~Rate~~of ~~for~~promised ~~Hedge~~goods ~~Accounting~~or ~~Purposes~~services ~~("ASU~~to ~~2013-10").~~customers ~~ASU~~in ~~2013-10~~an ~~permits~~amount that reflects the ~~Fed~~consideration ~~Funds~~to ~~Effective~~which ~~Swap~~the ~~Rate~~entity ~~(or~~expects ~~Overnight~~to ~~Index~~be ~~Swap~~entitled ~~Rate)~~in toexchange befor ~~used~~those asgoods or services using a ~~U.S.~~five-step ~~benchmark~~determination ~~interest~~process. ~~rate~~The ~~for~~five-step ~~hedge~~process ~~accounting~~includes ~~purposes~~(i) ~~under~~identifying the ~~Derivatives~~contract ~~and~~with ~~Hedging~~a ~~Topic~~customer, (ii) identifying the performance obligations in ~~addition~~the tocontract, (iii) determining the ~~United~~transaction ~~States~~price, ~~Treasury~~(iv) ~~rate~~allocating ~~and~~the ~~London~~transaction ~~Interbank~~price ~~Offered~~to ~~Rate~~the performance obligations, and (~~"LIBOR"~~v) recognizing revenue as the entity satisfies a performance obligation. InLease ~~addition~~contracts are specifically excluded from ASU 2014-09; however, ~~the~~disposals ~~restriction~~of onreal ~~using~~estate ~~different~~assets ~~benchmark~~are ~~rates~~subject ~~for~~to ~~similar~~the ~~hedges~~derecognition isrequirements ~~removed~~included in ASU 2014-09. ASU ~~2013~~2014-1009 ~~was~~will be effective for Signature Office REIT for ~~qualifying~~the ~~new~~period orbeginning ~~redesignated~~on ~~hedging~~January ~~relationships~~1, ~~entered~~2017, ~~into~~and onearly oradoption ~~after~~is ~~July~~not ~~17, 2013~~permitted. ~~The~~Signature Office REIT expects that the adoption of ASU ~~2013~~2014-1009 ~~has~~will not ~~had~~have a material impact on ~~Signature~~its ~~Office~~consolidated ~~REIT~~ financial statements or disclosures.

In ~~July~~January ~~2013~~2015, the FASB issued Accounting Standards Update ~~2013~~2015-1101, Simplifying Income ~~Taxes~~Statement ~~Topic~~ Presentation ofby anEliminating ~~Unrecognized~~the ~~Tax~~Concept ~~Benefit~~of ~~When~~Extraordinary aItems ~~Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists~~ ("ASU ~~2013~~2015-1101"). ASU ~~2013~~2015-1101 ~~requires~~eliminates anthe ~~entity~~requirement tofor ~~present~~ an ~~unrecognized~~entity ~~tax benefit in the financial statements as a reduction~~ to aseparately ~~deferred~~classify, ~~tax~~present ~~asset~~and ~~for~~disclose aextraordinary ~~net~~events ~~operating~~and ~~loss~~transactions. ~~carryforward,~~Under aASU ~~similar tax loss~~2015-01, orreporting aentities ~~tax~~will ~~credit~~no ~~carryforward.~~longer Tobe ~~the~~required ~~extent~~to aassess ~~net~~whether ~~operating~~an ~~loss~~underlying ~~carryforward,~~event ~~a similar tax loss,~~ or atransaction ~~tax credit carryforward~~ is ~~not~~extraordinary; ~~available~~however, at the ~~reporting~~presentation ~~date~~and ordisclosure ~~not~~guidance ~~intended~~for toitems ~~be used to settle any additional income taxes~~ that ~~would~~are ~~result~~unusual in ~~the~~nature ~~disallowance~~or ofoccur ainfrequently ~~tax~~will ~~position~~be inretained ~~which~~and ~~case~~will ~~the~~be ~~unrecognized~~expanded ~~tax~~to ~~benefit~~include ~~should~~items bethat ~~presented~~are inboth ~~the~~unusual ~~financial~~in ~~statements~~nature ~~as a liability~~ and ~~should~~infrequently ~~not be combined with deferred tax assets~~occurring. ASU ~~2013~~2015-1101 will be effective ~~prospectively~~ for Signature Office REIT for the period beginning on January 1, ~~2014~~2016. Signature Office REIT expects that the adoption of ASU ~~2013~~2014-1109 will not have a material impact on its consolidated financial statements or disclosures.

In February 2015, the FASB issued Accounting Standards Update 2015-02, Amendments to the Consolidation Analysis ("ASU 2015-02"). ASU 2015-02 requires reevaluation of the consolidation of certain legal entities. Specifically, it (i) modifies the evaluation of whether limited partnerships and similar legal entities are variable interest entities (VIEs) or voting interest entities, (ii) eliminates the presumption that a general partner should consolidate a limited partnership, (iii) revises the consolidation analysis of reporting entities that are involved with VIEs, and (vi) provides a scope exception from consolidation guidance for certain investment funds. ASU 2015-02 will be effective for Signature Office REIT for the period beginning on January 1, 2016. Signature Office REIT is currently evaluating the impact that the adoption of ASU 2015-02 may have on its consolidated financial statements or disclosures.

Use of Estimates

The preparation of the accompanying consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the accompanying consolidated financial statements and the accompanying notes. Actual results could differ from those estimates.

Fair Value Measurements

Signature Office REIT estimates the fair value of its assets and liabilities (where currently required under GAAP) consistent with the provisions of the accounting standard for fair value measurements and disclosures. Under this guidance, fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. While various techniques and assumptions can be used to estimate fair value depending on the nature of the asset or liability, the accounting standard for fair value measurements and disclosures provides the following fair value technique parameters and hierarchy, depending upon availability:

Level 1 - Assets or liabilities valued based on quoted prices in active markets for identical assets or liabilities.

Level 2 - Assets or liabilities valued based on observable market data for similar instruments.

Level 3 - Assets or liabilities for which significant valuation assumptions are not readily observable in the market; instruments valued based on the best available data, some of which is internally developed, and considers risk premiums that a market participant would require.

Real Estate Assets

Real estate assets are stated at cost, less accumulated depreciation and amortization. Amounts capitalized to real estate assets consist of the cost of acquisition or construction and any tenant improvements or major improvements and betterments that extend the useful life of the related asset. Additionally, Signature Office REIT capitalizes interest while the development of a real estate asset is in progress. There was no interest capitalized during the years ended December 31, 2013 and 2012. All costs incurred in connection with acquiring acquisitions, including acquisition fees paid to the Advisor (see Note 10), and repairs and maintenance costs are expensed as incurred.

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Real Estate Assets

Real estate assets are stated at cost, less accumulated depreciation and amortization. Amounts capitalized to real estate assets consist of the cost of acquisition or construction and any tenant improvements or major improvements and betterments that extend the useful life of the related asset. Additionally, Signature Office REIT capitalizes interest while the development of a real estate asset is in progress. There was no interest capitalized during the years ended December 31, 2014 and 2013. All costs incurred in connection with acquiring real estate assets, including acquisition fees paid to the Advisor (see Note 10), and repairs and maintenance costs are expensed as incurred.

Signature Office REIT is required to make subjective assessments as to the useful lives of our depreciable assets. Signature Office REIT considers the period of future benefit of the asset to determine the appropriate useful lives. These assessments have a direct impact on net income. Signature Office REIT's real estate assets are depreciated or amortized using the straight-line method. The estimated useful lives of our assets by class are as follows:



Building	40 years
Building improvements	5-25 years
Site improvements	15 years
Tenant improvements	Shorter of lease term or economic life
Furniture, fixtures, and equipment	3-5 years
Intangible lease assets	Lease term

Evaluating the Recoverability of Real Estate Assets

Signature Office REIT continually monitors events and changes in circumstances that could indicate that the carrying amounts of the real estate and related intangible assets of ~~both~~ operating properties ~~and properties under construction,~~ in which Signature Office REIT has an ownership interest, ~~either directly or through investments in joint ventures,~~ may not be recoverable. When indicators of potential impairment are present that suggest that the carrying amounts of real estate assets and related intangible assets may not be recoverable, Signature Office REIT assesses the recoverability of these assets by determining whether the respective carrying values will be recovered through the estimated undiscounted future operating cash flows expected from the use of the assets and their eventual disposition. In the event that such expected undiscounted future cash flows do not exceed the carrying values, Signature Office REIT adjusts the carrying value of the real estate assets and related intangible assets to the estimated fair values, pursuant to the property, plant, and equipment accounting standard for the impairment or disposal of long-lived assets, and recognizes an impairment loss. Estimated fair values are calculated based on the following information, in order of preference, dependent upon availability: (i) recently quoted market price(s) for the subject property, or highly comparable properties, under sufficiently active and normal market conditions, or (ii) the present value of future cash flows, including estimated residual value. Signature Office REIT has determined that there has been no impairment in the carrying value of real estate assets held by Signature Office REIT to date.

Projections of expected future operating cash flows require that management estimate future market rental income amounts subsequent to the expiration of current lease agreements, property operating expenses, the number of months it takes to re-lease the property, and the number of years the property is held for investment, among other factors. The subjectivity of assumptions used in the future cash flow analysis, including discount rates, could result in an incorrect assessment of the property's fair value and could result in the misstatement of the carrying value of Signature Office REIT's real estate assets and related intangible assets and net income (loss).

Allocation of Purchase Price of Acquired Assets

Upon the acquisition of real properties, Signature Office REIT allocates the purchase price of properties to tangible assets, consisting of land and building, site improvements, and identified intangible assets and liabilities, including the value of in-place leases, based in each case on Signature Office REIT's estimate of their fair values.

The fair values of the tangible assets of an acquired property (which includes land and building) are determined by valuing the property as if it were vacant, and the "as-if-vacant" value is then allocated to land and building based on management's determination of the relative fair value of these assets. Management determines the as-if-vacant fair value of a property using methods similar to those used by independent appraisers. Factors considered by management in performing these analyses include an estimate of carrying costs during the expected lease-up periods considering current market conditions and costs to execute similar leases, including leasing commissions and other related costs. In estimating carrying costs, management includes real estate taxes, insurance, and other operating expenses during the expected lease-up periods based on current market demand.

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management's determination of the relative fair value of these assets. Management determines the as-if-vacant fair value of a property using methods similar to those used by independent appraisers. Factors considered by management in performing these analyses include an estimate of carrying costs during the expected lease-up periods considering current market conditions and costs to execute similar leases, including leasing commissions and other related costs. In estimating carrying costs, management includes real estate taxes, insurance, and other operating expenses during the expected lease-up periods based on current market demand.

Intangible Assets and Liabilities Arising from In-Place Leases where Signature Office REIT is the Lessor

As further described below, in-place leases with Signature Office REIT as the lessor may have values related to direct costs associated with obtaining a new tenant, opportunity costs associated with lost rentals that are avoided by acquiring an in-place lease, tenant relationships, and effective contractual rental rates that are above or below market rates.

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