Summary Risk Factors

        An investment in our common stock involves a number of risks. You should consider carefully the risks discussed below and under " RISK FACTORS " beginning on page 25 before purchasing our common stock.

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We are subject to the risks of commercial real estate ownership in general, and the risks inherent in owning single tenant net leased properties, including the risk of tenant default and non-renewal of leases.



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A majority of our leases provide for renewal rental rates that are substantially lower than the current rental rates and the revenue that we derive from such leases would therefore decrease upon such renewal.



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Substantially all of our leases expire over the next five years and we are subject to the risk that tenants under those leases will not renew their leases upon expiration or that then prevailing market rents will be lower than existing market rents.



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We are dependent on our Advisor's ability to identify suitable acquisition and investment opportunities in order to maximize returns on capital available for investment.



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The loss of our Advisor's key personnel could harm our operations and adversely affect the value of our common stock.



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Following a 12 month lock-up period we may issue a significant number of shares of our common stock to effect the redemption of Newkirk MLP units, which may have an adverse effect on the value of your shares.



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There are various conflicts of interest resulting from relationships among us, our management, our Advisor and other parties, including those relating to the purchase of partnership interests from affiliates, the structuring of the advisory agreement with our advisor and other formation transactions with affiliated parties.



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The concentration of our ownership will adversely affect the ability of new investors to influence our policies. Michael Ashner, our chairman and chief executive officer, and his affiliates will own 8.5% of our common stock on a fully diluted basis and Apollo Real Estate Fund III and Vornado Realty Trust and its affiliates will own 29.2% and 15.9%, respectively, of our common stock on a fully diluted basis.



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If we do not qualify as a REIT or fail to remain qualified as a REIT, we will be subject to tax as a regular corporation and could face substantial tax liability.



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Our charter generally does not permit ownership in excess of 9.8% of our common or capital stock without prior approval from our board of directors and acquisitions of our capital stock in excess of these limits are ineffective without prior approval from our board of directors. We have agreed to grant exemptions from this ownership limitation to First Union to the extent that it holds up to 17.5% of our common stock, to Vornado Realty Trust and its affiliates to the extent they hold up to 22.5% of our common stock (in either case, on a fully diluted basis assuming the redemption of all redeemable Newkirk MLP units in exchange for shares of our common stock whether or not such units are then redeemable and, in the case of Vornado

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Realty Trust and its affiliates, excluding shares of our common stock owned indirectly through their ownership of shares of First Union) and to Apollo Real Estate Fund III to the extent its share ownership would exceed this limitation if it received shares of our common stock in redemption of its Newkirk MLP units.

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There is no assurance that the per share offering price represents the market value of our assets on a per share basis.

RISK FACTORS

         An investment in our common stock involves a number of risks. Before making an investment decision, you should carefully consider all of the risks described below and the other information contained in this prospectus. If any of the risks discussed in this prospectus actually occur, our business, financial condition and results of operations could be materially adversely affected. If this were to occur, the value of our common stock could decline and you may lose all or part of your investment.

Risks Related to Our Business

We are subject to the risks of commercial real estate ownership that could reduce the value of our properties.

        Our core business is the ownership of real estate that is leased to retail, distribution and service companies on a net leased basis; accordingly, our performance is subject to risks incident to the ownership of commercial real estate, including:

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changes in the general economic and business climate;



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the illiquid nature of real estate compared to most other financial assets;



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environmental risks related to the presence of hazardous or toxic substances or materials on our properties;



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acts of God, including earthquakes, floods and other natural disasters which may result in uninsured losses;



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changes in consumer trends and preferences that affect the demand for products and services offered by our tenants;



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changes in local real estate conditions;



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changes in interest rates and the availability of financing;



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real estate valuations are subjective and may change over time; and



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changes in laws and governmental regulations, including those governing real estate usage, zoning and taxes.

        If these or similar events occur, it could cause the value of our real estate to decline, which could adversely affect the rents our tenants are willing to pay and our results of operations.

Our success depends on the ability of our Advisor to operate properties and our Advisor's failure to operate our properties in a sufficient manner could have a material adverse effect on the value of our real estate investments and results of operations.

        We presently have no employees. Our officers are employees of our Advisor. Although we intend to hire employees to perform dedicated business, acquisition and investment functions, we depend on the ability of our Advisor to operate our properties and manage our other investments in a manner sufficient to maintain or increase revenues and to generate sufficient revenues in excess of our operating and other expenses. Our Advisor is not required to dedicate any particular number of employees or employee-hours to our business in order to fulfill its obligations under our advisory agreement. We are subject to the risk that our Advisor will terminate the advisory agreement and that no suitable replacement will be found to manage us. We believe that our success depends to a significant extent upon the experience of our Advisor's executive officers, whose continued service is not guaranteed. If our Advisor terminates the advisory agreement, we may not be able to execute our business plan and may suffer losses, which could have a material adverse effect on our ability to make distributions to our stockholders. The failure of our Advisor to operate our properties and manage our other investments will adversely affect the underlying value of our real estate investments, the results of

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our operations and our ability to make distributions to our stockholders and to pay amounts due on our indebtedness.

We depend on the experience and expertise of our and our Advisor's senior management team, and the loss of the services of our key personnel could have a material adverse effect on our business strategy, financial condition and results of operations.

        We are dependent on the efforts, diligence, skill, network of business contacts and close supervision of all aspects of our business by our Advisor and, in particular, Michael Ashner, the chairman of our board of directors and our chief executive officer, and Peter Braverman, our president, as well as our other executive officers, Carolyn Tiffany, Thomas Staples, and Lara Sweeney Johnson. In addition, the resignation of Michael Ashner as an officer of us and our Advisor, would constitute "cause" for which we would have the right to terminate the advisory agreement, would cause our exclusivity rights with respect to all business opportunities related to net leased properties that are offered to or generated by Michael Ashner to terminate and revert back to First Union and would likely cause our relationship with Winthrop Financial Associates, which is controlled by Mr. Ashner, to be terminated. Our continued success will depend on the continued service of our and our Advisor's senior management team. The loss of their services could harm our business strategy, financial condition and results of operations, which would adversely affect the value of our common stock.

Our Advisor's base management fee is payable regardless of our performance, which may reduce its incentive to devote time and resources to our portfolio.

        Our Advisor is entitled to receive a base management fee that is based on the amount of our equity (as defined in the advisory agreement), regardless of the performance of our portfolio. Our Advisor's entitlement to substantial non-performance based compensation might reduce its incentive to devote its time and effort to seeking profitable opportunities for our portfolio. This in turn could hurt our ability to make distributions to our stockholders.

Our Advisor's entitlement to an incentive management fee may induce our Advisor to make certain investments, including speculative investments.

        Our senior management's right to indirectly benefit from the incentive management fee may cause it to invest in high risk investments. In addition to its base management fee, our Advisor is entitled to receive incentive management fees based in part upon our achievement of targeted levels of adjusted funds from operations. First Union will receive 80.0% of the incentive management fees earned by our Advisor. As more fully described under " PROSPECTUS SUMMARY—History ", our senior management will benefit indirectly from this payment through their indirect ownership of securities of First Union and their entitlement to share in the incentive management compensation earned by First Union's external advisor. In evaluating investments and other management strategies, the opportunity to benefit indirectly from our Advisor's incentive management fees may lead our Advisor to place undue emphasis on the maximization of adjusted funds from operations at the expense of other criteria, such as preservation of capital, in order to achieve higher incentive management fees. Investments with higher yield potential are generally riskier or more speculative. This could result in increased risk to the value of our invested portfolio.

Substantially all of our leases will expire over the next five years which could unfavorably affect our financial performance.

        With respect to Newkirk MLP's properties, we are subject to the risk that, upon expiration, leases may not be renewed, the space may not be leased, or the terms of renewal or leasing, including the cost of required renovations, may be less favorable than the current lease terms. This may adversely affect our financial performance. This risk is increased in our case because the current term of many of

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the leases for Newkirk MLP's properties will expire over the next five years. Based upon September 30, 2005 annualized rentals, the weighted average remaining lease term for the Newkirk MLP properties is approximately four years; 90% of our current leases expire by the end of 2009. At the end of the initial term, the prevailing market rates for a comparable property may be higher or lower than the fixed renewal rate under the tenant's lease. A tenant's decision to renew may be based on a number of factors, including prevailing market rents, a tenant's capital investment in the property, the length of time that a tenant has leased the property, the location and use of the property, the availability of other suitable locations, particular tenant needs, the financial condition of the tenant, the cost of returning the property to us in its original condition and the tenant's practical ability to sublease a property. We face the risk that tenants will choose not to renew their leases, leaving the properties vacant, or that we will be forced to negotiate a lower renewal rental rate to induce tenants to remain. Non-renewal of our leases will require us to locate new tenants and negotiate replacement leases with tenants. In the event the property becomes vacant we would be responsible for all costs associated with the property, including property taxes, insurance and utilities. In this regard, please see " NEWKIRK REALTY TRUST, INC. " for a table of aggregate renewal rental rates for expiring leases. Some Newkirk MLP leases grant tenants early lease termination rights upon the tenant's payment of a termination penalty. The costs for tenant improvements, tenant inducements and leasing commissions are typically greater than costs relating to renewals of leases with existing tenants. If we are unable to promptly relet or renew leases for all or a substantial portion of the space subject to expiring leases or if our reserves for these purposes prove inadequate, our revenue, net income and available cash could be adversely affected. In addition, if it becomes necessary for us to make capital expenditures for tenant improvements, leasing commissions and tenant inducements in order to re-lease space, our revenue, net income and cash available for future investment could be adversely affected.

Primary term rents are substantially higher than contractual renewal rental rates which may cause a material decrease in our revenues.

        Upon expiration of their initial term , leases can be renewed at the option of the tenants for one or more renewal terms at fixed renewal rates that are substantially lower than the rent during the initial terms. As set forth under " NEWKIRK REALTY TRUST, INC. — Our Real Estate Assets — Description of Assets — Properties ", for leases scheduled to expire in 2006, the weighted average current rent per square foot is $12.20, while the contractual renewal rent per square foot for those properties is $7.17. For leases scheduled to expire in 2007, the weighted average current rent per square foot is $12.41, while the contractual renewal rent per square foot for those properties is $6.16. For leases scheduled to expire in 2008, the weighted average current rent per square foot is $16.63, while the contractual renewal rent per square foot for those properties is $9.80. For leases scheduled to expire in 2009, the weighted average current rent per square foot is $21.73, while the contractual renewal rent per square foot for those properties is $12.26. Lower renewal rates may cause a material decrease in our revenues.

We face the risk that a tenant will develop financial weakness which could unfavorably affect our financial performance.

        A tenant of a Newkirk MLP property may experience a downturn in its business, which could result in the tenant's inability to make rental payments when due. In addition, a tenant may seek the protection of bankruptcy, insolvency or similar laws, which could result in the rejection and termination of such tenant's lease and cause a reduction in our cash flows. If a lease were to be rejected and terminated at a single tenant property, the entire property would become vacant.

        We cannot evict a tenant solely because of its bankruptcy. A court, however, may authorize a tenant to reject and terminate its lease. In such a case, our claim against the tenant for unpaid, future rent would be subject to a statutory cap that might be substantially less than the remaining amount of rent owed under the lease. In any event, it is unlikely that a bankrupt tenant will pay in full the

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amounts it owes us under a lease. The loss of rental payments from tenants, whether because of a tenant's bankruptcy or other factors, could adversely affect our cash flows and operations.

        In addition, a number of Newkirk MLP's properties are leased to banks and insurance companies that are not eligible to be debtors under the federal bankruptcy code, but would be subject to the liquidation and insolvency provisions of applicable federal and state laws and regulations. If the FDIC or an analogous state authority were appointed as receiver of such a tenant because of a tenant's insolvency, we would become an unsecured creditor of the tenant and be entitled to share with the other unsecured non-depositor creditors in the tenant's assets on an equal basis after payment to the depositors of their claims. For example, the FDIC has in the past taken the position that it has the same avoidance powers as a trustee in bankruptcy, meaning that the FDIC may try to reject the tenant's lease with us. As a result, we would be unlikely to have a claim for more than the insolvent tenant's accrued but unpaid rent owing through the date of the FDIC's appointment as receiver. In any event, the amount paid on claims in respect of the lease would depend on, among other factors, the amount of assets of the insolvent tenant available for unsecured claims. We may recover substantially less than the full value of any unsecured claims, which could have a material adverse effect on our operating results and financial condition, as well as our ability to pay dividends to stockholders at historical levels or at all.

        If our largest tenants develop financial weaknesses, our results of operations could be adversely affected. Triple-net leases with Raytheon, St. Paul Fire and Marine Insurance Co. and Albertson's Inc. represented approximately 17.4%, 10.5% and 9.8%, respectively, of Newkirk MLP's aggregate rental revenue based on annualized rent as of September 30, 2005. Accordingly, the future financial weakness of any of these tenants could substantially negatively impact our operations.

Adverse developments in various industries or geographic areas in which our tenants are concentrated could have an unfavorable effect on our financial performance.

        Tenants in the banking and finance, supermarket, aerospace/defense and manufacturing industries represent 18.9%, 18.4%, 17.8%, and 10.8% of Newkirk MLP's September 30, 2005 annualized rental revenues, respectively, and adverse industry developments in any of these industries could result in our tenants in such industries being unable to make rental payments when due, which could have a material adverse effect on our financial condition and results of operations. Properties in California, Maryland and Texas account for 23.1%, 10.5% and 10.1% of Newkirk MLP's September 30, 2005 annualized rental revenues, respectively. Adverse developments in those areas could have a material adverse effect on our financial condition and results of operations.

If the current tenant of our Toledo, Ohio property does not renew its lease in September 2006 and we are unable to sell or re-lease the property, there is a substantial likelihood that we will default on the mortgage and the mortgage holder will foreclose on the property.

        Newkirk MLP owns a 707,482 square foot office building in Toledo, Ohio that is leased to Owens-Illinois, Inc. for an initial term that expires on September 30, 2006. This building represented approximately 4.0% of Newkirk MLP's total assets as of June 30, 2005. The property is encumbered by a non-recourse mortgage which matures in October 2006 at which time a $32,000,000 balloon payment will be due. This tenant is presently not using a substantial portion of the building and, although it has not given notice to Newkirk MLP, has publicly announced that it will not be renewing its lease. Thus, Newkirk MLP believes that the tenant will not renew its lease. While Newkirk MLP will attempt to sell or re-lease the property there is a substantial risk that we will not be able to satisfy the balloon payment due on the mortgage and that Newkirk MLP will lose this property through foreclosure.

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Square footage figures disclosed in this prospectus may not accurately reflect our properties' actual leasable square footage.

        In various places in this prospectus, we refer to the current square footage of Newkirk MLP's properties in the aggregate, of particular Newkirk MLP properties in particular and of certain groups of Newkirk MLP properties. The square footage of most of Newkirk MLP's properties has not been measured since the original acquisition of these properties by Newkirk MLP's predecessor partnerships. The current actual rentable space of Newkirk MLP's properties may be higher or lower than the amounts set forth in this prospectus. There is a risk that the actual rentable square footage of Newkirk MLP's properties or of any particular property or group of properties may be lower than that disclosed in this prospectus.

We operate in a highly competitive market for investment opportunities.

        A number of entities compete with us to make the types of investments that we plan to make. We compete with other REITs, public and private pension plans and investment funds, commercial and investment banks and commercial finance companies for tenants and the acquisition of additional properties and related investments. Many of our competitors are substantially larger and have considerably greater financial, technical and marketing resources than we do. Several other REITs have recently raised, or are expected to raise, significant amounts of capital, and may have investment objectives that overlap with ours, which may create competition for investment opportunities. Some competitors may have a lower cost of funds and access to funding sources that are not available to us. In addition, some of our competitors may have higher risk tolerances or different risk assessments, which could allow them to consider a wider variety of investments and establish more relationships than us. These competitive pressures may have a material adverse effect on our business, financial condition and results of operations. Also, as a result of this competition, we may not be able to take advantage of attractive investment opportunities from time to time, and we may not be able to identify and make investments that are consistent with our investment objective.

The past performance of Newkirk MLP and our management is not an indicator or guarantee of our future results.

        Neither the track record of our senior management while they were senior executive officers of Newkirk MLP, the performance of Newkirk MLP during that period, nor the track record of other publicly-traded REITs and other entities while they were managed by members of our senior management shall imply, predict (directly or indirectly) or guarantee any level of our future performance. Our performance is dependent on future events and market conditions, including, without limitation, varying business strategies, different local and national economic circumstances, different supply and demand characteristics relevant to buyers and sellers of our investments, varying degrees of competition and varying circumstances pertaining to the capital markets. To a certain degree, our strategy differs from Newkirk MLP's in that we intend to engage in significantly more acquisition and investment activity than Newkirk MLP. See " NEWKIRK REALTY TRUST, INC.—Our Strategy " below. The unaudited pro forma condensed consolidated financial information included in this prospectus as of June 30, 2005 and for the six months ended June 30, 2005 and for the year ended December 31, 2004 were derived from the historical financial results of Newkirk MLP, and may not reflect what our results of operations and financial condition would have been had this offering, the formation transactions, the exercise of the T-Two option, and the refinancing of various debt balances with a loan from KeyBank and Bank of America of up to $750.0 million occurred as of such dates.

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We may be unable to generate sufficient revenue from operations to pay our operating expenses and to pay dividends to our stockholders.

        As a REIT, we are generally required to distribute at least 90% of our REIT taxable income each year to our stockholders. In order to qualify for the tax benefits accorded to REITs we intend to pay quarterly dividends and to make additional distributions to our stockholders, if necessary, in amounts such that we distribute all or substantially all of our taxable income each year, subject to certain adjustments. However, our ability to make distributions may be adversely affected by the risk factors described in this prospectus, such as a downturn in our operating results and financial performance or unanticipated declines in the value of our asset portfolio. The timing and amount of dividends are in the sole discretion of our board of directors, which considers, among other factors, our earnings, financial condition, debt service obligations and applicable debt covenants, REIT qualification requirements and other tax considerations and capital expenditure requirements as our board may deem relevant from time to time.

        Among the factors that could adversely affect our results of operations and impair our ability to make distributions to our stockholders are:

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our inability to make profitable investments;



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failure of our tenants to renew leases or the negotiation by our tenants of lower lease rates;



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tenant defaults; and



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increased debt service requirements, including those resulting from higher interest rates on variable rate indebtedness.

        A change in any one of these factors could affect our ability to make distributions. If we are not able to comply with the restrictive covenants and financial ratios contained in our credit facilities, our ability to make distributions to our stockholders may also be impaired. We may be unable to make distributions to our stockholders in the future and the level of distributions may not increase or remain consistent over time.

We could experience a reduction in revenues if our tenants are unable to meet the lease payments on our net leased properties.

        The existing lease agreements for our properties typically obligate the tenant to pay all costs associated with the property, including real estate taxes, ground rent, insurance, utilities and maintenance costs. In addition, the lease payments, assuming tenants exercise their renewal options, are designed to be sufficient to satisfy our debt service requirements on the loans encumbering the leased properties. Accordingly, if a tenant were to experience financial difficulty and default on its lease payments, we would either have to assume such obligations or risk losing the property through foreclosure. Any such default would have a negative impact on our revenues and results of operations.

If our plan to invest in commercial mortgage loans is unsuccessful, our financial condition and cash flow from operations could suffer and the market price of our common stock could decline.

        We may in the future invest in commercial mortgage loans that are secured by commercial net leased property. In the event of any default by the borrower under a mortgage loan held directly by us, we will bear the risk of loss of principal to the extent of any deficiency between the value of the collateral and the principal and accrued interest of the mortgage loan, which could have a material adverse effect on our cash flow from operations. In the event of the bankruptcy of a mortgage loan borrower, the mortgage loan to such borrower will be deemed to be secured only to the extent of the value of the underlying collateral at the time of bankruptcy (as determined by the bankruptcy court), and the lien securing the mortgage loan will be subject to the avoidance powers of the bankruptcy

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trustee or debtor-in-possession to the extent the lien is unenforceable under state law. Foreclosure of a mortgage loan can be an expensive and lengthy process which could have a substantial negative affect on our anticipated return on the foreclosed mortgage loan.

If our plan to invest in mezzanine loans is unsuccessful, we could experience a reduction in our revenues and results of operations.

        Following the formation transactions we will hold investments in subordinated debt and we may invest in mezzanine loans and other subordinated debt investments in net leased properties. These investments typically take the form of subordinated loans secured by second mortgages on the underlying property or loans secured by either a pledge of the ownership interests of the entity owning the property or a pledge of the ownership interests of the entity that owns the interest in the entity owning the property. These types of investments involve a higher degree of risk than long term senior mortgage lending secured by income producing real property because the investment may become unsecured as a result of foreclosure by the senior lender. In the event of a bankruptcy of the entity providing the pledge of its ownership interests as security, we may not have full recourse to the assets of such entity, or the assets of the entity may not be sufficient to satisfy our mezzanine loan. If a borrower defaults on our mezzanine loan or debt senior to our loan, or in the event of a borrower's bankruptcy, our mezzanine loan will be satisfied only after the repayment of the senior debt. As a result, we may not recover some or all of our investment. In addition, mezzanine loans may have higher loan to value ratios than conventional mortgage loans, resulting in less equity in the property and increasing the risk of loss of principal. Our inability to recover some or all of our investment in mezzanine loans could negatively impact our revenues and results of operations.

We may not be able to invest our excess cash in suitable investments.

        We may not be able to identify investments that meet our investment criteria and we may not be successful in closing the investments that we identify. Our ability to generate increased revenues is dependent upon our ability to invest these funds in real estate related assets that will ultimately generate favorable returns. If we do not successfully identify investments or close investments we identify, our growth rate, business strategy and results of operations could be impaired.

We could experience increased operating costs and limited amounts of growth if we are unable to obtain reasonably priced financing.

        Our business plan requires significant funds for asset acquisition, minimum REIT distributions and other needs. This strategy depends, in part, on our ability to access the debt and equity capital markets to finance our cash requirements. Our credit facility with KeyBank and Bank of America will mature in three years and provides for two one year renewals. We may need to develop and access long-term debt financing facilities or other permanent debt strategies in order to successfully execute our business plan. Our inability to effectively access these markets would have an adverse effect on our ability to make new investments and could adversely affect our ability to make dividend payments to you over time. Our inability to extend our credit facility with KeyBank and Bank of America or to obtain reasonably priced financing to replace the facility when it matures could create increased operating costs and diminished levels of growth as we may be forced to incur indebtedness with above-market interest rates or with substantial restrictive covenants.

If our financial condition deteriorates or we fail to qualify as a REIT, we may be delisted by the New York Stock Exchange and our stockholders could find it difficult to sell our common stock.

        Our common stock has been approved for listing on the New York Stock Exchange, or NYSE. If we fail to qualify as a REIT, we might lose our listing on the NYSE. Whether we would lose our NYSE listing would depend on a number of factors besides our REIT status, including the number of

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holders of our common stock and the amount and the composition of our assets. If our common stock is delisted from trading on the New York Stock Exchange, the price of our common stock could be materially adversely affected.

Illiquidity of our real estate investments could significantly impede our ability to respond to adverse changes in the performance of our properties and harm our financial condition.

        Because real estate investments are relatively illiquid, our ability promptly to sell properties in our portfolio in response to adverse changes in their performance may be limited, which may harm our financial condition. If we decide to sell an investment, we may be unable to dispose of it in the time period we desire and the sales price of any investment may not recoup or exceed the amount of our investment. Our inability to dispose of one or more properties on advantageous terms could result in losses to us, which could limit our ability to pay dividends to our stockholders.

Additional regulations applicable to our properties may require substantial expenditures to ensure compliance, which could adversely affect cash flows and operating results.

        Our properties are subject to various federal, state and local regulatory requirements such as local building codes and other similar regulations. If we fail to comply with these requirements, governmental authorities may impose fines on us or private litigants may be awarded damages against us.

        We believe that our properties are currently in substantial compliance with all applicable regulatory requirements. New regulations or changes in existing regulations applicable to our properties, however, may require that we make substantial expenditures to ensure regulatory compliance to the extent that tenants under net leases are not required to pay such expenditures, which would adversely affect our cash flows and operating results.

Insurance on our properties may not adequately cover all losses to our properties, which could reduce stockholder returns if a material uninsured loss occurs.

        Our tenants are required to maintain property insurance coverage for the properties they operate. We maintain a blanket policy on our properties not insured by our tenants. There are various types of losses, generally of a catastrophic nature, such as earthquakes, floods, hurricanes, terrorism or acts of war, that may be uninsurable or not economically insurable. Should an uninsured loss occur, we could lose our capital investment and/or anticipated profits and cash flow from one or more properties. Inflation, changes in building codes and ordinances, environmental considerations, and other factors, including terrorism or acts of war, might make the insurance proceeds insufficient to repair or replace a property if it is damaged or destroyed. In that case, the insurance proceeds received might not be adequate to restore our economic position with respect to the affected real property, which could reduce the amounts we have available to pay dividends to you.

Our debt level may have a negative impact on our ability to make distributions to stockholders and pursue our business strategy.

        We have incurred indebtedness in connection with the acquisition of our properties and will incur new indebtedness in the future in connection with our operating activities. Our use of debt financing creates risks, including the risk that our cash flow will be insufficient to meet required payments of principal and interest and distributions and the risk that indebtedness on our properties, or unsecured indebtedness, will not be able to be renewed, repaid or refinanced when due, or that the terms of any renewal or refinancing will not be as favorable as the terms of such indebtedness. If we were unable to refinance such indebtedness on acceptable terms, or at all, we might be forced to dispose of one or more of our properties on disadvantageous terms, which might result in losses to us, which could have

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a material adverse affect on us and our ability to pay dividends to our stockholders and to pay amounts due on our indebtedness. Furthermore, if a property is mortgaged to secure payment of indebtedness and we are unable to meet mortgage payments, the mortgagor could foreclose upon the property, petition for the appointment a receiver or obtain an assignment of rents and leases or pursue other remedies, all with a consequent loss of revenues and asset value to us. Foreclosures could also create taxable income without accompanying cash proceeds, thereby hindering our ability to meet the REIT distribution requirements of the Code.

        The covenants contained in the KeyBank/Bank of America credit facility into which Newkirk MLP recently entered, which include but are not limited to a consolidated leverage ratio, minimum liquidity test, minimum consolidated net worth test, and consolidated debt service coverage ratio, which may impose limitations on the amount of leverage Newkirk MLP and its subsidiaries can incur. Since we own our properties and conduct our operations through Newkirk MLP this indirectly limits the amount of leverage we can employ. However, there are no provisions in our organizational documents or contracts to which we are a party that limit the amount of leverage we can employ.

Our financial covenants may restrict our operating or acquisition activities which may harm our financial condition and operating results.

        To the extent the agreements governing our borrowings contain financial and other covenants that we are required to fulfill, our operating flexibility may be limited. Newkirk MLP's loan facility with KeyBank and Bank of America subjects Newkirk MLP to various covenants, including limitations on its ability to reinvest proceeds from the sale of its properties without applying such proceeds to the prepayment of principal under the facility, a maximum leverage ratio, minimum liquidity amount, minimum tangible net worth, and other financial ratio calculations. These covenants, as well as any additional covenants we may be subject to in the future on additional borrowings, could cause us to forego investment opportunities and finance investments in a less efficient manner than if we were not subject to such covenants. In addition, the agreements governing our borrowings may have cross default provisions, such that a default on one of our borrowings would lead to a default under all of the agreements governing our borrowings.

Noncompliance with environmental laws could unfavorably affect our financial condition and operating results.

        The real estate properties we expect to own, including those that we may acquire by foreclosure in connection with our net lease loans, will be subject to various federal, state and local environmental laws. Under these laws, courts and government agencies have the authority to require the current owner of a contaminated property to clean up the property, even if the owner did not know of and was not responsible for the contamination. Liability can be imposed upon a property owner based on activities of a tenant. These laws also apply to persons who owned a property at the time it became contaminated. In addition to the costs of cleanup, environmental contamination can affect the value of a property and, therefore, an owner's ability to borrow funds using the property as collateral or to sell the property. Under the environmental laws, courts and government agencies also have the authority to require that a person who sent waste to a waste disposal facility, such as a landfill or an incinerator, to pay for the clean-up of that facility if it becomes contaminated and threatens human health or the environment. A person that arranges for the disposal of, or transports for disposal or treatment, a hazardous substance at a property owned by another may be liable for the costs of removal or remediation of hazardous substances released into the environment at that property.

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        Furthermore, various court decisions have established that third parties may recover damages for injury caused by property contamination. Also, some of these environmental laws restrict the use of a property or place conditions on various activities. For example, some laws require a business using chemicals to manage them carefully and to notify local officials that the chemicals are being used. We may be responsible for environmental liabilities created by our tenants irrespective of the terms of any lease.

        We could be responsible for the costs related to noncompliance with environmental laws discussed above. The costs incurred to clean up a contaminated property, to defend against a claim, or to comply with environmental laws could be material and could adversely affect our financial condition and operating results.

        We may obtain Phase I environmental reports or, in some cases, a Phase II environmental report prior to acquisition of or foreclosure on a property. However, these reports may not reveal all environmental conditions at a property and we may incur material environmental liabilities of which we are unaware. Future laws or regulations may impose material environmental liabilities on us or our tenants and the current environmental condition of our properties may be affected by the condition of the properties in the vicinity of our properties (such as the presence of leaking underground storage tanks) or by third parties unrelated to us.

        Although our leases generally require our tenants to operate in compliance with all applicable laws and to indemnify us against any environmental liabilities arising from a tenant's activities on the property, we would be subject to strict liability by virtue of our ownership interest, and we cannot be sure that our tenants will, or will be able to, satisfy their indemnification obligations under our lease, if any. The discovery of environmental liabilities attached to our properties could adversely affect a lessee's ability to make payments to us or otherwise affect our results of operations, our financial condition and our ability to pay dividends to you.

Our properties may contain or develop harmful mold, which could lead to liability for adverse health effects and costs of remediation of the problem.

        When excessive moisture accumulates in buildings or on building materials, mold growth may occur, particularly if the moisture problem remains undiscovered or is not addressed over a period of time. Some molds may produce airborne toxins or irritants. Public concern about indoor exposure to mold has been increasing along with awareness that exposure to mold may cause a variety of adverse health effects and symptoms, including allergic or other reactions. As a result, the presence of a significant amount of mold at any of our properties could require us to undertake a costly remediation program to contain or remove the mold from the affected properties. In addition, the presence of a significant amount of mold could expose us to liability from our tenants, employees of our tenants and others if property damage or health concerns arise as a result of the presence of mold in our properties. If we ever become subject to significant mold-related liabilities, our business, financial condition, liquidity, results of operations and ability to pay dividends could be materially and adversely affected.

Compliance with the Americans with Disabilities Act and fire, safety and other regulations may require us to make unintended expenditures that adversely impact our ability to pay dividends to you.

        All of our properties are required to comply with the Americans with Disabilities Act, or the ADA. The ADA has separate compliance requirements for "public accommodations" and "commercial facilities," but generally requires that buildings be made accessible to people with disabilities. Compliance with the ADA requirements could require removal of access barriers and non-compliance could result in imposition of fines by the U.S. government or an award of damages to private litigants, or both. While our tenants are obligated by law to comply with the ADA provisions, and typically our

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leases and financing agreements obligate our tenants to cover costs associated with compliance, if required changes involve greater expenditures than anticipated, or if the changes must be made on a more accelerated basis than anticipated, the ability of these tenants to cover costs could be adversely affected and we could be required to expend our own funds to comply with the provisions of the ADA. The occurrence of such events could adversely affect our results of operations our financial condition and our ability to pay dividends to you.

        In addition, we are required to operate our properties in compliance with fire and safety regulations, building codes and other land use regulations, as they may be adopted by governmental agencies and bodies and become applicable to our properties. We may be required to make substantial capital expenditures to comply with those requirements and these expenditures could have an adverse effect on our ability to pay dividends to you. Additionally, failure to comply with any of these requirements could result in the imposition of fines by governmental authorities or awards of damages to private litigants. While we intend to acquire only properties that we believe are currently in substantial compliance with all regulatory requirements, these requirements could be changed or new requirements could be imposed which would require significant unanticipated expenditures by us and could have an adverse affect on our cash flow and dividends paid.

Properties owned through joint ventures may limit our ability to act exclusively in our interests.

        Approximately 23.1% of the September 30, 2005 annualized rental revenue of the Newkirk properties is attributable to properties owned in partnership with other parties. In addition, in the future we may participate in joint ventures and purchase properties jointly with other entities, some of which may be unaffiliated with us. There are additional risks involved in these types of transactions, including the loss of total operational control, the potential of our joint venture partner becoming bankrupt and the possibility that our partners have economic or business interests that are inconsistent with our business interests or goals.

        These diverging interests could result in exposing us to liabilities of the joint venture in excess of our proportionate share of these liabilities. The partition of rights of each owner in a jointly-owned property could reduce the value of each portion of the divided property. In addition, the fiduciary obligation that we may owe to our partners in affiliated transactions may make it more difficult for us to enforce our rights. Accordingly, our participation in joint ventures could adversely affect our financial condition, results of operations, cash flow and ability to make distributions with respect to our common stock.

The collateral securing the real estate loans we own may not be sufficient to protect our investments in the event of a foreclosure, and a foreclosure on real estate loans could delay or reduce payments to us, which could reduce the amounts we have available to pay dividends to you.

        Foreclosure and other similar proceedings used to enforce payment of real estate loans are generally subject to principles of equity, which are designed to relieve the indebted party from the legal effect of that party's default. Foreclosure and other similar laws may limit our right to obtain a deficiency judgment against the defaulting party after a foreclosure or sale. To the extent we make loans secured by real estate, the application of any of these principles may lead to a loss or delay in the payment on loans we hold, which in turn could reduce the amounts we have available to pay dividends to you. Further, in the event we have to foreclose on a property, the amount we receive from the foreclosure sale of the property may be inadequate to fully pay the amounts owed to us by the borrower and our costs incurred to foreclose, repossess and sell the property, which could adversely impact our results of operations and our ability to pay dividends to you.

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We leverage our portfolio, which may adversely affect our return on our investments and may reduce cash available for distribution.

        We seek to leverage our portfolio through borrowings. Our return on investments and cash available for distribution to our stockholders may be reduced to the extent that changes in market conditions cause the cost of our financing to increase relative to the income that can be derived from the assets. Our debt service payments reduce the net income available for the payment of dividends to our stockholders. We may not be able to meet our debt service obligations and, to the extent that we cannot, we risk the loss of some or all of our assets to foreclosure or forced sale to satisfy our debt obligations. A decrease in the value of the assets may lead to a requirement that we repay certain borrowings. We may not have the funds available to satisfy such repayments.

We are subject to increases in the cost of our borrowings as a result of rising interest rates, which could have a material unfavorable effect on us and our ability to pay dividends and make debt service payments.

        We have incurred, and may incur in the future, indebtedness that bears interest at variable rates. Accordingly, increases in interest rates may decrease the spread between the returns on our portfolio investments and the cost of our borrowings to the extent that the related indebtedness was not protected by interest rate protection arrangements, which could have a material adverse effect on us and our ability to pay dividends to our stockholders and to pay amounts due on our indebtedness or cause us to be in default under certain debt instruments. In addition, an increase in market interest rates may encourage holders to sell their common stock and reinvest the proceeds in higher yielding securities, which could adversely affect the market price for our common stock. Immediately following this offering and the formation transactions we will have floating rate debt outstanding of approximately $593.5 million. This debt bears interest at a rate elected by us equal to either (1) LIBOR, as defined, plus 200 basis points (decreasing to 175 basis points at the closing of this offering) or (2) the prime rate charged by KeyBank plus 50 basis points. Newkirk MLP entered into interest rate swap and cap agreements to limit exposure to interest rate volatility. As a result, LIBOR has been fixed at 4.642% for $250.0 million of the loan for five years. In addition, $450.0 million, decreasing to $425.0 million as of December 1, 2005 and further decreasing to $290.0 million as of December 1, 2006 will be subject to a LIBOR cap of 5.0% through November 2006 and 6.0% from December 1, 2006 through August 2008.

Terrorist attacks and other acts of violence or war may affect the market for our common stock, the industry in which we conduct our operations and our profitability.

        Terrorist attacks may harm our results of operations and your investment. There may be future terrorist attacks or armed conflicts against the United States or U.S. businesses that may directly impact the property underlying our common stock or the securities markets in general. Losses resulting from these types of events may be uninsurable.

        More generally, any of these events could cause consumer confidence and spending to decrease or result in increased volatility in the United States and worldwide financial markets and economy. Adverse economic conditions could harm the value of the property underlying our common stock or the securities markets in general, which could harm our operating results and revenues and may result in volatility of the value of our common stock.

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Risks Related to Conflicts of Interest and Certain Relationships

There are various conflicts of interest resulting from the relationships among us, our management, our Advisor and other parties.

        As more fully described under " PROSPECTUS SUMMARY—Conflicts of Interest ", various conflicts of interest exist in connection with this offering or may exist after the offering among us, our management, and our Advisor including:

•

our purchase of MLP units from members of our management team, other than Michael Ashner, and Apollo Real Estate Investment Fund III and our exemption of Apollo Real Estate Fund III from our 9.8% ownership limitation;



•

the transactions involving First Union in connection with this offering, including;



•

our sale of $50.0 million of our common stock to First Union;



•

our issuance of $20.0 million of our common stock to First Union in exchange for First Union's assignment to us of a portion of its exclusivity rights in respect of Michael Ashner;



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our granting of an exemption to First Union from our 9.8% ownership limitation; and



•

First Union's entitlement to 80.0% of the incentive management fees payable by us to our Advisor;



•

allocation of time by our Advisor's senior management team, which also serves as senior management of, and holds economic interests in, First Union and its advisor as well as Winthrop Financial Associates, between us and First Union, and between us and Winthrop Financial Associates;



•

certain transactions with Vornado Realty Trust and its affiliates, including with respect to Vornado Realty Trust's right to designate one member of our board, our exemption of Vornado Realty Trust from our 9.8% ownership limitation and Vornado Realty Trust's and certain of its affiliates' ownership interest in our Advisor; and



•

the terms of the advisory agreement between us and our Advisor which were not negotiated on an arm's length basis.

        These conflicts may result in terms that are more favorable to our management, our Advisor and/or our Advisor's affiliates than would have been obtained on an arm's length basis, and may operate to the detriment of our stockholders.

Termination of our advisory agreement with our Advisor may be costly.

        Termination of the advisory agreement with our Advisor may be difficult and costly. We may elect not to renew our advisory agreement after the initial term or after any one-year renewal period by the affirmative vote of at least two-thirds of our independent directors. We may also terminate our advisory agreement (1) for cause at any time upon the affirmative vote of a majority of our independent directors and (2) without cause during any renewal period upon the affirmative vote of at least two-thirds of our independent directors. If we terminate without cause or do not renew the advisory agreement, in each case, we are required to pay our Advisor a termination fee equal to two times the annual average of the sum of the base management and incentive fees earned during the previous 24 months. In the case of any termination or non-renewal by us, our exclusivity rights with respect to net lease property opportunities offered to or generated by Michael Ashner will terminate and revert back to First Union and all lock-up restrictions on vested shares of our common stock held by First Union and all shares and Newkirk MLP units held by executive officers and employees of Winthrop Financial Associates, will terminate. These provisions may increase the effective cost to us of

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terminating the advisory agreement, thereby adversely affecting our ability to terminate our Advisor without cause.

We are substantially controlled by Michael Ashner.

        Michael Ashner is our chairman and chief executive officer and the president and sole manager of our Advisor. Michael Ashner and entities controlled by Michael Ashner will beneficially own 1,894,388 Newkirk MLP units representing approximately 3.0% of our outstanding common stock following the offering and the formation transactions on a fully diluted basis assuming redemption of all Newkirk MLP units in exchange for shares of our common stock. The Newkirk MLP units are redeemable for cash, or, at our election, for shares of our common stock. Our Advisor will hold our special voting preferred stock entitling it to vote on all matters submitted to a vote of our stockholders. Our Advisor will agree to cast those votes in respect of the special voting preferred stock on any matter in direct proportion to votes that are cast by limited partners of Newkirk MLP (other than us) on such matter, including limited partners controlled by and/or affiliated with Michael Ashner, except that our Advisor (through its managing member) will be entitled to vote in its sole discretion to the extent the voting rights of Vornado Realty Trust's affiliates are limited as discussed under " OUR ADVISOR AND THE ADVISORY AGREEMENT—Special Voting Preferred Stock ". The special voting preferred stock will initially represent 63.0% of our voting power immediately following the anticipated sale by First Union of its common shares to Vornado Realty Trust. In addition, we anticipate that First Union will own 14.9% of our common stock following this offering. FUR Holdings LLC, an entity controlled by Michael Ashner and in which Michael Ashner has a significant economic interest, owns, through a wholly-owned subsidiary, 31.2% of First Union's common shares and will own approximately 28.1% of First Union's common shares following the anticipated sale of common shares by First Union to Vornado Realty Trust. Michael Ashner is also the chairman and chief executive officer of First Union, a publicly traded corporation that is controlled by a board of directors, a majority of which are independent, and is the chief executive officer and manager of First Union's advisor. We granted Michael Ashner and such entities an exemption from the ownership limitations contained in our articles of incorporation. Because of his position with us and our Advisor and his ability to effectively vote a substantial amount of our outstanding voting securities, Michael Ashner has significant influence over our policies and strategy.

We have agreed with Vornado Realty Trust that our activities will satisfy certain requirements. If we are unable to satisfy these requirements we could be liable for substantial amounts.

        Following the formation transactions, affiliates of Vornado Realty Trust will own 10,101,169 Newkirk MLP units, representing a 15.9% equity interest in us on a fully diluted basis. In connection with the formation transactions, we and our operating partnership have agreed to certain restrictions regarding our activities and assets and the activities and assets of our operating partnership intended to maintain our qualification as a REIT. These restrictions will generally expire sixty business days following the date on which we notify Vornado Realty Trust that its aggregate ownership in Newkirk MLP represents less than a 2.0% interest in us, on a fully- diluted basis, assuming the redemption of all redeemable Newkirk MLP units for shares of our common stock. If we breach any of these agreements, and, as a result, Vornado Realty Trust fails to maintain its qualification as a REIT or otherwise incurs liability for any tax, penalty or similar charges, we and our operating partnership could be exposed to substantial liability for damages attributable to our breach. See " NEWKIRK REALTY TRUST, INC.—Investment Policies with Respect to Certain Activities— Our Agreements with Vornado Realty Trust and its Affiliates Restrict our Activities ".

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Risks Related to Our Status as a REIT

If we do not qualify as a REIT or fail to remain qualified as a REIT, we will be subject to tax as a regular corporation and could face substantial tax liability.

        We intend to qualify as a REIT under the Internal Revenue Code. However, qualification as a REIT involves the application of highly technical and complex Internal Revenue Code provisions for which only limited judicial and administrative authorities exist, and which are subject to change, potentially with retroactive effect. Even a technical or inadvertent mistake could jeopardize our REIT status. Our continued qualification as a REIT will depend on our satisfaction of certain asset, income, organizational, distribution, stockholder ownership and other requirements on a continuing basis. Actions taken by Newkirk MLP may affect our ongoing satisfaction of these tests.

        If we fail to qualify as a REIT in any tax year, then:

•

we would not be required to make distributions to our stockholders;



•

we would be taxed as a regular domestic corporation, which, among other things, means we would be unable to deduct distributions to stockholders in computing taxable income and would be subject to federal income tax on our taxable income at regular corporate rates;



•

any resulting tax liability could be substantial, which could require us to borrow money or sell assets to pay such liability and would reduce the amount of cash available for distribution to stockholders;



•

unless we were entitled to relief under applicable statutory provisions, we would be disqualified from treatment as a REIT for the subsequent four taxable years following the year during which we lost our qualification, and thus, our cash available for distribution to stockholders would be reduced for each of the years during which we did not qualify as a REIT; and



•

we may be in breach of our agreement with Vornado Realty Trust in which case we and our operating partnership could be exposed to substantial liability. See the last risk factor under " Risks Related to Conflicts of Interest and Certain Relationships " above.

Even if we remain qualified as a REIT, we may face other tax liabilities that reduce our cash flow.

        Even if we remain qualified for taxation as a REIT, we may be subject to certain federal, state and local taxes on our income and assets, including taxes on any undistributed income. See " FEDERAL INCOME TAX CONSIDERATIONS—General ." Any of these taxes would decrease the amount of cash available for distribution to our stockholders. In addition, in order to meet the REIT qualification requirements, or to avert the imposition of a 100% tax that applies to certain gains derived by a REIT from dealer property or inventory, we may in the future hold some of our assets through taxable subsidiary corporations, which (unlike REITs) are taxed on their taxable income, whether or not distributed.

Complying with REIT requirements may force us to borrow to make distributions to stockholders.

        As a REIT, we must generally distribute at least 90% of our annual REIT taxable income, subject to certain adjustments, to our stockholders. To the extent that we satisfy the REIT distribution requirement but distribute less than 100% of our taxable income, we will be subject to federal corporate income tax on our undistributed taxable income. In addition, we will be subject to a 4% nondeductible excise tax if the actual amount that we pay to our stockholders in a calendar year is less than a minimum amount specified under federal tax laws.

        From time to time, we may generate taxable income greater than our cash flow available for distribution to stockholders (for example, due to substantial non-deductible cash outlays, such as capital

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expenditures or principal payments on debt). If we do not have other funds available in these situations we could be required to borrow funds, sell investments at disadvantageous prices or find alternative sources of funds to make distributions sufficient to enable us to pay out enough of our taxable income to satisfy the REIT distribution requirement and to avoid income and excise taxes in a particular year. These alternatives could increase our operating costs or diminish our levels of growth.

We may be subject to adverse legislative or regulatory tax changes that could reduce the market price of our common stock.

        At any time, the federal income tax laws governing REITs, or the administrative interpretations of those laws, may be amended. Any of those new laws or interpretations may take effect retroactively and could adversely affect us or you as a stockholder. REIT dividends, with only very limited exceptions, do not qualify for preferential tax rates, which might cause shares of common stock in non-REIT corporations to be a more attractive investment to individual investors than shares in REITs and could have an adverse effect on the value of our common stock.

REIT restrictions on ownership of our common stock may delay or prevent our acquisition by a third party, even if such acquisition were in the best interests of our stockholders.

        In order for us to qualify as a REIT, not more than 50% of the value of our outstanding shares of common stock may be owned, directly or indirectly, by five or fewer individuals during the last half of a taxable year.

        In order to prevent five or fewer individuals from acquiring more than 50% of the outstanding shares of our common stock and our resulting failure to qualify as a REIT, our charter provides that, subject to certain exceptions, no person, including entities, may own, or be deemed to own by virtue of the attribution provisions of the Internal Revenue Code, more than 9.8% of our outstanding common stock. While these restrictions are designed to prevent any five individuals from owning more than 50% of the shares, they could also discourage a change in control of our company. These restrictions may also deter tender offers that may be attractive to stockholders or limit the opportunity for stockholders to receive a premium for their shares if an investor makes purchases of shares of our common stock to acquire a block of shares of our common stock.

Risks Related to the Offering

There may not be an active market for our common stock, which may cause our common stock to trade at a discount and make it difficult for you to sell your common stock.

        Prior to this offering, there has been no public market for our common stock. We cannot assure you that an active trading market for our common stock will develop or be sustained after this offering. The initial public offering price for our common stock will be determined by negotiations between the underwriters and us. The initial public offering price may not correspond to the price at which our common stock will trade in the public market subsequent to this offering and the price of our shares of our common stock available in the public market may not reflect our actual financial performance. In addition, the trading volume in our common stock may fluctuate and cause significant price variations to occur.

        Our common stock has been approved for listing, subject to notice of issuance, on the New York Stock Exchange under the symbol "NKT." Quotation through the New York Stock Exchange would not ensure that an actual market will develop for our common stock. Accordingly,

•

an actual market for our common stock may not develop,



•

the market for our common stock may not be liquid,

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•

the holders of our common stock may be unable to sell their shares of our common stock, and



•

the prices that may be obtained upon the sale of our common stock may be insufficient.

There is no assurance that the offering price represents the per share market value of our assets.

        No independent third-party appraisals of the Newkirk properties were obtained by us or Newkirk MLP in connection with the formation transactions. Accordingly, there can be no assurance that the value of the consideration paid by us in the formation transactions to acquire our interest in Newkirk MLP, which was generally based on the value of Newkirk MLP as a going concern, will not exceed the fair market value of the Newkirk MLP properties and other assets acquired by us in the formation transactions. In addition, our value will not be determined on a property-by-property basis because, in the view of management, the appropriate basis for valuing the company is as an ongoing business enterprise, rather than a collection of assets. There can be no assurance that there will not be discrepancies between assumed results and actual results which could lead to a reduction in actual distributions compared to assumed distributions or that the price paid by us for our interest in Newkirk MLP will not exceed the fair market value of Newkirk MLP's assets. It is therefore possible that the offering price per share of our common stock may exceed the per share market value of our assets.

Provisions in our charter and bylaws and Maryland law may delay or prevent our acquisition by a third party, even if such acquisition were in the best interests of our stockholders.

        Certain provisions of Maryland law and our charter and bylaws could have the effect of discouraging, delaying or preventing transactions that involve an actual or threatened change in control of us, and may have the effect of entrenching our management and members of our board of directors, regardless of their performance. These provisions include the following:

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Removal of directors . Under our charter, a director may be removed during such director's term of office, only for cause and only by the affirmative vote of at least a majority of all votes entitled to be cast by our stockholders generally in the election of directors.



•

Limitation on stockholder requested special meetings . Our bylaws provide that our stockholders have the right to call a special meeting only upon the written request of the stockholders entitled to cast not less than 30% of all the votes entitled to be cast by our stockholders at such meeting.



•

Advance notice provisions for stockholder nominations and proposals . Our bylaws generally require stockholders to notify us not less than 90 days and not more than 120 days prior to the anniversary of the date of mailing of the previous annual years' proxy statement in order to nominate persons for election as directors at, or to bring other business before, any meeting of our stockholders. This provision limits the ability of our stockholders to make nominations of persons for election as directors or to introduce other proposals unless we are notified in a timely manner prior to the meeting.



•

Exclusive authority of our board to amend our bylaws . Our bylaws provide that our board of directors has the exclusive power to adopt, alter or repeal any provision of our bylaws or to make new bylaws. Thus our stockholders may not effect any changes to any of the provisions of our bylaws, including, without limitation, the provisions referred to above relating to stockholder requested special meetings and advance notice for stockholder nominations and proposals. These bylaw provisions limit the ability of potential acquirors to call a special meeting of stockholders, and to make nominations of persons for election as directors and to introduce other proposals at meetings of our stockholders.



•

Preferred stock . Under our charter, our board of directors has authority to issue preferred stock from time to time in one or more series and to establish the terms, preferences and rights of any

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such series of preferred stock, all without approval of our stockholders. The terms, preferences and rights of any series of our preferred stock that becomes outstanding may be unattractive to a potential acquiror or may require a separate vote of the holders of such series of preferred stock to effect a change in control of us.

•

Duties of directors with respect to unsolicited takeovers. Maryland law provides protection for Maryland corporations against unsolicited takeovers by limiting, among other things, the duties of the directors in unsolicited takeover situations. The duties of directors of Maryland corporations do not require them to (1) accept, recommend or respond to any proposal by a person seeking to acquire control of the corporation, (2) authorize the corporation to redeem any rights under, or modify or render inapplicable, any stockholders rights plan, (3) make a determination under the Maryland Business Combination Act or the Maryland Control Share Acquisition Act, or (4) act or fail to act solely because of the effect of the act or failure to act may have on an acquisition or potential acquisition of control of the corporation or the amount or type of consideration that may be offered or paid to the stockholders in an acquisition. Moreover, under Maryland law the act of the directors of a Maryland corporation relating to or affecting an acquisition or potential acquisition of control is not subject to any higher duty or greater scrutiny than is applied to any other act of a director. Maryland law also contains a statutory presumption that an act of a director of a Maryland corporation satisfies the applicable standards of conduct for directors under Maryland law.



•

Ownership limit. Our charter generally prohibits any single stockholder, or any group of affiliated stockholders, from beneficially owning more than 9.8% in value or number of shares, whichever is more restrictive, of the outstanding shares of our common stock and the aggregate of the outstanding shares of all classes and series of our stock unless the board of directors waives or modifies this ownership limit. We have agreed to grant exemptions from this ownership limitation to First Union to the extent that it acquires up to 17.5% of our common stock, to Vornado Realty Trust and its affiliates to the extent they hold up to 22.5% of our common stock (in either case, on a fully diluted basis assuming the redemption of all redeemable Newkirk MLP units in exchange for shares of our common stock whether or not such units are then redeemable and, in the case of Vornado Realty Trust and its affiliates, excluding shares of our common stock owned indirectly through their ownership of shares of First Union) and to Apollo Real Estate Investment Fund III to the extent its share ownership would exceed the ownership limitation if it received shares of our common stock in redemption of its MLP units.



•

Maryland Business Combination Act. The Maryland Business Combination Act which provides that unless exempted, a Maryland corporation may not engage in business combinations, including mergers, dispositions of 10% or more of its assets, certain issuances of shares of stock and other specified transactions, with an "interested stockholder" or an affiliate of an interested stockholder for five years after the most recent date on which the interested stockholder became an interested stockholder, and thereafter unless specified criteria are met. An interested stockholder is generally a person owning or controlling, directly or indirectly, 10% or more of the voting power of the outstanding stock of a Maryland corporation. Our board of directors has adopted a resolution exempting us from this statute. However, we may repeal or modify this resolution in the future if such repeal or modification is approved by a unanimous vote of our independent directors, in which case the provisions of the Maryland Business Combination Act will be applicable to business combinations between us and other persons.



•

Maryland Control Share Acquisition Act. Maryland law provides that "control shares" of a corporation acquired in a "control share acquisition" shall have no voting rights except to the extent approved by a vote of two-thirds of the votes eligible to be cast on the matter excluding all interested shares under the Maryland Control Share Acquisition Act. "Control shares" means

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shares of stock that, if aggregated with all other shares of stock previously acquired by the acquirer, would entitle the acquirer to exercise voting power in electing directors within one of the following ranges of the voting power: one tenth or more but less than one third, one third or more but less than a majority or a majority or more of all voting power. A "control share acquisition" means the acquisition of control shares, subject to certain exceptions. If voting rights of control shares acquired in a control share acquisition are not approved at a stockholders' meeting, then subject to certain conditions and limitations, the issuer may redeem any or all of the control shares for fair value. If voting rights of such control shares are approved at a stockholders' meeting and the acquirer becomes entitled to vote a majority of the shares of stock entitled to vote, all other stockholders may exercise appraisal rights. Our bylaws contain a provision exempting acquisitions of our shares from the Maryland Control Share Acquisition Act. However, we may amend our bylaws in the future to repeal or modify this exemption if such amendment is approved by the unanimous vote of our independent directors, in which case any control shares acquired in a control share acquisition will be subject to the Maryland Control Share Acquisition Act.

•

Unsolicited Takeovers. Under certain provisions of Maryland law, so long as a corporation has a class of equity securities registered under the Securities Exchange Act of 1934 and at least three independent directors (both of which we will have upon completion of this offering), it may elect to be subject to certain statutory provisions which: (i) automatically classify the members of its board of directors into three classes with staggered terms of office of three years each; and (ii) vest in the board of directors the exclusive right to determine the number of directors and the exclusive right by the affirmative vote of a majority of the remaining directors, to fill vacancies on the board of directors, even if the remaining directors do not constitute a quorum. These provisions of Maryland law, which are applicable even if other provisions of Maryland law or the charter or bylaws of the corporation provide to the contrary, also provide that any director elected to fill a vacancy shall hold office for the remainder of the full term of the class of directors in which the vacancy occurred, rather than the next annual meeting of directors as would otherwise be the case, and until his or her successor is elected and qualified. The election to be subject to any or all of the foregoing provisions of Maryland law may be made in the charter or bylaws of the corporation or by resolution of the board of directors of the corporation, without stockholder approval. Our board of directors has adopted a resolution prohibiting us from electing to be subject to any of the foregoing provisions of Maryland law. However, our board of directors may repeal or modify this resolution in the future if such repeal or modification is approved by the unanimous vote of our independent directors, and we could then, by resolutions adopted by our board of directors, elect to become subject to some or all of the foregoing statutory provisions.

        See "IMPORTANT PROVISIONS OF MARYLAND LAW AND OF OUR CHARTER AND BYLAWS", "DESCRIPTION OF STOCK—Preferred Stock" and "DESCRIPTION OF STOCK—Power to Increase and Issue Additional Shares of Our Common Stock and Preferred Stock."

Future offerings of debt securities, which would be senior to our common stock upon liquidation, or equity securities, which would dilute the holdings of our existing stockholders and may be senior to our common stock for the purposes of dividend distributions or distributions upon liquidation, may adversely affect the market price of our common stock.

        In the future we may attempt to increase our capital resources by making additional offerings of debt or equity securities, including commercial paper, medium term notes, senior or subordinated notes and classes of preferred stock or common stock. Upon liquidation, holders of our debt securities holders of our preferred stock and lenders with respect to other borrowings will receive a distribution of our available assets prior to the holders of our common stock. Additional equity offerings may dilute

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the holdings of our existing stockholders or reduce the market price of our common stock, or both. If we decide to issue preferred stock in addition to our special voting preferred stock already issued, it could have a preference on liquidating distributions or a preference on dividend payments that could limit our ability to make a dividend distribution to the holders of our common stock. Because our decision to issue securities in any future offering will depend on market conditions and other factors beyond our control, we cannot predict or estimate the amount, timing or nature of our future offerings. Thus, our stockholders bear the risk that our future offerings may reduce the market price of our common stock and dilute their ownership of our common stock.

Securities eligible for future sale may have adverse effects on our share price.

        Following this offering and the formation transactions we will have outstanding 23,500,000 shares of common stock or 26,500,000 shares if the underwriters exercise their overallotment option in full. Newkirk MLP will have outstanding 63,500,000 MLP units, including 40,000,000 MLP units (37,000,000 if the overallotment option is exercised in full) held by limited partners other than us. After 12 months, MLP units may be redeemed for cash or, at our option, on a one-for-one basis (subject to anti-dilution protection) for shares of our common stock. We may file registration statements that would allow up to 40,000,000 shares of our common stock issued upon redemption of MLP units to be sold after a 12 month period following the completion of this offering. The issuance of these shares of common stock could result in a decrease in the market price of our common stock.

We have established an initial dividend payment level but there is no assurance of our ability to pay dividends in the future.

        We intend to pay quarterly dividends and to make distributions to our stockholders in an amount such that all or substantially all of our taxable income in each year, subject to certain adjustments, is distributed. While we have established an initial dividend payment level, our ability to pay dividends may be adversely affected by the risk factors described in this prospectus. All distributions will be made at the discretion of our board of directors and will depend on our earnings, our financial condition, maintenance of our REIT status and such other factors as our board of directors may deem relevant from time to time. There are no assurances of our ability to pay dividends in the future. In addition, some of our distributions may include a return of capital.

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

        One of the factors that investors may consider in deciding whether to buy or sell shares of our common stock is our dividend rate as a percentage of our share price relative to market interest rates. If the market price of our common stock is based primarily on the earnings and return that we derive from our investments and income with respect to our properties and our related distributions to stockholders, and not from the market value or underlying appraised value of the properties or investments themselves, then interest rate fluctuations and capital market conditions will likely affect the market price of our common stock. For instance, if market rates rise without an increase in our dividend rate, the market price of our common stock could decrease as potential investors may require a higher dividend yield on our common stock or seek other securities paying higher dividends or interest. In addition, rising interest rates would result in increased interest expense on our variable rate debt, thereby adversely affecting cash flow and our ability to service our indebtedness and pay dividends.

A recent valuation provided by Newkirk MLP's general partner implied a lower valuation for MLP units than our offering price.

        In February 2005, the general partner of Newkirk MLP provided the limited partners of Newkirk MLP with an estimate of the net asset value per MLP unit. That estimate is equivalent to a value of

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$11.32 for each MLP unit that will be outstanding prior to this offering. The general partner's estimate valued MLP units for which there was no public market, which were not redeemable for publicly-traded securities, which were subject to substantial transfer restrictions and for which there were no assumptions made relating to new investments or future growth.

Investors in the offering will suffer immediate and substantial dilution.

        The initial public offering price of our common stock is substantially higher than the net tangible book value per share of our common stock after this offering and the completion of the formation transactions. Purchasers of our common stock in this offering will incur immediate dilution of approximately $11.08 per share in net tangible book value. See " DILUTION ."

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