Carey Watermark Investors 2 Inc (Form: 10-Q, Received: 05/15/2015 06:19:12)

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q



þ		QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

		For the quarterly period ended March 31, 2015

or

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: 333-196681

CAREY WATERMARK INVESTORS 2 INCORPORATED

(Exact name of registrant as specified in its charter)



Maryland		46-5765413
(State of incorporation)		(I.R.S. Employer Identification No.)

50 Rockefeller Plaza
New York, New York		10020
(Address of principal executive office)		(Zip Code)

Investor Relations (212) 492-8920

(212) 492-1100

(Registrant’s telephone numbers, including area code)

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 þ 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 þ

No o

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 þ	Smaller reporting company o
	(Do not check if a smaller reporting company)

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

Registrant has 22,222 shares of Class A common stock, $0.001 par value, and no shares of Class T common stock, $0.001 par value, outstanding at May 8, 2015.

INDEX



		Page No.
PART I − FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)
	Consolidated Balance Sheets	3
	Consolidated Statement of Operations	4
	Consolidated Statement of Equity	5
	Consolidated Statement of Cash Flows	6
	Notes to Consolidated Financial Statements	7
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations		13
Item 3. Quantitative and Qualitative Disclosures About Market Risk		14
Item 4. Controls and Procedures		15

PART II − OTHER INFORMATION
Item 1A. Risk Factors		16
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds		16
Item 6. Exhibits		17
Signatures		19

Forward-Looking Statements

This Quarterly Report on Form 10-Q, or this Report, including Management’s Discussion and Analysis of Financial Condition and Results of Operations, in Item 2 of Part I of this Report, contains forward-looking statements within the meaning of the federal securities laws. These forward-looking statements generally are identified by the words “believe,” “project,” “expect,” “anticipate,” “estimate,” “intend,” “strategy,” “plan,” “may,” “should,” “will,” “would,” “will be,” “will continue,” “will likely result,” and similar expressions. It is important to note that our actual results could be materially different from those projected in such forward-looking statements. You should exercise caution in relying on forward-looking statements as they involve known and unknown risks, uncertainties and other factors that may materially affect our future results, performance, achievements or transactions. Information on factors that could impact actual results and cause them to differ from what is anticipated in the forward-looking statements contained herein is included in this Report as well as in our other filings with the Securities and Exchange Commission, or the SEC, including but not limited to the risk factors described in our Registration Statement on Form S-11 (File No. 333-196681) and Part II, Item 1A “Risk Factors” of this Quarterly Report. We do not undertake to revise or update any forward-looking statements.

All references to “Notes” throughout the document refer to the footnotes to the consolidated financial statements of the registrant in Part I, Item 1. Financial Statements (Unaudited).

CWI 2 3/31/2015 10-Q – 2

PART I

Item 1. Financial Statements.

CAREY WATERMARK INVESTORS 2 INCORPORATED

CONSOLIDATED BALANCE SHEETS (UNAUDITED)



	March 31, 2015			December 31, 2014
Assets
Cash	$	500,050		$	200,035
Other assets	1,745,616			—
Total assets	$	2,245,666		$	200,035

Liabilities and Equity
Liabilities:
Due to related parties and affiliates	$	2,040,679		$	108,069
Accounts payable, accrued expenses and other	241,370			—
Total liabilities	2,282,049			108,069
Commitments and contingencies ( Note 4 )
Equity:
CWI 2 stockholder’s equity:
Preferred stock, $0.001 par value, 50,000,000 shares authorized; none issued	—			—
Class A common stock, $0.001 par value; 320,000,000 shares authorized; 22,222 shares issued and 22,222 shares outstanding	22			22
Class T common stock, $0.001 par value; 80,000,000 shares authorized; none issued	—			—
Additional paid-in capital	199,978			199,978
Accumulated losses	(536,383		)	(108,034		)
Total CWI 2 stockholder’s (deficit) equity	(336,383		)	91,966
Noncontrolling interest	300,000			—
Total (deficit) equity	(36,383		)	91,966
Total liabilities and equity	$	2,245,666		$	200,035

See Notes to Consolidated Financial Statements.

CWI 2 3/31/2015 10-Q – 3

CAREY WATERMARK INVESTORS 2 INCORPORATED

CONSOLIDATED STATEMENT OF OPERATIONS (UNAUDITED)



	Three Months Ended
	March 31, 2015
Other Operating Expenses
Corporate general and administrative expenses	$	(260,722	)
Acquisition-related expenses	(167,642		)
	(428,364		)

Other Income
Interest income	15

Net Loss	$	(428,349	)

See Notes to Consolidated Financial Statements.

CWI 2 3/31/2015 10-Q – 4

CAREY WATERMARK INVESTORS 2 INCORPORATED

CONSOLIDATED STATEMENT OF EQUITY (UNAUDITED)

Three Months Ended March 31, 2015



	Shares	Common Stock		Additional Paid-In Capital		Accumulated Losses			Total CWI 2 Stockholder’s Equity (Deficit)			Noncontrolling Interest		Total Stockholder’s Equity (Deficit)
Balance at January 1, 2015	22,222	$	22	$	199,978	$	(108,034	)	$	91,966		$	—	$	91,966
Contribution from noncontrolling interest									—			300,000		300,000
Net loss						(428,349		)	(428,349		)			(428,349		)
Balance at March 31, 2015	22,222	$	22	$	199,978	$	(536,383	)	$	(336,383	)	$	300,000	$	(36,383	)

See Notes to Consolidated Financial Statements.

CWI 2 3/31/2015 10-Q – 5

CAREY WATERMARK INVESTORS 2 INCORPORATED

CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED)



	Three Months Ended
	March 31, 2015
Cash Flows — Operating Activities
Net loss	$	(428,349	)
Net changes in other assets	(1,745,616		)
Net changes in due to related parties and affiliates	1,932,610
Net changes in accounts payable, accrued expenses and other	241,370
Net Cash Provided by Operating Activities	15

Cash Flows — Financing Activities
Contribution from noncontrolling interest	300,000
Net Cash Provided by Financing Activities	300,000

Change in Cash During the Period
Net increase in cash	300,015
Cash, beginning of period	200,035
Cash, end of period	$	500,050

See Notes to Consolidated Financial Statements.

CWI 2 3/31/2015 10-Q – 6

CAREY WATERMARK INVESTORS 2 INCORPORATED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Note 1. Organization and Offering

Organization

Carey Watermark Investors 2 Incorporated, or CWI 2, and, together with its consolidated subsidiaries, we, us, or our, is a publicly-owned, non-listed real estate investment trust, or REIT, formed as a Maryland corporation on May 22, 2014 for the purpose of investing in lodging and lodging-related properties. We expect to conduct substantially all of our investment activities and own all of our assets through CWI 2 OP, LP, or our Operating Partnership. We are a general partner and a limited partner and own a 99.985% capital interest in the Operating Partnership. Carey Watermark Holdings 2, LLC, or Carey Watermark Holdings 2, which is owned indirectly by W. P. Carey Inc., or WPC, holds a special general partner interest in the Operating Partnership.

Carey Lodging Advisors, LLC, or our advisor, is an indirect subsidiary of WPC. Our advisor will manage our overall portfolio, including providing oversight and strategic guidance to the independent hotel operators that manage our hotels. Our subadvisor, CWA2, LLC, a subsidiary of Watermark Capital Partners, will provide services to our advisor primarily relating to acquiring, managing, financing and disposing of our hotels and overseeing the independent operators that manage the day-to-day operations of our hotels. In addition, our subadvisor provides us with the services of our chief executive officer during the term of the subadvisory agreement, subject to the approval of our independent directors.

On May 30, 2014, we received a capital contribution from Carey REIT II, Inc., an indirect subsidiary of WPC, and an affiliate of our advisor, for $200,000 in exchange for 22,222 shares of our common stock, par value $0.001 per share. Carey REIT II, Inc. purchased its shares at $9.00 per share, net of selling commissions and fees, which would have otherwise been payable to Carey Financial, LLC. On March 27, 2015, Carey Watermark Holdings 2 purchased a capital interest in the Operating Partnership representing its special general partnership interest of 0.015% for $300,000 .

Public Offering

On February 9, 2015, our Registration Statement on Form S-11 (File No. 333-196681), covering an initial public offering of up to $1,400,000,000 of Class A shares at $10.00 per share, was declared effective under the Securities Act of 1933. The Registration Statement also covered the offering of up to $600,000,000 of Class A shares at $9.60 pursuant to our distribution reinvestment plan. On April 1, 2015, we filed an amended Registration Statement to include Class T shares in our initial public offering at $9.45 per share and under our distribution reinvestment plan at $9.07 per share, which was declared effective on April 13, 2015, allowing for the sales of Class A and Class T shares, in any combination, of up to $1,400,000,000 in the offering and up to $600,000,000 through our distribution reinvestment plan. Our initial public offering is being offered on a “best efforts” basis by Carey Financial, LLC, an affiliate of our advisor, and other selected dealers. We intend to use the net proceeds of the offering to acquire, own and manage a portfolio of interests in lodging and lodging related properties. While our core strategy is focused on the lodging industry, we may also invest in other real estate property sectors. At March 31, 2015, subscription proceeds for our common stock have not reached the minimum offering amount of $2,000,000 , and therefore we have not begun admitting stockholders.

Note 2. Basis of Presentation

Basis of Presentation

Our interim consolidated financial statements have been prepared in accordance with the instructions to Form 10-Q and, therefore, do not necessarily include all information and footnotes necessary for a fair statement of our consolidated financial position, results of operations and cash flows in accordance with accounting principles generally accepted in the U.S.

In the opinion of management, the unaudited financial information for the interim period presented in this Report reflects all normal and recurring adjustments necessary for a fair statement of financial position, results of operations and cash flows.

Operating results for interim periods are not necessarily indicative of operating results for an entire year.

We had no significant operations as of March 31, 2015. We had no operating activity prior to June 30, 2014 and, therefore, no activity is presented for the three months ended March 31, 2014. Our operating expenses for the three months ended March 31, 2015 consist of corporate general and administrative expenses ( Note 3 ), organization costs incurred in connection with our offering ( Note 3 ) and acquisition-related costs associated with future acquisitions. The consolidated financial statements reflect

CWI 2 3/31/2015 10-Q – 7

Notes to Consolidated Financial Statements (Unaudited)

all of our accounts, including those of our majority-owned and/or controlled subsidiaries.

The preparation of financial statements in conformity with accounting principles general accepted in the United States requires management to make estimates and assumptions that affect the reported amounts and the disclosure of contingent amounts in our consolidated financial statements and the accompanying notes. Actual results could differ from those estimates.

Basis of Consolidation

Our consolidated financial statements reflect all of our accounts, including those of our controlled subsidiaries. The portion of equity in a consolidated subsidiary that is not attributable, directly or indirectly, to us is presented as noncontrolling interests. All significant intercompany accounts and transactions have been eliminated.

When we obtain an economic interest in an entity, we evaluate the entity to determine if it is a variable interest entity, or VIE and, if so, whether we are deemed to be the primary beneficiary and are therefore required to consolidate the entity. We performed an analysis of all of our subsidiary entities to determine whether they qualify as variable interest entities and whether they should be consolidated or accounted for as equity investments in an unconsolidated venture. As a result of our assessment, we have concluded that none of our subsidiaries qualified as a variable interest entity. All our subsidiaries are consolidated under the voting interest entity model at March 31, 2015.

We account for the capital interest held by Carey Watermark Holdings 2 in the Operating Partnership as a noncontrolling interest.

Accounting for Acquisitions

In accordance with the guidance for business combinations, we determine whether a transaction or other event is a business combination, which requires that the assets acquired and the liabilities assumed constitute a business. Each business combination is then accounted for by applying the acquisition method of accounting. We will record our investments in hotel properties based on the fair value of the identifiable assets acquired, identifiable intangible assets acquired, liabilities assumed and any noncontrolling interest in the acquired entity, and if applicable, recognizing and measuring any goodwill or gain from a bargain purchase at the acquisition date. Assets and liabilities will be recorded at fair value and allocated to land, buildings, building and site improvements, furniture, fixtures and equipment and intangibles, as applicable, using appraisals and valuations performed by management and independent third parties. Fair values will be based on the exit price (i.e. the price that would be received in an orderly transaction to sell an asset or transfer a liability between market participants at the measurement date). We will evaluate several factors, including market data for similar assets or similar in-place lease contractual agreements for intangible assets, expected cash flows discounted at risk adjusted rates and replacement cost for the assets to determine an appropriate exit cost when evaluating the fair value of our assets. We immediately expense, as incurred, all acquisition costs and fees associated with transactions deemed to be business combinations in which we expect to consolidate the asset and we capitalize these costs for transactions we expect to be acquisitions of an asset, including an equity investment. We will record debt assumed in business combinations at fair value. We will determine the estimated fair value using a discounted cash flow model with rates that take into account the current market interest rate risk. We will also consider the value of the underlying collateral taking into account the quality of the collateral, the time until maturity and the current interest rate. Any resulting premium or discount will be amortized over the remaining term of the obligation.

Real Estate

We will carry land, buildings and personal property at cost less accumulated depreciation. We will capitalize improvements and will expense replacements, maintenance and repairs that do not improve or extend the life of the respective assets. Renovations and/or replacements at the hotel properties that improve or extend the life of the assets will be capitalized and depreciated over their useful lives, and repairs and maintenance will be expensed as incurred. We will capitalize interest and certain other costs, such as incremental labor costs relating to hotels undergoing major renovations and redevelopments.

Cash

Our cash is held in the custody of a major financial institution, and this balance may, at times, exceed federally insurable limits, however management believes the credit risk related to this deposit is minimal.

Other Assets

Other assets consists of a deposit placed on our behalf by our affiliate, Carey Watermark Investors Incorporated, or CWI or

CWI 2 3/31/2015 10-Q – 8

Notes to Consolidated Financial Statements (Unaudited)

CWI 1, a publicly owned non-listed REIT investing in lodging properties that is also managed by our advisor, on the Courtyard Nashville Downtown, which we acquired during the second quarter of 2015, and deferred acquisition-related costs related to a potential future acquisition that we expect to be accounted for under the equity method of accounting.

Federal Income Taxes

We intend to qualify as a REIT, under the Internal Revenue Code, beginning with our taxable year ending December 31, 2015. Maintaining our qualification as a REIT will require us to distribute at least 90% of our REIT taxable income to our stockholders and to meet certain tests regarding the nature of our income and assets. In addition, REITs are subject to numerous organizational and operational requirements including limitations on certain types of gross income. As a REIT, we generally will not be subject to U.S. federal income tax on income that we distribute to stockholders as long as we meet such requirements and distribute all of our net taxable income on an annual basis. If we fail to qualify for taxation as a REIT for any taxable year, our income will be taxed at regular corporate rates, and we may not be able to elect REIT status in that year and for the next four years. As a REIT for U.S. federal income tax purposes, we may be subject to state and local income or excise taxes on our income, property or capital, and may pay federal, state and local income and excise taxes on undistributed income.

We may elect to treat one or more of our corporate subsidiaries as a taxable REIT subsidiary, or TRS. In general, a TRS may perform additional services for our tenants and generally may engage in any real estate or non-real estate related business (except for the operation or management of lodging facilities or providing to any person, under a franchise, license or otherwise, rights to any brand name under which any lodging facility is operated). The Internal Revenue Code permits a TRS to lease from a REIT a lodging facility if the TRS engages an Eligible Independent Contractor to operate the facility under a management agreement or other service contract. We intend to engage an Eligible Independent Contractor, as defined in the Internal Revenue Code, whenever required to maintain our REIT status. A TRS is subject to corporate federal, state and local income taxes.

As of March 31, 2015 and December 31, 2014, the Company has determined that it has no uncertain tax positions.

Depreciation

We will compute depreciation for hotels and related building improvements using the straight-line method over the estimated useful lives of the properties, site improvements and furniture, fixtures and equipment.

Organization and Offering Costs

During the offering period, costs incurred in connection with the raising of capital will be recorded as deferred offering costs. Upon receipt of offering proceeds, we will charge the deferred costs to stockholder’s equity. Under the terms of our advisory agreement as described in Note 3 , we will reimburse our advisor for organization and offering costs incurred; however, such reimbursements will not exceed regulatory limitations. Organization costs are expensed as incurred and are included in corporate general and administrative expenses in the financial statements.

Distributions

We will begin to accrue daily distributions once subscription proceeds for our common stock reach the minimum offering amount of $2,000,000 and we begin admitting stockholders.

Our first quarter 2015 declared daily distribution was $0.0016665 per share for our Class A common stock, comprised of $0.0013888 per day payable in cash and $0.0002777 per day payable in shares of our Class A common stock. As of March 31, 2015, we had not raised the minimum amount of subscription proceeds and, therefore, no distributions had accrued at that date.

CWI 2 3/31/2015 10-Q – 9

Notes to Consolidated Financial Statements (Unaudited)

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts and the disclosure of contingent amounts in our financial statements and the accompanying notes. Actual results could differ from those estimates.

Recent Accounting Requirements

The following Accounting Standards Updates, or ASUs, promulgated by the Financial Accounting Standards Board is applicable to us:

ASU 2014-09 , Revenue from Contracts with Customers (Topic 606) . ASU 2014-09 is a comprehensive new revenue recognition model requiring a company to recognize revenue to depict the transfer of goods or services to a customer at an amount reflecting the consideration it expects to receive in exchange for those goods or services. Additionally, this guidance modifies disclosures regarding the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers. In April 2015, the Financial Accounting Standards Board issued a proposed ASU to defer the effective date of ASU 2014-09 by one year. Under the proposal, ASU 2014-09 would be effective beginning in 2018, and early adoption is permitted but not before 2017, the original public company effective date. We are currently evaluating the impact of ASU 2014-09 on our consolidated financial statements and have not yet determined the method by which we will adopt the standard.

ASU 2015-02, Consolidation (Topic 810) . ASU 2015-02 changes the analysis that a reporting entity must perform to determine whether it should consolidate certain types of legal entities. Specifically, ASU 2015-02 modifies the evaluation of whether limited partnerships and similar legal entities are VIEs or voting interest entities, eliminates the presumption that a general partner should consolidate a limited partnership, and affects the evaluation of fee arrangements in the primary beneficiary determination. ASU 2015-02 is effective for periods beginning after December 15, 2015 and early adoption is permitted. We are currently evaluating the impact of ASU 2015-02 on our consolidated financial statements.

ASU 2015-03, Interest-Imputation of Interest (Subtopic 835-30). ASU 2015-03 changes the presentation of debt issuance costs, which are currently recognized as a deferred charge (that is, an asset) and requires that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. ASU 2015-03 does not affect the recognition and measurement guidance for debt issuance costs. ASU 2015-03 is effective for periods beginning after December 15, 2015, early adoption is permitted and retrospective application is required. We are currently evaluating the impact of ASU 2015-03 on our consolidated financial statements.

Note 3. Agreements and Transactions with Related Parties

Agreements with our Advisor and Affiliates

Effective February 9, 2015, we entered into an agreement with our advisor to perform certain services for us, including managing our offering, the identification, evaluation, negotiation, purchase and disposition of lodging and lodging-related properties, and our overall business. Pursuant to the advisory agreement, after we have reached the minimum offering amount of $2,000,000 , our advisor shall be reimbursed for all organization expenses and offering costs incurred in connection with our offering (excluding selling commissions and the dealer manager fees) of between 1.5% and 4.0% of the gross proceeds of our offering and distribution reinvestment plan, depending on the gross offering proceeds. See Note 4 for details of the maximum expense reimbursement cap range. For the three months ended March 31, 2015, organization expenses totaled $68,999 and were included in Corporate general and administrative expenses in the consolidated financial statements. From inception through March 31, 2015, organization expenses and offering costs were approximately $177,068 and $2,045,516 , respectively. During the offering period, costs incurred in connection with the raising of capital will be recorded as deferred offering costs. Upon receipt of offering proceeds, we will charge the deferred offering costs to stockholder’s equity. Reimbursement of organization expenses and offering costs is contingent on raising the minimum offering amount of $2,000,000 .

Our advisor will receive acquisition fees of 2.5% of the total investment cost of the properties acquired, as defined in our advisory agreement, described above. The total fees to be paid may not exceed 6% of the aggregate contract purchase price of all investments, as measured over a period specified in our advisory agreement. We also will pay our advisor an annual asset management fee equal to 0.55% of the aggregate average market value of our investments. Carey Watermark Holdings 2, an affiliate of our advisor, will also receive 10% of Available Cash distributions, as defined in the limited partnership agreement of the Operating Partnership. Our advisor may also receive disposition fees of up to 1.5% of the contract sales price of a property and loan refinancing fees of up to 1.0% of the principal amount of the refinanced loan. No such fees were earned by our advisor

CWI 2 3/31/2015 10-Q – 10

Notes to Consolidated Financial Statements (Unaudited)

during the three months ended March 31, 2015. The limited partnership agreement of the Operating Partnership also provides Carey Watermark Holdings 2 with an interest in subordinated disposition proceeds and subordinated incentive distributions upon a stock exchange listing.

Effective February 9, 2015, our advisor entered into a subadvisory agreement with our subadvisor whereby our advisor will pay 25% of the aforementioned fees and Available Cash distributions and 30% of the subordinated incentive distributions to our subadvisor. No such fees or distributions were incurred during the three months ended March 31, 2015.

Effective February 9, 2015, we have entered into a dealer manager agreement with Carey Financial, LLC, an affiliate of our advisor, whereby Carey Financial, LLC will receive a selling commission of up to $0.70 per share sold and a dealer manager fee of up to $0.30 per share sold. No shares were sold during the three months ended March 31, 2015.

Amounts Due to Related Parties and Affiliates

At March 31, 2015, amounts due to related parties and affiliates of $2,040,679 represented amounts due to our advisor totaling $205,241 and amounts due to CWI totaling $1,835,438 . Amounts due to our advisor represent organization expenses, as discussed above, as well as reimbursement for the services of Michael G. Medzigian, our chief executive officer, which will subsequently be reimbursed to our subadvisor. Our subadvisor provides us with these services, during the term of the subadvisory agreement, subject to the approval of our board of directors. Amounts due to CWI primarily represent a deposit of $1,500,000 placed on our behalf by CWI on Courtyard Nashville Downtown, which we acquired during the second quarter of 2015. Amounts due to CWI also include audit-related fees incurred in connection with our acquisition with CWI of an interest in a joint venture owning the Marriott Sawgrass Golf Resort & Spa ( Note 5 ) and acquisition-related costs incurred in connection with a potential future acquisition and our acquisition of the Courtyard Nashville Downtown ( Note 5 ) totaling $335,438 , that were paid by CWI on our behalf during the first quarter of 2015, of which $86,800 was included in Corporate general and administrative expenses in our consolidated financial statements.

Operating Expenses

Pursuant to the advisory agreement, our advisor is obligated to reimburse us for “operating expenses” to the extent that these expenses exceed the greater of 2% of “average invested assets” or 25% of our “adjusted net income,” as defined in that agreement. At March 31, 2015, we had no invested assets or net income, and therefore all operating expenses were the responsibility of our advisor. However, pursuant to the advisory agreement, if a majority of the independent directors finds these expenses are justified based on unusual and non-recurring factors as they deem sufficient, the Operating Partnership may reimburse our advisor in future quarters for the full amount of these expenses to the extent such reimbursements would not cause the operating expenses to exceed the 2% / 25% guidelines in the 12-month period ended on the last day of such quarter. In April 2015, the independent directors approved the future reimbursement to our advisor for certain expenses incurred during the three months ended March 31, 2015 totaling $104,924 , which is included in Corporate general and administrative expenses in the consolidated financial statements.

Other Transactions with Affiliates

In April 2015, our board of directors and the board of directors of WPC approved unsecured loans to us and CWI of up to an aggregate of $110,000,000 , at an interest rate equal to the rate at which WPC is able to borrow funds under its senior unsecured credit facility, for the purpose of facilitating acquisitions that we might not otherwise have sufficient available funds to complete. Any such loans are solely at the discretion of WPC’s management. At March 31, 2015, there were no such loans outstanding. See Note 5 for descriptions of such loans obtained subsequent to March 31, 2015.

Note 4. Commitments and Contingencies

At March 31, 2015, we were not involved in any litigation. Various claims and lawsuits may arise against us in the normal course of business, but we do not expect the results of such proceedings to have a material adverse effect on our consolidated financial position or results of operations.

We will be liable for certain expenses of our initial public offering, including filing, legal, accounting, printing and escrow fees, which are to be deducted from the gross proceeds of the offering. We will reimburse Carey Financial, LLC or selected dealers for certain organization and offering costs. The total underwriting compensation to Carey Financial, LLC and selected dealers in connection with the offering shall not exceed limitations prescribed by the Financial Industry Regulatory Authority Inc. Our advisor has agreed to be responsible for the repayment of (i) organization and offering expenses (excluding selling commissions and dealer manager fees paid to Carey Financial, LLC with respect to shares held by any clients of it and selected

CWI 2 3/31/2015 10-Q – 11

Notes to Consolidated Financial Statements (Unaudited)

dealers and fees paid and expenses reimbursed to selected dealers) which exceed in the aggregate 4% of the gross proceeds from the offering if the gross proceeds are less than $500,000,000 , 2% of the gross proceeds from the offering if the gross proceeds are $500,000,000 or more but less than $750,000,000 , and 1.5% of the gross proceeds from the offering if the gross proceeds are $750,000,000 or more; and (ii) organization and offering expenses (including selling commissions, dealer manager fees, and expenses reimbursed to selected dealers) which exceed 15% of the gross proceeds of the offering.

Note 5. Subsequent Events

Acquisitions

On April 1, 2015, we acquired a 50% interest in a joint venture owning the Marriott Sawgrass Golf Resort & Spa from our affiliate, CWI, which acquired the hotel in October 2014. The 511 -room resort is located in Ponte Vedra Beach, Florida. The joint venture’s total investment in the property is approximately $141,000,000 , including debt and acquisition-related expenses. Our investment in the property is approximately $70,520,000 in the aggregate, including our allocated portion of debt, acquisition-related costs and the reimbursement to CWI for 50% of the acquisition fee it paid to the advisor in October 2014, of which our portion totaled approximately $1,996,000 . The purchase price for our interest was 50% of CWI’s total equity investment. Our investment was financed, in part, by a loan from a subsidiary of WPC ( Note 3 ). We are the managing member of the joint venture and will consolidate this hotel. The preliminary purchase price allocation for the real estate assets acquired by the joint venture in connection with this acquisition totaled approximately $130,000,000 and was comprised of land, building and furniture, fixtures and equipment totaling approximately $26,000,000 , $95,000,000 and $9,000,000 , respectively.

On May 1, 2015, we acquired a 100% interest in Courtyard Nashville Downtown from Worthington Hyde Partners, an unaffiliated third party. The 192 -room, select-service hotel is located in Nashville, Tennessee. Our total investment in the property is approximately $69,700,000 , which was partially financed by a loan from a subsidiary of WPC ( Note 3 ). We also obtained a non-recourse mortgage loan at closing of $42,000,000 . We paid acquisition fees of approximately $1,746,000 . The hotel will continue to be managed by Marriott International.

It was not practicable to disclose the preliminary purchase price allocation for the Courtyard Nashville Downtown acquisition or consolidated pro forma financial information for the acquisition of Marriott Sawgrass Golf Resort & Spa and Courtyard Nashville Downtown, given the short period of time between the acquisition date and the issuance of this Report.

Loans from Affiliate

Through the date of this Report, we have obtained loans aggregating approximately $102,500,000 from a subsidiary of WPC, of which approximately $65,000,000 has been used to finance, in part, the acquisitions discussed above ( Note 3 ).

CWI 2 3/31/2015 10-Q – 12

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

Management’s Discussion and Analysis of Financial Condition and Results of Operations is intended to provide the reader with information that will assist in understanding our financial statements and the reasons for changes in certain key components of our financial statements from period to period. Management’s Discussion and Analysis of Financial Condition and Results of Operations also provides the reader with our perspective on our financial position and liquidity, as well as certain other factors that may affect our future results. Our Management’s Discussion and Analysis of Financial Condition and Results of Operations should be read in conjunction with the financial statements and accompanying notes thereto as of March 31, 2015 .

Business Overview

We were formed on May 22, 2014 for the purpose of investing in lodging and lodging-related properties. We intend to qualify as a REIT beginning with our taxable year ending December 31, 2015 and intend to conduct substantially all of our investment activities and own all of our assets through our Operating Partnership. We are a general partner and a limited partner and own approximately a 99.985% capital interest in the Operating partnership. Carey Watermark Holdings 2, which is owned by an indirect subsidiary of WPC, holds a special general partner interest in the operating partnership.

Carey Lodging Advisors, LLC is our advisor and will manage our business. Our advisor has retained CWA2, LLC, a subsidiary of Watermark Capital Partners LLC, to act as a subadvisor. Our advisor and subadvisor will manage our overall portfolio, including providing oversight and strategic guidance to the independent property operators that manage our hotels.

Significant Developments

Public Offering

We intend to use the net proceeds of the offering to acquire, own and manage a portfolio of interests in lodging and lodging related properties. While our core strategy is focused on the lodging industry, we may also invest in other real estate property sectors. At March 31, 2015, subscription proceeds for our common stock had not reached the minimum offering amount of $2,000,000, and therefore we had not begun admitting stockholders.

Subsequent Events

Acquisitions

As of the date of this Report, we entered into the following investments:

•

Acquired a 50% interest in a joint venture owning the Marriott Sawgrass Golf Resort & Spa from our affiliate, CWI. Our investment in the property is approximately $70,520,000 in the aggregate, including our allocated portion of debt, acquisition-related costs and the reimbursement to CWI for 50% of the acquisition fee it paid to the advisor in October 2014, of which our portion totaled approximately $1,996,000 ( Note 3 ). Our investment was financed, in part, by a loan from a subsidiary of WPC.


•	Acquired a 100% interest in Courtyard Nashville Downtown from Worthington Hyde Partners, an unaffiliated third party. Our investment in the property is approximately $69,700,000, which was partially financed by a loan from a subsidiary of WPC ( Note 3 ). We also obtained a non-recourse mortgage loan at closing of $42,000,000.

Loans from Affiliate

CWI 2 3/31/2015 10-Q – 13

Distributions

On March 24, 2015, our board of directors declared second quarter distributions for our Class A shares at a daily rate of $0.0016483 per share, comprised of $0.0013736 per day payable in cash and $0.0002747 per day payable in shares of our common stock for the quarter ending June 30, 2015, payable on or about July 15, 2015 to stockholders of record on each day of the quarter.

On April 22, 2015, our board of directors declared second quarter distributions for our Class T shares at a daily rate of $0.0013887 per share, comprised of $0.0011291 per day payable in cash and $0.0002596 per day payable in shares of our common stock for the quarter ending June 30, 2015, payable on or about July 15, 2015 to stockholders of record on each day of the quarter.

Daily distributions will begin to accrue once subscription proceeds for our common stock reach the minimum offering amount of $2,000,000.

Results of Operations

We will be dependent primarily upon proceeds received from our initial public offering to conduct our proposed activities. The capital required to purchase any property will be obtained from the offering proceeds, from any mortgage indebtedness that we may incur in connection with the acquisition of any property or thereafter or through short-term borrowings from WPC. We did not own any properties as of March 31, 2015. We were initially capitalized with $200,000 from the sale of 22,222 shares of our common stock to an affiliate of our advisor.

We incurred a loss of $428,349 for the three months ended March 31, 2015, primarily comprised of corporate general and administrative expenses totaling $260,722 , which include organization expenses of $68,999 and acquisition-related costs and fees associated with future acquisitions totaling $167,642 . We immediately expense acquisition-related costs and fees associated with acquisitions that are accounted for as business combinations.

Financial Condition

Liquidity is affected adversely by unanticipated costs and greater-than-anticipated operating expenses. To the extent that the working capital reserve is insufficient to satisfy our cash requirements, additional funds may be provided from cash generated from operations or through short-term borrowings from WPC for acquisitions. In addition, subject to limitations described in our prospectus, we may incur indebtedness in connection with the acquisition of any property, refinance the debt thereon, arrange for the leveraging of any previously unfinanced property or reinvest the proceeds of financings or refinancings in additional properties.

If we qualify as a REIT, we will not be subject to U.S. federal income taxes on amounts distributed to stockholders provided we meet certain conditions, including distributing at least 90% of our taxable income to stockholders. Our objectives are to pay quarterly distributions at an increasing rate, to increase equity in our real estate through regular mortgage principal payments and to own a geographically diversified portfolio of lodging properties that will increase in value. Our distributions may exceed our earnings and our cash flow from operating activities and may be paid from borrowings, offering proceeds and other sources, without limitation, particularly during the period before we have substantially invested the net proceeds from our initial public offering.

As a REIT, we will be allowed to own lodging properties but are prohibited from operating these properties. In order to comply with applicable REIT qualification rules, we will enter into leases for each of our lodging properties with the TRS lessees. The TRS lessees will in turn contract with independent property operators that will manage day-to-day operations of our properties under the oversight of the subadvisor.

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

At March 31, 2015, we had limited exposure to financial market risks, including changes in interest rates. As of the date of this Report, we had no foreign operations and were not exposed to foreign currency fluctuations.

CWI 2 3/31/2015 10-Q – 14

Item 4. Controls and Procedures.

Disclosure Controls and Procedures

Our disclosure controls and procedures include our controls and other procedures designed to provide reasonable assurance that information required to be disclosed in this and other reports filed under the Securities Exchange Act of 1934, as amended, or the Exchange Act, is recorded, processed, summarized, and reported within the required time periods specified in the SEC’s rules and forms and that such information is accumulated and communicated to management, including our chief executive officer and chief financial officer, to allow timely decisions regarding required disclosures. It should be noted that no system of controls can provide complete assurance of achieving a company’s objectives and that future events may impact the effectiveness of a system of controls.

Our chief executive officer and chief financial officer, after conducting an evaluation, together with members of our management, of the effectiveness of the design and operation of our disclosure controls and procedures as of March 31, 2015 , have concluded that our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Exchange Act) were effective as of March 31, 2015 at a reasonable level of assurance.

Changes in Internal Control Over Financial Reporting

In January 2015, we implemented an enterprise resource planning system and accordingly have updated our internal controls over financial reporting, as necessary, to accommodate modifications to our business processes and to take advantage of enhanced automated controls provided by the new system. We have taken the necessary steps for establishing and maintaining effective internal control over financial reporting as of March 31, 2015 .

Other than as expressly noted above, there have been no changes in our internal control over financial reporting during our most recently completed fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

CWI 2 3/31/2015 10-Q – 15

PART II

Item 1A. Risk Factors.

We are including the following additional risk factor, which should be read in conjunction with the risks described in the “Risk Factors” section of our Registration Statement on Form S-11 as filed with the SEC, as amended:

The DOL’s proposed regulation expanding the definition of fiduciary investment advice under ERISA could adversely affect our financial condition and results of operations.

On April 14, 2015, the U.S. Department of Labor, or DOL, issued its re-proposed regulation addressing when a person providing investment advice with respect to an employee benefit plan or individual retirement account, or IRA, is considered to be a fiduciary under the Employee Retirement Income Security Act of 1974, or ERISA, and the Internal Revenue Code. The new proposal offers a broader definition of fiduciary investment advice covering specific recommendations on investments, investment management, the selection of persons to provide investment advice or management, and appraisals in connection with investment decisions, thereby expanding the group that would be considered investment advice fiduciaries under ERISA. The proposed regulation is subject to a 75-day notice and public comment period ending on July 6, 2015 (75 days after the proposed regulation was published in the Federal Register). The DOL has announced that there will be a public hearing within 30 days after the end of the public comment period and that the comment period will be reopened after the hearing. We cannot predict whether or when the regulation may be finalized, or how any final regulation may differ from the proposed regulation. If the final regulation is issued with provisions substantially similar to the proposed regulation, it could impact our ability to raise funds through our public offering and our operations, which could adversely affect our financial condition and results of operations. We are currently analyzing the potential impact of the proposed regulation.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

Unregistered Sales of Equity Securities

We did not issue any shares of common stock during the three months ended March 31, 2015.

Use of Proceeds

On April 13, 2015, our amended Registration Statement (File No. 333-196681) was declared effective by the SEC, allowing for the sale of Class A and Class T shares, in any combination, of up to $1,400,000,000 in our initial public offering and up to $600,000,000 through our distribution reinvestment plan. At March 31, 2015, subscription proceeds for our Class A and Class T common stock have not reached the minimum offering amount of $2,000,000 and we have not begun admitting stockholders.

CWI 2 3/31/2015 10-Q – 16

Item 6. Exhibits.

The following exhibits are filed with this Report. Documents other than those designated as being filed herewith are incorporated herein by reference.



Exhibit No.	Description	Method of Filing

3.1	Second Articles of Amendment and Restatement of Carey Watermark Investors 2 Incorporated	Filed herewith

3.2	Bylaws of Carey Watermark Investors 2 Incorporated	Incorporated by reference to Exhibit 3.3 to the registrant's Registration Statement on Form S-11 (File No. 333-196681) filed on June 11, 2014

4.1	Distribution Reinvestment Plan	Filed herewith

4.2	Form of Notice to Stockholder	Incorporated by reference to Exhibit 4.2 to the registrant’s Registration Statement on Form S-11 (File No. 333-196681) filed on August 7, 2014

10.1	Advisory Agreement dated February 9, 2015, between Carey Watermark Investors 2 Incorporated, CWI 2 OP, LP, and Carey Lodging Advisors, LLC	Filed herewith

10.2	Subadvisory Agreement dated February 9, 2015 between Carey Lodging Advisors, LLC, and CWA 2, LLC	Filed herewith

10.3	Agreement of Limited Partnership of CWI 2 OP, LP dated as of February 9, 2015, by and among Carey Watermark Investors 2 Incorporated and Carey Watermark Holdings 2, LLC	Filed herewith

10.4	Dealer Manager Agreement dated April 13, 2015, between Carey Watermark Investors 2 Incorporated and Carey Financial, LLC	Filed herewith

10.5	Escrow Agreement dated February 19, 2015, between Carey Financial, LLC, Carey Watermark Investors 2 Incorporated and UMB Bank, N.A.	Filed herewith

10.6	2015 Equity Incentive Plan	Filed herewith

10.7	Indemnification Agreement dated February 9, 2015, between Carey Watermark Investors 2 Incorporated and CWA2, LLC	Filed herewith

10.8	Form of Indemnification Agreement between Carey Watermark Investors 2 Incorporated and its directors and executive officers	Filed herewith

10.9	Amended and Restated Limited Liability Company Agreement of CWI Sawgrass Holdings, LLC dated April 1, 2015	Incorporated by reference to Exhibit 10.1 to the registrant’s Current Report on Form 8-K filed on April 2, 2015

10.10	Form of Selected Dealer Agreement	Filed herewith

10.11	Agreement for Sale and Purchase of Hotel, by and between Nashville Hotel Group and CWI Nashville Downtown Hotel, LLC dated as of February 13, 2015	Incorporated by reference to Exhibit 10.1 to the registrant’s Current Report on Form 8-K filed on May 7, 2015

31.1	Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002	Filed herewith

CWI 2 3/31/2015 10-Q – 17




31.2	Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002	Filed herewith

32	Certifications pursuant to Section 906 of the Sarbanes-Oxley Act of 2002	Filed herewith

101	The following materials from Carey Watermark Investors 2 Incorporated’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2015, formatted in XBRL (eXtensible Business Reporting Language): (i) Consolidated Balance Sheets at March 31, 2015 and December 31, 2014, (ii) Consolidated Statement of Operations for the three months ended March 31, 2015, (iii) Consolidated Statement of Equity for the three months ended March 31, 2015,(iv) Consolidated Statement of Cash Flows for the three months ended March 31, 2015, and (v) Notes to Consolidated Financial Statements.*	Filed herewith




*		Pursuant to Rule 406T of Regulation S-T, the Interactive Data Files on Exhibit 101 hereto are deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, are deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and otherwise are not subject to liability under those sections.

CWI 2 3/31/2015 10-Q – 18

SIGNATURES

Pursuant to the requirements of Section 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.



			Carey Watermark Investors 2 Incorporated
Date:	May 14, 2015
		By:	/s/ Hisham A. Kader
			Hisham A. Kader
			Chief Financial Officer
			(Principal Accounting and Financial Officer)

CWI 2 3/31/2015 10-Q – 19

EXHIBIT INDEX

The following exhibits are filed with this Report. Documents other than those designated as being filed herewith are incorporated herein by reference.



Exhibit No.	Description	Method of Filing

3.1	Second Articles of Amendment and Restatement of Carey Watermark Investors 2 Incorporated	Filed herewith

3.2	Bylaws of Carey Watermark Investors 2 Incorporated	Incorporated by reference to Exhibit 3.3 to the registrant's Registration Statement on Form S-11 (File No. 333-196681) filed on June 11, 2014

4.1	Distribution Reinvestment Plan	Filed herewith

4.2	Form of Notice to Stockholder	Incorporated by reference to Exhibit 4.2 to the registrant’s Registration Statement on Form S-11 (File No. 333-196681) filed on August 7, 2014

10.1	Advisory Agreement dated February 9, 2015, between Carey Watermark Investors 2 Incorporated, CWI 2 OP, LP, and Carey Lodging Advisors, LLC	Filed herewith

10.2	Subadvisory Agreement dated February 9, 2015 between Carey Lodging Advisors, LLC, and CWA 2, LLC	Filed herewith

10.3	Agreement of Limited Partnership of CWI 2 OP, LP dated as of February 9, 2015, by and among Carey Watermark Investors 2 Incorporated and Carey Watermark Holdings 2, LLC	Filed herewith

10.4	Dealer Manager Agreement dated April 13, 2015, between Carey Watermark Investors 2 Incorporated and Carey Financial, LLC	Filed herewith

10.5	Escrow Agreement dated February 19, 2015, between Carey Financial, LLC, Carey Watermark Investors 2 Incorporated and UMB Bank, N.A.	Filed herewith

10.6	2015 Equity Incentive Plan	Filed herewith

10.7	Indemnification Agreement dated February 9, 2015, between Carey Watermark Investors 2 Incorporated and CWA2, LLC	Filed herewith

10.8	Form of Indemnification Agreement between Carey Watermark Investors 2 Incorporated and its directors and executive officers	Filed herewith

10.9	Amended and Restated Limited Liability Company Agreement of CWI Sawgrass Holdings, LLC dated April 1, 2015	Incorporated by reference to Exhibit 10.1 to the registrant’s Current Report on Form 8-K filed on April 2, 2015

10.10	Form of Selected Dealer Agreement	Filed herewith

10.11	Agreement for Sale and Purchase of Hotel, by and between Nashville Hotel Group and CWI Nashville Downtown Hotel, LLC dated as of February 13, 2015	Incorporated by reference to Exhibit 10.1 to the registrant’s Current Report on Form 8-K filed on May 7, 2015

CWI 2 3/31/2015 10-Q – 20



31.1	Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002	Filed herewith

31.2	Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002	Filed herewith

32	Certifications pursuant to Section 906 of the Sarbanes-Oxley Act of 2002	Filed herewith

101	The following materials from Carey Watermark Investors 2 Incorporated’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2015, formatted in XBRL (eXtensible Business Reporting Language): (i) Consolidated Balance Sheets at March 31, 2015 and December 31, 2014, (ii) Consolidated Statement of Operations for the three months ended March 31, 2015, (iii) Consolidated Statement of Equity for the three months ended March 31, 2015,(iv) Consolidated Statement of Cash Flows for the three months ended March 31, 2015, and (v) Notes to Consolidated Financial Statements.*	Filed herewith




*		Pursuant to Rule 406T of Regulation S-T, the Interactive Data Files on Exhibit 101 hereto are deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, are deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and otherwise are not subject to liability under those sections.

CWI 2 3/31/2015 10-Q – 21

EXHIBIT 3.1

CAREY WATERMARK INVESTORS 2 INCORPORATED

SECOND ARTICLES OF AMENDMENT AND RESTATEMENT

FIRST : CAREY WATERMARK INVESTORS 2 INCORPORATED, a Maryland corporation (the " Corporation "), desires to amend and restate its charter as currently in effect and as hereinafter amended.

SECOND : The following provisions are all the provisions of the charter currently in effect and as hereinafter amended:

Article I

NAME

The name of the corporation (which is hereinafter called the " Corporation ") is:

CAREY WATERMARK INVESTORS 2 INCORPORATED

ARTICLE II

PURPOSES AND POWERS

The purposes for which the Corporation is formed are to engage in any lawful act or activity (including, without limitation or obligation, engaging in business as a real estate investment trust under the Internal Revenue Code of 1986, as amended, or any successor statute (the " Code ")) for which corporations may be organized under the general laws of the State of Maryland as now or hereafter in force.

ARTICLE III

PRINCIPAL OFFICE IN STATE AND RESIDENT AGENT

The address of the principal office of the Corporation in the State of Maryland is c/o CSC – Lawyers Incorporating Service Company, 7 Saint Paul Street, Suite 1660, Baltimore, Maryland 21202. The name and address of the resident agent of the Corporation are CSC — Lawyers Incorporating Service Company, 7 Saint Paul Street, Suite 1660, Baltimore, Maryland 21202. The resident agent is a Maryland corporation.

ARTICLE IV

DEFINITIONS

As used in the Charter, the following terms shall have the following meanings unless the context otherwise requires:

Acquisition Expenses . The term "Acquisition Expenses" shall mean, to the extent not paid or to be paid by the seller, lessee, borrower or any other party involved in the transaction, those expenses, including, but not limited to, legal fees and expenses, travel and communications expenses, costs of appraisals, nonrefundable option payments on Investments not acquired, accounting fees and expenses, title insurance, and miscellaneous expenses related to selection, acquisition and origination of Investments, whether or not a particular Investment ultimately is made. Acquisition Expenses shall not include Acquisition Fees.

Acquisition Fee . The term "Acquisition Fee" shall mean the total of all fees and commissions paid by the Corporation or its subsidiaries to any party in connection with the making of Investments, including, without limitation, the purchase, development or construction of Properties. A Development Fee or Construction Fee paid to a Person not affiliated with the Sponsor in connection with the actual development or construction of a project after acquisition of the Property by the Corporation shall not be deemed an Acquisition Fee. Included in the computation of such fees or commissions shall be any real estate commission, selection fee, Development Fee or Construction Fee (other than as described above), non-recurring management fees, loan fees, points or any fee of a similar nature, however designated.Acquisition Fees shall not include Acquisition Expenses.

Adjusted Net Income . The term "Adjusted Net Income" shall mean for any period, the total consolidated revenues recognized in such period by the Corporation, less the total consolidated expenses of the Corporation recognized in such period, excluding additions to reserves for depreciation and amortization, bad debts or other similar non‑cash reserves; provided , however , that Adjusted Net Income for purposes of calculating total allowable Operating Expenses under the 2%/25% Guidelines shall exclude any gains, losses or writedowns from the sale of the Corporation's assets.

Advisor or Advisors . The term "Advisor" or "Advisors" shall mean the Person or Persons, if any, appointed, employed or contracted with by the Corporation pursuant to Section 8.1 hereof and responsible for directing or performing the day‑to‑day business affairs of the Corporation, including any Person to whom the Advisor subcontracts all or substantially all of such functions.

Advisory Agreement . The term "Advisory Agreement" shall mean the agreement between the Corporation and the Advisor pursuant to which the Advisor will direct or perform the day‑to‑day business affairs of the Corporation.

Affiliate or Affiliated . The term "Affiliate" or "Affiliated" shall mean, with respect to any Person, (i) any Person directly or indirectly owning, controlling or holding, with the power to vote, ten percent or more of the outstanding voting securities of such other Person; (ii) any Person ten percent or more of whose outstanding voting securities are directly or indirectly owned, controlled or held, with the power to vote, by such other Person; (iii) any Person directly or indirectly controlling, controlled by or under common control with such other Person; (iv) any executive officer, director, trustee or general partner of such other Person; or (v) any legal entity for which such Person acts as an executive officer, director, trustee or general partner.



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Aggregate Share Ownership Limit . The term "Aggregate Share Ownership Limit" shall mean 9.8% in value of the aggregate of the outstanding Shares, or such other percentage determined by the Board of Directors in accordance with Section 6.1.8 of the Charter.

Appraised Value . The term "Appraised Value" shall mean value according to an appraisal made by an Independent Appraiser, which may take into consideration any factor deemed appropriate by such Independent Appraiser, including, but not limited to, current market and property conditions, any unique attributes of the Investment operations, current and anticipated income and expense trends, forecasts of stabilized operations, repositioning opportunities, the terms and conditions of any lease, franchise or management agreement of a relevant property, the quality of any lessee's, borrower's, franchisor's, manager's or other counter‑party's credit and the conditions of the credit markets. The Appraised Value of a Property may be greater than the construction cost or the replacement cost of the Property.

Average Invested Assets . The term "Average Invested Assets" shall mean the average during any period of the aggregate book value of the Corporation's Investments, before deducting reserves for depreciation, bad debts, impairments, amortization and all other non‑cash reserves, computed by taking the average of such values at the end of each month during such period.

Beneficial Ownership . The term "Beneficial Ownership" shall mean ownership of Shares by a Person, whether the interest in Shares is held directly or indirectly (including by a nominee), and shall include interests that would be treated as owned through the application of Section 544 of the Code, as modified by Section 856(h)(1)(B) of the Code. The terms "Beneficial Owner," "Beneficially Owns" and "Beneficially Owned" shall have the correlative meanings.

Board or Board of Directors . The term "Board" or "Board of Directors" shall mean the Board of Directors of the Corporation.

Business Day . The term "Business Day" shall mean any day, other than a Saturday or Sunday, that is neither a legal holiday nor a day on which banking institutions in New York City are authorized or required by law, regulation or executive order to close.

Bylaws . The term "Bylaws" shall mean the Bylaws of the Corporation, as amended from time to time.

Charitable Beneficiary . The term "Charitable Beneficiary" shall mean one or more beneficiaries of the Charitable Trust as determined pursuant to Section 6.2.6, provided that each such organization must be described in Section 501(c)(3) of the Code and contributions to each such organization must be eligible for deduction under each of Sections 170(b)(1)(A), 2055 and 2522 of the Code.

Charitable Trust . The term "Charitable Trust" shall mean any trust provided for in Section 6.2.1.



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Charitable Trustee . The term "Charitable Trustee" shall mean the Person unaffiliated with the Corporation and a Prohibited Owner, that is appointed by the Corporation to serve as trustee of the Charitable Trust.

Charter . The term "Charter" shall mean the charter of the Corporation.

Class A Common Stock . The term "Class A Common Stock" shall have the meaning as provided in Section 5.1 herein.

Class T Common Stock . The term "Class T Common Stock" shall have the meaning as provided in Section 5.1 herein.

Code . The term "Code" shall have the meaning as provided in Article II herein.

Commencement of the Initial Public Offering . The term "Commencement of the Initial Public Offering" shall mean the date that the Securities and Exchange Commission declares effective the registration statement filed under the Securities Act for the Initial Public Offering.

Common Share Ownership Limit . The term "Common Share Ownership Limit" shall mean 9.8% (in value or in number of Common Shares, whichever is more restrictive) of the aggregate of the outstanding Common Shares, or such other percentage determined by the Board of Directors in accordance with Section 6.1.8 of the Charter.

Common Shares . The term "Common Shares" shall have the meaning as provided in Section 5.1 herein.

Competitive Real Estate Commission . The term "Competitive Real Estate Commission" shall mean a real estate or brokerage commission paid for the purchase or sale of an Investment that is reasonable, customary and competitive in light of the size, type and location or other relevant characteristics of the Investment.

Construction Fee . The term "Construction Fee" shall mean a fee or other remuneration for acting as general contractor and/or construction manager to construct improvements, supervise and coordinate projects or to provide major repairs or rehabilitations on a Property.

Constructive Ownership . The term "Constructive Ownership" shall mean ownership of Shares by a Person, whether the interest in Shares is held directly or indirectly (including by a nominee), and shall include interests that would be treated as owned through the application of Section 318(a) of the Code, as modified by Section 856(d)(5) of the Code. The terms "Constructive Owner," "Constructively Owns" and "Constructively Owned" shall have the correlative meanings.

Contract Purchase Price . The term "Contract Purchase Price" shall mean the amount actually paid or allocated to the purchase, development, construction or improvement of an Investment or, in the case of an originated Loan, the principal amount of such Loan, in each case exclusive of Acquisition Fees and Acquisition Expenses.



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Contract Sales Price . The term "Contract Sales Price" shall mean the total consideration received by the Corporation for the sale of an Investment.

Corporation . The term "Corporation" shall have the meaning as provided in Article I herein.

Dealer Manager Fees . The term "dealer manager fees" shall mean the dealer manager fees on the Class A common stock and the Class T common stock payable to the Dealer Manager as described in the Prospectus.

Development Fee . The term "Development Fee" shall mean a fee for the packaging of a Property, including the negotiation and approval of plans, and undertaking to assist in obtaining zoning and necessary variances and necessary financing for a specific Property, either initially or at a later date.

Director . The term "Director" shall have the meaning as provided in Section 7.1 herein.

Disposition Fee . The term "Disposition Fee" shall mean the fee paid to the Advisor or an Affiliate under the Advisory Agreement for property disposition services.

Distribution and Shareholder Servicing Fees . The term "distribution and shareholder servicing fees" shall mean the distribution and shareholder servicing fees on the Class T common stock payable to the Dealer Manager as described in the Prospectus.

Distributions . The term "Distributions" shall mean any distributions under the MGCL of money or other property, pursuant to Section 5.5 hereof, by the Corporation to owners of Shares, including distributions that may constitute a return of capital for federal income tax purposes.

Excepted Holder . The term "Excepted Holder" shall mean a Stockholder for whom an Excepted Holder Limit is created by the Board of Directors pursuant to Section 6.1.7.

Excepted Holder Limit . The term "Excepted Holder Limit" shall mean, provided that the affected Excepted Holder agrees to comply with the requirements established by the Board of Directors pursuant to Section 6.1.7 and subject to adjustment pursuant to Section 6.1.8, the percentage limit established by the Board of Directors pursuant to Section 6.1.7.

Excess Amount . The term "Excess Amount" shall have the meaning as provided in Section 8.10 herein.

Exchange Act . The term "Exchange Act" shall mean the Securities Exchange Act of 1934, as amended from time to time, or any successor statute thereto.

FINRA . The term "FINRA" shall mean the Financial Industry Regulatory Authority.

Gross Proceeds . The term "Gross Proceeds" shall mean the aggregate purchase price of all Shares sold for the account of the Corporation through an Offering, without deduction for Selling Commissions, volume discounts, any marketing support and due diligence expense reimbursement or Organization and Offering Expenses in any Offering.



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Indemnitee . The term "Indemnitee" shall have the meaning as provided in Section 12.2.1(b) herein.

Independent Appraiser . The term "Independent Appraiser" shall mean a qualified appraiser of real estate of the type held by the Corporation as determined by the Board, who has no material current or prior business or personal relationship with the Advisor or the Directors and who is engaged to a substantial extent in the business of rendering opinions regarding the value of assets of the type held by the Corporation. Membership in a nationally recognized appraisal society such as the American Institute of Real Estate Appraisers or the Society of Real Estate Appraisers shall be conclusive evidence of such qualification (but not of independence).

Independent Director . The term "Independent Director" shall mean a Director who is not on the date of determination, and within the last two years from the date of determination has not been, directly or indirectly associated with the Sponsor or the Advisor by virtue of (i) ownership of an interest in the Sponsor, the Advisor or any of their Affiliates, other than the Corporation, (ii) employment by the Sponsor, the Advisor or any of their Affiliates, (iii) service as an officer or director of the Sponsor, the Advisor or any of their Affiliates, other than as a Director of the Corporation, (iv) performance of services, other than as a Director, for the Corporation, (v) service as a director or trustee of more than three REITs organized by the Sponsor or advised by the Advisor, or (vi) maintenance of a material business or professional relationship with the Sponsor, the Advisor or any of their Affiliates. A business or professional relationship is considered "material" per se if the aggregate gross revenue derived by the Director from the Sponsor, the Advisor and their Affiliates exceeds five percent of either the Director's annual gross revenue, derived from all sources during either of the last two years or the Director's net worth on a fair market value basis. In addition, (x) a Director's ownership of Shares or of shares of stock of another REIT organized by the Sponsor or advised by the Advisor for which the Director has served or is serving as a member of the board of directors and (y) indirect ownership of an immaterial amount of stock of the Sponsor (for example, through ownership of a widely diversified mutual fund) shall be deemed not to be an interest prohibited by clause (i) of this definition. An indirect association with the Sponsor or the Advisor shall include circumstances in which a Director's spouse, parent, child, sibling, mother– or father‑in‑law, son– or daughter‑in‑law or brother– or sister‑in‑law is or has been associated with the Sponsor, the Advisor, any of their Affiliates or the Corporation.

Initial Date . The term "Initial Date" shall mean the date on which Shares are first issued in the Initial Public Offering.

Initial Investment . The term "Initial Investment" shall mean that portion of the initial capitalization of the Corporation contributed by the Sponsor or its Affiliates pursuant to Section II.A. of the NASAA REIT Guidelines.

Initial Public Offering . The term "Initial Public Offering" shall mean the Corporation's first Offering pursuant to an effective registration statement filed under the Securities Act.

Investment . The term "Investment" shall mean an investment made by the Corporation, directly or indirectly, in a Property, Loan or other asset that is consistent with the investment objectives and policies of the Corporation.



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Joint Ventures . The term "Joint Ventures" shall mean those joint venture or partnership arrangements in which the Corporation or any of its subsidiaries is a co‑venturer or general partner established to acquire or hold Investments.

Leverage . The term "Leverage" shall mean the aggregate amount of indebtedness of the Corporation for money borrowed (including purchase money mortgage loans) outstanding at any time, both secured and unsecured.

Listing . The term "Listing" shall mean the listing of the Common Shares on a national securities exchange. Upon such Listing, the Common Shares shall be deemed Listed.

Loans . The term "Loans" shall mean the notes and other evidences of indebtedness or obligations acquired, originated or entered into, directly or indirectly, by the Corporation as lender, noteholder, participant, note purchaser or other capacity, including but not limited to first or subordinate mortgage loans, construction loans, development loans, loan participation, B notes, loans secured by capital stock or any other assets or form of equity interest and any other type of loan or financial arrangement, such as providing or arranging for letters of credit, providing guarantees of obligations to third parties, or providing commitments for loans. The term "Loans" shall not include leases which are not recognized as leases for federal income tax reporting purposes.

Market Price . The term "Market Price" on any date shall mean, with respect to any class or series of outstanding Shares, the Closing Price for such Shares on such date. The "Closing Price" on any date shall mean the last sale price for such Shares, regular way, or, in case no such sale takes place on such day, the average of the closing bid and asked prices, regular way, for such Shares, in either case as reported in the principal consolidated transaction reporting system with respect to securities listed or admitted to trading on the NYSE or, if such Shares are not listed or admitted to trading on the NYSE, as reported on the principal consolidated transaction reporting system with respect to securities listed on the principal national securities exchange on which such Shares are listed or admitted to trading or, if such Shares are not listed or admitted to trading on any national securities exchange, the last quoted price, or, if not so quoted, the average of the high bid and low asked prices in the over‑the‑counter market, as reported by FINRA's OTC Bulletin Board quotation system or, if such system is no longer in use, the principal other automated quotation system that may then be in use or, if such Shares are not quoted by any such system, the average of the closing bid and asked prices as furnished by a professional market maker making a market in such Shares selected by the Board of Directors or, in the event that no trading price is available for such Shares, the fair market value of Shares, as determined in good faith by the Board of Directors.

MGCL . The term "MGCL" shall mean the Maryland General Corporation Law, as amended from time to time.

NASAA REIT Guidelines . The term "NASAA REIT Guidelines" shall mean the Statement of Policy Regarding Real Estate Investment Trusts published by the North American Securities Administrators Association on May 7, 2007 and in effect on the Initial Date.



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Net Assets . The term "Net Assets" shall mean the total assets of the Corporation (other than intangibles) valued at cost, before deducting depreciation, reserves for bad debts or other non‑cash reserves, less total liabilities, calculated quarterly by the Corporation on a basis consistently applied.

Net Asset Value per share of Class A Common Stock . The term "Net Asset Value per share of Class A Common Stock" shall mean the net asset value of the Corporation allocable to the shares of Class A Common Stock, as determined by the Board from time to time.

Net Asset Value per share of Class T Common Stock . The term "Net Asset Value per share of Class T Common Stock" shall mean the net asset value of the Corporation allocable to the shares of Class T Common Stock, as determined by the Board from time to time.

Non-Compliant Tender Offer . The term "Non-Compliant Tender Offer" shall have the meaning as provided in Section 11.7 herein.

NYSE . The term "NYSE" shall mean the New York Stock Exchange.

Offering . The term "Offering" shall mean the offering of Shares pursuant to a Prospectus.

Operating Expenses . The term "Operating Expenses" shall mean all consolidated operating, general and administrative expenses paid or incurred by the Corporation, as determined under generally accepted accounting principles, except the following (insofar as they would otherwise be considered operating, general and administrative expenses under generally accepted accounting principles): (i) interest and discounts and other cost of borrowed money; (ii) taxes (including state, Federal and foreign income tax, property taxes and assessments, franchise taxes and taxes of any other nature); (iii) expenses of raising capital, including Organization and Offering Expenses, printing, engraving, and other expenses, and taxes incurred in connection with the issuance and distribution of the Corporation's Shares and Securities; (iv) Acquisition Expenses, real estate commissions on resale of property and other expenses connected with the acquisition, disposition, origination, ownership and operation of Investments, including the costs of foreclosure, insurance premiums, legal services, brokerage and sales commissions, and the maintenance, repair and improvement of Property; (v) Acquisition Fees or Disposition Fees payable to the Advisor or any other party; (vi) Distribution and Shareholder Servicing Fees payable to the Dealer Manager; (vii) distributions paid by the Operating Partnership to the special general partner under the agreement of limited partnership of the Operating Partnership in respect of gains realized on dispositions of Investments and other capital transactions; (viii) amounts paid to effect a redemption or repurchase of the special general partner interest held by the special general partner pursuant to the agreement of limited partnership of the Operating Partnership; and (ix) non-cash items, such as depreciation, amortization, depletion, and additions to reserves for depreciation, amortization, depletion, losses and bad debts. Notwithstanding anything herein to the contrary, Operating Expenses shall include asset management fees and any loan refinancing fee and, solely for the purposes of determining compliance with the 2%/25% Guideline, (1) distributions of available cash generated by operations and investments made by the Operating Partnership to the special general partner pursuant to the agreement of limited partnership of the Operating Partnership, which, for the avoidance of doubt, does not include distributions described in clauses (vii) and (viii) of this definition and (2) Disposition Fees paid in respect of Investments that are not direct or indirect interests in real estate.



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Operating Partnership . The term "Operating Partnership" or "OP" shall mean CWI 2 OP, LP, a Delaware limited partnership, through which the Corporation may own Investments.

Organization and Offering Expenses . The term "Organization and Offering Expenses" shall mean those expenses payable by the Corporation and the OP in connection with the formation, qualification and registration of the Corporation and in marketing and distributing Shares including, but not limited to such expenses as: (i) the preparation, printing, filing and delivery of any registration statement or Prospectus (including any amendments thereof or supplements thereto) and the preparing and printing of contractual agreements among the Corporation, the OP, dealer managers and selected dealers (including copies thereof); (ii) the preparing and printing of the Charter and Bylaws, other solicitation material and related documents and the filing and/or recording of such documents necessary to comply with the laws of the State of Maryland for the formation of a corporation and thereafter for the continued good standing of a corporation; (iii) the qualification or registration of the Shares under state securities or "Blue Sky" laws; (iv) any escrow arrangements, including any compensation to an escrow agent; (v) the filing fees payable to the Securities and Exchange Commission and to FINRA; (vi) reimbursement for the reasonable and identifiable out-of-pocket expenses of the dealer managers and the selected dealers, including the cost of their counsel; (vii) the fees of the Corporation's counsel and accountants; (viii) all advertising expenses incurred in connection with an Offering, including the cost of all sales literature and the costs related to investor and broker/dealer sales and information meetings and marketing incentive programs; and (ix) Selling Commissions, Dealer Manager Fees, selected dealer fees, marketing fees, incentive fees and due diligence fees incurred in connection with the sale of the Shares.

Person . The term "Person" shall mean an individual, corporation, partnership, estate, trust (including a trust qualified under Sections 401(a) or 501(c)(17) of the Code), a portion of a trust permanently set aside for or to be used exclusively for the purposes described in Section 642(c) of the Code, association, limited liability company, private foundation within the meaning of Section 509(a) of the Code, joint stock company or other entity and also includes a group as that term is used for purposes of Section 13(d)(3) of the Exchange Act and a group to which an Excepted Holder Limit applies.

Preferred Shares . The term "Preferred Shares" shall have the meaning as provided in Section 5.1 herein.

Prohibited Owner . The term "Prohibited Owner" shall mean, with respect to any purported Transfer, any Person who, but for the provisions of Article VI herein, would Beneficially Own or Constructively Own Shares in violation of Section 6.1.1, and, if appropriate in the context, shall also mean any Person who would have been the record owner of Shares that the Prohibited Owner would have so owned.

Property or Properties . The term "Property" or "Properties" shall mean, as the context requires, the Corporation's partial or entire interest in real property (including leasehold interests) and personal or mixed property connected therewith. A definitive arrangement which obligates the Corporation to acquire a Property shall be treated as a Property.



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Prospectus . The term "Prospectus" shall mean any prospectus or offering document pursuant to which the Corporation offers Shares in a public or private offering, as the same may at any time and from time to time be amended or supplemented, after the effective date of the registration statement in which it is included.

Reinvestment Plan . The term "Reinvestment Plan" shall have the meaning as provided in Section 5.10 herein.

REIT . The term "REIT" shall mean a corporation, trust, association or other legal entity (other than a real estate syndication) that is engaged primarily in investing in equity interests in real estate (including fee ownership and leasehold interests) or in loans secured by real estate or both as defined pursuant to the REIT Provisions of the Code.

REIT Provisions of the Code . The term "REIT Provisions of the Code" shall mean Sections 856 through 860 of the Code and any successor or other provisions of the Code relating to REITs (including provisions as to the attribution of ownership of beneficial interests therein) and the regulations promulgated thereunder.

Restriction Termination Date . The term "Restriction Termination Date" shall mean the first day after the Initial Date on which the Board of Directors determines that it is no longer in the best interests of the Corporation to attempt to, or continue to, qualify as a REIT or that compliance with the restrictions and limitations on Beneficial Ownership, Constructive Ownership and Transfers of Shares set forth herein is no longer required in order for the Corporation to qualify as a REIT.

Roll‑Up Entity . The term "Roll‑Up Entity" shall mean a partnership, REIT, corporation, trust or similar entity that would be created or would survive after the successful completion of a proposed Roll‑Up Transaction.

Roll‑Up Transaction . The term "Roll‑Up Transaction" shall mean a transaction involving the acquisition, merger, conversion or consolidation either directly or indirectly of the Corporation and the issuance of securities of a Roll‑Up Entity to the holders of Common Shares. Such term does not include:


(a)	a transaction involving securities of the Roll-Up Entity that have been for at least 12 months Listed on a national securities exchange or a cash election; or


(b)	a transaction involving the conversion to corporate, trust or association form of only the Corporation, if, as a consequence of the transaction, there will be no significant adverse change in any of the following:

(i) voting rights of the holders of Common Shares;

(ii) the term of existence of the Corporation;

(iii) Sponsor or Advisor compensation; or

(iv) the Corporation's investment objectives.



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Securities . The term "Securities" shall mean any of the following issued by the Corporation, as the text requires: Shares, any other stock, shares or other evidences of equity or beneficial or other interests, voting trust certificates, bonds, debentures, notes or other evidences of indebtedness, secured or unsecured, convertible, subordinated or otherwise, or in general any instruments commonly known as "securities" or any certificates of interest, shares or participations in, temporary or interim certificates for, receipts for, guarantees of, or warrants, options or rights to subscribe to, purchase or acquire, any of the foregoing.

Securities Act . The term "Securities Act" shall mean the Securities Act of 1933, as amended from time to time, or any successor statute thereto. Reference to any provision of the Securities Act shall mean such provision as in effect from time to time, as the same may be amended, and any successor provision thereto, as interpreted by any applicable regulations as in effect from time to time.

Selling Commissions . The term "selling commissions" shall mean the selling commissions on the Class A common stock and the Class T common stock payable to the Dealer Manager as described in the Prospectus.

Shares . The term "Shares" shall mean shares of stock of the Corporation of any class or series, including Common Shares or Preferred Shares.

Sponsor . The term "Sponsor" shall mean any Person which (i) is directly or indirectly instrumental in organizing, wholly or in part, the Corporation, (ii) will control, manage or participate in the management of the Corporation and any affiliate of such Person, (iii) takes the initiative, directly or indirectly, in founding or organizing the Corporation, either alone or in conjunction with one or more other Persons, (iv) receives a material participation in the Corporation in connection with the founding or organizing of the business of the Corporation, in consideration of services or property, or both services and property, (v) has a substantial number of relationships and contacts with the Corporation, (vi) possesses significant rights to control Properties, (vii) receives fees for providing services to the Corporation which are paid on a basis that is not customary in the industry, or (viii) provides goods or services to the Corporation on a basis which was not negotiated at arm's‑length with the Corporation. The term "Sponsor" does not include any Person whose only relationship with the Corporation is that of an independent property manager and whose only compensation is as such, or wholly independent third parties such as attorneys, accountants and underwriters whose only compensation is for professional services.

Stockholder List . The term "Stockholder List" shall have the meaning as provided in Section 11.5 herein.

Stockholders . The term "Stockholders" shall mean the holders of record of the Shares as maintained in the books and records of the Corporation or its transfer agent.

Termination Date . The term "Termination Date" shall mean the date of termination of the Advisory Agreement.



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Total Investment Cost . The term "Total Investment Cost" with regard to any Investment shall mean, an amount equal to the sum of the Contract Purchase Price of such Investment plus the Acquisition Fees and Acquisition Expenses paid in connection with such Investment.

Transfer . The term "Transfer" shall mean any issuance, sale, transfer, gift, assignment, devise or other disposition, as well as any other event that causes any Person to acquire Beneficial Ownership or Constructive Ownership of Shares or the right to vote or receive dividends on Shares, or any agreement to take any such actions or cause any such events, including (a) the granting or exercise of any option (or any disposition of any option), (b) any disposition of any securities or rights convertible into or exchangeable for Shares or any interest in Shares or any exercise of any such conversion or exchange right and (c) Transfers of interests in other entities that result in changes in Beneficial Ownership or Constructive Ownership of Shares; in each case, whether voluntary or involuntary, whether owned of record, Constructively Owned or Beneficially Owned and whether by operation of law or otherwise. The terms "Transferring" and "Transferred" shall have the correlative meanings.

2%/25% Guideline . The term "2%/25% Guideline" shall have the meaning as provided in Section 8.10 herein.

Unimproved Real Property . The term "Unimproved Real Property" shall mean Property in which the Corporation has an equity interest that was not acquired for the purpose of producing rental or other operating income, that has no development or construction in process and for which no development or construction is planned, in good faith, to commence within one year.

ARTICLE V

STOCK

Section 5.1. Authorized Shares . The Corporation has authority to issue 450,000,000 Shares, consisting of 400,000,000 shares of Common Stock, $.001 par value per share (" Common Shares "), 320,000,000 of which are classified as shares of Class A Common Stock (the " Class A Common Stock ") and 80,000,000 of which are classified as shares of Class T Common Stock (the " Class T Common Stock "), and 50,000,000 shares of Preferred Stock, $.001 par value per share (" Preferred Shares "). The aggregate par value of all authorized Shares having par value is $450,000.00. All Shares shall be fully paid and nonassessable when issued. If Shares of one class are classified or reclassified into Shares of another class pursuant to this Article V, the number of authorized Shares of the former class shall be automatically decreased and the number of Shares of the latter class shall be automatically increased, in each case by the number of Shares so classified or reclassified, so that the aggregate number of Shares of all classes that the Corporation has authority to issue shall not be more than the total number of Shares set forth in the first sentence of this Section 5.1. The Board of Directors, with the approval of a majority of the entire Board and without any action by the Stockholders, may amend the Charter from time to time to increase or decrease the aggregate number of Shares or the number of Shares of any class or series that the Corporation has authority to issue.



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Section 5.2. Common Shares .

Section 5.2.1 Common Shares Subject to Terms of Preferred Shares . The Common Shares shall be subject to the express terms of any series of Preferred Shares.

Section 5.2.2 Description . Subject to the provisions of Article VI and except as may otherwise be specified in the Charter, each Common Share shall entitle the holder thereof to one vote per share on all matters upon which Stockholders are entitled to vote pursuant to Section 11.2 hereof. The Board may classify or reclassify any unissued Common Shares from time to time into one or more classes or series of Shares; provided , however , that the voting rights per Share (other than any publicly held Share) sold in a private offering shall not exceed the voting rights which bear the same relationship to the voting rights of a publicly held Share as the consideration paid to the Corporation for each privately offered Share bears to the book value of each outstanding publicly held Share.

Section 5.2.3 Rights Upon Liquidation . In the event of any voluntary or involuntary liquidation, dissolution or winding up, or any distribution of the assets of the Corporation, the aggregate assets available for distribution to holders of the Common Shares shall be determined in accordance with applicable law. The holder of each share of Class A Common Stock shall be entitled to be paid, out of the assets of the Corporation that are legally available for distribution to the Stockholders, a liquidation payment equal to the Net Asset Value per share of Class A Common Stock and the holder of each share of Class T Common Stock shall be entitled to be paid, out of the assets of the Corporation that are legally available for distribution to the Stockholders, a liquidation payment equal to the Net Asset Value per share of Class T Common Stock; provided , however , that if the available assets of the Corporation are insufficient to pay in full the above described liquidation payments, then such assets, or the proceeds thereof, shall be distributed among the holders of the shares of Class A Common Stock and the Class T Common Stock ratably in the same proportion as the respective amounts that would be payable on such shares of Class A Common Stock and Class T Common Stock if all amounts payable thereon were paid in full.

Section 5.2.4 Voting Rights . Except as may be provided otherwise in the Charter, and subject to the express terms of any series of Preferred Shares, each holder of a Common Share shall vote together with the holders of all other Common Shares, and the holders of the Common Shares shall have the exclusive right to vote on all matters (as to which a common stockholder shall be entitled to vote pursuant to applicable law) at all meetings of the Stockholders; provided, however , that with respect to any matter that would only have a material adverse effect on the rights of a particular class of Common Shares, only the holders of such affected class of Common Shares shall have the right to vote.

Section 5.3. Preferred Shares . The Board may classify any unissued Preferred Shares and reclassify any previously classified but unissued Preferred Shares of any series from time to time, into one or more classes or series of Shares; provided , however , that the voting rights per Share (other than any publicly held Share) sold in a private offering shall not exceed the voting rights which bear the same relationship to the voting rights of a publicly held Share as the



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consideration paid to the Corporation for each privately offered Share bears to the book value of each outstanding publicly held Share.

Section 5.4. Classified or Reclassified Shares . Prior to issuance of classified or reclassified Shares of any class or series, the Board by resolution shall: (a) designate that class or series to distinguish it from all other classes and series of Shares; (b) specify the number of Shares to be included in the class or series; (c) set or change, subject to the provisions of Article VI and subject to the express terms of any class or series of Shares outstanding at the time, the preferences, conversion or other rights, voting powers, restrictions, limitations as to dividends or other distributions, qualifications and terms and conditions of redemption for each class or series; and (d) cause the Corporation to file articles supplementary with the State Department of Assessments and Taxation of Maryland. Any of the terms of any class or series of Shares set or changed pursuant to clause (c) of this Section 5.4 may be made dependent upon facts or events ascertainable outside the Charter (including determinations by the Board or other facts or events within the control of the Corporation) and may vary among holders thereof, provided that the manner in which such facts, events or variations shall operate upon the terms of such class or series of Shares is clearly and expressly set forth in the articles supplementary or other charter document.

Section 5.5. Dividends and Distributions . The Board of Directors may from time to time authorize the Corporation to declare and pay to Stockholders such dividends or other Distributions, in cash or other assets of the Corporation or in securities of the Corporation or from any other source as the Board of Directors in its discretion shall determine. The Board of Directors shall endeavor to authorize the Corporation to declare and pay such dividends and Distributions as shall be necessary for the Corporation to qualify as a REIT under the Code so long as such qualification, in the opinion of the Board of Directors, is in the best interest of the Corporation; however, Stockholders shall have no right to any dividend or other Distribution unless and until authorized by the Board and declared by the Corporation. The exercise of the powers and rights of the Board of Directors pursuant to this Section 5.5 shall be subject to the provisions of any class or series of Shares at the time outstanding. The receipt by any Person in whose name any Shares are registered on the records of the Corporation or by his or her duly authorized agent shall be a sufficient discharge for all dividends or other Distributions payable or deliverable in respect of such Shares and from all liability to see to the application thereof. Distributions in kind shall not be permitted, except for distributions of readily marketable securities, distributions of beneficial interests in a liquidating trust established for the dissolution of the Corporation and the liquidation of its assets in accordance with the terms of the Charter or distributions in which (i) the Board advises each Stockholder of the risks associated with direct ownership of the property, (ii) the Board offers each Stockholder the election of receiving such in‑kind distributions, and (iii) in‑kind distributions are made only to those Stockholders that accept such offer.

Section 5.6. Charter and Bylaws . The rights of all Stockholders and the terms of all Shares are subject to the provisions of the Charter and the Bylaws.

Section 5.7. No Issuance of Share Certificates . Unless otherwise provided by the Board of Directors, the Corporation shall not issue stock certificates. A Stockholder's investment shall be recorded on the books of the Corporation. To transfer his or her Shares, a Stockholder shall submit



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an executed form to the Corporation, which form shall be provided by the Corporation upon request. Such transfer will also be recorded on the books of the Corporation. With respect to any Shares that are issued without certificates, and upon request by a Stockholder, the Corporation will provide the Stockholder with information concerning his or her rights with regard to such Shares, as required by the Bylaws and the MGCL or other applicable law.

Section 5.8. Suitability of Stockholders . Upon the Commencement of the Initial Public Offering and until Listing, the following provisions shall apply:

Section 5.8.1 Investor Suitability Standards . Subject to suitability standards established by individual states, to become a Stockholder in the Corporation, if such prospective Stockholder is an individual (including an individual beneficiary of a purchasing Individual Retirement Account), or if the prospective Stockholder is a fiduciary (such as a trustee of a trust or corporate pension or profit sharing plan, or other tax‑exempt organization, or a custodian under a Uniform Gifts to Minors Act), such individual or fiduciary, as the case may be, must represent to the Corporation, among other requirements as the Corporation may require from time to time:

(a) that such individual (or, in the case of a fiduciary, that the fiduciary account or the donor who directly or indirectly supplies the funds to purchase the Shares) has a minimum annual gross income of $70,000 and a net worth (excluding home, furnishings and automobiles) of not less than $70,000; or

(b) that such individual (or, in the case of a fiduciary, that the fiduciary account or the donor who directly or indirectly supplies the funds to purchase the Shares) has a net worth (excluding home, furnishings and automobiles) of not less than $250,000.

Section 5.8.2 Determination of Suitability of Sale . The Sponsor and each Person selling Common Shares on behalf of the Corporation shall make every reasonable effort to determine that the purchase of Common Shares by a Stockholder is a suitable and appropriate investment for such Stockholder. In making this determination, the Sponsor and each Person selling Common Shares on behalf of the Corporation shall ascertain that the prospective Stockholder: (a) meets the minimum income and net worth standards established for the Corporation; (b) can reasonably benefit from the Corporation based on the prospective Stockholder's overall investment objectives and portfolio structure; (c) is able to bear the economic risk of the investment based on the prospective Stockholder's overall financial situation; and (d) has apparent understanding of (1) the fundamental risks of the investment; (2) the risk that the Stockholder may lose the entire investment; (3) the lack of liquidity of the Common Shares; (4) the restrictions on transferability of the Common Shares; and (5) the tax consequences of the investment.

The Sponsor and each Person selling Common Shares on behalf of the Corporation shall make this determination with respect to each prospective Stockholder on the basis of information it has obtained from such prospective Stockholder. Relevant information for this purpose will include at least the age, investment objectives, investment experience,



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income, net worth, financial situation, and other investments of the prospective Stockholder, as well as any other pertinent factors.

The Sponsor and each Person selling Common Shares on behalf of the Corporation shall maintain records of the information used to determine that an investment in Common Shares is suitable and appropriate for a Stockholder. The Sponsor and each Person selling Common Shares on behalf of the Corporation shall maintain these records for at least six years.

Section 5.8.3 Minimum Investment and Transfer . Subject to certain individual state requirements and the issuance of Common Shares under the Reinvestment Plan, no initial sale or transfer of Common Shares will be permitted of less than $2,000.

Section 5.9. Repurchase of Shares . The Board may establish, from time to time, a program or programs by which the Corporation voluntarily repurchases Shares from its Stockholders; provided , however , that such repurchase does not impair the capital or operations of the Corporation. The Sponsor, the Advisor, members of the Board or any Affiliates thereof may not receive any fees arising out of the repurchase of Shares by the Corporation.

Section 5.10. Distribution Reinvestment Plans . The Board may establish, from time to time, a Distribution reinvestment plan or plans (each, a " Reinvestment Plan "). Under any such Reinvestment Plan, (i) all material information regarding Distributions to the Stockholders and the effect of reinvesting such Distributions, including the tax consequences thereof, shall be provided to the Stockholders at least annually, and (ii) each Stockholder participating in such Reinvestment Plan shall have a reasonable opportunity to withdraw from the Reinvestment Plan at least annually after receipt of the information required in clause (i) above.

ARTICLE VI

RESTRICTION ON TRANSFER AND OWNERSHIP OF SHARES

Section 6.1. Shares.

Section 6.1.1 Ownership Limitations . During the period commencing on the Initial Date and prior to the Restriction Termination Date, but subject to Section 6.3:

(a) Basic Restrictions.

(i) (1) No Person, other than an Excepted Holder, shall Beneficially Own or Constructively Own Shares in excess of the Aggregate Share Ownership Limit, (2) no Person, other than an Excepted Holder, shall Beneficially Own or Constructively Own Common Shares in excess of the Common Share Ownership Limit and (3) no Excepted Holder shall Beneficially Own or Constructively Own Shares in excess of the Excepted Holder Limit for such Excepted Holder.



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(ii) No Person shall Beneficially Own or Constructively Own Shares to the extent that such Beneficial Ownership or Constructive Ownership of Shares would result in the Corporation being " closely held " within the meaning of Section 856(h) of the Code (without regard to whether the ownership interest is held during the last half of a taxable year), or otherwise failing to qualify as a REIT (including, but not limited to, Beneficial Ownership or Constructive Ownership that would result in the Corporation owning (actually or Constructively) an interest in a tenant that is described in Section 856(d)(2)(B) of the Code if the income derived by the Corporation from such tenant would cause the Corporation to fail to satisfy any of the gross income requirements of Section 856(c) of the Code).

(iii) Any Transfer of Shares that, if effective, would result in Shares being Beneficially Owned by less than 100 Persons (determined under the principles of Section 856(a)(5) of the Code) shall be void ab initio , and the intended transferee shall acquire no rights in such Shares.

(b) Transfer in Trust . If any Transfer of Shares occurs which, if effective, would result in any Person Beneficially Owning or Constructively Owning Shares in violation of Section 6.1.1(a)(i) or (ii),

(i) then that number of Shares the Beneficial Ownership or Constructive Ownership of which otherwise would cause such Person to violate Section 6.1.1(a)(i) or (ii) (rounded up to the nearest whole share) shall be automatically transferred to a Charitable Trust for the benefit of a Charitable Beneficiary, as described in Section 6.2, effective as of the close of business on the Business Day prior to the date of such Transfer, and such Person shall acquire no rights in such Shares; or

(ii) if the transfer to the Charitable Trust described in clause (i) of this sentence would not be effective for any reason to prevent the violation of Section 6.1.1(a)(i) or (ii), then the Transfer of that number of Shares that otherwise would cause any Person to violate Section 6.1.1(a)(i) or (ii) shall be void ab initio , and the intended transferee shall acquire no rights in such Shares.

To the extent that, upon a transfer of Shares pursuant to this Section 6.1.1(b), a violation of any provision of this Article VI would nonetheless be continuing (for example where the ownership of Shares by a single Charitable Trust would violate the 100 stockholder requirement applicable to REITs), then Shares shall be transferred to that number of Charitable Trusts, each having a distinct Charitable Trustee and a Charitable Beneficiary or Beneficiaries that are distinct from those of each other Charitable Trust, such that there is no violation of any provision of this Article VI.



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Section 6.1.2 Remedies for Breach . If the Board of Directors or its designee (including any duly authorized committee of the Board) shall at any time determine in good faith that a Transfer or other event has taken place that results in a violation of Section 6.1.1(a) or that a Person intends to acquire or has attempted to acquire Beneficial Ownership or Constructive Ownership of any Shares in violation of Section 6.1.1(a) (whether or not such violation is intended), the Board of Directors or its designee shall take such action as it deems advisable to refuse to give effect to or to prevent such Transfer or other event, including, without limitation, causing the Corporation to redeem Shares, refusing to give effect to such Transfer on the books of the Corporation or instituting proceedings to enjoin such Transfer or other event; provided , however , that any Transfers or attempted Transfers or other events in violation of Section 6.1.1(a) shall automatically result in the transfer to the Charitable Trust described above, and, where applicable, such Transfer (or other event) shall be void ab initio as provided above irrespective of any action (or non‑action) by the Board of Directors or its designee.

Section 6.1.3 Notice of Restricted Transfer . Any Person who acquires or attempts or intends to acquire Beneficial Ownership or Constructive Ownership of Shares that will or may violate Section 6.1.1(a), or any Person who would have owned Shares that resulted in a transfer to the Charitable Trust pursuant to the provisions of Section 6.1.1(b), shall immediately give written notice to the Corporation of such event, or in the case of such a proposed or attempted transaction, give at least 15 days' prior written notice, and shall provide to the Corporation such other information as the Corporation may request in order to determine the effect, if any, of such Transfer on the Corporation's status as a REIT.

Section 6.1.4 Owners Required To Provide Information . From the Initial Date and prior to the Restriction Termination Date:

(a) every owner of more than five percent (or such lower percentage as required by the Code or the Treasury Regulations promulgated thereunder) of the outstanding Shares, within 30 days after the end of each taxable year, shall give written notice to the Corporation stating the name and address of such owner, the number of Shares Beneficially Owned and a description of the manner in which such Shares are held. Each such owner shall provide to the Corporation such additional information as the Corporation may request in order to determine the effect, if any, of such Beneficial Ownership on the Corporation's status as a REIT and to ensure compliance with the Aggregate Share Ownership Limit, the Common Share Ownership Limit and the other restrictions set forth herein; and

(b) each Person who is a Beneficial Owner or Constructive Owner of Shares and each Person (including the stockholder of record) who is holding Shares for a Beneficial Owner or Constructive Owner shall provide to the Corporation such information as the Corporation may request, in good faith, in order to determine the Corporation's status as a REIT and to comply with requirements of any taxing authority or governmental authority or to determine such compliance.



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Section 6.1.5 Remedies Not Limited . Subject to Section 7.10, nothing contained in this Section 6.1 shall limit the authority of the Board of Directors to take such other action as it deems necessary or advisable to protect the Corporation and the interests of its Stockholders in preserving the Corporation's status as a REIT.

Section 6.1.6 Ambiguity . In the case of an ambiguity in the application of any of the provisions of this Section 6.1, Section 6.2 or any definition contained in Article IV, the Board of Directors shall have the power to determine the application of the provisions of this Section 6.1 or Section 6.2 with respect to any situation based on the facts known to it. In the event Section 6.1 or 6.2 requires an action by the Board of Directors and the Charter fails to provide specific guidance with respect to such action, the Board of Directors shall have the power to determine the action to be taken so long as such action is not contrary to the provisions of Article IV or Sections 6.1 or 6.2. Absent a decision to the contrary by the Board of Directors (which the Board may make in its sole and absolute discretion), if a Person would have (but for the remedies set forth in Section 6.1.2) acquired Beneficial Ownership or Constructive Ownership of Shares in violation of Section 6.1.1, such remedies (as applicable) shall apply first to the Shares which, but for such remedies, would have been Beneficially Owned or Constructively Owned (but not actually owned) by such Person, pro rata among the Persons who actually own such Shares based upon the relative number of the Shares held by each such Person.

Section 6.1.7 Exceptions .

(a) Subject to Section 6.1.1(a)(ii), the Board of Directors, in its sole discretion, may exempt (prospectively or retroactively) a Person from the Aggregate Share Ownership Limit and the Common Share Ownership Limit, as the case may be, and may establish or increase an Excepted Holder Limit for such Person if:

(iv) the Board of Directors obtains such representations and undertakings from such Person as are reasonably necessary to ascertain that no individual's Beneficial Ownership or Constructive Ownership of such Shares will violate Section 6.1.1(a)(ii);

(v) such Person does not and represents that it will not own, actually or Constructively, an interest in a tenant of the Corporation (or a tenant of any entity owned or controlled by the Corporation) that would cause the Corporation to own, actually or Constructively, more than a 9.9% interest (as set forth in Section 856(d)(2)(B) of the Code) in such tenant and the Board of Directors obtains such representations and undertakings from such Person as are reasonably necessary to ascertain this fact (for this purpose, a tenant from whom the Corporation (or an entity owned or controlled by the Corporation) derives (and is expected to continue to derive) a sufficiently small amount of revenue such that, in the opinion of the Board of Directors, rent from such tenant would not adversely affect the Corporation's ability to qualify as a REIT, shall not be treated as a tenant of the Corporation); and



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(vi) such Person agrees that any violation or attempted violation of such representations or undertakings (or other action which is contrary to the restrictions contained in Sections 6.1.1 through 6.1.6) will result in such Shares being automatically transferred to a Charitable Trust in accordance with Sections 6.1.1(b) and 6.2.

(b) Prior to granting any exception pursuant to Section 6.1.7(a), the Board of Directors may require a ruling from the Internal Revenue Service, or an opinion of counsel, in either case in form and substance satisfactory to the Board of Directors in its sole discretion, as it may deem necessary or advisable in order to determine or ensure the Corporation's status as a REIT. Notwithstanding the receipt of any ruling or opinion, the Board of Directors may impose such conditions or restrictions as it deems appropriate in connection with granting such exception.

(c) Subject to Section 6.1.1(a)(ii), an underwriter which participates in a public offering or a private placement of Shares (or securities convertible into or exchangeable for Shares) may Beneficially Own or Constructively Own Shares (or securities convertible into or exchangeable for Shares) in excess of the Aggregate Share Ownership Limit, the Common Share Ownership Limit or both such limits, but only to the extent necessary to facilitate such public offering or private placement.

(d) The Board of Directors may only reduce the Excepted Holder Limit for an Excepted Holder: (1) with the written consent of such Excepted Holder at any time, or (2) pursuant to the terms and conditions of the agreements and undertakings entered into with such Excepted Holder in connection with the establishment of the Excepted Holder Limit for that Excepted Holder. No Excepted Holder Limit shall be reduced to a percentage that is less than the Common Share Ownership Limit.

Section 6.1.8 Increase or Decrease in Aggregate Share Ownership and Common Share Ownership Limits . Subject to Section 6.1.1(a)(ii), the Board of Directors may from time to time increase the Common Share Ownership Limit and the Aggregate Share Ownership Limit for one or more Persons and decrease the Common Share Ownership Limit and the Aggregate Share Ownership Limit for all other Persons; provided , however , that the decreased Common Share Ownership Limit and/or Aggregate Share Ownership Limit will not be effective for any Person whose percentage ownership in Shares is in excess of such decreased Common Share Ownership Limit and/or Aggregate Share Ownership Limit until such time as such Person's percentage of Shares equals or falls below the decreased Common Share Ownership Limit and/or Aggregate Share Ownership Limit, but any further acquisition of Shares in excess of such percentage ownership of Shares will be in violation of the Common Share Ownership Limit and/or Aggregate Share Ownership Limit and, provided further , that the new Common Share Ownership Limit and/or Aggregate Share Ownership Limit would not allow five or fewer Persons to Beneficially Own more than 49.9% in value of the outstanding Shares.



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Section 6.1.9 Legend . Any certificate representing Shares shall bear substantially the following legend:

The Shares represented by this certificate are subject to restrictions on Beneficial Ownership and Constructive Ownership and Transfer for the purpose, among others, of the Corporation's maintenance of its status as a real estate investment trust (a " REIT ") under the Internal Revenue Code of 1986, as amended (the " Code "). Subject to certain further restrictions and except as expressly provided in the Charter, (i) no Person may Beneficially Own or Constructively Own Common Shares in excess of 9.8% (in value or number of Shares) of the outstanding Common Shares unless such Person is an Excepted Holder (in which case the Excepted Holder Limit shall be applicable); (ii) no Person may Beneficially Own or Constructively Own Shares in excess of 9.8% of the value of the total outstanding Shares, unless such Person is an Excepted Holder (in which case the Excepted Holder Limit shall be applicable); (iii) no Person may Beneficially Own or Constructively Own Shares that would result in the Corporation being "closely held" under Section 856(h) of the Code or otherwise cause the Corporation to fail to qualify as a REIT; and (iv) any Transfer of Shares that, if effective, would result in Shares being Beneficially Owned by less than 100 Persons (as determined under the principles of Section 856(a)(5) of the Code) shall be void ab initio , and the intended transferee shall acquire no rights in such Shares. Any Person who Beneficially Owns or Constructively Owns or attempts to Beneficially Own or Constructively Own Shares which cause or will cause a Person to Beneficially Own or Constructively Own Shares in excess or in violation of the above limitations must immediately notify the Corporation in writing (or, in the case of an attempted transaction, give at least 15 days prior written notice). If any of the restrictions on transfer or ownership as set forth in (i), (ii) or (iii) above are violated, the Shares in excess or in violation of the above limitations will be automatically transferred to a Charitable Trust for the benefit of one or more Charitable Beneficiaries. In addition, the Corporation may redeem Shares upon the terms and conditions specified by the Board of Directors in its sole discretion if the Board of Directors determines that ownership or a Transfer or other event may violate the restrictions described above. Furthermore, upon the occurrence of certain events, attempted Transfers in violation of the restrictions described in (i), (ii) or (iii) above may be void ab initio . All capitalized terms in this legend have the meanings defined in the Charter, as the same may be amended from time to time, a copy of which, including the restrictions on transfer and ownership, will be furnished to each holder of Shares on request and without charge. Requests for such a copy may be directed to the Secretary of the Corporation at its principal office.

Instead of the foregoing legend, the certificate may state that the Corporation will furnish a full statement about certain restrictions on transferability to a Stockholder on request and without charge. In the case of uncertificated Shares, the Corporation will send the holder of such Shares, on request and without charge, a written statement of the information otherwise required on certificates.

Section 6.2. Transfer of Shares in Trust .

Section 6.2.1 Ownership in Trust . Upon any purported Transfer or other event described in Section 6.1.1(b) that would result in a transfer of Shares to a Charitable Trust, such Shares shall be deemed to have been transferred to the Charitable Trustee as trustee of



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a Charitable Trust for the exclusive benefit of one or more Charitable Beneficiaries. Such transfer to the Charitable Trustee shall be deemed to be effective as of the close of business on the Business Day prior to the purported Transfer or other event that results in the transfer to the Charitable Trust pursuant to Section 6.1.1(b). The Charitable Trustee shall be appointed by the Corporation and shall be a Person unaffiliated with the Corporation and any Prohibited Owner. Each Charitable Beneficiary shall be designated by the Corporation as provided in Section 6.2.6.

Section 6.2.2 Status of Shares Held by the Charitable Trustee . Shares held by the Charitable Trustee shall continue to be issued and outstanding Shares. The Prohibited Owner shall have no rights in the Shares held by the Charitable Trustee. The Prohibited Owner shall not benefit economically from ownership of any Shares held in trust by the Charitable Trustee, shall have no rights to dividends or other Distributions and shall not possess any rights to vote or other rights attributable to the Shares held in the Charitable Trust.

Section 6.2.3 Dividend and Voting Rights . The Charitable Trustee shall have all voting rights and rights to dividends or other Distributions with respect to Shares held in the Charitable Trust, which rights shall be exercised for the exclusive benefit of the Charitable Beneficiary. Any dividend or other Distribution paid prior to the discovery by the Corporation that Shares have been transferred to the Charitable Trustee shall be paid by the recipient of such dividend or other Distribution to the Charitable Trustee upon demand and any dividend or other Distribution authorized but unpaid shall be paid when due to the Charitable Trustee. Any dividends or other Distributions so paid over to the Charitable Trustee shall be held in trust for the Charitable Beneficiary. The Prohibited Owner shall have no voting rights with respect to Shares held in the Charitable Trust and, subject to Maryland law, effective as of the date that the Shares have been transferred to the Charitable Trustee, the Charitable Trustee shall have the authority (at the Charitable Trustee's sole discretion) (i) to rescind as void any vote cast by a Prohibited Owner prior to the discovery by the Corporation that Shares have been transferred to the Charitable Trustee and (ii) to recast such vote in accordance with the desires of the Charitable Trustee acting for the benefit of the Charitable Beneficiary; provided , however , that if the Corporation has already taken irreversible corporate action, then the Charitable Trustee shall not have the authority to rescind and recast such vote. Notwithstanding the provisions of this Article VI, until the Corporation has received notification that Shares have been transferred into a Charitable Trust, the Corporation shall be entitled to rely on its share transfer and other Stockholder records for purposes of preparing lists of Stockholders entitled to vote at meetings, determining the validity and authority of proxies and otherwise conducting votes of Stockholders.

Section 6.2.4 Sale of Shares by Charitable Trustee . Within 20 days of receiving notice from the Corporation that Shares have been transferred to the Charitable Trust, the Charitable Trustee shall sell the Shares held in the Charitable Trust to a Person, designated by the Charitable Trustee, whose ownership of the Shares will not violate the ownership limitations set forth in Section 6.1.1(a). Upon such sale, the interest of the Charitable Beneficiary in the Shares sold shall terminate and the Charitable Trustee shall distribute the



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net proceeds of the sale to the Prohibited Owner and to the Charitable Beneficiary as provided in this Section 6.2.4. The Prohibited Owner shall receive the lesser of (1) the price paid by the Prohibited Owner for the Shares or, if the Prohibited Owner did not give value for the Shares in connection with the event causing the Shares to be held in the Charitable Trust ( e.g. , in the case of a gift, devise or other such transaction), the Market Price of the Shares on the day of the event causing the Shares to be held in the Charitable Trust and (2) the price per share received by the Charitable Trustee (net of any commissions and other expenses of sale) from the sale or other disposition of the Shares held in the Charitable Trust. The Charitable Trustee may reduce the amount payable to the Prohibited Owner by the amount of dividends and other Distributions which have been paid to the Prohibited Owner and are owed by the Prohibited Owner to the Charitable Trustee pursuant to Section 6.2.3 of this Article VI. Any net sales proceeds in excess of the amount payable to the Prohibited Owner shall be immediately paid to the Charitable Beneficiary. If, prior to the discovery by the Corporation that Shares have been transferred to the Charitable Trustee, such Shares are sold by a Prohibited Owner, then (i) such Shares shall be deemed to have been sold on behalf of the Charitable Trust and (ii) to the extent that the Prohibited Owner received an amount for such Shares that exceeds the amount that such Prohibited Owner was entitled to receive pursuant to this Section 6.2.4, such excess shall be paid to the Charitable Trustee upon demand.

Section 6.2.5 Purchase Right in Shares Transferred to the Charitable Trustee . Shares transferred to the Charitable Trustee shall be deemed to have been offered for sale to the Corporation, or its designee, at a price per share equal to the lesser of (i) the price per share in the transaction that resulted in such transfer to the Charitable Trust (or, in the case of a devise or gift, the Market Price at the time of such devise or gift) and (ii) the Market Price on the date the Corporation, or its designee, accepts such offer. The Corporation may reduce the amount payable to the Prohibited Owner by the amount of dividends and other Distributions which have been paid to the Prohibited Owner and are owed by the Prohibited Owner to the Charitable Trustee pursuant to Section 6.2.3 of this Article VI. The Corporation may pay the amount of such reduction to the Charitable Trustee for the benefit of the Charitable Beneficiary. The Corporation shall have the right to accept such offer until the Charitable Trustee has sold the Shares held in the Charitable Trust pursuant to Section 6.2.4. Upon such a sale to the Corporation, the interest of the Charitable Beneficiary in the Shares sold shall terminate and the Charitable Trustee shall distribute the net proceeds of the sale to the Prohibited Owner.

Section 6.2.6 Designation of Charitable Beneficiaries . By written notice to the Charitable Trustee, the Corporation shall designate one or more nonprofit organizations to be the Charitable Beneficiary of the interest in the Charitable Trust such that (i) Shares held in the Charitable Trust would not violate the restrictions set forth in Section 6.1.1(a) in the hands of such Charitable Beneficiary and (ii) each such organization must be described in Section 501(c)(3) of the Code and contributions to each such organization must be eligible for deduction under each of Sections 170(b)(1)(A), 2055 and 2522 of the Code.



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Section 6.3. NYSE Transactions . Nothing in this Article VI shall preclude the settlement of any transaction entered into through the facilities of the NYSE or any other national securities exchange or automated inter‑dealer quotation system. The fact that the settlement of any transaction occurs shall not negate the effect of any other provision of this Article VI and any transferee in such a transaction shall be subject to all of the provisions and limitations set forth in this Article VI.

Section 6.4. Enforcement . The Corporation is authorized specifically to seek equitable relief, including injunctive relief, to enforce the provisions of this Article VI.

Section 6.5. Non‑Waiver . No delay or failure on the part of the Corporation or the Board of Directors in exercising any right hereunder shall operate as a waiver of any right of the Corporation or the Board of Directors, as the case may be, except to the extent specifically waived in writing.

Section 6.6. Non-Compliant Tender Offers . No Stockholder may transfer any Shares held by such Stockholder to a Person making a Non-Compliant Tender Offer unless such Stockholder shall have first offered such Shares to the Corporation at the tender offer price offered in such Non-Compliant Tender Offer.

ARTICLE VII

PROVISIONS FOR DEFINING, LIMITING
AND REGULATING CERTAIN POWERS OF THE
CORPORATION AND OF THE STOCKHOLDERS AND DIRECTORS

Section 7.1. Number of Directors . The business and affairs of the Corporation shall be managed under the direction of the Board of Directors. The number of Directors of the Corporation (the " Directors ") shall be seven, which number may be increased or decreased from time to time pursuant to the Bylaws; provided , however , that, upon Commencement of the Initial Public Offering, the total number of Directors shall not be fewer than three. Upon Commencement of the Initial Public Offering, a majority of the Board will be Independent Directors except for a period of up to 90 days after the death, removal or resignation of an Independent Director pending the election of such Independent Director's successor. The names of the Directors who shall serve until the first annual meeting of stockholders and until their successors are duly elected and qualify are:

Trevor P. Bond

Charles S. Henry

Michael D. Johnson

Michael G. Medzigian

Robert E. Parsons, Jr.

William H. Reynolds, Jr.

William J. Sales

These Directors may increase the number of Directors and fill any vacancy, whether resulting from an increase in the number of Directors or otherwise, on the Board of Directors prior to the first annual meeting of Stockholders in the manner provided in the Bylaws.



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The Corporation elects, at such time as it becomes eligible to make the election provided for under Section 3‑804(c) of the MGCL, that, except as may be provided by the Board of Directors in setting the terms of any class or series of Preferred Shares, any and all vacancies on the Board of Directors may be filled only by the affirmative vote of a majority of the remaining Directors in office, even if the remaining Directors do not constitute a quorum, and any Director elected to fill a vacancy shall serve for the remainder of the full term of the directorship in which such vacancy occurred. Notwithstanding the foregoing sentence, Independent Directors shall nominate replacements for vacancies among the Independent Directors' positions, provided , however , that if there are no Independent Directors, the Directors shall nominate replacements for vacancies among the Independent Directors.

Section 7.2. Experience . Each Director shall have at least three years of relevant experience demonstrating the knowledge and experience required to successfully acquire and manage the type of assets being acquired by the Corporation. At least one of the Independent Directors shall have three years of relevant real estate experience.

Section 7.3. Committees . The Board may establish such committees as it deems appropriate, in its discretion, provided that the majority of the members of each committee are Independent Directors.

Section 7.4. Term . Except as may otherwise be provided in the terms of any Preferred Shares issued by the Corporation, each Director shall hold office for one year, until the next annual meeting of Stockholders and until his or her successor is duly elected and qualifies. Directors may be elected to an unlimited number of successive terms.

Section 7.5. Fiduciary Obligations . The Directors serve in a fiduciary capacity to the Corporation and have a fiduciary duty to the Stockholders, including a specific fiduciary duty to supervise the relationship of the Corporation with the Advisor.

Section 7.6. Extraordinary Actions . Notwithstanding any provision of law permitting or requiring any action to be taken or approved by the affirmative vote of the holders of Shares entitled to cast a greater number of votes, any such action shall be effective and valid if declared advisable by the Board of Directors and taken or approved by the affirmative vote of holders of Shares entitled to cast a majority of all the votes entitled to be cast on the matter.

Section 7.7. Authorization by Board of Stock Issuance . The Board of Directors may authorize the issuance from time to time of Shares of any class or series, whether now or hereafter authorized, or securities or rights convertible into Shares of any class or series, whether now or hereafter authorized, for such consideration as the Board of Directors may deem advisable (including as compensation for the Independent Directors or without consideration in the case of a stock split or stock dividend), subject to such restrictions or limitations, if any, as may be set forth in the Charter or the Bylaws. The issuance of Preferred Shares shall also be approved by a majority of Independent Directors not otherwise interested in the transaction, who shall have access at the Corporation's expense to the Corporation's legal counsel or to independent legal counsel.



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Section 7.8. Preemptive Rights and Appraisal Rights . Except as may be provided by the Board of Directors in setting the terms of classified or reclassified Shares pursuant to Section 5.4 or as may otherwise be provided by contract approved by the Board of Directors, no holder of Shares shall, as such holder, have any preemptive right to purchase or subscribe for any additional Shares or any other security of the Corporation which it may issue or sell. Holders of Shares shall not be entitled to exercise any rights of an objecting stockholder provided for under Title 3, Subtitle 2 of the MGCL or any successor statute unless the Board of Directors, upon the affirmative vote of a majority of the Board of Directors, shall determine that such rights apply, with respect to all or any classes or series of Shares, to one or more transactions occurring after the date of such determination in connection with which holders of such Shares would otherwise be entitled to exercise such rights.

Section 7.9. Determinations by Board . The determination as to any of the following matters, made in good faith by or pursuant to the direction of the Board of Directors consistent with the Charter, shall be final and conclusive and shall be binding upon the Corporation and every holder of Shares: the review and ratification of the Charter by a majority of the Board of Directors, including a majority of the Independent Directors, at or prior to the first meeting of the Board of Directors; the amount of the net income of the Corporation for any period and the amount of assets at any time legally available for the payment of dividends, redemption of Shares or the payment of other Distributions on Shares; the amount of paid‑in surplus, net assets, other surplus, annual or other cash flow, funds from operations, net profit, net assets in excess of capital, undivided profits or excess of profits over losses on sales of assets; the amount, purpose, time of creation, increase or decrease, alteration or cancellation of any reserves or charges and the propriety thereof (whether or not any obligation or liability for which such reserves or charges shall have been created shall have been paid or discharged); any interpretation of the terms, preferences, conversion or other rights, voting powers or rights, restrictions, limitations as to dividends or other Distributions, qualifications or terms or conditions of redemption of any class or series of Shares; the fair value, or any sale, bid or asked price to be applied in determining the fair value, of any asset owned or held by the Corporation or any Shares; the number of Shares of any class of the Corporation; any matter relating to the acquisition, holding and disposition of any assets by the Corporation; the application of any provision of the Charter in the case of any ambiguity, including, without limitation: (i) any provision of the definitions of any of the following: Affiliate, Independent Director and Sponsor, (ii) which amounts paid to the Advisor or its Affiliates are property-level expenses connected with the ownership of real estate interests, loans or other property, (iii) which expenses are excluded from the definition of Operating Expenses and (iv) whether expenses qualify as Organization and Offering Expenses; any conflict between the MGCL and the provisions set forth in the NASAA REIT Guidelines; or any other matter relating to the business and affairs of the Corporation or required or permitted by applicable law, the Charter or Bylaws or otherwise to be determined by the Board of Directors; provided , however , that any determination by the Board of Directors as to any of the preceding matters shall not render invalid or improper any action taken or omitted prior to such determination and no Director shall be liable for making or failing to make such a determination; and provided , further , that to the extent the Board determines that the MGCL conflicts with the provisions set forth in the NASAA REIT Guidelines, the NASAA REIT Guidelines control to the extent any provisions of the MGCL are not mandatory.



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Section 7.10. REIT Qualification . If the Corporation elects to qualify for federal income tax treatment as a REIT, the Board of Directors shall use its reasonable best efforts to take such actions as are necessary or appropriate to preserve the status of the Corporation as a REIT; however, the Board of Directors may revoke or otherwise terminate the Corporation's REIT election pursuant to Section 856(g) of the Code if a majority of the directors not otherwise interested in the transaction conclude that a failure to effect such a revocation or termination could result in material adverse tax consequences to the Corporation or its Stockholders. The Board of Directors also may determine that compliance with any restriction or limitation on stock ownership and transfers set forth in Article VI is no longer required for REIT qualification.

Section 7.11. Removal of Directors . Subject to the rights of holders of one or more classes or series of Preferred Shares to elect or remove one or more Directors, any Director, or the entire Board of Directors, may be removed from office at any time, but only by the affirmative vote of at least a majority of the votes entitled to be cast generally in the election of Directors at a meeting called for the purpose of removing the Director, and the notice of that meeting must state that the purpose, or one of the purposes of the meeting, is the proposed removal of the Director.

Section 7.12. Board Action with Respect to Certain Matters . A majority of the Independent Directors must approve any Board action to which the following sections of the NASAA REIT Guidelines apply: II.A., II.C., II.F., II.G., IV.A., IV.B., IV.C., IV.D., IV.E., IV.F., IV.G., V.E., V.H., V.J., VI.A., VI.B.4, and VI.G.

ARTICLE VIII

ADVISOR

Section 8.1. Appointment and Initial Investment of Advisor . The Board is responsible for setting the general policies of the Corporation, including policies on investments and borrowing, and for the general supervision of its business conducted by officers, agents, employees, advisors or independent contractors of the Corporation. However, the Board is not required personally to conduct the business of the Corporation, and it may (but need not) appoint, employ or contract with any Person (including a Person Affiliated with any Director) as an Advisor and may grant or delegate such authority to the Advisor as the Board may, in its sole discretion, deem necessary or desirable. The term of retention of any Advisor shall not exceed one year, although there is no limit to the number of times that a particular Advisor may be retained. The Advisor or its Affiliates have made an Initial Investment of $200,000 in the Corporation. The Advisor or any such Affiliate may not sell this Initial Investment while the Advisor or its Affiliate remains a Sponsor but may transfer the Initial Investment to other Affiliates.

Section 8.2. Supervision of Advisor . The Board shall review and evaluate the qualifications of the Advisor before entering into, and shall evaluate the performance of the Advisor before renewing, an Advisory Agreement, and the criteria used in such evaluation shall be reflected in the minutes of the meetings of the Board. The Board may exercise broad discretion in allowing the Advisor to administer and regulate the operations of the Corporation, to act as agent for the Corporation, to execute documents on behalf of the Corporation and to make executive decisions that conform to general policies and principles established by the Board. The Board shall monitor



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the Advisor to assure that the administrative procedures, operations and programs of the Corporation are in the best interests of the Stockholders and are fulfilled. The Independent Directors are responsible for reviewing the fees and expenses of the Corporation at least annually or with sufficient frequency to determine that the expenses incurred are reasonable in light of the investment performance of the Corporation, its Net Assets, its Adjusted Net Income and the fees and expenses of other comparable unaffiliated REITs. Each such determination shall be reflected in the minutes of the meetings of the Board. The Independent Directors also will be responsible for reviewing, from time to time and at least annually, the performance of the Advisor and determining that compensation to be paid to the Advisor is reasonable in relation to the nature and quality of services performed and the investment performance of the Corporation and that the provisions of the Advisory Agreement are being carried out. Specifically, the Independent Directors will consider factors such as (i) the amount of the fee paid to the Advisor in relation to the size, composition and performance of the Net Assets, (ii) the success of the Advisor in generating opportunities that meet the investment objectives of the Corporation, (iii) rates charged to other REITs and to investors other than REITs by advisors performing the same or similar services, (iv) additional revenues realized by the Advisor and its Affiliates through their relationship with the Corporation, including loan administration, underwriting or broker commissions, servicing, engineering, inspection and other fees, whether paid by the Corporation or by others with whom the Corporation does business, (v) the quality and extent of service and advice furnished by the Advisor, (vi) the performance of the Assets, including income, conservation or appreciation of capital, frequency of problem investments and competence in dealing with distress situations, and (vii) the quality of the Corporation's portfolio relative to the investments generated by the Advisor for its own account. The Independent Directors may also consider all other factors that they deem relevant, and the findings of the Independent Directors on each of the factors considered shall be recorded in the minutes of the Board. The Board shall determine whether any successor Advisor possesses sufficient qualifications to perform the advisory function for the Corporation and whether the compensation provided for in its contract with the Corporation is justified.

Section 8.3. Fiduciary Obligations . The Advisor shall have a fiduciary responsibility and duty to the Corporation and to the Stockholders.

Section 8.4. Affiliation and Functions . The Board, by resolution or in the Bylaws, may provide guidelines, provisions or requirements concerning the affiliation and functions of the Advisor.

Section 8.5. Termination . A majority of the Independent Directors may terminate the Advisory Agreement on 60 days' written notice without cause or penalty, and, in such event, the Advisor will cooperate with the Corporation and the Board in making an orderly transition of the advisory function.

Section 8.6. Disposition Fee on Sale of Property . If the Advisor, any Director, the Sponsor or any Affiliate thereof provides a substantial amount of services in the effort to sell an Investment, then such Person may receive a fee in the amount equal to the lesser of (i) 50% of the Competitive Real Estate Commission (if applicable) or (ii) three percent of the Contract Sales Price. Total brokerage commissions (including real estate brokerage commissions) payable to all Persons shall



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not exceed the lesser of (a) the Competitive Real Estate Commission or (b) an amount equal to six percent of the Contract Sales Price.

Section 8.7. Incentive Fees . The Corporation may pay the Advisor or an Affiliate of the Advisor an interest in the gain from the sale of Investments, provided the amount or percentage of such interest is reasonable. Such an interest in gain from the sale of Investments shall be considered presumptively reasonable if it does not exceed 15% of the balance of such net proceeds remaining after payment to Stockholders, in the aggregate, of an amount equal to 100% of the invested capital (through liquidity or Distributions), plus a six percent cumulative annual return. In the case of multiple Advisors, such Advisor and any of their Affiliates shall be allowed such fees provided such fees are distributed by a proportional method reasonably designed to reflect the value added to the Corporation's assets by each respective Advisor or any Affiliate. For these purposes, Stockholders will be deemed to have been provided with liquidity if the Shares are Listed, if Shares can be repurchased through the Corporation's repurchase plan on a quarterly basis without delay or some other liquidity device has been provided which enables Stockholders to receive cash or marketable securities for their Shares no less frequently than quarterly. The return requirement will be deemed satisfied if the total Distributions paid by the Corporation equals or exceeds 100% of the capital raised by the Corporation (less any amounts distributed from the sale or refinancing of any Investment). The market value will be calculated on the basis of the average market value of the Shares over the 30 trading days beginning 180 days after the Shares are first listed on a stock exchange or listed or included for quotation.

Section 8.8. Limitation on Organization and Offering Expenses . The Organization and Offering Expenses shall be reasonable and shall in no event exceed an amount equal to 15% of the proceeds raised in the initial Offering. To the extent that all Organizational and Offering Expenses (excluding Selling Commissions and fees paid and expenses reimbursed to selected dealers) paid directly by the Corporation and its subsidiaries exceed (A) 4% of the Gross Proceeds if the Gross Proceeds are less than $500 million, (B) 2% of the Gross Proceeds if the Gross Proceeds are $500 million or more but less than $750 million, or (C) 1.5% of the Gross Proceeds if the Gross Proceeds are $750 million or more, the excess above the applicable percentage shall be paid by the Advisor.

Section 8.9. Limitation on Acquisition Fees and Expenses . The total of all Acquisition Fees and Acquisition Expenses shall be reasonable and shall not exceed an amount equal to six percent of the aggregate Contract Purchase Price of all Investments, measured for the period beginning with the initial acquisition of an Investment and ending (i) on December 31 of the year in which the Corporation has invested 90% of the net proceeds of its initial Offering (excluding the net proceeds from the sale of Shares pursuant to the Reinvestment Plan), and (ii) on each December 31 thereafter, unless a majority of the Directors (including a majority of the Independent Directors) not otherwise interested in any transaction approves the excess as being commercially competitive, fair and reasonable to the Corporation. In the event that the Sponsor holds an Investment on an interim basis on behalf of the Corporation, all profits and losses generated from that Investment during the interim period will be paid to the Corporation.

Section 8.10. Reimbursement for Total Operating Expenses . If Operating Expenses during the 12‑month period ending on the last day of any fiscal quarter of the Corporation exceed the



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greater of (i) two percent of the Average Invested Assets during the same 12‑month period or (ii) 25% of the Adjusted Net Income of the Corporation during the same 12-month period (the " 2%/25% Guideline "), then subject to the following sentence, such excess amount shall be the sole responsibility of the Advisor and neither the Operating Partnership nor the Corporation shall be liable for payment therefor or if the Advisor has received reimbursement for the excess amount, the Advisor shall reimburse the Corporation within 60 days after the end of the 12-month period the amount by which the aggregate annual expenses paid or incurred by the Corporation exceed the above described limitations. The Independent Directors have the fiduciary responsibility of limiting such expenses to amounts that do not exceed such limitations unless a majority of the Independent Directors finds such excess amount or a portion thereof justified based on such unusual and non-recurring factors as they deem sufficient, in which case the Operating Partnership shall reimburse the Advisor in future quarters for the full amount of such excess amount, or any portion thereof found to be justified by a majority of Independent Directors, but only to the extent such reimbursement would not cause the Operating Expenses to exceed the 2%/25% Guideline in the 12-month period ending on the last day of such quarter. In no event shall the Operating Expenses payable by the Operating Partnership in any 12‑month period ending at the end of a fiscal quarter exceed the 2%/25% Guideline. Within 60 days after the end of any 12-month period referred to in the foregoing for which Operating Expenses (for the 12 months then ended) do exceed the 2%/25% Guideline and the Independent Directors determine that such excess Operating Expenses are justified, there shall be sent to the Stockholders a written disclosure of such fact, together with an explanation of the factors the Independent Directors considered in ascertaining that such excess Operating Expenses were justified. Additionally, such information shall be reflected in the minutes of the meetings of the Board. All figures used in the foregoing computation shall be determined in accordance with generally accepted accounting principles applied in a consistent basis.

Section 8.11. Reimbursement Limitation . The Corporation shall not reimburse the Advisor or its Affiliates for services for which the Advisor or its Affiliates are entitled to compensation in the form of a separate fee.

Section 8.12. Other Activities of the Advisor . The Advisor shall not be restricted to administering the investment activities of the Corporation as its sole and exclusive function and may have other business interests and may engage in other activities similar or in addition to those relating to the Corporation, including the performance of services and advice to other Persons (including other REITs) and the management of other investments (including investments of the Advisor and its Affiliates). The Directors may request the Advisor to engage in other activities which complement the Investments, and the Advisor may receive compensation or commissions for those activities from the Corporation or other Persons. Nothing herein shall limit or restrict the right of any director, officer, employee or shareholder of the Advisor, whether or not also a Director, officer or employee of the Company, to engage in any other business or to render services of any kind to any other partnership, corporation, firm, individual, trust or association. The Advisor with or without remuneration may render advice and service to Persons involved with Investments. Except as provided in the Advisory Agreement, neither the Advisor nor any Affiliate of the Advisor shall be obligated generally to present any particular investment opportunity to the Corporation even if the opportunity is of character which, if presented to the Corporation, could be taken by the Corporation. In the event that the Advisor or its Affiliates is presented with a potential investment



	30

which might be made by the Corporation or any wholly‑owned subsidiary corporation and by another investment entity which the Advisor or its Affiliates advises or manages, the Advisor shall determine the allocation of such potential investment in a fair and reasonable manner. It shall be the duty of the Directors (including the Independent Directors) to ensure such method is applied fairly to the Corporation.

ARTICLE IX

INVESTMENT OBJECTIVES AND LIMITATIONS

Section 9.1. Review of Objectives . The Independent Directors shall review the investment policies of the Corporation with sufficient frequency (not less often than annually) to determine that the policies being followed by the Corporation are in the best interests of its Stockholders. Each such determination and the basis therefor shall be set forth in the minutes of the meetings of the Board.

Section 9.2. Certain Permitted Investments . The following provisions shall apply:

(a) The Corporation may invest in Investments.

(b) The Corporation may invest in Joint Ventures with the Sponsor, the Advisor, one or more Directors or any Affiliate thereof, only if a majority of Directors (including a majority of Independent Directors) not otherwise interested in the transaction, approve such investment as being fair and reasonable to the Corporation and on substantially the same terms and conditions as those received by the other joint venturers.

(c) The Corporation may not invest in equity securities unless a majority of Directors (including a majority of Independent Directors) not otherwise interested in the transaction, approve such investment as being fair, competitive, and commercially reasonable to the Corporation.

Section 9.3. Investment Limitations . In addition to other investment restrictions imposed by the Board from time to time, consistent with the Corporation's objective of qualifying as a REIT, the following shall apply to the Corporation's investments:

(a) Not more than ten percent of the Corporation's total assets shall be invested in Unimproved Real Property or mortgage loans on Unimproved Real Property.

(b) The Corporation shall not invest in commodities or commodity futures contracts. This limitation is not intended to apply to future contracts, when used solely for hedging purposes in connection with the Corporation's ordinary business of investing in real estate assets and mortgages.

(c) The Corporation shall not invest in or make any mortgage loan unless an appraisal is obtained concerning the underlying property except for those loans



	31

insured or guaranteed by a government or government agency. In cases in which a majority of Independent Directors so determine, and in all cases in which the transaction is with the Advisor, the Sponsor, any Director, or any Affiliate thereof, such appraisal of the underlying property must be obtained from an Independent Appraiser. Such appraisal shall be maintained in the Corporation's records for at least five years and shall be available for inspection and duplication by any holder of Common Shares for a reasonable charge. In addition to the appraisal, a mortgagee's or owner's title insurance policy or commitment as to the priority of the mortgage or condition of the title must be obtained.

(d) The Corporation shall not make or invest in any mortgage loan, including a construction loan, on any one property if the aggregate amount of all mortgage loans outstanding on the property, including the loans of the Corporation, would exceed an amount equal to 85% of the appraised value of the property as determined by appraisal unless substantial justification exists because of the presence of other underwriting criteria. For purposes of this subsection, (i) investments in commercial mortgage backed securities shall be deemed not to be an investment in mortgage loans and (ii) the "aggregate amount of all mortgage loans outstanding on the property, including the loans of the Corporation" shall include all interest (excluding contingent participation in income and/or appreciation in value of the mortgaged property), the current payment of which may be deferred pursuant to the terms of such loans, to the extent that deferred interest on each loan exceeds five percent per annum of the principal balance of the loan.

(e) The Corporation shall not invest in indebtedness secured by a mortgage on real property which is subordinate to the lien or other indebtedness of the Advisor, any Director, the Sponsor or any Affiliate of the Corporation.

(f) The Corporation shall not issue (A) equity Securities redeemable solely at the option of the holder (except that Stockholders may offer their Common Shares to the Corporation pursuant to any repurchase plan adopted by the Board on terms outlined in the Prospectus relating to any Offering, as such plan is thereafter amended in accordance with its terms); (B) debt Securities unless the historical debt service coverage (in the most recently completed fiscal year) as adjusted for known changes is sufficient to properly service that higher level of debt, as determined by the Board of Directors or a duly authorized officer of the Corporation; (C) equity Securities on a deferred payment basis or under similar arrangements; or (D) options or warrants to the Advisor, the Directors, the Sponsor or any Affiliate thereof except on the same terms as such options or warrants, if any, are sold to the general public. Options or warrants may be issued to Persons other than the Advisor, the Directors, the Sponsor or any Affiliate thereof, but not 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 Independent Directors has a market value less than the value of such option or warrant on the date of grant. Options or warrants issuable to the Advisor, the Directors, the Sponsor or any



	32

Affiliate thereof shall not exceed ten percent of the outstanding Shares on the date of grant. The voting rights per Share (other than any publicly held Share) sold in a private offering shall not exceed the voting rights which bear the same relationship to the voting rights of a publicly held Share as the consideration paid to the Corporation for each privately offered Share bears to the book value of each outstanding publicly held Share.

(g) The consideration paid for an Investment by the Corporation shall ordinarily be based on the fair market value thereof, as determined by a majority of the Directors (or of the members of a duly authorized committee thereof) or the Advisor's investment committee. If a majority of the Independent Directors on the Board of Directors or such duly authorized committee determine, or if the Investment is acquired from the Advisor, a Director, the Sponsor or their Affiliates, such fair market value shall be determined by a qualified Independent Appraiser selected by such Independent Directors.

(h) The aggregate Leverage shall be reasonable and shall be reviewed by the Board at least quarterly. The maximum amount of such Leverage shall not exceed the lesser of 75% of the total costs of the Corporation's investment or 300% of its Net Assets. Notwithstanding the foregoing, Leverage may exceed such limit if any excess in borrowing over such level is approved by a majority of the Independent Directors. Any such excess borrowing shall be disclosed to Stockholders in the next quarterly report of the Corporation following such borrowing, along with justification for such excess.

(i) The Corporation will continually review its investment activity to attempt to ensure that it is not classified as an "investment company" under the Investment Company Act of 1940, as amended.

(j) The Corporation will not make any investment that the Corporation believes will be inconsistent with its objectives of qualifying and remaining qualified as a REIT unless and until the Board determines, in its sole discretion, that REIT qualification is not in the best interests of the Corporation.

(k) The Corporation shall not invest in real estate contracts of sale unless such contracts of sale are in recordable form and appropriately recorded in the chain of title.

ARTICLE X

CONFLICTS OF INTEREST

Section 10.1. Sales and Leases to the Corporation . The Corporation may purchase or lease an asset or assets from the Sponsor, the Advisor, a Director or any Affiliate thereof upon a finding by a majority of Directors (including a majority of Independent Directors) not otherwise interested in the transaction that such transaction is fair and reasonable to the Corporation and at a price to



	33

the Corporation no greater than the cost of the asset to such Sponsor, Advisor, Director or Affiliate, or, if the price to the Corporation is in excess of such cost, that substantial justification for such excess exists and such excess is reasonable. In no event shall the purchase price paid by the Corporation for any such asset exceed the asset's current Appraised Value.

Section 10.2. Sales and Leases to the Sponsor, Advisor, Directors or Affiliates . The Advisor, the Sponsor, a Director or any Affiliate thereof may purchase or lease Assets from the Corporation if a majority of Directors (including a majority of Independent Directors) not otherwise interested in the transaction determine that the transaction is fair and reasonable to the Corporation.

Section 10.3. Other Transactions .

(a) The Corporation shall not make Loans to the Sponsor, the Advisor, a Director or any Affiliates thereof except Loans pursuant to Section 9.3(c) hereof or Loans to wholly owned subsidiaries of the Corporation. The Sponsor, the Advisor, the Directors and any Affiliates thereof shall not make Loans to the Corporation, or to joint ventures in which the Corporation is a co‑venturer, unless approved by a majority of the Directors (including a majority of the Independent Directors) not otherwise interested in such transaction as fair, competitive, and commercially reasonable, and no less favorable to the Corporation than comparable loans between unaffiliated parties.

(b) The Corporation shall not engage in any other transaction with the Sponsor, the Advisor, a Director or any Affiliates thereof unless a majority of the Directors (including a majority of the Independent Directors) not otherwise interested in such transaction approve such transaction as fair and reasonable to the Corporation and on terms and conditions not less favorable to the Corporation than those available from unaffiliated third parties.

ARTICLE XI

STOCKHOLDERS

Section 11.1. Meetings . There shall be an annual meeting of the Stockholders, to be held on such date and at such time and place as shall be determined by or in the manner prescribed in the Bylaws, at which the Directors shall be elected and any other proper business may be conducted; provided that such annual meeting will be held upon reasonable notice and within a reasonable period (not less than 30 days) following delivery of the annual report. The Board of Directors (including the Independent Directors) shall take reasonable steps to ensure that this requirement is met. The holders of a majority of Shares entitled to vote who are present in person or by proxy at an annual meeting at which a quorum is present, may, without the necessity for concurrence by the Board, vote to elect the Directors. A quorum shall be the presence in person or by proxy of Stockholders entitled to cast at least 50% of all the votes entitled to be cast at such meeting on any matter. Special meetings of Stockholders may be called in the manner provided in the Bylaws, including by the chairman of the board, the president, the chief executive officer, a majority of the Board of Directors or a majority of the Independent Directors, and shall be called by the secretary



	34

of the Corporation to act on any matter that may properly be considered at a meeting of Stockholders upon written request of Stockholders entitled to cast not less than ten percent of all the votes entitled to be cast at such meeting on such matter. Notice of any special meeting of Stockholders shall be given as provided in the Bylaws. If the meeting is called by the secretary upon the written request of Stockholders as described in this Section 11.1, notice of the special meeting shall be sent to all Stockholders within ten days of the receipt of the written request and the special meeting shall be held at the time and place specified in the Stockholder request not less than 15 days nor more than 60 days after the delivery of the notice; provided , however , that if no time or place is so specified in the Stockholder request, at such time and place convenient to the Stockholders. If there are no Directors, the officers of the Corporation shall promptly call a special meeting of the Stockholders entitled to vote for the election of successor Directors. Any meeting may be adjourned and reconvened as the Board may determine or as otherwise provided in the Bylaws.

Section 11.2. Voting Rights of Stockholders . Subject to the provisions of any class or series of Shares then outstanding and the mandatory provisions of any applicable laws or regulations, the Stockholders shall be entitled to vote only on the following matters: (a) election or removal of Directors, without the necessity for concurrence by the Board, as provided in Sections 11.1, 7.4 and 7.11 hereof; (b) amendment of the Charter, without the necessity for concurrence by the Board, as provided in Article XIII hereof; (c) dissolution of the Corporation, without the necessity for concurrence by the Board; (d) merger or consolidation of the Corporation, or the sale or other disposition of all or substantially all of the Corporation's assets; and (e) such other matters with respect to which the Board of Directors has adopted a resolution declaring that a proposed action is advisable and directing that the matter be submitted to the Stockholders for approval or ratification. Except with respect to the foregoing matters, no action taken by the Stockholders at any meeting shall in any way bind the Board. Without the approval of a majority of the Shares entitled to vote on the matter, the Board may not (i) amend the Charter to materially and adversely affect the rights, preferences and privileges of the Stockholders; (ii) amend provisions of the Charter relating to director qualifications, fiduciary duties, liability and indemnification, conflicts of interest, investment policies or investment restrictions; (iii) liquidate or dissolve the Corporation other than before the initial investment in property; (iv) sell all or substantially all of the Corporation's assets other than in the ordinary course of business or as otherwise permitted by law; or (v) cause the merger or similar reorganization of the Corporation except as permitted by law.

Section 11.3. Voting Limitations on Shares Held by the Advisor, Directors and Affiliates . With respect to Shares owned by the Advisor, any Director, or any of their Affiliates, neither the Advisor, nor such Director(s), nor any of their Affiliates may vote or consent on matters submitted to the Stockholders regarding the removal of the Advisor, such Director(s) or any of their Affiliates or any transaction between the Corporation and any of them. In determining the requisite percentage in interest of Shares necessary to approve a matter on which the Advisor, such Director(s) and any of their Affiliates may not vote or consent, any Shares owned by any of them shall be deemed not entitled to cast votes on the matter and shall not be included in making such determination.

Section 11.4. Right of Inspection . Any Stockholder and any designated representative thereof shall be permitted access to the records of the Corporation to which it is entitled under applicable law at all reasonable times, and may inspect and copy any of them for a reasonable



	35

charge. Inspection of the Corporation's books and records by the office or agency administering the securities laws of a jurisdiction shall be provided upon reasonable notice and during normal business hours.

Section 11.5. Access to Stockholder List . An alphabetical list of the names, addresses and telephone numbers of the Stockholders, along with the number of Shares held by each of them (the " Stockholder List "), shall be maintained as part of the books and records of the Corporation and shall be available for inspection by any Stockholder or the Stockholder's designated agent at the home office of the Corporation upon the request of the Stockholder only if the Stockholder represents to the Corporation that the list will not be used to pursue commercial interests of the Stockholder unrelated to the Stockholder's interest in the Corporation. If the representation is not included with the request, the Corporation will mail a copy of the representation within five days. The Corporation will mail a list of the names and addresses of all Stockholders within 10 days (or five days if the Stockholder first requests a copy of the representation and returns it within 30 days) of the receipt of the request and the representation and the payment for cost of postage and duplication. The Stockholder List shall be updated at least quarterly to reflect changes in the information contained therein. The copy of the Stockholder List shall be printed in alphabetical order, on white paper, and in a readily readable type size (in no event smaller than ten‑point type). The Corporation may impose a reasonable charge for expenses incurred in reproduction pursuant to the Stockholder request. A Stockholder may request a copy of the Stockholder List in connection with matters relating to Stockholders' voting rights, and the exercise of Stockholder rights under federal proxy laws.

If the Advisor or the Board neglects or refuses to exhibit, produce or mail a copy of the Stockholder List as requested, the Advisor and/or the Board, as the case may be, shall be liable to any Stockholder requesting the Stockholder List for the costs, including reasonable attorneys' fees, incurred by that Stockholder for compelling the production of the Stockholder List, and for actual damages suffered by any Stockholder by reason of such refusal or neglect. It shall be a defense that the actual purpose and reason for the requests for inspection or for a copy of the Stockholder List is to secure the Stockholder List or other information for the purpose of selling the Stockholder List or copies thereof, or of using the same for a commercial purpose other than in the interest of the applicant as a Stockholder relative to the affairs of the Corporation. The remedies provided hereunder to Stockholders requesting copies of the Stockholder List are in addition, to and shall not in any way limit, other remedies available to Stockholders under federal law, or the laws of any state.

Section 11.6. Reports . For each fiscal year after the Commencement of the Initial Public Offering, the Directors, including the Independent Directors, shall take reasonable steps to insure that the Corporation shall cause to be prepared and mailed or delivered to each Stockholder as of a record date after the end of the fiscal year and each holder of other publicly held Securities, within 120 days after the end of the fiscal year to which it relates, an annual report that shall include: (i) financial statements prepared in accordance with generally accepted accounting principles which are audited and reported on by independent certified public accountants; (ii) the ratio of the costs of raising capital during the period to the capital raised; (iii) the aggregate amount of advisory fees and the aggregate amount of other fees paid to the Advisor and any Affiliate of the Advisor by the



	36

Corporation and including fees or charges paid to the Advisor and any Affiliate of the Advisor by third parties doing business with the Corporation; (iv) the Operating Expenses of the Corporation, stated as a percentage of Average Invested Assets and as a percentage of its Adjusted Net Income; (v) a report from the Independent Directors that the policies being followed by the Corporation are in the best interests of its Stockholders and the basis for such determination; and (vi) separately stated, full disclosure of all material terms, factors and circumstances surrounding any and all transactions involving the Corporation, Directors, Advisors, Sponsors and any Affiliate thereof occurring in the year for which the annual report is made, and the Independent Directors shall be specifically charged with a duty to examine and comment in the report on the fairness of such transactions.

Section 11.7. Tender Offers . If any Person makes a tender offer, including, without limitation, a "mini-tender" offer, such Person must comply with all of the provisions set forth in Regulation 14D of the Exchange Act, including, without limitation, disclosure and notice requirements, that would be applicable if the tender offer was for more than five percent of the outstanding Shares; provided , however , that, unless otherwise required by the Exchange Act, such documents are not required to be filed with the Securities and Exchange Commission. In addition, any such Person must provide notice to the Corporation at least ten business days prior to initiating any such tender offer. Any Person who initiates a tender offer without complying with the provisions set forth above (a " Non-Compliant Tender Offer "), shall be responsible for all expenses incurred by the Corporation in connection with the enforcement of the provisions of this Section 11.7, including, without limitation, expenses incurred in connection with the review of all documents related to such tender offer. In addition, the Corporation may seek injunctive relief, including, without limitation, a temporary or permanent restraining order, in connection with any Non-Compliant Tender Offer. This Section 11.7 shall be of no force or effect with respect to any Shares that are then Listed.

ARTICLE XII

LIABILITY LIMITATION AND INDEMNIFICATION

Section 12.1. Limitation of Stockholder Liability . No Stockholder shall be liable for any debt, claim, demand, judgment or obligation of any kind of, against or with respect to the Corporation by reason of his or her being a Stockholder, nor shall any Stockholder be subject to any personal liability whatsoever, in tort, contract or otherwise, to any Person in connection with the Corporation's assets or the affairs of the Corporation by reason of his or her being a Stockholder.

Section 12.2. Limitation of Director and Officer Liability; Indemnification .

Section 12.2.1 Limitation of Director and Officer Liability .

(a) Subject to any limitations set forth under Maryland law or in paragraph (b) below, no Director or officer of the Corporation shall be liable to the Corporation or its Stockholders for money damages. Neither the amendment nor repeal of this Section 12.2.1(a), nor the adoption or amendment of any other provision of the Charter or Bylaws inconsistent with this Section 12.2.1(a), shall apply to or



	37

affect in any respect the applicability of the preceding sentence with respect to any act or failure to act which occurred prior to such amendment, repeal or adoption.

(b) Notwithstanding anything to the contrary contained in paragraph (a) above, the Corporation shall not provide that a Director, the Advisor or any Affiliate of the Advisor (the " Indemnitee ") be held harmless for any loss or liability suffered by the Corporation, unless all of the following conditions are met:

(i) The Indemnitee has determined, in good faith, that the course of conduct that caused the loss or liability was in the best interests of the Corporation.

(ii) The Indemnitee was acting on behalf of or performing services for the Corporation.

(iii) Such liability or loss was not the result of (A) negligence or misconduct, in the case that the Indemnitee is a Director (other than an Independent Director), the Advisor or an Affiliate of the Advisor or (B) gross negligence or willful misconduct, in the case that the Indemnitee is an Independent Director.

(iv) Such agreement to hold harmless is recoverable only out of Net Assets and not from the Stockholders.

Section 12.2.2 Indemnification .

(a) Subject to any limitations set forth under Maryland law or in paragraph (b) or (c) below, the Corporation shall indemnify and, without requiring a preliminary determination of the ultimate entitlement to indemnification, pay or reimburse reasonable expenses in advance of final disposition of a proceeding to (i) any individual who is a present or former Director or officer of the Corporation or a non‑Director member of the investment committee and who is made or threatened to be made a party to the proceeding by reason of his or her service in that capacity, (ii) any individual who, while a Director or officer of the Corporation and at the request of the Corporation, serves or has served as a director, officer, partner, member, manager or trustee of such corporation, real estate investment trust, partnership, limited liability company, joint venture, trust, employee benefit plan or other enterprise and who is made or threatened to be made a party to the proceeding by reason of his or her service in that capacity or (iii) the Advisor or any of its Affiliates acting as an agent of the Corporation. The rights to indemnification and advance of expenses provided to a Director or officer hereby shall vest immediately upon election of such Director or officer. The Corporation may, with the approval of the Board of Directors or any duly authorized committee thereof, provide such indemnification and advance for expenses to a Person who served a predecessor of the Corporation in any of the capacities described in (i) or (ii) above and to any employee or agent of the Corporation or a predecessor of the Corporation. The Board



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may take such action as is necessary to carry out this Section 12.2.2(a). No amendment of the Charter or repeal of any of its provisions shall limit or eliminate the right of indemnification provided hereunder with respect to acts or omissions occurring prior to such amendment or repeal.

(b) Notwithstanding anything to the contrary contained in paragraph (a) above, the Corporation shall not provide for indemnification of an Indemnitee for any liability or loss suffered by such Indemnitee unless all of the following conditions are met:

(v) The Indemnitee has determined, in good faith, that the course of conduct that caused the loss or liability was in the best interests of the Corporation.

(vi) The Indemnitee was acting on behalf of or performing services for the Corporation.

(vii) Such liability or loss was not the result of (A) negligence or misconduct, in the case that the Indemnitee is a Director (other than an Independent Director), the Advisor or an Affiliate of the Advisor or (B) gross negligence or willful misconduct, in the case that the Indemnitee is an Independent Director.

(viii) Such indemnification is recoverable only out of Net Assets and not from the Stockholders.

(c) Notwithstanding anything to the contrary contained in paragraph (a) of this Section 12.2.2, the Corporation shall not provide indemnification for any loss, liability or expense arising from or out of an alleged violation of federal or state securities laws by an Indemnitee and any person acting as a broker dealer unless one or more of the following conditions are met: (i) there has been a successful adjudication on the merits of each count involving alleged material securities law violations as to the Indemnitee, (ii) such claims have been dismissed with prejudice on the merits by a court of competent jurisdiction as to the Indemnitee; or (iii) a court of competent jurisdiction approves a settlement of the claims against the Indemnitee and finds that indemnification of the settlement and the related costs should be made, and the court considering the request for indemnification has been advised of the position of the Securities and Exchange Commission and of the published position of any state securities regulatory authority in which Securities were offered or sold as to indemnification for violations of securities laws.

Section 12.3. Payment of Expenses . The Corporation may pay or reimburse reasonable legal expenses and other costs incurred by an Indemnitee in advance of final disposition of a proceeding only if all of the following are satisfied: (i) the proceeding relates to acts or omissions with respect to the performance of duties or services on behalf of the Corporation, (ii) the Indemnitee provides the Corporation with written affirmation of the Indemnitee's good faith belief that the



	39

Indemnitee has met the standard of conduct necessary for indemnification by the Corporation as authorized by Section 12.2 hereof, (iii) the legal proceeding was initiated by a third party who is not a Stockholder or, if by a Stockholder of the Corporation acting in his or her capacity as such, a court of competent jurisdiction approves such advancement, and (iv) the Indemnitee provides the Corporation with a written agreement to repay the amount paid or reimbursed by the Corporation, together with the applicable legal rate of interest thereon, if it is ultimately determined that the Indemnitee did not comply with the requisite standard of conduct and is not entitled to indemnification.

Section 12.4. Express Exculpatory Clauses in Instruments . Neither the Stockholders nor the Directors, officers, employees or agents of the Corporation shall be liable under any written instrument creating an obligation of the Corporation by reason of their being Stockholders, Directors, officers, employees or agents of the Corporation, and all Persons shall look solely to the Corporation's assets for the payment of any claim under or for the performance of that instrument. The omission of the foregoing exculpatory language from any instrument shall not affect the validity or enforceability of such instrument and shall not render any Stockholder, Director, officer, employee or agent liable thereunder to any third party, nor shall the Directors or any officer, employee or agent of the Corporation be liable to anyone as a result of such omission.

ARTICLE XIII

AMENDMENTS

The Corporation reserves the right from time to time to make any amendment to the Charter, now or hereafter authorized by law, including any amendment altering the terms or contract rights, as expressly set forth in the Charter, of any Shares. All rights and powers conferred by the Charter on Stockholders, Directors and officers are granted subject to this reservation. Except for those amendments permitted to be made without Stockholder approval under Maryland law or by specific provision in the Charter, any amendment to the Charter shall be valid only if approved by the affirmative vote of a majority of all votes entitled to be cast on the matter, including without limitation, (1) any amendment which would adversely affect the rights, preferences and privileges of the Stockholders and (2) any amendment to Sections 7.2, 7.5 and 7.11 of Article VII, Article IX, Article X, Article XII and Article XIV hereof and this Article XIII (or any other amendment of the Charter that would have the effect of amending such sections).

ARTICLE XIV

ROLL‑UP TRANSACTIONS

Section 14.1. Roll-Up Transactions . In connection with any proposed Roll‑Up Transaction, an appraisal of all of the Corporation's assets shall be obtained from a competent Independent Appraiser. If the appraisal will be included in a prospectus used to offer the securities of a Roll-Up Entity, the appraisal shall be filed with the Securities and Exchange Commission and the states as an exhibit to the registration statement for the offering.The Corporation's assets shall be appraised on a consistent basis, and the appraisal shall be based on the evaluation of all relevant information and shall indicate the value of the assets as of a date immediately prior to the



	40

announcement of the proposed Roll‑Up Transaction. The appraisal shall assume an orderly liquidation of the assets over a twelve‑month period. The terms of the engagement of the Independent Appraiser shall clearly state that the engagement is for the benefit of the Corporation and the Stockholders. A summary of the appraisal, indicating all material assumptions underlying the appraisal, shall be included in a report to Stockholders in connection with a proposed Roll‑Up Transaction. In connection with a proposed Roll‑Up Transaction, the Person sponsoring the Roll‑Up Transaction shall offer to holders of Common Shares who vote against the proposed Roll‑Up Transaction the choice of:

(a) accepting the securities of a Roll‑Up Entity offered in the proposed Roll‑Up Transaction; or

(b) one of the following:

(i) remaining as Stockholders and preserving their interests therein on the same terms and conditions as existed previously; or

(ii) receiving cash in an amount equal to the Stockholder's pro rata share of the appraised value of the net assets of the Corporation.

Section 14.2. Limitations on Roll-Up Transactions . The Corporation is prohibited from participating in any proposed Roll‑Up Transaction:

(a) that would result in the holders of Common Shares having voting rights in a Roll‑Up Entity that are less than the rights provided for in Sections 11.1 and 11.2 hereof;

(b) that includes provisions that would operate as a material impediment to, or frustration of, the accumulation of Shares by any purchaser of the securities of the Roll‑Up Entity (except to the minimum extent necessary to preserve the tax status of the Roll‑Up Entity), or which would limit the ability of an investor to exercise the voting rights of its securities of the Roll‑Up Entity on the basis of the number of Shares held by that investor;

(c) in which investor's rights to access of records of the Roll‑Up Entity will be less than those described in Sections 11.4 and 11.5 hereof; or

(d) in which any of the costs of the Roll‑Up Transaction would be borne by the Corporation if the Roll‑Up Transaction is rejected by the holders of Common Shares.

THIRD : The amendment and restatement of the charter of the Corporation as hereinabove set forth has been duly advised and approved by the Board of Directors and approved by the stockholders of the Corporation to the extent required by law.

FOURTH : The current address of the principal office of the Corporation is as set forth in Article III of the foregoing amendment and restatement of the charter.



	41

FIFTH : The name and address of the Corporation's current resident agent is as set forth in Article III of the foregoing amendment and restatement of the charter.

SIXTH : The number of directors of the Corporation and the names of those currently in office are as set forth in Article VII of the foregoing amendment and restatement of the charter.

SEVENTH : The total number of shares of stock which the Corporation had authority to issue immediately prior to the foregoing amendment and restatement of the charter of the Corporation was 150,000,000 shares of Common Stock, $.001 par value per share. The aggregate par value of all shares of stock having par value was $150,000.00.

EIGHTH : The total number of shares of stock which the Corporation has authority to issue pursuant to the foregoing amendment and restatement of the charter of the Corporation is 450,000,000, consisting of 400,000,000 shares of Common Stock, $.001 par value per share, 320,000,000 of which are classified as shares of Class A Common Stock and 80,000,000 of which are classified as shares of Class T Common Stock, and 50,000,000 shares of Preferred Stock, $.001 par value per share. The aggregate par value of all authorized shares of stock having par value is $450,000.00.

NINTH : The undersigned acknowledges these Articles of Amendment and Restatement to be the corporate act of the Corporation and as to all matters or facts required to be verified under oath, the undersigned acknowledges that to the best of his knowledge, information and belief, these matters and facts are true in all material respects and that this statement is made under the penalties for perjury.



	42

IN WITNESS WHEREOF, the Corporation has caused these Second Articles of Amendment and Restatement to be signed in its name and on its behalf by its Chief Executive Officer and attested to by its Secretary on this 30 ^th day of April, 2015.



ATTEST:	CAREY WATERMARK INVESTORS 2 INCORPORATED
/s/ Susan C. Hyde Name: Susan C. Hyde Title: Secretary	/s/ Thomas E. Zacharias (SEAL) Name: Thomas E. Zacharias Title: Chief Operating Officer



	43

EXHIBIT 4.1

CAREY WATERMARK INVESTORS 2 INCORPORATED

DISTRIBUTION REINVESTMENT PLAN

1. Participation; Agent. Carey Watermark Investors 2 Incorporated's Distribution Reinvestment Plan ("Plan") is available to stockholders of record of the Class A Common Stock, par value $.001 per share, and the Class C Common Stock, par value $.001 per share, (collectively, the "Common Stock") of Carey Watermark Investors 2 Incorporated ("CWI 2" or the "Company"). DST Systems, Inc. ("DST") acting as agent for each participant in the Plan, will apply cash distributions that become payable to such participant on shares of Common Stock (including shares held in the participant's name and shares accumulated under the Plan), to the purchase of additional whole and fractional shares of Common Stock of the same class for such participant, i.e. distributions paid on Class A Common Stock will be used to purchase additional shares of Class A Common Stock, and distributions paid on Class C Common Stock will be used to purchase additional shares of Class C Common Stock.

2. Eligibility. Participation in the Plan is limited to registered owners of Common Stock. Shares held by a broker-dealer or nominee must be transferred to ownership in the name of the stockholder in order to be eligible for this Plan. Further, a stockholder who wishes to participate in the Plan may purchase shares through the Plan only after receipt of a prospectus relating to the Plan, which prospectus may also relate to a concurrent public offering of shares by CWI 2. CWI 2's board of directors' (the "Board") reserves the right to amend the Plan in the future to permit voluntary cash investments in Class A Common Stock and/or Class C Common Stock pursuant to the Plan. A participating stockholder is not required to include all of the shares owned by such stockholder in the Plan, but all of the cash distributions paid on enrolled shares will be reinvested in shares of the same class.

3. Stock Purchases. In making purchases for the accounts of participants, DST may commingle the funds of one participant with those of other participants in the Plan. All shares purchased under the Plan will be held in the name of each participant. Purchases will be made directly from CWI 2 at 96% of the estimated net asset value ("NAV") per share of CWI 2's Class A Common Stock or Class C Common Stock, as applicable, as estimated by Carey Lodging Advisors, LLC (the "Advisor") or another firm CWI 2 chooses for that purpose; provided, however, that during any period in which CWI 2 is conducting a public offering of its Class A Common Stock and/or Class C Common Stock, as applicable, and until a subsequent NAV is determined, purchases will be made through the Plan at a price per share equal to 96% of the per share offering price of CWI 2's Class A Common Stock and/or Class C Common Stock, as applicable, in the public offering. DST shall have no responsibility with respect to the market value of the Common Stock acquired for participants under the Plan.

4. Timing of Purchases . DST will make every reasonable effort to reinvest all distributions on the day the cash distribution is paid (except where necessary to comply with applicable securities laws) by CWI 2. If, for any reason beyond the control of DST, reinvestment

of the distributions cannot be completed within 30 days after the applicable distribution payment date, participants' funds held by DST will be distributed to the participant.

5. Account Statements . Following the completion of the purchase of shares after each distribution, DST will provide to each participant an account statement showing the cash distribution, the number of shares purchased with the cash distribution and the year-to-date and cumulative cash distributions paid.

6. Expenses and Commissions . There will be no direct expenses to participants for the administration of the Plan. Administrative fees associated with the Plan will be paid by CWI 2. In no event will any discounts (including, without limitation, any discounts attributable to CWI 2's payment of brokerage commissions on behalf of the participants) on shares exceed 5% of the fair market value of such purchased shares.

7. Taxation of Distributions . The reinvestment of distributions does not relieve the participant of any taxes which may be payable on such distributions.

8. Stock Certificates . No stock certificates will be issued to a participant.

9. Voting of Shares . In connection with any matter requiring the vote of either or both classes of CWI 2 stockholders, each participant will be entitled to vote all of the whole shares held by the participant in the Plan. Fractional shares will not be voted.

10. Absence of Liability . Neither CWI 2 nor DST shall have any responsibility or liability as to the value of CWI 2's shares, any change in the value of the shares acquired for any participant's account, or the rate of return earned on, or the value of, the interest-bearing accounts, if any, in which distributions are invested. Neither CWI 2 nor DST shall be liable for any act done in good faith, or for any good faith omission to act, including, without limitation, any claims of liability: (a) arising out of the failure to terminate a participant's participation in the Plan upon such participant's death prior to the date of receipt of such notice, and (b) with respect to the time and prices at which shares are purchased for a participant. NOTWITHSTANDING THE FOREGOING, LIABILITY UNDER THE U.S. FEDERAL SECURITIES LAWS CANNOT BE WAIVED. Similarly, CWI 2 and DST have been advised that in the opinion of certain state securities commissioners, indemnification is also considered contrary to public policy and therefore unenforceable.

11. Termination of Participation . A participant may terminate participation in the Plan at any time by written instructions to that effect to DST. To be effective on a distribution payment date, the notice of termination and termination fee must be received by DST at least 15 days before that distribution payment date. Upon receipt of notice of termination from the participant, DST may also terminate any participant's account at any time in its discretion by notice in writing mailed to the participant.

12. Amendment, Supplement, Termination and Suspension of Plan . This Plan may be amended, supplemented or terminated by CWI 2 at any time by the delivery of written notice to each participant at least 10 days prior to the effective date of the amendment, supplement or



	2

termination. Any amendment or supplement shall be effective as to the participant unless, prior to its effective date, DST receives written notice of termination of the participant's account. Amendment may include an appointment by CWI 2 or DST with the approval of CWI 2 of a successor agent, in which event such successor shall have all of the rights and obligations of DST under this Plan. CWI 2 may suspend the Plan with regard to either or both classes of Common Stock at any time without notice to the participants.

13. Governing Law . This Plan and the authorization card signed by the participant (which is deemed a part of this Plan) and the participant's account shall be governed by and construed in accordance with the laws of the State of Maryland provided that the foregoing choice of law shall not restrict the application of any state's securities laws to the sale of shares to its residents or within such state. This Agreement cannot be changed orally.



	3

Exhibit 10.1








	ADVISORY AGREEMENT



CONTENTS
	Page

1. Definitions 1

2. Appointment 8

3. Duties of the Advisor 8

4. Authority of Advisor 11

5. Bank Accounts 12

6. Records; Access 12

7. Limitations on Activities 12

8. Relationship with Directors 14

9. Fees 15

10. Expenses. 17

11. Other Services 19

12. Fidelity Bond 20

13. Limitation on Expenses 20

14. Other Activities of the Advisor. 21

15. Relationship of Advisor and CWI 2 22

16. Term; Termination of Agreement 22

17. Termination by CWI 2 22

18. Termination by Either Party 23

19. Assignment Prohibition 23

20. Payments to and Duties of Advisor Upon Termination 23

21. Non-Solicitation and Non-Hire Following Termination 24

22. Indemnification by CWI 2 and the Operating Partnership 25

23. Indemnification by Advisor 25

24. Joint and Several Obligations 25

25. Notices 25

26. Modification 26

27. Severability 26

28. Construction 26

29. Entire Agreement 26

30. Indulgences, Not Waivers 26

31. Gender 27

32. Titles Not to Affect Interpretation 27

33. Execution in Counterparts 27

34. Initial Investment 27

ADVISORY AGREEMENT

THIS ADVISORY AGREEMENT, dated as of February 9, 2015, is among CAREY WATERMARK INVESTORS 2 INCORPORATED, a Maryland corporation (" CWI 2 "), CWI 2 OP, LP, a Delaware limited partnership of which CWI 2 is the general partner (the " Operating Partnership "), and CAREY LODGING ADVISORS, LLC, a Delaware limited liability company (the " Advisor ").

W I T N E S S E T H:

WHEREAS, CWI 2 through its interest in the Operating Partnership intends to acquire, own, dispose of, and, through its Advisor, manage a portfolio consisting primarily of lodging and other lodging related investments; and

WHEREAS, CWI 2 intends to qualify as a REIT (as defined below), and the Operating Partnership intends to qualify as a partnership, in each case for U.S. federal income tax purposes; and

WHEREAS, CWI 2 and its subsidiaries, including the Operating Partnership, desire to avail themselves of the experience, sources of information, advice and assistance of, and certain facilities available to, the Advisor and to have the Advisor undertake the duties and responsibilities hereinafter set forth, on behalf of, and subject to the supervision of the Board of Directors of CWI 2, all as provided herein; and

WHEREAS, the Advisor is willing to render such services, subject to the supervision of the Board of Directors of CWI 2, on the terms and conditions hereinafter set forth;

NOW, THEREFORE, in consideration of the foregoing and of the mutual covenants and agreements contained herein, the parties hereto agree as follows:

1. Definitions . As used in this Agreement, the following terms have the definitions hereinafter indicated:

" 2%/25% Guidelines ." The requirement, as provided for in Section 13 hereof, that, in the 12‑month period ending on the last day of any fiscal quarter, Operating Expenses not exceed the greater of two percent of Average Invested Assets during such 12‑month period or 25% of CWI 2's Adjusted Net Income over the same 12‑month period.

" Acquisition Expenses ." To the extent not paid or to be paid by the seller, lessee, borrower or any other party involved in the transaction, those expenses, including, but not limited to, travel and communications expenses, the cost of appraisals, title insurance, nonrefundable option payments on Investments not acquired, legal fees and expenses, accounting fees and expenses, and miscellaneous expenses related to selection, acquisition and origination of Investments, whether or not a particular Investment ultimately is made. Acquisition Expenses shall not include Acquisition Fees.

" Acquisition Fees ." Any fee or commission paid by CWI 2 or its subsidiaries to the Advisor, or, with respect to Section 9(b)(ii), by CWI 2 or its subsidiaries to any party, in connection with the making of Investments, including, without limitation, the purchase, development or construction of Properties. A Development Fee or Construction Fee paid to a Person not affiliated with the Sponsor in connection with the actual development or construction of a project after acquisition of the Property by CWI 2 shall not be deemed an Acquisition Fee. Included in the computation of such fees or commissions shall be any real estate commission, selection fee, Development Fee or Construction Fee (other than as described above), non‑recurring management fees, loan fees, points or any fee of a similar nature, however designated. Acquisition Fees shall not include Acquisition Expenses.

" Adjusted Net Income ." For any period, the total consolidated revenues recognized in such period by CWI 2, less the total consolidated expenses of CWI 2 recognized in such period, excluding additions to reserves for depreciation and amortization, bad debts or other similar non-cash reserves; provided, however , that Adjusted Net Income for purposes of calculating total allowable Operating Expenses under the 2%/25% Guidelines shall exclude any gains, losses or writedowns from the sale of CWI 2's assets.

" Affiliate ." An Affiliate of another Person shall include any of the following: (i) any Person directly or indirectly owning, controlling, or holding, with power to vote ten percent or more of the outstanding voting securities of such other Person; (ii) any Person ten percent or more of whose outstanding voting securities are directly or indirectly owned, controlled, or held, with power to vote, by such other Person; (iii) any Person directly or indirectly controlling, controlled by, or under common control with such other Person; (iv) any executive officer, director, trustee or general partner of such other Person; or (v) any legal entity for which such Person acts as an executive officer, director, trustee or general partner.

" Agreement ." This Advisory Agreement.

" Appraised Value ." Value according to an appraisal made by an Independent Appraiser, which may take into consideration any factor deemed appropriate by such Independent Appraiser, including, but not limited to, current market and property conditions, any unique attributes of the property or its operations, current and anticipated income and expense trends, forecasts of stabilized operations, repositioning opportunities and conditions in the credit and investment markets. The Appraised Value of a Property may be greater than the construction cost or the replacement cost of the Property.

" Asset Management Fee ." The Asset Management Fee as defined in Section 9(a) hereof.

" Average Invested Assets ." The average during any period of the aggregate book value of CWI 2's Investments, before deducting reserves for depreciation, bad debts, impairments, amortization and all other non-cash reserves, computed by taking the average of such values at the end of each month during such period.

" Average Market Value ." The Total Investment Cost paid by CWI 2 for an Investment, less Acquisition Fees, provided that, if a later Appraised Value is obtained for the Investment, that later Appraised Value, adjusted for other net assets and liabilities that have economic value and are associated with that Investment, shall become the Average Market Value for the Investment.

" Board or Board of Directors ." The Board of Directors of CWI 2.

" Bylaws ." The bylaws of CWI 2, as amended from time to time.

" Cause ." With respect to the termination of this Agreement means the occurrence of any of the following: (a) the transfer of W. P. Carey & Co. LLC's interests in the Advisor to one or more entities other than to one or more controlled subsidiaries of W. P. Carey & Co. LLC, (b) fraud, criminal conduct, willful misconduct or willful or negligent breach of fiduciary duty by the Advisor that, in each case, is determined by a majority of the Independent Directors to be materially adverse to CWI 2, or (c) a breach of a material term or condition of this Agreement by the Advisor and the Advisor has not cured such breach within 30 days of written notice thereof or, in the case of any breach that cannot be cured within 30 days by reasonable effort, has not taken all necessary action within a reasonable time period to cure such breach.

" Charter ." The Charter of CWI 2 under the Maryland General Corporation Law, as amended from time to time, pursuant to which CWI 2 is organized.

" Code ." Internal Revenue Code of 1986, as amended.

" Competitive Real Estate Commission ." The real estate or brokerage commission paid for the purchase or sale of an Investment that is reasonable, customary and competitive in light of the size, type and location or other relevant characteristics of the Investment.

" Construction Fee ." A fee or other remuneration for acting as general contractor and/or construction manager to construct improvements, supervise and coordinate projects or to provide major repairs or rehabilitations on a Property.

" Contract Purchase Price ." The amount actually paid for, or allocated (as of the date of purchase) to, the purchase, development, construction or improvement of an Investment or, in the case of an originated Loan, the principal amount of such Loan, in each case exclusive of Acquisition Fees and Acquisition Expenses.

" Contract Sales Price ." The total consideration received by CWI 2 for the sale of an Investment.

" Control ." The possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of a Person, whether through the ability to exercise voting power, by contract or otherwise. "Controlling" and "Controlled" have meanings correlative thereto.

" CWI 1 " Carey Watermark Investors Incorporated, a Maryland corporation.

" CWI 2. " Carey Watermark Investors 2 Incorporated together with its consolidated subsidiaries, including the Operating Partnership, unless in the context of a particular reference, it is clear that such reference refers to Carey Watermark Investors 2 Incorporated excluding its consolidated subsidiaries. Unless the context otherwise requires, any reference to financial measures of CWI 2 shall be calculated by reference to the consolidated financial statements of CWI 2 and its subsidiaries, including, without limitation, the Operating Partnership, prepared in accordance with GAAP.

" Dealer Manager ." Carey Financial, LLC.

" Development Fee ." A fee for the packaging of a Property including negotiating and approving plans, and undertaking to assist in obtaining zoning and necessary variances and necessary financing for the specific Property, either initially or at a later date.

" Directors ." The persons holding such office, as of any particular time, under the Articles of Incorporation, whether they be the directors named therein or additional or successor directors.

" Disposition Fee ." The Disposition Fee as defined in Section 9(d) hereof.

" Distributions ." Distributions declared by the Board.

" Distribution and Shareholder Servicing Fees ." The distribution and shareholder servicing fees payable to the Dealer Manager as described in the Prospectus.

" GAAP ." Generally accepted accounting principles, as applied in the United States.

" Good Reason ." With respect to the termination of this Agreement, (i) any failure to obtain a satisfactory agreement from any successor to CWI 2 or the Operating Partnership to assume and agree to perform CWI 2's or the Operating Partnership's, as applicable, obligations under this Agreement; or (ii) any material breach of this Agreement of any nature whatsoever by CWI 2 or the Operating Partnership; provided that (a) such breach is of a material term or condition of this Agreement and (b) CWI 2 or the Operating Partnership, as applicable, has not cured such breach within 30 days of written notice thereof or, in the case of any breach that cannot be cured within

30 days by reasonable effort, has not taken all necessary action within a reasonable time period to cure such breach.

" Gross Offering Proceeds ." The aggregate purchase price of Shares sold in any Offering.

" Guidelines ." The Investment Allocation Guidelines set forth as Schedule A.

" Incentive Plan ." CWI 2's 2014 Equity Incentive Plan.

" Independent Appraiser ." A qualified appraiser of real estate as determined by the Board, who has no material current or prior business or personal relationship with the Advisor or the Directors and who is engaged to a substantial extent in the business of rendering opinions regarding the value of assets of the type held by CWI 2. Membership in a nationally recognized appraisal society such as the American Institute of Real Estate Appraisers or the Society of Real Estate Appraisers shall be conclusive evidence of such qualification (but not of independence).

" Independent Director ." A Director of CWI 2 who meets the criteria for an Independent Director specified in the Articles of Incorporation.

" Individual ." Any natural person and those organizations treated as individuals in Section 542(a) of the Code.

" Investment ." An investment made by CWI 2, directly or indirectly, in a Property, Loan or Other Permitted Investment Asset.

" Investment Committee ." The committee of individuals responsible for reviewing Investments on behalf of CWI 2.

" Investment Opportunity ." With respect to the limitations set forth in Section 14 hereof, the opportunity to lease, sublease, purchase or to offer to purchase any asset or investment originated by, presented to or otherwise identified by the Subadvisor, the Advisor, or any of their respective Affiliates, as applicable, relating to (i) Lodging Facilities or (ii) Lodging Loans. "Investment Opportunity" shall not include any opportunity to purchase or to offer to purchase any asset or investment located outside the Americas.

" Loans ." The notes and other evidences of indebtedness or obligations acquired, originated or entered into, directly or indirectly, by CWI 2 as lender, noteholder, participant, note purchaser or other capacity, including but not limited to first or subordinate mortgage loans, construction loans, development loans, loan participations, B notes, loans secured by capital stock or any other assets or form of equity interest and any other type of loan or financial arrangement, such as providing or arranging for letters of credit, providing guarantees of obligations to third parties, or providing commitments for loans. The term "Loans" shall not include leases which are not recognized as leases for federal income tax reporting purposes.

" Loan Refinancing Fee ." A fee payable to the Advisor in respect of the refinancing of a loan secured by an Investment.

" Lodging Facility or Lodging Facilities ." With respect to an Investment Opportunity (1) a hotel, motel or other mixed-use establishment of which more than one-half (1/2) of its dwelling units are used on a transient basis or (2) equity interests in an entity that derives at least 30% of its earnings before interest, taxes, depreciation and amortization, or "EBITDA", from owning, operating or managing facilities of the type described in clause (1) of this definition.

" Lodging Loans ." With respect to an Investment Opportunity (1) Loans fully or partially secured by Lodging Facilities or equity interests in entities that own, directly or indirectly, Lodging Facilities; (2) unsecured Loans to entities that derive at least 30% of their EBITDA from interests in Lodging Facilities, or (3) participations in any of the Loans described in clauses (1) or (2) of this definition.

" Offering ." The offering of Shares pursuant to a Prospectus.

" Operating Expenses ." All consolidated operating, general and administrative expenses paid or incurred by CWI 2, as determined under GAAP, except the following (insofar as they would otherwise be considered operating, general and administrative expenses under GAAP): (i) interest and discounts and other cost of borrowed money; (ii) taxes (including state, Federal and foreign income tax, property taxes and assessments, franchise taxes and taxes of any other nature); (iii) expenses of raising capital, including Organization and Offering Expenses, printing, engraving, and other expenses, and taxes incurred in connection with the issuance and distribution of CWI 2's Shares and Securities; (iv) Acquisition Expenses, real estate commissions on resale of property and other expenses connected with the acquisition, disposition, origination, ownership and operation of Investments, including the costs of foreclosure, insurance premiums, legal services, brokerage and sales commissions, and the maintenance, repair and improvement of property; (v) Acquisition Fees or Disposition Fees payable to the Advisor or any other party; (vi) Distribution and Shareholder Servicing Fees payable to the Dealer Manager; (vii) distributions paid by the Operating Partnership to the Special General Partner under the agreement of limited partnership of the Operating Partnership in respect of gains realized on dispositions of Investments and other capital transactions; (viii) amounts paid to effect a redemption or repurchase of the special general partner interest held by the Special General Partner pursuant to the agreement of limited partnership of the Operating Partnership; and (ix) non-cash items, such as depreciation, amortization, depletion, and additions to reserves for depreciation, amortization, depletion, losses and bad debts. Notwithstanding anything herein to the contrary, Operating Expenses shall include the Asset Management Fee and any Loan Refinancing Fee and, solely for the purposes of determining compliance with the 2%/25% Guidelines, distributions of available cash generated by operations and investments made by the Operating Partnership to the Special General Partner pursuant to the agreement of limited partnership of the Operating Partnership, which, for the avoidance of doubt, does not include distributions described in clauses (vii) and (viii) of this definition.

" Operating Partnership ." CWI 2 OP, LP, a Delaware limited partnership, through which CWI 2 owns Investments.

" Organization and Offering Expenses ." Those expenses payable by CWI 2 and the Operating Partnership in connection with the formation, qualification and registration of CWI 2 and in marketing and distributing Shares, including, but not limited to: (i) the preparation, printing, filing

and delivery of any registration statement or Prospectus (including any amendments thereof or supplements thereto) and the preparing and printing of contractual agreements among CWI 2, the Operating Partnership, the Dealer Manager and the Selected Dealers (including copies thereof); (ii) the preparing and printing of the Charter and Bylaws, other solicitation material and related documents and the filing and/or recording of such documents necessary to comply with the laws of the State of Maryland for the formation of a corporation and thereafter for the continued good standing of a corporation; (iii) the qualification or registration of the Shares under state securities or "Blue Sky" laws; (iv) any escrow arrangements, including any compensation to an escrow agent; (v) the filing fees payable to the SEC and to the Financial Industry Regulatory Authority; (vi) reimbursement for the reasonable and identifiable out-of-pocket expenses of the Dealer Manager and the Selected Dealers, including the cost of their counsel; (vii) the fees of CWI 2's counsel and accountants; (viii) all advertising expenses incurred in connection with an Offering, including the cost of all sales literature and the costs related to investor and broker-dealer sales and information meetings and marketing incentive programs; and (ix) selling commissions, dealer manager fees, selected dealer fees, marketing fees, incentive fees and due diligence fees incurred in connection with the sale of the Shares.

" Other Permitted Investment Asset ." An asset, other than cash, cash equivalents, short term bonds, auction rate securities and similar short term investments, acquired by CWI 2 for investment purposes that is not a Loan or a Property and is consistent with the investment objectives and policies of CWI 2.

" Person ." An Individual, corporation, partnership, joint venture, association, company, trust, bank, or other entity, or government or any agency or political subdivision of a government.

" Property or Properties ."CWI 2's partial or entire interest in real property (including leasehold interests) and personal or mixed property connected therewith. An Investment which obligates CWI 2 to acquire a Property will be treated as a Property for purposes of this Agreement.

" Property Management Fee ." Subject to CWI 2's intention to qualify as a REIT for U.S. federal income tax purposes, a fee for property management services rendered by the Advisor or its Affiliates in connection with Properties acquired directly or through foreclosure.

" Prospectus ." Any prospectus or offering document pursuant to which CWI 2 offers Shares in a public or private offering, as the same may at any time and from time to time be amended or supplemented, after the effective date of the registration statement in which it is included.

" REIT ." A real estate investment trust, as defined in Sections 856-860 of the Code.

" Securities ." Any stock, shares (other than currently outstanding Shares and subsequently issued Shares), or other evidences of equity or beneficial or other interests, voting trust certificates, bonds, debentures, notes or other evidences of indebtedness, secured or unsecured, convertible, subordinated or otherwise or in general any instruments commonly known as "securities" or any certificate of interest, shares or participation in temporary or interim certificates for, receipts for, guarantees of, or warrants, options or rights to subscribe to, purchase or acquire any of the foregoing.

" Selected Dealers ." Broker-dealers who are members of the Financial Industry Regulatory Authority and who have executed an agreement with the Dealer Manager in which the Selected Dealers agree to participate with the Dealer Manager in the Offering.

" Shareholders ." Those Persons who, at the time any calculation hereunder is to be made, are shown as holders of record of Shares on the books and records of CWI 2 or its transfer agent.

" Shares ." The shares of any class of common stock of CWI 2, $0.001 par value, and any other shares of common stock of CWI 2.

" Special General Partner ." Carey Watermark Holdings 2, LLC and any permitted transferee of the special general partnership interest under the agreement of limited partnership of the Operating Partnership.

" Sponsor ." W. P. Carey Inc. and any other Person directly or indirectly instrumental in organizing, wholly or in part, CWI 2 or any person who will control, manage or participate in the management of CWI 2, and any Affiliate of any such person. Sponsor does not include a person whose only relationship to CWI 2 is that of an independent property manager and whose only compensation is as such. Sponsor also does not include wholly independent third parties such as attorneys, accountants and underwriters whose only compensation is for professional services.

" Subadvisor ." CWA 2, LLC, an Illinois limited liability company.

" Subadvisory Agreement ." The Subadvisory Agreement, dated as of the date hereof (as amended from time to time), between the Advisor and the Subadvisor.

" Termination Date ." The effective date of any termination of this Agreement.

" Total Investment Cost ." With regard to any Investment, an amount equal to the sum of the Contract Purchase Price of such Investment plus the Acquisition Fees and Acquisition Expenses paid in connection with such Investment and other fees and costs approved by the Independent Directors relating to the initial capitalization of the Investment.

2. Appointment . CWI 2 hereby appoints the Advisor to serve as its advisor on the terms and conditions set forth in this Agreement, and the Advisor hereby accepts such appointment.

3. Duties of the Advisor . Subject to Section 14, the Advisor undertakes to use its best efforts to present to CWI 2 potential investment opportunities and to provide a continuing and suitable investment program consistent with the investment objectives and policies of CWI 2 as determined and adopted from time to time by the Board. The Advisor will follow the Guidelines when allocating Investment opportunities among CWI 2, other entities managed by the Advisor and its Affiliates, and the Advisor and its Affiliates for their own account. The Guidelines shall not be amended without the prior approval of at least a majority of the Independent Directors. In performance of the foregoing undertakings, subject to the supervision of the Board and consistent with the provisions of the Articles of Incorporation and Bylaws of CWI 2 and any Prospectus pursuant to which Shares are offered, the Advisor shall, either directly or by engaging an Affiliate or the Subadvisor:

(a) serve as CWI 2's investment and financial advisor and provide research and economic and statistical data in connection with CWI 2's assets and investment policies;

(b) provide the daily management of CWI 2 and perform and supervise the various administrative functions reasonably necessary for the management of CWI 2, the Operating Partnership and the Investments;

(c) investigate, select, and, on behalf of CWI 2, engage, oversee and conduct business with such Persons as the Advisor deems necessary to the proper performance of its obligations hereunder, including but not limited to consultants, accountants, correspondents, lenders, technical advisors, attorneys, brokers, underwriters, corporate fiduciaries, escrow agents, depositaries, custodians, agents for collection, insurers, insurance agents, banks, builders, developers, property owners, mortgagors, franchisors, independent property operators and any and all agents for any of the foregoing, including Affiliates of the Advisor, and Persons acting in any other capacity deemed by the Advisor necessary or desirable for the performance of any of the foregoing services, including but not limited to entering into contracts in the name of CWI 2 with any of the foregoing;

(d) consult with Directors of CWI 2 and assist the Board in the formulation and implementation of CWI 2's policies, and furnish the Board with such information, advice and recommendations as they may request or as otherwise may be necessary to enable them to discharge their fiduciary duties with respect to matters coming before the Board;

(e) subject to the provisions of Sections 3(h) and 4 hereof: (i) locate, analyze and select potential Investments and deliver to the Investment Committee, as applicable, such information as it may request or as otherwise may be necessary to enable the Investment Committee to evaluate potential Investments; (ii) structure and negotiate the terms and conditions of transactions pursuant to which Investments will be made, purchased or acquired by CWI 2; (iii) make Investments on behalf of CWI 2; (iv) arrange for financing and refinancing of, make other changes in the asset or capital structure of, dispose of, reinvest the proceeds from the sale of, or otherwise deal with the Investments; (v) enter into service contracts for Properties and, to the extent necessary, perform all other operational functions for the maintenance and administration of such; (vi) oversee such non-affiliated property managers and other non-affiliated Persons who perform services for CWI 2; and (vii) undertake accounting and other record-keeping functions at the Investment level;

(f) provide the Board with periodic reports regarding prospective Investments and with periodic reports, no less than quarterly, of new Investments made during the prior fiscal quarter;

(g) assist the Board in its evaluation of potential liquidity transactions for CWI 2 and take such actions as may be requested by the Board or as may otherwise be necessary or desirable to execute any liquidity transaction approved by the Board;

(h) obtain the prior approval of the Board (including a majority of the Independent Directors) for any and all investments in Properties which do not meet all of the requirements set forth in Section 4(b) hereof;

(i) negotiate on behalf of CWI 2 with banks or lenders for loans to be made to CWI 2, and negotiate on behalf of CWI 2 with investment banking firms and broker-dealers or negotiate private sales of Shares and Securities or obtain loans for CWI 2, but in no event in such a way so that the Advisor shall be acting as broker-dealer or underwriter; and provided , further , that any fees and costs payable to third parties incurred by the Advisor in connection with the foregoing shall be the responsibility of CWI 2;

(j) obtain reports (which may be prepared by the Advisor or its Affiliates), where appropriate, concerning the value of Investments or contemplated Investments;

(k) obtain for, or provide to, CWI 2 such services as may be required in acquiring, managing and disposing of Investments, including, but not limited to: (i) the negotiation, making and servicing of Investments; (ii) the disbursement and collection of Company monies; (iii) the payment of debts of and fulfillment of the obligations of CWI 2; and (iv) the handling, prosecuting and settling of any claims of or against CWI 2, including, but not limited to, foreclosing and otherwise enforcing mortgages and other liens securing Loans;

(l) from time to time, or at any time reasonably requested by the Board, make reports to the Board of its performance of services to CWI 2 under this Agreement;

(m) communicate on behalf of CWI 2 with Shareholders as required to satisfy the reporting and other requirements of any governmental bodies or agencies to Shareholders and third parties and otherwise as requested by CWI 2;

(n) provide or arrange for administrative services and items, legal and other services, office space, office furnishings, personnel and other overhead items necessary and incidental to CWI 2's business and operations;

(o) provide CWI 2 with such accounting data and any other information requested by CWI 2 concerning the investment activities of CWI 2 as shall be required to prepare and to file all periodic financial reports and returns required to be filed with the Securities and Exchange Commission and any other regulatory agency, including annual financial statements;

(p) maintain the books and records of CWI 2;

(q) supervise the performance of such ministerial and administrative functions as may be necessary in connection with the daily operations of the Investments;

(r) provide CWI 2 with all necessary cash management services;

(s) provide asset management services including, without limitation, oversight and strategic guidance to independent property operators that handle day-to-day operations of CWI 2's Properties;

(t) do all things necessary to assure its ability to render the services described in this Agreement;

(u) perform such other services as may be required from time to time for management and other activities relating to the assets of CWI 2 as the Advisor shall deem advisable under the particular circumstances;

(v) arrange to obtain on behalf of CWI 2 as requested by the Board, and deliver to or maintain on behalf of CWI 2 copies of, all appraisals obtained in connection with Investments;

(w) if a transaction, proposed transaction or other matter requires approval by the Board or by the Independent Directors, deliver to the Board or the Independent Directors, as the case may be, all documentation reasonably requested by them to properly evaluate such transaction, proposed transaction or other matter; and

(x) on an annual basis, no later than 90 days prior to the end of each term of this Agreement, provide the Independent Directors with a report on (1) the Advisor's performance during the past year, (2) the compensation paid to the Advisor during such year and (3) any proposed changes to the compensation to be paid to the Advisor during the upcoming year if the Agreement is renewed. The Advisor's report shall address, among other things, (a) those matters identified in CWI 2's organizational documents as matters which the Independent Directors must review each year with respect to the Advisor's performance and compensation; (b) whether any Triggering Event occurred with respect to an Investment made during the past year; and (c) the "dead deal" costs incurred by CWI 2 during the past year. In addition, the Independent Directors may request that the Advisor refund certain of the "dead deal" costs incurred by CWI 2 if, in light of the circumstances under which such costs were incurred, the Independent Directors determine that CWI 2 should not bear such costs.

4. Authority of Advisor .

(a) Pursuant to the terms of this Agreement (and subject to the restrictions included in Paragraphs (b), (c) and (d) of this Section 4 and in Section 7 hereof), and subject to the continuing and exclusive authority of the Board over the management of CWI 2, the Board hereby delegates to the Advisor the authority to: (1) locate, analyze and select Investment opportunities; (2) structure and negotiate the terms and conditions of transactions pursuant to which Investments will be made, purchased or acquired for CWI 2; (3) make Investments on behalf of CWI 2 in compliance with the investment objectives and policies of CWI 2; (4) arrange for financing or refinancing, or make changes in the asset or capital structure of, and dispose of, reinvest the proceeds from the sale of, or otherwise deal with, Investments; (5) enter into the Subadvisory Agreement; (6) enter into service contracts, contracts with independent property operators and franchisors and perform other property level operations; (7) oversee such non-affiliated property managers and other non-affiliated Persons who perform services for CWI 2; and (8) undertake accounting and other record-keeping functions at the Investment level.

(b) The consideration paid for an Investment acquired by CWI 2 shall ordinarily be based on the fair market value thereof. Consistent with the foregoing provision, the Advisor may, without further approval by the Board (except with respect to transactions subject to paragraphs (c) and (d) of this Section 4) invest on behalf of CWI 2 in an Investment so long as, in the Advisor's good faith judgment, (i) the Total Investment Cost of such Investment does not exceed the fair market value thereof, and in the case of an Investment that is a Property, shall in no event exceed the Appraised Value of such Property and (ii) the Investment, in conjunction with CWI 2's other Investments and proposed Investments, at the time CWI 2 is committed to purchase or originate the Investment, is reasonably expected to fulfill CWI 2's investment objectives and policies as established by the Board and then in effect. For purposes of the foregoing, the Total Investment Cost shall be measured at the date the Investment is made and shall exclude future commitments to fund improvements. Investments not meeting the foregoing criteria must be approved in advance by the Board.

(c) Notwithstanding anything to the contrary contained in this Agreement, the Advisor shall not cause CWI 2 to make Investments that do not comply with Article IX (Investment Objectives and Limitations) of the Charter and related sections of the Bylaws.

(d) The prior approval of the Board, including a majority of the Independent Directors and a majority of the Directors not interested in the transaction, will be required for: (i) Investments made through co-investment or joint venture arrangements with the Sponsor, the Advisor, one or more Directors or any of their Affiliates; (ii) Investments which are not contemplated by the terms of a Prospectus; (iii) transactions that present issues which involve conflicts of interest for the Advisor, its members or Affiliates (other than conflicts involving the payment of fees or the reimbursement of expenses); (iv) the purchase or lease of assets from or to any Director, any Sponsor, the Advisor, the member of the Advisor or any of their Affiliates; (v) any purchase or sale of an Investment from or to the Advisor, its members, one or more Directors or their Affiliates; and (vi) the retention of any Affiliate of the Advisor to provide services to CWI 2 not expressly contemplated by this Agreement and the terms of such services by such Affiliate. In addition, the Advisor shall comply with any further approval requirements set forth in the Bylaws.

(e) The Board may, at any time upon the giving of notice to the Advisor, modify or revoke the authority set forth in this Section 4 . If and to the extent the Board so modifies or revokes the authority contained herein, the Advisor shall henceforth comply with such modification or revocation, provided however , that such modification or revocation shall be effective upon receipt by the Advisor and shall not be applicable to investment transactions to which the Advisor has committed CWI 2 prior to the date of receipt by the Advisor of such notification.

5. Bank Accounts . The Advisor may establish and maintain one or more bank accounts in its own name for the account of CWI 2 or in the name of CWI 2 and may collect and deposit into any such account or accounts, and disburse from any such account or accounts, any money on behalf of CWI 2, provided that no funds shall be commingled with the funds of the Advisor; and the Advisor shall from time to time render appropriate accountings of such collections and payments to the Board and to the auditors of CWI 2.

6. Records; Access . The Advisor shall maintain appropriate records of all its activities hereunder and make such records available for inspection by the Board and by counsel, auditors and authorized agents of CWI 2, at any time or from time to time during normal business hours. The Advisor shall at all reasonable times have access to the books and records of CWI 2.

7. Limitations on Activities . Anything else in this Agreement to the contrary notwithstanding, the Advisor shall refrain from taking any action which, in its sole judgment made in good faith, would (i) adversely affect the status of CWI 2 as a REIT or of the Operating Partnership as a partnership for Federal income tax purposes, (ii) subject CWI 2 or the Operating Partnership to regulation under the Investment Company Act of 1940, as amended, or (iii) would violate any law, rule, regulation or statement of policy of any governmental body or agency having jurisdiction over CWI 2, its Shares or its Securities, or otherwise not be permitted by the Articles of Incorporation or Bylaws or agreement of limited partnership of the Operating Partnership, except if such action shall be ordered by the Board, in which case the Advisor shall notify promptly the Board of the Advisor's judgment of the potential impact of such action and shall refrain from taking such action until it receives further clarification or instructions from the Board. In such event the Advisor shall have no liability for acting in accordance with the specific instructions of the Board so given.

(a) Notwithstanding the foregoing, the Company shall indemnify and hold harmless the the Advisor, its shareholders, members, directors, officers and employees, and partners, shareholders, directors and officers of the Advisor's shareholders and Affiliates of any of them for any loss or liability suffered by them, and the Advisor, its shareholders, members, directors, officers and employees, and partners, shareholders, directors and officers of the Advisor's shareholders and Affiliates of any of them, shall not be liable to CWI 2, the Operating Partnership or to the Directors or Shareholders for any act or omission by the Advisor, its shareholders, members, directors, officers and employees, or partners, shareholders, directors or officers of the Advisor's shareholders and Affiliates of any of them, if in each case the following conditions are met:

(i) The Advisor, its shareholders, members, directors, officers and employees, and partners, shareholders, directors and officers of the Advisor's shareholders and Affiliates of any of them have determined, in good faith, that the course of conduct which caused the loss or liability was in the best interests of CWI 2;

(ii) The Advisor, its shareholders, members, directors, officers and employees, and partners, shareholders, directors and officers of the Advisor's shareholders and Affiliates of any of them were acting on behalf of or performing services for CWI 2; and

(iii) Such liability or loss was not the result of negligence or misconduct by the Advisor, its shareholders, members, directors, officers and employees, and partners, shareholders, directors and officers of the Advisor's shareholders or Affiliates of any of them.

(b) Notwithstanding the foregoing, the Advisor and its Affiliates shall not be indemnified by CWI 2 or the Operating Partnership for any losses, liabilities or expenses arising from or out of the alleged violation of federal or state securities laws unless one or more of the following conditions are met:

(i) There has been a successful adjudication on the merits of each count involving alleged securities law violations as to the particular indemnitee;

(ii) Such claims have been dismissed with prejudice on the merits by a court of competent jurisdiction as to the particular indemnitee; or

(iii) A court of competent jurisdiction approves a settlement of the claims against a particular indemnitee and finds that indemnification of the settlement and the related costs should be made, and the court considering the request for indemnification has been advised of the position of the Securities and Exchange Commission and of the published position of any state securities regulatory authority in which securities of CWI 2 were offered or sold as to indemnification for violation of securities laws.

(c) CWI 2 and the Operating Partnership shall advance funds to the Advisor or its Affiliates for legal expenses and other costs incurred as a result of any legal action for which indemnification is being sought only if all of the following conditions are satisfied:

(i) The legal action relates to acts or omissions with respect to the performance of duties or services on behalf of CWI 2;

(ii) The Advisor or the Affiliate has provided CWI 2 or the Operating Partnership with a written affirmation of his, her or its good faith belief that the standard of conduct necessary for indemnification has been met;

(iii) The legal action is initiated by a third party who is not a Shareholder or the legal action is initiated by a Shareholder acting in his or her capacity as such and a court of competent jurisdiction specifically approves such advancement; and

(iv) The Advisor or the Affiliate undertakes to repay the advanced funds to CWI 2, together with the applicable legal rate of interest thereon, in cases in which such Advisor or Affiliate is found not to be entitled to indemnification.

(d) Notwithstanding the foregoing, the Advisor shall not be entitled to indemnification or be held harmless pursuant to this Section 7 for any activity which the Advisor shall be required to indemnify or hold harmless CWI 2 pursuant to Section 23 hereof .

(e) Any amounts paid pursuant to this Section 7 shall be recoverable or paid only out the net assets of CWI 2 and not from Shareholders.

8. Relationship with Directors . There shall be no limitation on any shareholder, member, director, officer, or employee of the Advisor or its Affiliates serving as a Director or an officer of CWI 2, except that no employee of the Advisor or its Affiliates who is also a Director or officer of CWI 2 shall receive any compensation from CWI 2 for serving as a Director or officer other than for (a) reasonable reimbursement for travel and related expenses incurred in attending meetings of the Board and (b) awards made pursuant to the Incentive Plans; for the avoidance of doubt, the limitations of this Section 8 shall not apply to any compensation paid by the Advisor or any Affiliate for which CWI 2 reimbursed the Advisor or Affiliate in accordance with Section 10 hereof. However, an employee of the Advisor who is also an officer of CWI 2 is eligible to receive restricted stock units as provided under the Incentive Plans.

9. Fees .

(a) Asset Management Fee .

(v) The Operating Partnership shall pay to the Advisor as compensation for the advisory services rendered hereunder an asset management fee (the " Asset Management Fee ") in an amount equal to 0.55% of the aggregate Average Market Value of Investments. The Asset Management Fee with respect to an Investment will be calculated monthly, beginning with the month in which CWI 2 first makes the Investment, and shall be pro rated for the number of days during a month that CWI 2 owns the Investment. The aggregate Asset Management Fees calculated with respect to each month shall be payable on the first business day following such month.

(b) Acquisition Fee .

(i) The Advisor may receive as compensation for services rendered in connection with the investigation, selection, acquisition or origination (by purchase, investment or exchange) of any Investment, an acquisition fee (an " Acquisition Fee ") payable by the Operating Partnership. The Acquisition Fee payable to the Advisor in respect of an Investment shall be payable at the time such Investment is acquired in an amount equal to 2.50% of the Total Investment Cost.

(ii) The total amount of all Acquisition Fees, whether payable to the Advisor or a third party, and Acquisition Expenses payable by the Operating Partnership may not exceed 6% of the aggregate Contract Purchase Price of all Investments, measured for the period beginning with the initial acquisition of an Investment and ending (A) on December 31 of the year in which CWI 2 has invested 90% of the net proceeds of its initial Offering (excluding the net proceeds from the sale of Shares pursuant to CWI 2's dividend reinvestment program), and (B) on each December 31 thereafter, unless a majority of the Directors (including a majority of the Independent Directors) not otherwise interested in any transaction approves the excess as being commercially competitive, fair and reasonable to CWI 2.

(i) No Property Management Fee shall be paid unless approved by a majority of the Independent Directors.

(ii) The Advisor shall receive as compensation for services rendered in connection with a qualifying refinancing of a Loan secured by a Property (the " Refinanced Loan "), a loan refinancing fee (a " Loan Refinancing Fee ") payable by the Operating Partnership. A refinancing will qualify for a Loan Refinancing Fee only if (A) the maturity date of the Refinanced Loan is less than one year from the date of the refinancing and the new loan has a term of at least five years, (B) in the judgment of the Independent Directors, the terms of the new loan represent an improvement over the Refinanced Loan, or (C) the new loan is approved by the Independent Directors as being in the best interest of CWI 2. The Loan Refinancing Fee payable to the Advisor in respect of a Refinanced Loan shall be payable at upon the funding of the related mortgage loan or as soon thereafter as is reasonably practicable in an amount up to 1.00% of the principal amount of the Refinanced Loan.

(d) Disposition Fee .

(i) If the Advisor or an Affiliate provides a substantial amount of services in the sale of an Investment, the Advisor or such Affiliate shall be entitled to receive a disposition fee (the " Disposition Fee ") at the time of such disposition, in an amount equal to the lesser of (1) 50% of the Competitive Real Estate Commission (if applicable) and (2) 1.5% of the Contract Sales Price of the Investment.

(ii) The total real estate commissions and Disposition Fees CWI 2 pays to all Persons shall not exceed an amount equal to the lesser of: (1) 6% of the Contract Sales Price of the Investment and (2) the Competitive Real Estate Commission. The Advisor shall present to the Independent Directors such information as they may reasonably request to review the level of services provided by the Advisor in connection with a disposition and the basis for the calculation of the amount of the Disposition Fees on a quarterly basis. No payment of Disposition Fees shall be made prior to review and approval of such information by the Independent Directors.

(e) Loans From Affiliates . CWI 2 shall not borrow funds from the Advisor or its Affiliates unless (A) the transaction is approved by a majority of the Independent Directors and a majority of the Directors who are not interested in the transaction as being fair, competitive and commercially reasonable, (B) the interest and other financing charges or fees received by the Advisor or its Affiliates do not exceed the amount which would be charged by non-affiliated lending institutions and (C) the terms are not less favorable than those prevailing for comparable arm's-length loans for the same purpose. CWI 2 will not borrow on a long-term basis from the Advisor or its Affiliates unless it is to provide the debt portion of a particular investment and CWI 2 is unable to obtain a permanent loan at that time or in the judgment of the Board, it is not in CWI 2's best interest to obtain a permanent loan at the interest rates then prevailing and the Board has reason to believe that CWI 2 will be able to obtain a permanent loan on or prior to the end of the loan term provided by the Advisor or its Affiliates.

(f) Changes To Fee Structure . In the event the Shares are listed on a national securities exchange, CWI 2 and the Advisor shall negotiate in good faith to establish a fee structure appropriate for an entity with a perpetual life. A majority of the Independent Directors must approve the new fee structure negotiated with the Advisor. In negotiating a new fee structure, the Independent Directors may consider any of the factors they deem relevant, including but not limited to: (a) the size of the advisory fee in relation to the size, composition and profitability of CWI 2's portfolio; (b) the success of the Advisor in generating opportunities that meet the investment objectives of CWI 2; (c) the rates charged to other REITs and to investors other than REITs by advisors performing similar services; (d) additional revenues realized by the Advisor and its Affiliates through their relationship with CWI 2, including loan administration, underwriting or broker commissions, servicing, engineering, inspection and other fees, whether paid by CWI 2 or by others with whom CWI 2 does business; (e) the quality and extent of service and advice furnished by the Advisor; (f) the performance of the investment portfolio of CWI 2, including income, conservation or appreciation of capital, frequency of problem investments and competence in dealing with distress situations; and (g) the quality of the portfolio of CWI 2 in relationship to the investments generated by the Advisor for the account of other clients. The Independent Directors shall not approve any new fee structure that is in their judgment more favorable (taken as a whole) to the Advisor than the current fee structure.

(g) Payment . Compensation payable to the Advisor pursuant to this Section 9 shall be paid in cash; provided , however , that any fee payable pursuant to this Section 9 may be paid, at the option of the Advisor, in the form of: (i) cash, (ii) restricted Class A common stock of CWI 2, or (iii) a combination of cash and Class A common restricted stock. The Advisor shall notify CWI 2 in writing annually of the form in which the fee shall be paid. Such notice shall be provided no later than January 15 of each year. If no such notice is provided, the fee shall be paid in cash. For purposes of the payment of compensation to the Advisor in the form of stock, the value of each share of restricted stock shall be: (i) the Net Asset Value per Share as determined based on the most recent appraisal of CWI 2's assets performed by an Independent Appraiser, or (ii) if a public offering of CWI 2 common stock is then ongoing, the price to the public per share, including selling commissions and fees. The Net Asset Value determined on the basis of such appraisal may be adjusted on a quarterly or other basis by the Board to account for significant capital transactions. Stock issued by CWI 2 to the Advisor in payment of fees hereunder shall be governed by the terms set forth in Schedule A hereto, or such other terms as the Advisor and CWI 2 may from time to time agree.

10. Expenses .

(a) Subject to the limitations set forth in Section 9(b) , to the extent applicable, in addition to the compensation paid to the Advisor pursuant to Section 9 hereof, the Operating Partnership shall pay directly or reimburse the Advisor for the following expenses:

(iii) Organization and Offering Expenses; provided however , that within 60 days after the end of the quarter in which any Offering terminates, the Advisor shall reimburse the Operating Partnership for any Organization and Offering Expense reimbursements received by the Advisor pursuant to this Section 10 to the extent that such reimbursements, when added to the balance of the Organization and Offering Expenses (excluding selling commissions and dealer manager fees) paid directly by the Operating Partnership, exceed (A) four percent of the Gross Offering Proceeds if the Gross Offering Proceeds are less than five hundred million dollars ($500,000,000.00), (B) two percent of the Gross Offering Proceeds if the Gross Offering Proceeds are five hundred million dollars ($500,000,000.00) or more, but less than seven hundred and fifty million dollars ($750,000,000.00), or (C) one and a half percent of the Gross Offering Proceeds if the Gross Offering Proceeds are more than seven hundred and fifty million dollars ($750,000,000.00); provided further , that the Advisor shall be responsible for the payment of all Organization and Offering Expenses (excluding such commissions and such fees and expense reimbursements) in excess of (A) four percent of the Gross Offering Proceeds if the Gross Offering Proceeds are less than five hundred million dollars ($500,000,000.00), (B) two percent of the Gross Offering Proceeds if the Gross Offering Proceeds are five hundred million dollars ($500,000,000.00) or more, but less than seven hundred and fifty million dollars ($750,000,000.00), or (C) one and a half percent of the Gross Offering Proceeds if the Gross Offering Proceeds are more than seven hundred and fifty million dollars ($750,000,000.00);

(iv) all Acquisition Expenses;

(v) to the extent not included in Acquisition Expenses, all expenses of whatever nature reasonably incurred and directly connected with the proposed acquisition of any Investment that does not result in the actual acquisition of the Investment, including, without limitation, personnel costs;

(vi) expenses other than Acquisition Expenses incurred in connection with the investment of the funds of CWI 2, including, without limitation, business development expenses, costs of retaining industry or economic consultants and finder's fees and similar payments, to the extent not paid by the seller of the Investment or another third party, regardless of whether such expenses were incurred in transactions where a fee is not payable to the Advisor;

(vii) interest and other costs for borrowed money, including discounts, points and other similar fees;

(viii) taxes and assessments on income of CWI 2, to the extent paid or advanced by the Advisor, or on Investments and taxes as an expense of doing business;

(ix) costs associated with insurance required in connection with the business of CWI 2 or by the Directors;

(x) expenses of managing and operating Investments owned by CWI 2, whether payable to an Affiliate of the Advisor or a non-affiliated Person;

(xi) fees and expenses of legal counsel for CWI 2;

(xii) fees and expenses of auditors and accountants for CWI 2;

(xiii) all expenses in connection with payments to the Directors and meetings of the Directors and Shareholders;

(xiv) all expenses in connection with payments to the non-director members of the Investment Committee for CWI 2's Investments and meetings of the Investment Committee;

(xv) expenses associated with listing the Shares and Securities on a securities exchange if requested by the Board;

(xvi) expenses connected with payments of Distributions in cash or otherwise made or caused to be made by the Board to the Shareholders;

(xvii) expenses of organizing, revising, amending, converting, modifying, or terminating CWI 2, the Operating Partnership or their respective governing instruments;

(xviii) expenses of maintaining communications with Shareholders, including the cost of preparation, printing and mailing annual reports and other Shareholder reports, proxy statements and other reports required by governmental entities; and

(xix) all other Operating Expenses and other expenses the Advisor incurs in connection with providing services to CWI 2, including reimbursement to the Advisor or its Affiliates for the costs of rent, goods, materials and personnel incurred by them based upon the compensation of the Persons involved and an appropriate share of overhead allocable to those Persons as reasonably determined by the Advisor on a basis approved annually by the Board (including a majority of the Independent Directors).

(b) Expenses described in clause (xviii) of Section 10(a) and any other expenses described in Section 10(a) that are shared expenses of CWI 2 and CWI 1, shall be allocated between them based upon the percentage that CWI 2's or CWI 1's, as applicable, total revenues for the most recently completed four fiscal quarters represent of the combined total revenues for such period of CWI 2 and CWI 1 (provided that if any such entity has not been in operation for the full four quarter period, the period for which such entity has been in operation shall be annualized), or such other methodology as may be approved by the Board (including a majority of the Independent Directors). No reimbursement shall be made for the cost of personnel to the extent that such personnel are used in transactions for which the Advisor receives a separate transaction fee.

(c) Expenses incurred by the Advisor on behalf of CWI 2 and payable pursuant to this Section 10 shall be reimbursed quarterly to the Advisor within 60 days after the end of each quarter, subject to the provisions of Section 13 hereof. The Advisor shall prepare a statement documenting the Operating Expenses of CWI 2 within 45 days after the end of each quarter.

11. Other Services . Should the Board request that the Advisor or any Affiliate, shareholder or employee thereof render services for CWI 2 other than as set forth in Section 3 hereof, such services shall be separately compensated and shall not be deemed to be services pursuant to the terms of this Agreement.

12. Fidelity Bond . The Advisor shall maintain a fidelity bond for the benefit of CWI 2 which bond shall insure CWI 2 from losses of up to $5,000,000 and shall be of the type customarily purchased by entities performing services similar to those provided to CWI 2 by the Advisor.

13. Limitation on Expenses .

(a) If Operating Expenses during the 12-month period ending on the last day of any fiscal quarter of CWI 2 exceed the greater of (i) two percent of the Average Invested Assets during the same 12-month period or (ii) 25% of the Adjusted Net Income of CWI 2 over the same 12-month period (the " 2%/25% Guidelines "), then subject to paragraph (b) of this Section 13, such excess amount shall be the sole responsibility of the Advisor and neither the Operating Partnership nor CWI 2 shall be liable for payment therefor. CWI 2 may defer the payment or distribution to the Advisor and the Special General Partner of fees, expenses and distributions that would, if paid or distributed, cause Operating Expenses during such 12-month period to exceed the foregoing limitations; provided, however , that in determining which items shall be paid and which may be deferred, priority will be given to the payment of distributions to the Special General Partner over the payment to the Advisor of amounts due under this Agreement.

(b) Notwithstanding the foregoing, to the extent that the Advisor becomes responsible for any excess amount as provided in paragraph (a), if a majority of the Independent Directors finds such excess amount or a portion thereof justified based on such unusual and non-recurring factors as they deem sufficient, the Operating Partnership shall reimburse the Advisor in future quarters for the full amount of such excess, or any portion thereof, but only to the extent such reimbursement would not cause the Operating Expenses to exceed the 2%/25% Guidelines in the 12-month period ending on the last day of such quarter. In no event shall the Operating Expenses payable by the Operating Partnership in any 12-month period ending at the end of a fiscal quarter exceed the 2%/25% Guidelines.

(c) Within 60 days after the end of any 12‑month period referred to in paragraph (a), the Advisor shall reimburse CWI 2 for any amounts expended by CWI 2 in such 12‑month period that exceeds the limitations provided in paragraph (a) unless the Independent Directors determine that such excess expenses are justified, as provided in paragraph (b), and provided the Operating Expenses for such later quarter would not thereby exceed the 2%/25% Guidelines.

(d) All computations made under paragraphs (a) and (b) of this Section 13 shall be determined in accordance with generally accepted accounting principles applied on a consistent basis.

(e) If the Special General Partner receives distributions pursuant to the agreement of limited partnership of the Operating Partnership in respect of realized gains on the disposition of an Investment, Adjusted Net Income, for purposes of calculating the Operating Expenses, shall exclude the gain from the disposition of such Investment.

14. Other Activities of the Advisor .

(a) Subject to the Guidelines, nothing herein contained shall prevent the Advisor from engaging in other activities, including without limitation, direct investment by the Advisor and its Affiliates in assets that would be suitable for CWI 2 the rendering of advice to other investors (including other REITs) and the management of other programs advised, sponsored or organized by the Advisor or its Affiliates; nor shall this Agreement limit or restrict the right of the Advisor or any of its Affiliates or of any director, member, officer, employee or shareholder of the Advisor or its Affiliates to engage in any other business or to render services of any kind to any other partnership, corporation, firm, individual, trust or association. The Advisor may, with respect to any investment in which CWI 2 is a participant, also render advice and service to each other participant therein. Without limiting the generality of the foregoing, CWI 2 acknowledges that (i) affiliates of the Advisor provide or will provide services to the CPA ^® REIT funds, (ii) W. P. Carey Inc. owns investments in lodging properties which are not being contributed to CWI 2 which it will continue to own and manage and (iii) the Advisor and its Affiliates may provide services to other programs sponsored or managed by W. P. Carey Inc. whether now in existence or formed hereafter, and (iv) WP Carey Inc. and its Affiliates may make future investments for their own account. The Advisor shall be responsible for promptly reporting to the Board the existence of any actual or potential conflict of interest that arises that may affect its performance of its duties under this Agreement. If the Sponsor, Advisor, Director or Affiliates thereof has or have sponsored other investment programs with similar investment objectives which have investment funds available at the same time as CWI 2, it shall be the duty of the Advisor to allocate investments in a fair and equitable manner and in accordance with the Guidelines.

(b) The Advisor shall be required to use its best efforts to present a continuing and suitable investment program to CWI 2 that is consistent with the investment objectives and policies of CWI 2, but subject to the last sentence of the preceding paragraph, neither the Advisor nor any Affiliate of the Advisor shall be obligated generally to present any particular investment opportunity to CWI 2 even if the opportunity is of character which, if presented to CWI 2, could be taken by CWI 2. If an Investment Opportunity is presented to, and rejected by, the investment committee of CWI 2, the Advisor shall be free to allocate such Investment Opportunity to itself or to another entity managed by it or its Affiliates.

(c) The Advisor shall not consent to any material amendment of Section 4(a) of the Subadvisory Agreement without the prior approval of a majority of the Independent Directors.

Once each quarter, senior representatives of the Advisor will meet with at least a majority of the Independent Directors for the purpose of reviewing the Advisor's compliance with the Guidelines with respect to all Investments allocated among W. P. Carey Inc., CWI 2 and each other REIT and investment program managed by an Affiliate of W. P. Carey Inc. (each, together with its Affiliates, an " Investment Entity ," and collectively, the " Investment Entities ") during the most recently completed fiscal quarter. The quarterly review will take place at the regularly scheduled quarterly meeting of the Board of Directors, or at another time and place that are mutually determined by the Advisor and the Independent Directors, and may include representatives of other Investment Entities. The Advisor will use its best efforts to distribute a report reasonably in advance of each quarterly review meeting containing a list of all Investments allocated to the Investment Entities, the particular Investment Entity to which each Investment was allocated, a brief description of the Investment, the purchase price of each Investment and acquisition fees (if any) paid to the Advisor and its Affiliates in connection with each Investment. Representatives of the Advisor shall be prepared to discuss each Investment and the reasons for its allocation to particular Investment Entities at the quarterly review meeting.

15. Relationship of Advisor and CWI 2 . CWI 2 and the Advisor agree that they have not created and do not intend to create by this Agreement a joint venture or partnership relationship between them and nothing in this Agreement shall be construed to make them partners or joint venturers or impose any liability as partners or joint venturers on either of them.

16. Term; Termination of Agreement . This Agreement, as amended and restated, shall continue in force until December 31, 2016 or until 60 days after the date on which the Independent Directors shall have notified the Advisor of their determination either to renew this Agreement for an additional one-year period or terminate this Agreement, as required by the Articles of Incorporation.

17. Termination by CWI 2 . At the sole option of the Board (including a majority of the Independent Directors), this Agreement may be terminated immediately by written notice of termination from CWI 2 to the Advisor upon the occurrence of events which would constitute Cause or if any of the following events occur:

(a) If the Advisor shall be adjudged bankrupt or insolvent by a court of competent jurisdiction, or an order shall be made by a court of competent jurisdiction for the appointment of a receiver, liquidator, or trustee of the Advisor, for all or substantially all of its property by reason of the foregoing, or if a court of competent jurisdiction approves any petition filed against the Advisor for reorganization, and such adjudication or order shall remain in force or unstayed for a period of 30 days; or

(b) If the Advisor shall institute proceedings for voluntary bankruptcy or shall file a petition seeking reorganization under the federal bankruptcy laws, or for relief under any law for relief of debtors, or shall consent to the appointment of a receiver for itself or for all or substantially all of its property, or shall make a general assignment for the benefit of its creditors, or shall admit in writing its inability to pay its debts, generally, as they become due.

Any notice of termination under Section 16 or 17 hereof shall be effective on the date specified in such notice, which may be the day on which such notice is given or any date thereafter. The Advisor agrees that if any of the events specified in this Section 17(a) or (b) shall occur, it shall give written notice thereof to the Board within 15 days after the occurrence of such event.

18. Termination by Either Party . This Agreement may be terminated immediately without penalty (but subject to the requirements of Section 20 hereof) by the Advisor by written notice of termination to CWI 2 upon the occurrence of events which would constitute Good Reason or by CWI 2 without cause or penalty (but subject to the requirements of Section 20 hereof) by action of the Directors, a majority of the Independent Directors or by action of a majority of the Shareholders, in each case upon 60 days' written notice.

19. Assignment Prohibition . This Agreement may not be assigned by the Advisor without the prior written approval of the Board (including a majority of the Independent Directors); provided, however, that such approval shall not be required in the case of an assignment to a corporation, partnership, association, trust or organization which takes over the assets and carries on the affairs of the Advisor, provided : (i) that at the time of such assignment, such successor organization shall be owned substantially by an entity directly or indirectly controlled by the Advisor and only if such entity has a net worth of at least $5,000,000, and (ii) that the board of directors of the Advisor shall deliver to the Board a statement in writing indicating the ownership structure and net worth of the successor organization and a certification from the new Advisor as to its net worth. Such an assignment shall bind the assignees hereunder in the same manner as the Advisor is bound by this Agreement. The Advisor may assign any rights to receive fees or other payments under this Agreement without obtaining the approval of the Board. This Agreement may not be assigned by CWI 2 or the Operating Partnership without the prior written consent of the Advisor except in case of an assignment to a corporation or other organization which is a successor to CWI 2 or the Operating Partnership, in which case such successor organization shall be bound hereunder and by the terms of said assignment in the same manner as CWI 2 or the Operating Partnership is bound by this Agreement.

20. Payments to and Duties of Advisor Upon Termination .

(a) After the Termination Date, the Advisor shall not be entitled to compensation for further services hereunder but shall be entitled to receive from CWI 2 the following:

(i) all unpaid reimbursements of Organization and Offering Expenses and of Operating Expenses payable to the Advisor;

(ii) all earned but unpaid Asset Management Fees payable to the Advisor prior to the Termination Date;

(iii) all earned but unpaid Acquisition Fees payable to the Advisor relating to the acquisition of any Property prior to the Termination Date;

(iv) all earned but unpaid Disposition Fees payable to the Advisor relating to the sale of any Investment prior to the Termination Date; and

(v) all earned but unpaid Property Management Fees and Loan Refinancing Fees, if any, payable to the Advisor or its Affiliates relating to the management of any property prior to the termination of this Agreement.

(b) Notwithstanding the foregoing, if this Agreement is terminated by CWI 2 for Cause, or by the Advisor for other than Good Reason, the Advisor will not be entitled to receive the sums in this Section 20(a) (ii) through (v).

(c) Any and all amounts payable to the Advisor pursuant to Section 20(a) hereof that, irrespective of the termination, were payable on a current basis prior to the Termination Date either because they were not subordinated or all conditions to their payment had been satisfied, shall be paid within 90 days after the Termination Date. All other amounts shall be paid in a manner determined by the Board, but in no event on terms less favorable to the Advisor than those represented by a note (i) maturing upon the liquidation of CWI 2 or the Operating Partnership or three years from the Termination Date, whichever is earlier, (ii) with no less than twelve equal quarterly installments and (iii) bearing a fair, competitive and commercially reasonable interest rate (the " Note "). The Note, if any, may be prepaid by the Operating Partnership at any time prior to maturity with accrued interest to the date of payment but without premium or penalty. Notwithstanding the foregoing, any amounts that relate to Investments (A) shall be an amount which provides compensation to the Advisor only for that portion of the holding period for the respective Investments during which the Advisor provided services to CWI 2, (B) shall not be due and payable until the Property, Loan or Other Permitted Investment Asset to which such amount relates is sold or refinanced, and (C) shall not bear interest until the Property, Loan or Other Permitted Investment Asset to which such amount relates is sold or refinanced. A portion of the amount shall be paid as each Investment owned by CWI 2 on the Termination Date is sold. The portion of such amount payable upon each such sale shall be equal to (X) such amount multiplied by (Y) the percentage calculated by dividing the fair value (at the Termination Date) of the Investment sold by CWI 2 divided by the total fair value (at the Termination Date) of all Investments owned by CWI 2 on the Termination Date.

(d) The Advisor shall promptly upon termination:

(i) pay over to the Operating Partnership all money collected and held for the account of CWI 2 pursuant to this Agreement, after deducting any accrued compensation and reimbursement for its expenses to which it is then entitled;

(ii) deliver to the Board a full accounting, including a statement showing all payments collected by it and a statement of all money held by it, covering the period following the date of the last accounting furnished to the Board;

(iii) deliver to the Board all assets, including the Properties, Loans, and Other Permitted Investment Assets, and documents of CWI 2 then in the custody of the Advisor; and

(iv) cooperate with CWI 2 to provide an orderly management transition.

21. Non-Solicitation and Non-Hire Following Termination . None of CWI 2 or any of its Affiliates will, for a period of 24 months after the termination of this Agreement for any reason, solicit for employment or employ, solicit for engagement or engage, including as an advisor, subadvisor, consultant or independent contractor, (i) any officer, director or management employee, or any other employee with whom CWI 2 or its Affiliates came into contact in connection with the services to be provided under this Agreement and the Subadvisory Agreement, in each case of the Advisor or the Subadvisor or any of their respective Affiliates (each a "Restricted Person") or (ii) any Affiliate of a Restricted Person.

22. Indemnification by CWI 2 and the Operating Partnership . Neither CWI 2 nor the Operating Partnership shall indemnify the Advisor or any of its Affiliates for any loss or liability suffered by the Advisor or the Affiliate, or hold the Advisor or the Affiliate harmless for any loss or liability suffered by CWI 2, except as permitted under Section 7 hereof.

23. Indemnification by Advisor . The Advisor shall indemnify and hold harmless CWI 2 and the Operating Partnership from liability, claims, damages, taxes or losses and related expenses including attorneys' fees, to the extent that such liability, claims, damages, taxes or losses and related expenses are not fully reimbursed by insurance and are incurred by reason of the Advisor's bad faith, fraud, willful misfeasance, misconduct, negligence or reckless disregard of its duties.

24. Joint and Several Obligations . Any obligations of CWI 2 shall be construed as the joint and several obligations of CWI 2 and the Operating Partnership, unless otherwise specifically provided in this Agreement.

25. Notices . Any notice, report or other communication required or permitted to be given hereunder shall be in writing unless some other method of giving such notice, report or other communication is accepted by the party to whom it is given, and shall be given by being delivered by hand or by overnight mail or other overnight delivery service to the addresses set forth herein:



To the Board and to CWI 2 :	Carey Watermark Investors 2 Incorporated 50 Rockefeller Plaza New York, NY 10020

To the Operating Partnership:	c/o Carey Watermark Investors 2 Incorporated 50 Rockefeller Plaza New York, NY 10020

To the Advisor:	Carey Lodging Advisors, LLC 50 Rockefeller Plaza New York, NY 10020 With a copy to: Carey Asset Management Corp. 50 Rockefeller Plaza New York, NY 10020 and During the term of the Subadvisory Agreement, with a copy to: CWA, LLC c/o Watermark Capital Partners, LLC 272 East Deerpath Road, Suite 320 Lake Forest, IL 60045

Either party may at any time give notice in writing to the other party of a change in its address for the purposes of this Section 25 .

26. Modification . This Agreement shall not be changed, modified, terminated, or discharged, in whole or in part, except by an instrument in writing signed by both parties hereto, or their respective successors or assignees.

27. Severability . The provisions of this Agreement are independent of and severable from each other, and no provision shall be affected or rendered invalid or unenforceable by virtue of the fact that for any reason any other or others of them may be invalid or unenforceable in whole or in part.

28. Construction . This Agreement shall be governed by, construed and enforced in accordance with the laws of the State of New York.

29. Entire Agreement . This Agreement contains the entire agreement and understanding among the parties hereto with respect to the subject matter hereof, and supersedes all prior and contemporaneous agreements, understandings, inducements and conditions, express or implied, oral or written, of any nature whatsoever with respect to the subject matter hereof. The express terms hereof control and supersede any course of performance and/or usage of the trade inconsistent with any of the terms hereof. This Agreement may not be modified or amended other than by an agreement in writing.

30. Indulgences, Not Waivers . Neither the failure nor any delay on the part of a party to exercise any right, remedy, power or privilege under this Agreement shall operate as a waiver thereof, nor shall any single or partial exercise of any right, remedy, power or privilege preclude any other or further exercise of the same or of any other right, remedy, power or privilege, nor shall any waiver of any right, remedy, power or privilege with respect to any occurrence be construed as a waiver of such right, remedy, power or privilege with respect to any other occurrence. No waiver shall be effective unless it is in writing and is signed by the party asserted to have granted such waiver.

31. Gender . Words used herein regardless of the number and gender specifically used, shall be deemed and construed to include any other number, singular or plural, and any other gender, masculine, feminine or neuter, as the context requires.

32. Titles Not to Affect Interpretation . The titles of Sections and subsections contained in this Agreement are for convenience only, and they neither form a part of this Agreement nor are they to be used in the construction or interpretation hereof.

33. Execution in Counterparts . This Agreement may be executed in any number of counterparts, each of which shall be deemed to be an original as against any party whose signature appears thereon, and all of which shall together constitute one and the same instrument. This Agreement shall become binding when one or more counterparts hereof, individually or taken together, shall bear the signatures of all of the parties reflected hereon as the signatories.

34. Initial Investment . The Advisor has contributed to CWI 2 $200,000 in exchange for 22,222 shares of Class A common stock of CWI 2 (the " Initial Investment "). The Advisor or its Affiliates may not sell any of the shares purchased with the Initial Investment during the term of this Agreement. The restrictions included above shall not continue to apply to any Shares other than the shares acquired through the Initial Investment acquired by the Advisor or its Affiliates. The Advisor shall not vote any Shares it now owns or hereafter acquires in any vote for the election of Directors or any vote regarding the approval or termination of any contract with the Advisor or any of its Affiliates.

IN WITNESS WHEREOF, the parties hereto have executed this Advisory Agreement as of the day and year first above written.



CAREY WATERMARK INVESTORS 2 INCORPORATED
By:	/s/ Thomas E. Zacharias
Name: Thomas E. Zacharias
Title: Chief Operating Officer



CWI 2 OP, LP
By: CAREY WATERMARK INVESTORS 2 INCORPORATED, its General Partner
By:	/s/ Thomas E. Zacharias
Name: Thomas E. Zacharias
Title: Chief Operating Officer



CAREY LODGING ADVISORS, LLC By: CAREY ASSET MANAGEMENT CORP., as sole member
By:	/s/ Susan C. Hyde
Name: Susan C. Hyde
Title: Managing Director and Secretary

SCHEDULE A

Investment Allocation Guidelines

CWI 2 invests primarily in lodging and lodging related assets. CWI 2's investment objectives and investment strategy are set forth in its public filings with the Securities and Exchange Commission and are subject to change from time to time with the approval of the Board.

During the First Offer Period (as defined in the Subadvisory Agreement), the Advisor agrees to offer to the investment committee of CWI 2 the opportunity for CWI 2 to invest in all Investment Opportunities sourced by the Advisor.

During the First Offer Period, the Subadvisor (pursuant to the Subadvisory Agreement) agrees to offer to the investment committee of CWI 2 the opportunity to invest in all Investment Opportunities sourced by the Subadvisor.

The Advisor shall consider the following factors, together with such other factors as it deems relevant in the exercise of its reasonable judgment, when deciding how to allocate Investment Opportunities between CWI 2, on the one hand, and the Advisor and its Affiliates and other entities managed by the Advisor and its Affiliates in a fair and equitable manner


•	whether an entity is still in its fundraising and acquisition stage, or has substantially invested the proceeds from its fundraising stage;


•	the amount of funds available for investment by an entity and the length of time that such funds have been available for investment;


•	the effect of the Investment on the diversification of an entity's portfolio;


•	the effect of the Investment on the profile of an entity's mortgage maturity profile;


•	the ability of an entity to service any debt associated with the Investment;


•	the effect of the Investment on the ability of the entity to comply with any restrictions on investments and indebtedness contained in the Investment Entity's governing documents and public SEC filings, in any contract or in any law or regulation applicable to the Investment Entity;


•	whether an entity was formed for the purpose of making a particular type of investment;


•	the financial attributes of the Investment;


•	the future capital expenditures and other investments planned for the Investment;


•	the effect of the Investment on the Investment Entity's intention to qualify as a REIT, partnership or other type of entity for tax purposes; and


•	the effect of the Investment on an Investment Entity's intention not to be subject to regulation under the Investment Company Act of 1940, as amended.

The Advisor and the Subadvisor shall make investment allocation decisions without regard to the relative fees or other compensation that would be paid to the Advisor or the Subadivisor and their respective Affiliates in connection with the applicable Investments.

SCHEDULE B

This Schedule A sets forth the terms governing any Shares issued by CWI 2 to the Advisor in payment of advisory fees set forth in the Agreement. Capitalized terms used herein and not defined herein shall have the meanings ascribed to them in the Agreement.

1. Restrictions . The Shares are subject to vesting over a five-year period. The Shares shall vest ratably over a five-year period with 20% of the Shares paid in each payment vesting on each of the first through fifth anniversary of the date hereof. Prior to the vesting of the ownership of the Shares in the Advisor, the Shares may not be transferred by the Advisor.

2. Immediate Vesting . Upon the expiration or termination of the Agreement for any reason other than a termination for Cause under Section 17 of the Agreement or upon a "Change of Control" of CWI 2 (as defined below), all Shares granted to the Advisor pursuant to Section 9(g) of the Agreement shall vest immediately and all restrictions shall lapse. For purposes of this Schedule A, a "Change of Control" of CWI 2 shall be deemed to have occurred if there has been a change in the ownership of CWI 2 of a nature that would be required to be reported in response to the disclosure requirements of Schedule 14A of Regulation 14A promulgated under the Securities Exchange Act of 1934, as amended (the " Exchange Act "), as enacted and in force on the date hereof, whether or not CWI 2 is then subject to such reporting requirements; provided , however , that, without limitation, a " Change of Control " shall be deemed to have occurred if:

(i) any "person," as such term is used in Sections 13(d) and 14(d) of the Exchange Act (other than CWI 2, any of its subsidiaries, any trustee, fiduciary or other person or entity holding securities under any employee benefit plan of CWI 2 or any of its subsidiaries), together with all "affiliates" and "associates" (as such terms are defined in Rule 14b-2 under the Exchange Act) of such person, shall become the "beneficial owner" (as such term is defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of CWI 2 representing 25 % or more of either (A) the combined voting power of CWI 2's then outstanding securities having the right to vote in an election of the Board (" Voting Securities ") or (B) the Shares then outstanding (in either such case other than as a result of acquisition of securities directly from CWI 2);

(ii) persons who, as of the date hereof, constitute the Board (the " Incumbent Directors ") cease for any reason, including without limitation, as a result of a tender offer, proxy contest, merger or similar transaction, to constitute at least a majority of the Board, provided that any person becoming a director of CWI 2 subsequent to the date hereof whose election or nomination for election was approved by a vote of at least a majority of the Incumbent Directors shall be considered an Incumbent Director; or

(iii) the stockholders of CWI 2 shall approve (A) any consolidation or merger of CWI 2 or any subsidiary where the stockholders of CWI 2, immediately prior to the consolidation or merger, would not, immediately after the consolidation or merger, beneficially own (as such term is defined in Rule 13d-3 under the Exchange

Act), directly or indirectly, shares representing in the aggregate 50 % or more of the voting equity of the entity issuing cash or securities in the consolidation or merger (or of its ultimate parent entity, if any), (B) any sale, lease, exchange or other transfer (in one transaction or a series of transactions contemplated or arranged by any party as a single plan) of all or substantially all of the assets of CWI 2 or (C) any plan or proposal for the liquidation or dissolution of CWI 2.

Notwithstanding the foregoing, a Change of Control shall not be deemed to have occurred for purposes of the foregoing clause (i) solely as the result of an acquisition of securities by CWI 2 which, by reducing the number of Shares outstanding, increases (A) the proportionate number of Shares beneficially owned by any person to 25% or more of the Shares then outstanding, or (B) the proportionate voting power represented by the Shares beneficially owned by any person to 25% or more of the combined voting power of all then outstanding Voting Securities; provided , however , that if any person referred to in clause (A) or (B) of this sentence shall thereafter become the beneficial owner of any additional Shares or other Voting Securities (other than pursuant to a Share split, Share dividend, or similar transaction), then a Change of Control shall be deemed to have occurred for purposes of the foregoing clause (i).

3. Exception . Notwithstanding anything else in the Agreement to the contrary, the Shares shall continue to vest according to the vesting schedule in this Section A regardless of: (a) the expiration of the Agreement for any reason other than a termination by CWI 2 for Cause or a resignation by the Advisor for other than Good Reason, (b) the merger of CWI 2 and an Affiliate of CWI 2, or (c) any Change of Control of CWI 2 in connection with a merger of CWI 2 with an Affiliate of CWI 2.

Exhibit 10.2

SUBADVISORY AGREEMENT

BETWEEN

CAREY LODGING ADVISORS, LLC,

and

CWA2, LLC

Dated as of February 9, 2015



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TABLE OF CONTENTS

Page

Section 1. Definitions 1

Section 2. Appointment and Duties of Subadvisor 7

Section 3. Performance Standard 9

Section 4. Investment Opportunities. 9

Section 5. Compensation. 9

Section 6. Expenses of Subadvisor 10

Section 7. Investment Committee; Asset Operating Committee. 11

Section 8. Confidentiality; Proprietary Information; Records. 11

Section 9. Insurance. 13

Section 10. Indemnification 13

Section 11. Independent Subadvisor; No Joint Venture 14

Section 12. Term; Termination 14

Section 13. Termination for Cause 14

Section 14. Subadvisor Termination Option. 15

Section 15. Advisor Termination Option 16

Section 16. Action upon Termination 17

Section 17. Bank Accounts; Release of Property upon Written Request 17

Section 18. Assignment; Subcontractors 18

Section 19. Representations and Warranties. 18

Section 20. Additional Agreements of Advisor 20

Section 21. Submission to Jurisdiction; Arbitration. 21

Section 22. Notices 22

Section 23. Severability 23

Section 24. Entire Agreement 23

Section 25. Amendments and Waivers 23

Section 26. Assignments 24

Section 27. Cumulative Rights 24

Section 28. Governing Law 24

Section 29. Counterparts 24

Section 30. Construction 24



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Section 31. Survival 24

Section 32. Third Party Beneficiaries 25

Exhibits

Exhibit A – Advisory Agreement

Exhibit B – S-11

Exhibit C – MGM Indemnification Agreement

Exhibit D – Subadvisor Indemnification Agreement



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SUBADVISORY AGREEMENT

This SUBADVISORY AGREEMENT dated as of February 9, 2015 (the "Effective Date"), between CAREY LODGING ADVISORS, LLC, a Delaware limited liability company (the "Advisor"), and CWA2, LLC, an Illinois limited liability company (the "Subadvisor," and together with Advisor, the "Parties" and each a "Party").

W I T N E S S E T H

WHEREAS, pursuant to that certain Advisory Agreement dated as of the date hereof (as amended from time to time, the " Advisory Agreement "), among Advisor, Carey Watermark Investors 2 Incorporated, a Maryland corporation, (" CWI 2 ") and CWI 2 OP, LP, a Delaware limited partnership, of which CWI 2 is a general partner (the " Operating Partnership ," and together with CWI 2, the " REIT "), Advisor has agreed to perform certain services for the REIT, including the identification, evaluation, negotiation, financing, purchase, asset management and disposition of the REIT's lodging and lodging related investments.

WHEREAS, Advisor desires to retain Subadvisor to provide the Services (as hereinafter defined) in order for Subadvisor to assist Advisor in the performance of its duties under the Advisory Agreement, by providing to Advisor certain services and support; and

WHEREAS, subject to and in accordance with the terms of this Agreement, Advisor is willing to appoint Subadvisor to render the Services and Subadvisor is willing to accept such appointment;

NOW, THEREFORE, in consideration of the mutual undertakings contained herein, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties agree as follows:

Section 1. Definitions . The following terms have the meanings assigned them:

(a) " Acquisition Expenses " shall mean to the extent not paid or to be paid by the seller, lessee, borrower or any other party involved in the transaction, those expenses incurred by Subadvisor, including, but not limited to, travel and communications expenses, the cost of appraisals, title insurance, nonrefundable option payments on Investments not acquired, legal fees and expenses, accounting fees and expenses and miscellaneous expenses, related to selection, acquisition and origination of Investments, whether or not a particular Investment ultimately is made. Acquisition Expenses shall not include Acquisition Fees as defined under the Advisory Agreement.

(b) " Advisor " shall have the meaning set forth in the introductory paragraph of this Agreement.

(d) " Advisor Indemnitees " shall mean Advisor, the REIT, their respective Affiliates, and the directors, officers, employees, agents, members and shareholders of Advisor, the REIT and their respective Affiliates.

(e) " Affiliate " means, with respect to a specified Person, another Person that directly, or indirectly through one or more intermediaries or Persons, Controls or is Controlled by or is under common Control with the Person specified. For purposes of Section 4 hereof, any fund advised by any Affiliate of Carey Asset Management Corp. shall be deemed not to be an Affiliate of Advisor so long as no Affiliate of Carey Asset Management Corp. owns a majority of the outstanding voting equity interests in such fund.

(f) " Agreement " means this Subadvisory Agreement, as it may be amended from time to time.

(g) " Asset Operating Committee " has the meaning as set forth in Section 7(b) hereof.

(h) " Bankruptcy Law " means any Law relating to bankruptcy (whether voluntary or involuntary), insolvency, reorganization, restructuring, composition, moratorium, or relief of debtors or other similar Law or any Law relating to an analogous event in any other jurisdiction.

(i) " Bankruptcy Proceeding " means a Proceeding under any Bankruptcy Law wherein a Person may be adjudicated bankrupt, insolvent or become subject to an order of reorganization, arrangement, adjustment, winding up, dissolution, composition or any analogous event in any other jurisdiction or other similar order.

(j) " Business Day " means any day that is not a Saturday, Sunday or other day on which commercial banks in New York City are authorized or required by law to remain closed.

(k) " Change of Control of Advisor " means any Transfer where as a result (i) any person or group of related persons for purposes of Section 13(d) of the Securities Exchange Act of 1934 (a " Group "), other than Permitted Holders, shall become the owner, beneficially or of record, of shares representing more than 50% of the aggregate ordinary voting power represented by the issued and outstanding shares of Advisor or W.P. Carey & Co. LLC; or (ii) all or substantially all of the assets of W.P. Carey Inc. or Advisor are sold to a person or Group other than Permitted Holders. "Permitted Holders" means W. P. Carey Inc., Affiliates of W. P. Carey Inc. and the heirs, descendants, trusts and foundations established by Wm. Polk Carey for the benefit of his heirs and descendants and charitable organizations named as beneficiaries of his estate.

(l) " Change of Control of Subadvisor " any Transfer where as a result (i) MGM directly or indirectly will fail to own or Control at least fifty-one percent (51%) of the voting interests in Subadvisor, (ii) MGM and/or his spouse and children will fail to collectively own, directly or indirectly, at least fifty-one percent (51%) of the ownership and beneficial interests in Subadvisor, or (iii) all or substantially all of the assets of Subadvisor are sold to a third party or Group other than an entity in which MGM, directly or indirectly, owns or Controls at least 51% of the voting interests of such entity.

(m) " Code " means the Internal Revenue Code of 1986, as amended.

(n) " Confidential Information " has the meaning as set forth in Section 8(a) hereof.

(o) " Control " means the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of a Person, whether through the ability to exercise voting power, by contract or otherwise. "Controlling" and "Controlled" have meanings correlative thereto.

(p) " CWI 2 " shall have the meaning set forth in the recitals to this Agreement.

(q) " CWI 1 " means Carey Watermark Investors Incorporated, a Maryland corporation.

(r) " Distributions of Available Cash " means distributions of "Available Cash", as such term is defined in the OP Agreement, made by the Operating Partnership to the Special General Partner pursuant to the OP Agreement.

(s) " Effective Date " shall have the meaning set forth in the introductory paragraph of this Agreement.

(t) " Exchange Act " means the Securities Exchange Act of 1934, as amended.

(u) " First Offer Period " means (1) the period commencing on the Effective Date and ending on the earliest of:

(i) the dissolution of CWI 2,

(ii) the termination of this Agreement;

(iii) the third anniversary of the Effective Date, if CWI 2 has not then accepted aggregate net offering proceeds from investors of at least Five Hundred Million Dollars ($500,000,000);

(iv) the date on which CWI 2 has Fully Invested the net proceeds of its initial public offering, unless on or before such date there has been an initial filing by CWI 2 with the Securities and Exchange Commission of a Registration Statement on Form S-11, or any other form which CWI 2 is eligible to use to register securities, with respect to a Follow-On Offering;

(v) the third anniversary of the date of effectiveness of the Registration Statement for the Follow-On Offering as described in (iv) above, if CWI 2 has not then accepted net offering proceeds from investors of at least 75% of the maximum aggregate offering proceeds named in such registration statement at the time of its effectiveness; or

(vi) the date on which CWI 2 has Fully Invested the net proceeds of the Follow-On Offering.

(v) " Follow-On Offering " means a public offering of common stock of CWI 2 with maximum aggregate offering proceeds named in the registration statement related thereto of not less than $500,000,000 and for which CWI 2 begins receiving proceeds within six months after the termination of CWI' 2's initial public offering.

(w) " Fully Invested " means that at least ninety percent (90%) of the net offering proceeds of CWI 2's initial public offering or a Follow On Offering, as applicable, are invested or committed for investment.

(x) " GAAP " means generally accepted accounting principles, as applied in the United States.

(y) " Governing Instruments " means, with regard to any Person, the governing or organizational documents of such Person, in each case as the same may be amended from time to time.

(z) " Governmental Authority " means any governmental, judicial, legislative, executive, administrative or regulatory authority (including any court) of any national,

state, provincial or local government or any subdivision, agency, commission, office or instrumentality thereof.

(aa) " Investments " means the assets held by the REIT and its Subsidiaries, including without limitation, Lodging Facilities and Loans.

(bb) " Investment Committee " means the Investment Committee of CWI 2.

(cc) " Investment Opportunity " means the opportunity to lease, sublease, purchase or to offer to purchase any asset or investment originated by, presented to or otherwise identified by Subadvisor, Advisor, or any of their respective Affiliates, as applicable, relating to (i) Lodging Facilities or (ii) Lodging Loans. "Investment Opportunity" shall not include any opportunity to purchase or to offer to purchase or make any loan in respect of, any asset or investment located outside of the Americas.

(dd) " Law " means any law, treaty, statute, ordinance, code, rule, regulation or writ, judgment, decree, injunction, award or similar order of any Governmental Authority.

(ee) " Loans " means notes and other evidences of indebtedness or obligations, including but not limited to first or subordinate mortgage loans, construction loans, development loans, loan participations, B notes, mandatorily redeemable preferred stock, preferred stock subject to sinking fund obligations, loans secured by capital stock or any other assets or form of equity interest and any other type of loan or financial arrangement, such as providing or arranging for letters of credit, providing guarantees of obligations to third parties, or providing commitments for loans.

(ff) " Lodging Facility " means (1) a hotel, motel or other mixed-use establishment of which more than one-half (1/2) of its dwelling units are used on a transient basis or (2) equity interests in an entity that derives at least 30% of its EBITDA from owning, operating or managing facilities of the type described in clause (1) of this definition.

(gg) " Lodging Loans " means (1) Loans fully or partially secured by Lodging Facilities or equity interests in entities that own, directly or indirectly, Lodging Facilities; (2) unsecured Loans to entities that derive at least 30% of their EBITDA from interests in Lodging Facilities, or (3) participations in any of the Loans described in clauses (1) or (2) of this definition.

(hh) " Losses " means, collectively, any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, proceedings, costs, expenses and disbursements of any kind or nature whatsoever (including, without limitation, reasonable attorneys' fees, costs of investigation, fines, judgments and amounts paid in settlement actually incurred by such Party in connection with such action, suit or proceeding).

(ii) " MGM " shall mean Michael G. Medzigian.

(jj) " OP Agreement " means the agreement of limited partnership of the Operating Partnership as in effect from time to time.

(kk) " Operating Partnership " shall have the meaning set forth in the introductory paragraph of this Agreement.

(ll) " Party " shall have the meaning set forth in the introductory paragraph of this Agreement.

(mm) " Performance Standard " shall have the meaning set forth in Section 3.

(nn) " Person " means any individual, entity, corporation, partnership, joint venture, limited liability company, estate, trust, unincorporated association, any federal, state, county or municipal government or any bureau, department or agency thereof and any fiduciary acting in such capacity on behalf of any of the foregoing.

(oo) " Pre-Existing Holdings " means (i) the interests in the Lodging Facilities and Loans described in the Registration Statement as being owned by the Advisor and the Subadvisor outside of CWI 1 and CWI 2; and (ii) interests in Lodging Facilities and Loans owned by CWI 1.

(pp) " Presumed Capital Gains Rate " means the effective combined U.S. federal, state and local long term capital gains tax rate applicable to a natural person residing in Michael Medzigian's place of primary residence at the time of determination, taxable at the lowest marginal rate for long term capital gains, after giving effect to the U.S. federal income tax deduction for applicable state and local taxes.

(qq) " Presumed Ordinary Income Rate " means the effective combined U.S. federal, state and local ordinary income tax rate applicable to a natural person residing in Michael Medzigian's place of primary residence at the time of determination, taxable at the highest marginal income tax rates, after giving effect to the U.S. federal income tax deduction for applicable state and local taxes.

(rr) " Proceeding " means any action, suit, charge, hearing, claim, arbitration, alternative dispute resolution or other proceeding or any non-routine investigation or audit by any Governmental Authority, arbitrator or arbitration panel.

(ss) " REIT " shall have the meaning set forth in the recitals to this Agreement.

(tt) " Reimbursable Expenses " shall have the meaning set forth in Section 6.

(uu) " Services " has the meaning set forth in Section 2(a) hereof.

(vv) " Special General Partner " means Carey Watermark Holdings 2 LLC, the holder of the special general partner interest in the Operating Partnership.

(ww) " Special GP Agreement " means the limited liability company agreement of the Special General Partner, as the same may be amended from time to time.

(xx) " Subadvisor " shall have the meaning set forth in the introductory paragraph of this Agreement.

(yy) " Subadvisor Indemnitees " means Subadvisor, its Affiliates, and the directors, officers, employees, agents and equity holders of Subadvisor and its Affiliates.

(zz) " Subadvisory Base Fee " means a fee in an amount equal to 25% of: (i) the amount of fees paid to Advisor by the REIT pursuant to the Advisory Agreement, including but not limited to: Acquisition Fees, Asset Management Fees, Loan Refinancing Fees, Property Management Fees and Disposition Fees, each as defined in the Advisory Agreement; and (ii) Distributions of Available Cash.

(aaa) " Subsidiary " shall have the meaning ascribed to such term in the General Rules and Regulations promulgated under the Exchange Act.

(bbb) " Term " has the meaning set forth in Section 12 hereof.

(ccc) " Termination Payment " has the meaning as set forth in Section 14(a) hereof.

(ddd) " Transfer " means with respect to a Person, means any transfer, sale, pledge, hypothecation, encumbrance, assignment or other disposition, directly or indirectly, of any portion of the of the shares, interests, units or other equity in such Person (whether voluntarily, involuntarily, by operation of law or otherwise).

(eee) " Treasury Regulations " means the regulations promulgated under the Code from time to time, as amended.

Section 2. Appointment and Duties of Subadvisor . As of the Effective Date, Advisor hereby sub-contracts and delegates to Subadvisor the performance of the following functions, duties and services (together with the services to be provided by Subadvisor as set forth in Section 2(b), the "Services") in accordance with the Performance Standard, subject to the general supervision and direction of Advisor:

(i) provide CWI 2 with the services of MGM as the Chief Executive Officer of CWI 2, subject to approval of the board of directors of CWI 2, who shall devote such time to his duties as is necessary and appropriate, commensurate with level of activity of the REIT from time to time;

(ii) assist Advisor with the preparation of an annual budget for the operations of the REIT and other materials to be used in connection with the annual review of the performance and compensation of Advisor by the independent directors of the REIT;

(iii) assist Advisor with (i) locating, analyzing and selecting potential investments for the REIT and deliver to the Investment Committee, as applicable, such information as it may reasonably request or as otherwise may be reasonably necessary to enable it to evaluate such potential investments; (ii) structuring and negotiating the terms and conditions of transactions pursuant to which investments will be made, purchased or acquired by the REIT; (iii) making investments on behalf of the REIT; (iv) arranging for financing and refinancing of, disposing of, reinvesting the proceeds from the sale of, or otherwise dealing with the investments; (v) entering into service contracts for the REIT.

(iv) serve as Advisor's advisor with respect to the Investments including providing research and economic and statistical data in connection with the Investments and investment policies and preparing and providing periodic reports, no less than quarterly, on such matters as reasonably directed by Advisor;

(v) provide asset management services for the REIT including, without limitation, (i) overseeing and providing strategic guidance to independent property operators that handle day-to-day operations of the Investments, (ii) overseeing the preparation of asset level financial reports by such independent property operators, (iii) overseeing the preparation of budgets for each Investment by such independent property operators;

(vi) investigate, select and, on behalf of the REIT, engage, oversee and conduct business with such Persons as Subadvisor deems necessary to the proper performance of Subadvisor's obligations hereunder, including but not limited to consultants, correspondents, lenders, technical advisors, attorneys, brokers, underwriters, corporate fiduciaries, escrow agents, depositaries, custodians, agents for collection, insurers, insurance agents, banks, builders, developers, property owners, mortgagors, franchisors, independent property operators and any and all agents for any of the foregoing;

(vii) assist Advisor and the board of CWI 2 in the formulation and implementation of CWI 2's investment and asset management policies, and furnish the board of CWI 2 with such information, advice and recommendations with respect to corporate strategy, investigation of Investment Opportunities, portfolio management, asset management, financing and disposition (but excluding accounting, investor relations, and fund-raising matters) as reasonably requested or as otherwise may be reasonably necessary to enable them to discharge their fiduciary duties with respect to matters coming before the board of CWI 2;

(viii) provide the board of CWI 2 with periodic reports regarding potential investments and with periodic reports, no less than quarterly, of new investments made by the REIT during the prior fiscal quarter, which reports shall include information regarding the type of each investment made;

(ix) assist Advisor with negotiating on behalf of the REIT with banks or lenders for loans to be made to the REIT, and negotiate on behalf of the REIT with

investment banking firms and broker-dealers or obtain loans for the REIT, but in no event in such a way so that Subadvisor shall be acting as broker-dealer or underwriter;

(x) obtain for, or provide to, the REIT such services as may be required in acquiring, managing and disposing of investments, including, but not limited to: (i) the negotiation, making and servicing of investments; and (ii) at the direction of Advisor, the handling, prosecuting and settling of any claims of or against the REIT, including, but not limited to, foreclosing and otherwise enforcing mortgages and other liens securing loans;

(xi) from time to time, or at any time reasonably requested by Advisor, prepare reports to Advisor of its performance of Services;

(xii) arrange to obtain or maintain copies of all appraisals obtained in connection with the Investments;

(xiii) if a transaction, proposed transaction or other matter requires approval by the board of CWI 2, by the independent directors of CWI 2, or the Investment Committee, deliver, as the case may be, all documentation reasonably requested by any of them to properly evaluate such transaction, proposed transaction or other matter;

(xiv) act in good faith with respect to the appointment, removal and/or replacement of members of the Advisory Committee and Asset Operating Committee; and

(xv) any other services or functions as may be mutually agreed by Subadvisor and Advisor, from time to time.

Section 3. Performance Standard . The Services and all of the other duties and obligations of Subadvisor under this Agreement shall be carried out by Subadvisor in good faith and in a commercially reasonable manner, using a degree of skill and attention customarily applicable to investment managers of assets of the nature and character of the Investments (the " Performance Standard ").

Section 4. Investment Opportunities .

(a) During the First Offer Period, the Advisor agrees to offer to the Investment Committee the opportunity for CWI 2 to invest in all Investment Opportunities sourced by the Advisor.

(b) During the First Offer Period, the Subadvisor agrees to offer to the Investment Committee the opportunity to invest in all Investment Opportunities sourced by the Subadvisor.

(c) Any Investment Opportunity rejected by CWI 2 may be taken by the Advisor or the Subadvisor or their Affiliates or any vehicle managed by either of them or their Affiliates.

Section 5. Compensation .

(a) In exchange for the Services, Advisor shall pay Subadvisor the Subadvisory Base Fee, in U.S. Dollars, promptly after Advisor receives the consideration (whether received in cash or in shares of stock of CWI 2) underlying the Subadvisory Base Fee from the REIT and/or the Operating Partnership (i.e., monthly in the case of the Asset Management Fees, and as earned in the case of the Acquisition Fees, Loan Refinancing Fees, Property Management Fees, if any, and Disposition Fees); provided, however, that with respect to the Distributions of Available Cash, the Advisor shall estimate the expected Distributions of Available Cash for each fiscal quarter (the "Estimated Distribution Amount") and pay to the Subadvisor an amount equal to one-third of 50% of the Estimated Distribution Amount each month during such fiscal quarter. The balance of the Distributions of Available Cash owed to the Subadvisor for a fiscal quarter shall be paid by the Advisor to the Subadvisor promptly after receipt of the underlying Distributions of Available Cash from the REIT (whether in cash or in shares of stock of CWI 2), and if the Estimated Distribution Amount previously received by the Subadvisor exceeds 25% of the actual amount of the Distributions of Available Cash actually received by the Advisor for the applicable fiscal quarter, the Subadvisor shall promptly return the excess to the Advisor. Advisor shall be deemed to have received the consideration underlying the Subadvisory Base Fee from the REIT and/or the Operating Partnership on such date that Advisor or its Affiliates receive U.S. Dollars, securities, notes, or any other form of consideration from the REIT and/or the Operating Partnership in payment thereof.

(b) Advisor shall provide Advisor's calculation of the amount of the Subadvisory Base Fee when Advisor remits the Subadvisory Base Fee for payment, and shall, upon Subadvisor's reasonable request, provide Subadvisor with access to its books and records to enable Subadvisor to verify such calculation. The Subadvisory Base Fee shall be paid in immediately available funds.

(c) As additional compensation to the Subadvisor, the Subadvisor shall be entitled to receive from the Advisor an additional payment, in U.S. Dollars, in respect of any taxable year of the Special General Partner in which the Special General Partner receives at least $1.0 million of Distributions of Available Cash that is subject to tax at Federal capital gains rates (the "Net Capital Gains"). The amount of the Additional Payment will be equal to the difference between: (i) 25% of the Net Capital Gains multiplied by the Presumed Capital Gains Tax Rate; minus (ii) 25% of the Net Capital Gains multiplied by the Presumed Ordinary Tax Rate. Good faith estimates of the Net Capital Gains, if any, for a taxable year shall be made by the Advisor on a quarterly basis and provided to the Subadvisor, and an estimated payment of one-quarter of the annual amount of any Additional Payment expected to be made on the basis of such quarterly estimates will be made by the Advisor to the Subadvisor no later than 5 Business Days before the date by which the Subadvisor is required to pay estimated Federal and State taxes in respect of such quarter. On or before March 15 following the end of a taxable year, the Advisor shall calculate the amount of the Additional Payment, if any, due in respect of such taxable year and provide a copy of the calculations and a copy of the Special General Partner's annual tax report on Form K-1 to the Subadvisor. If that Additional Payment amount exceeds the estimated quarterly payments previously made to the Subadvisor in respect of such taxable year, the Subadvisor shall reimburse the Advisor for the excess, and if that Additional Payment is less than the estimated quarterly

payments previously made to the Subadvisor in respect of such taxable year, the Advisor shall promptly, and in any event within 5 Business Days after receipt of the calculations, pay the Subadvisor the amount of the shortfall.

(d) If the Advisor and/or the Subadvisor engages in an internalization transaction with CWI 2 during the Term or within 24 months thereafter pursuant to which CWI 2 becomes self-managed by acquiring or otherwise assuming (including through a merger with the Advisor and/or the Subadvisor) the management functions provided by the Advisor and/or the Subadvisor, the aggregate amount of any consideration payable by CWI 2 to the Advisor, the Subadvisor and their respective direct and indirect owners in such internalization transaction shall be allocated 75% to the Advisor and 25% to the Subadvisor, and any amounts received by either of them in excess of such percentages shall be promptly paid to the other so that the consideration is allocated in accordance with the foregoing percentages; provided, however, that payments to individuals that are directly and solely attributable to compensation for employment services to be rendered by such individuals to CWI 2 following the internalization transaction shall not be considered to be consideration subject to allocation between the Advisor and the Subadvisor for purposes of this Section 5(d).

(e) Subadvisor shall not be entitled to any other compensation from Advisor other than as set forth in this Section 5 (other than the reimbursement of expenses in accordance with Section 6).

Section 6. Expenses of Subadvisor .

(a) Advisor shall reimburse Subadvisor for all expenses (the " Reimbursable Expenses ") actually incurred by Subadvisor on Advisor's or the REIT's behalf in connection with the Services and which would be reimbursable under the Advisory Agreement if incurred by Advisor; provided, however, that (i) the personnel costs that shall be reimbursed to Subadvisor relating to MGM's involvement in asset management activities shall not exceed $50,000 per quarter; and (ii) notwithstanding anything to the contrary in this Agreement, Advisor shall have no obligation to reimburse Subadvisor for Reimbursable Expenses unless and until the REIT reimburses Advisor for such Reimbursable Expenses.

Section 7. Asset Operating Committee; Investment Authority .

(a) Advisor and Subadvisor shall establish an asset operating committee (the " Asset Operating Committee") consisting of up to six members, one of whom shall be MGM and one of whom shall be appointed by the Advisor (the " Advisor Designee "). MGM shall be the chairman of the Asset Operating Committee. The initial Advisor Designee shall be Thomas E. Zacharias. The Advisor shall have the right to remove and replace the Advisor Designee at the Advisor's sole discretion. Additional members of the Asset Operating Committee and their successors or replacements shall be proposed by the Subadvisor and shall be appointed to the Asset Operating Committee, subject to the reasonable approval of the Advisor. The Subadvisor may remove any member of the Asset Operating Committee, other than the Advisor Designee (who can be removed and replaced solely by the Advisor), subject to the reasonable approval of the Advisor. The Asset Operating Committee shall have responsibility for evaluating and making decisions with respect to any refinancing, disposition, sale, capital expenditure and/or any other transaction involving an asset of the REIT if the value of such transaction exceeds $10.0 million. Subadvisor shall have responsibility for evaluating and making decisions with respect to any refinancing, disposition, sale, capital expenditure and/or any other transaction involving an asset of the REIT if the value of such transaction does not exceed $10.0 million; provided, however, that Subadvisor shall notify Advisor as promptly as reasonably practicable, after Subadvisor has determined to take any such action.

(b) MGM, in his capacity as the Chief Executive Officer of CWI 2, shall have the authority to approve each acquisition of Lodging Facilities and Lodging Loans by CWI 2, without the need for review and approval by the investment committee responsible for approving CWI 2's investments, if the purchase price and contemplated capital improvements for the acquired asset, and any series of related acquisitions, do not exceed $10.0 million.

Section 8. Confidentiality; Proprietary Information; Records .

(a) Each Party agrees not to disclose or permit the disclosure of any of the terms of this Agreement or of any other confidential, non public or proprietary information relating to the other Party, its Affiliates, the REIT's Assets or business (collectively, " Confidential Information "), provided that such disclosure may be made (i) to any Person who is a member, partner, officer, director or employee of such Party or counsel to or accountants of such Party solely for their use and on a need to know basis, provided that such Persons are notified of the Party's confidentiality obligations hereunder, (ii) to lenders and investors providing financing and/or capital to such Party, provided that such lenders and investors are bound by written confidentiality agreements containing restrictions substantially similar to those set forth herein; (iii) with the prior consent of the other Party, (iv) subject to the next paragraph, pursuant to a subpoena or order issued by a court, arbitrator or governmental body, agency or official, but only to the extent required by such order or subpoena, or (v) to any lender providing financing to the REIT, (vi) as necessary or appropriate in connection with or to prevent the audit of the accounts of any Party or to enable any Party, or any of their respective Affiliates to comply with the disclosure and other requirements of any governmental authority having jurisdiction over it. Notwithstanding the foregoing, nothing herein shall prevent Subadvisor from disclosing investment and portfolio data including investment names, locations, general descriptions, strategies, dates of investments and performance but only to the extent necessary to detail its experience to potential sources of debt and equity capital and other business partners in connection with any activity not constituting a breach of Section 4; provided, in each case, that the receiving party agrees in writing to keep such information confidential on terms substantially similar to those set forth herein. Confidential Information shall not include information (i) known by such Party prior to the Effective Date; (ii) which is at the time of receipt publicly known; (iii) which becomes publicly known through no wrongful act of the Party; or (iv) that is received from a third party not under an obligation to keep such information confidential.

(b) In the event that a Party shall receive a request to disclose any Confidential Information under a subpoena or order, such Party shall (i) promptly notify the other Party thereof, (ii) consult with the other Party on the advisability of taking steps to resist or narrow such request; and (iii) if disclosure is required or deemed advisable, reasonably cooperate with the other Party in any attempt it may make to obtain an order or other assurance that confidential treatment will be accorded the Confidential Information that is disclosed.

(c) No Party shall issue any press release or other public communication about the formation or existence of the other Party without the express written consent of the other Party; provided that a Party may make a press release to the extent required to comply with the disclosure and other requirements of any governmental authority having jurisdiction over it. Subadvisor shall not remove, copy in any form or by any means, or electronically transmit from the premises of Advisor or any of its Affiliates any material or property of Advisor or any of its Affiliates, except as necessary to perform the Services.

(d) Subadvisor shall maintain appropriate books and records relating to the duties, functions and services to be performed under this Agreement, including, without limitation, the Investments, and Subadvisor will cause the operating agreements entered into by the REIT with the independent property operators of the REIT's Investments to require the operators to keep books and records in a manner sufficient to produce accounts in accordance with GAAP or such other accounting method adopted by the REIT from time to time and such books and records shall be accessible for inspection by representatives of Advisor at any time during normal business hours upon three (3) Business Day's advance written notice to Subadvisor; provided, that Advisor agrees to cause its representatives to abide by the rules and regulations of Subadvisor and shall indemnify, defend and hold Subadvisor harmless from and against any and all damages, Losses, costs and expenses suffered or incurred, resulting from such inspections, by reason of the gross negligence or willful misconduct of Advisor's representatives.

(e) The provisions of this Section 8 were negotiated in good faith by the Parties, and the parties hereto agree that such provisions are reasonable and are not more restrictive than necessary to protect the legitimate interests of the Parties. It is the intention of the Parties that if any restriction or covenant contained herein is held to be for a length of time that is not permitted by applicable law, or is any way construed to be too broad or to any extent invalid, such provision shall not be construed to be null, void and of no effect, but to the extent such provision would be valid or enforceable under applicable law, a court of competent jurisdiction shall construe and interpret or reform such provision to provide for a restriction or covenant having the maximum time period and other provisions (not greater than those contained herein) as shall be valid and enforceable under applicable law. The provisions of Sections 8, 8(a), 8(b), 8(c), and 8(e) shall survive and continue in full force and effect in accordance with its terms, notwithstanding any termination of this Agreement, for a period of three (3) years following any such termination.

Section 9. Insurance .

(a) Advisor shall procure and maintain at all times during the Term directors' and officers' liability insurance for MGM and all other employees of Subadvisor who are also officers and/or directors of the REIT providing coverage in amounts and on terms customary for non-traded, public real estate companies of a size similar to CWI 2. Advisor shall provide Subadvisor with certificates evidencing such director's and officer's liability insurance and, from time to time, as appropriate, shall provide Subadvisor with replacement certificates following expiration or substitution of coverage.

(b) Subadvisor shall procure and maintain at all times during the Term "errors and omissions" insurance coverage, insurance coverage as is deemed prudent or advisable by Subadvisor for gaps in and exclusions from the insurance coverage provided in Section 9(a), and other insurance coverage at its own expense which is customarily carried by asset and investment managers performing functions similar to those of Subadvisor under this Agreement with respect to assets similar to the Investments in an amount which is comparable to that customarily maintained by other managers of similar assets as those to be managed. Subadvisor shall provide Advisor with certificates evidencing such "errors and omissions" insurance coverage and other insurance coverage and from time to time, as appropriate, shall provide Advisor with replacement certificates following expiration or substitution of coverage.

Section 10. Indemnification .

(a) Subadvisor shall, to the full extent lawful, reimburse, indemnify and hold harmless the Advisor Indemnitees, of and from any and all Losses in respect of or to the extent arising from the gross negligence, malfeasance, fraud or willful misconduct of the Subadvisor Indemnitees or from a breach by Subadvisor of this Agreement.

(b) Advisor shall, to the full extent lawful, reimburse, indemnify and hold harmless the Subadvisor Indemnitees, of and from any and all Losses in respect of or to the extent arising from the gross negligence, malfeasance, fraud or willful misconduct of the Advisor Indemnitees or from a breach by Advisor of this Agreement.

(c) It shall be a condition to the effectiveness of this Agreement that MGM and Subadvisor enter into indemnification agreements with the REIT in form and substance substantially similar to the agreements attached hereto as Exhibit C and Exhibit D, respectively.

Section 11. Independent Subadvisor; No Joint Venture . The relationship between the Parties is that of independent contractors solely as set forth herein, and each Party shall be responsible only for its obligations as set forth herein. Nothing in this Agreement shall be construed to make Advisor and Subadvisor or their respective Affiliates, partners or joint venturers or impose any liability as such on any of them.

Section 12. Term; Termination . Subject to the execution and delivery hereof by the Parties, this Agreement is effective on the Effective Date and shall terminate on the earliest to occur of the following (the " Term "):

(a) The termination of Carey Lodging Advisors, LLC as the advisor under the Advisory Agreement for any reason;

(b) Termination by either Party pursuant to Section 13; or

(c) Termination by Advisor upon written notice of termination to Subadvisor following a Change of Control of Subadvisor arising from the death or disability of MGM.

Section 13. Termination for Cause .

(a) Advisor may terminate this Agreement upon written notice of termination to Subadvisor if any of the following events (each a " Subadvisor Default ") shall occur in relation to Subadvisor or MGM:

(1) the commission of an act of theft or embezzlement of money or property by MGM against Advisor, the REIT, and/or their respective Affiliates, or other act of fraud, gross negligence or willful misconduct by MGM resulting in injury to the property, operations or reputation of Advisor, the REIT, and/or their respective Affiliates;

(2) a voluntary termination of this Agreement by Subadvisor prior to the expiration of the Term, other than as a result of an Advisor Default;

(3) a continuing material breach or default by Subadvisor shall occur with respect to any term or provision of this Agreement or any representation or warranty, which default or breach shall continue for a period of thirty (30) days after written notice thereof, provided that if, within the thirty (30) day-period following receipt of the written notice thereof, Subadvisor in good faith commences to perform such obligation and cure such breach or default and thereafter prosecutes to completion with diligence the curing thereof and cures such breach or default within a reasonable time but in no event later than ninety (90) days following receipt of such written notice, then such breach or default shall not be deemed to be a Subadvisor Default.

(4) a Change of Control of Subadvisor other than as a result of the death or disability of MGM;

(5) the conviction or indictment, or plea of guilty or "no contest" to, a felony which results in injury to the property, operations or reputation of Advisor, the REIT, and/or their respective Affiliates; and

(6) a Bankruptcy Proceeding.

(b) Subadvisor shall provide prompt written notice to Advisor of the occurrence of any Subadvisor Default.

(c) Subadvisor may terminate this Agreement effective upon written notice of termination to Advisor if any of the following events (each an " Advisor Default ") shall occur in relation to Advisor:

(i) A failure by Advisor to pay any amount due to Subadvisor hereunder within 10 business days after receipt by Advisor of written notice from Subadvisor that such payment is past due;

(ii) a continuing material breach or default by Advisor shall occur, with respect to any term or provision of this Agreement or any representation or warranty, which default or breach shall continue for a period of thirty (30) days after written notice thereof, provided that if, within the thirty (30) day-period following receipt of the written notice thereof, Advisor, in good faith commences to perform such obligation and cure such breach or default and thereafter prosecutes to completion with diligence the curing thereof and cures such breach or default within a reasonable time but in no event later than ninety (90) days following receipt of such written notice, then such breach or default shall not be deemed to be an Advisor Default;

(iii) a voluntary termination of the Advisory Agreement by Advisor without cause or good reason;

(iv) a Bankruptcy Proceeding involving Advisor;

(v) any amendment or modification to the Advisory Agreement having a disproportionately adverse effect on Subadvisor as compared to the effect on Advisor;

(vi) a voluntary termination of the Agreement by Advisor prior to the expiration of the Term, other than as a result of a Subadvisor Default; or

(vii) a Change of Control of Advisor.

(d) Advisor shall provide prompt written notice to Subadvisor of the occurrence of any Advisor Default.

Section 14. Subadvisor Termination Option .

(a) Following the occurrence of an Advisor Default, Subadvisor shall have the option to terminate this Agreement and cause Advisor to pay Subadvisor the Termination Payment as set forth in this Section 14. Such option may be exercised by Subadvisor by giving Advisor written notice of termination (a "Termination Notice") within six months following the occurrence of an Advisor Default. The Termination Payment shall be paid within 30 days after the date of delivery of the Termination Notice and the termination shall be effective as of the time at which the Termination Payment is paid to the Subadvisor; provided, however, that if in connection with the termination of this Agreement, an Updated NAV or a Demand Fair Market Value (each as defined in the Special GP Agreement) is required to be obtained, then (i) all amounts other than the Special GP Payment (as defined below) owing to the Subadvisor through the effective date of termination shall be paid within 30 days after the date of delivery of the Termination Notice and the termination shall be effective as of the time at which such amounts are paid to the Subadvisor; and (ii) the Special GP Payment shall be paid on or before the date due as provided under the Special GP Agreement, and if the Special GP Payment is not so delivered within such 30 day period, the Special GP Payment shall bear default interest from and including the last day of such 30 day period to but excluding the date of payment at an annual rate equal to 10.0%.

(b) The "Termination Payment", shall be equal to the sum of all (i) Subadvisory Base Fees earned but unpaid prior to the effective date of termination of this Agreement, plus (ii) the amount of any Additional Payment owing to the Subadvisor through the effective date of termination plus (iii) all amounts due to Subadvisor under the Special GP Agreement (the "Special GP Payment"). The Termination Payment shall be paid in cash.

(c) In addition to the Termination Payment, Advisor shall pay to Subadvisor all unpaid reimbursements of Reimbursable Expenses on or before the effective date of termination.

(d) This Section 14 shall survive termination of this Agreement.

Section 15. Advisor Termination Option

(a) Following the occurrence of a Subadvisor Default, Advisor shall have the option to terminate this Agreement provided that Advisor shall pay to Subadvisor the Termination Payment as set forth in this Section 15. Such option may be exercised by Advisor by giving to Subadvisor a Termination Notice within six months following the occurrence of a Subadvisor Default. The Termination Payment shall be paid within 30 days after the date of delivery of the Termination Notice and the termination shall be effective as of the time at which the Termination Payment is paid to the Subadvisor; provided, however, that if in connection with the termination of this Agreement, an Updated NAV or a Demand Fair Market Value (each as defined in the Special GP Agreement) is required to be obtained, then (i) all amounts other than the Special GP Payment shall be paid within 30 days after the date of delivery of the Termination Notice and the termination shall be effective as of the time at which such amounts are paid to the Subadvisor; and (ii) the Special GP Payment, shall be paid on or before the date due as provided under the Special GP Agreement, and if the Special GP Payment is not so delivered within such 30 day period, the Special GP, and if the Special GP Payment is not so delivered within such 30 day period, the Special GP Payment shall bear default interest from and including the last day of such 30 day period to but excluding the date of payment at an annual rate equal to 10.0%.

(b) The Termination Payment for purposes of this Section 15 shall be calculated in the same manner as provided in Section 14 and shall be paid in cash.

Section 16. Action upon Termination .

(a) Upon a termination of this Agreement pursuant to Section 12(a) or Section 12(c), Advisor shall pay over to Subadvisor (i) the Termination Payment, (ii) all unpaid reimbursements of Reimbursable Expenses, if any, and (iii) 25% of any termination fee paid by the REIT to Advisor under the Advisory Agreement, if any. Such amounts shall be paid within 30 days after the date of the occurrence of an event described in Section 12(a) or 12(c) and the termination shall be effective as of the time at which such amounts are paid to the Subadvisor; provided, however, that if in connection with the termination of this Agreement, an Updated NAV or a Demand Fair Market Value (each as defined in the Special GP Agreement) is required to be obtained, then (i) all amounts other than the Special GP Payment shall be paid within 30 days after the date of the occurrence of an event described in Section 12(a) or 12(c) and the termination shall be effective as of the time at which such amounts are paid to the Subadvisor; and (ii) the Special GP Payment shall be paid on or before the due date as provided under the Special GP Agreement, and if the Special GP Payment is not so delivered within such 30 day period, the Special GP Payment shall bear default interest from and including the last day of such 30 day period to but excluding the date of payment at an annual rate of 10.0%.

(b) Upon any termination of this Agreement, Subadvisor shall as promptly as practicable:

(i) pay over to Advisor (or its designee) all money collected and held for the account of Advisor, the REIT or any of their respective Affiliates pursuant to this Agreement (if any);

(ii) deliver to Advisor all property and documents of Advisor, the REIT or any of their respective Affiliates then in the custody or subject to the control of Subadvisor; and

(iii) cooperate (at Advisor's sole cost and expense) with the transition of the Services to any new subadvisor or management team engaged by Advisor, the REIT or any of their respective Affiliates for a reasonable transition period after the termination.

Section 17. Bank Accounts; Release of Property upon Written Request . Subadvisor agrees that any money or other property of Advisor, the REIT or any of their respective Affiliates held by Subadvisor under this Agreement shall be held by Subadvisor as custodian for Advisor, the REIT or any of their respective Affiliates, and Subadvisor's records shall be appropriately marked to clearly reflect the ownership of such money or other property by Advisor, the REIT or any of their respective Affiliates, as applicable. Upon the receipt by Subadvisor of a written request signed by Advisor requesting Subadvisor to release to the applicable Person any such money or property, Subadvisor shall promptly release such money to the applicable Person, but in no event later than five (5) Business Days following such request. Subadvisor shall ensure that at all times at least one individual designated by Advisor (which initially shall be Mark J. DeCesaris) is included among the persons having signing authority (e.g., rights of direction and withdrawal) in respect of each bank account in which any of Advisor's or the REIT's funds are to be deposited and Subadvisor shall not designate any other individual(s) with such authority other than Mark J. DeCesaris unless each such individual has been approved by Advisor in advance.

Section 18. Assignment; Subcontractors . Subadvisor may retain third party subcontractors to perform the Services; provided, however, that Subadvisor shall remain primarily liable to Advisor for the performance of such Services. Subadvisor shall not assign this Agreement unless such assignment is consented to in writing by Advisor. Any such permitted assignment shall bind the assignee under this Agreement in the same manner as Subadvisor is bound, and Subadvisor shall be released from all liability hereunder accruing thereafter. In addition, to the extent the assignment of this Agreement by Subadvisor is a complete assignment of all of its rights and duties hereunder, the assignee shall execute and deliver to Advisor a counterpart of this Agreement naming such assignee as Subadvisor.

Section 19. Representations and Warranties .

(a) Subadvisor hereby represents and warrants to Advisor as follows:

(i) There is no action, suit, proceeding, investigation or arbitration, either at law or in equity, of or before any court or tribunal of any jurisdiction or any governmental authority of any jurisdiction pending or, to the knowledge of Subadvisor, threatened or proposed in any manner against Subadvisor, or, to the knowledge of Subadvisor, any circumstances which could or should reasonably form the basis of any such action, suit, proceeding, investigation or arbitration.

(ii) Subadvisor is duly organized, validly existing and in good standing under the Laws of Illinois, has the limited liability company power to own its assets and to transact the business in which it is now engaged and is duly qualified as a foreign limited liability company and in good standing under the Laws of each jurisdiction where its ownership or lease of property or the conduct of its business requires such qualification, except for failures to be so qualified, authorized or licensed that could not in the aggregate have a material adverse effect on the business operations, assets or financial condition of Subadvisor.

(iii) Subadvisor has the limited liability company power and authority to execute, deliver and perform this Agreement and all obligations required hereunder and has taken all necessary action to authorize this Agreement on the terms and conditions hereof and the execution, delivery and performance of this Agreement and all obligations required hereunder. No consent of any other person including, without limitation, shareholders or creditors of Subadvisor, and no license, permit, approval or authorization of, exemption by, notice or report to, or registration, filing or declaration with, any governmental authority is required by Subadvisor in connection with this Agreement or the execution, delivery or performance of this Agreement and all obligations required hereunder. This Agreement has been, and each instrument or document required hereunder will be, executed and delivered by a duly authorized officer of Subadvisor, and, when executed and delivered by the parties hereto, this Agreement constitutes, and each instrument or document required hereunder when executed and delivered hereunder will constitute, the valid and binding obligation of Advisor enforceable against Subadvisor in accordance with its terms.

(iv) The execution, delivery and performance of this Agreement and the documents or instruments required hereunder will not violate any provision of any existing Law binding on Subadvisor, or any order, judgment, award or decree of any court, arbitrator or governmental authority binding on Subadvisor, or the Governing Instruments of, or any securities issued by, Subadvisor or of any mortgage, indenture, lease, contract or other agreement, instrument or undertaking to which Subadvisor is a party or by which Subadvisor or any of its assets may be bound, the violation of which would have a material adverse effect on the business operations, assets or financial condition of Subadvisor, and will not result in, or require, the creation or imposition of any lien on any of its property, assets or revenues pursuant to the provisions of any such mortgage, indenture, lease, contract or other agreement, instrument or undertaking

(v) Watermark Capital Partners, LLC owns, beneficially and of record, 100% of the equity interests of Subadvisor and MGM owns, beneficially and of record, a majority of the voting equity interests of Watermark Capital Partners, LLC and Controls Watermark Capital Partners, LLC.

(b) Advisor hereby represents and warrants to Subadvisor as follows:

(i) There is no action, suit, proceeding, investigation or arbitration, either at law or in equity, of or before any court or tribunal of any jurisdiction or any governmental authority of any jurisdiction pending or, to the knowledge of Advisor, threatened or proposed in any manner against Advisor, or, to the knowledge of Advisor, any circumstances which could or should reasonably form the basis of any such action, suit, proceeding, investigation or arbitration.

(ii) Advisor is duly formed, validly existing and in good standing under the Laws of the State of Delaware, has the company power to own its assets and to transact the business in which it is now engaged and is duly qualified to do business and is in good standing under the Laws of each jurisdiction where its ownership or lease of property or the conduct of its business requires such qualification, except for failures to be so qualified, authorized or licensed that could not in the aggregate have a material adverse effect on the business operations, assets or financial condition of Advisor.

(iii) Advisor has the limited liability company power and authority to execute, deliver and perform this Agreement and all obligations required hereunder and has taken all necessary limited liability company action to authorize this Agreement on the terms and conditions hereof and the execution, delivery and performance of this Agreement and all obligations required hereunder. No consent of any other person including, without limitation, members or creditors of Advisor, and no license, permit, approval or authorization of, exemption by, notice or report to, or registration, filing or declaration with, any governmental authority is required by Advisor in connection with this Agreement or the execution, delivery or performance of this Agreement and all obligations required hereunder. This Agreement has been, and each instrument or document required hereunder will be, executed and delivered by a duly authorized agent of Advisor, and, when executed and delivered by the parties, this Agreement constitutes, and each instrument or document required hereunder when executed and delivered hereunder will constitute, the valid and binding obligation of Advisor enforceable against Advisor in accordance with its terms.

(iv) The execution, delivery and performance of this Agreement and the documents or instruments required hereunder, will not violate any provision of any existing Law binding on Advisor, or any order, judgment, award or decree of any court, arbitrator or governmental authority binding on Advisor, or the Governing Instruments of, or any securities issued by, Advisor or of any mortgage, indenture, lease, contract or other agreement, instrument or undertaking to which Advisor is a party or by which Advisor or any of its assets may be bound, the violation of which would have a material adverse effect on the business operations, assets or financial condition of Advisor and its Subsidiaries, taken as a whole, and will not result in, or require, the creation or imposition of any lien on any of their respective property, assets or revenues pursuant to the provisions of any such mortgage, indenture, lease, contract or other agreement, instrument or undertaking.

(v) A true and correct copy of the Advisory Agreement and the REIT's Registration Statement on Form S-11 (No. 333-196681), with all amendments thereto as of the Effective date, is attached hereto as Exhibits A and B, respectively.

Section 20. Additional Agreements of Advisor . In addition to all other obligations of Advisor hereunder, Advisor agrees as follows:

(a) Advisor shall perform all of its obligations under the Advisory Agreement as required thereunder in conformity with the Performance Standard;

(b) upon request, Advisor shall provide Subadvisor with all reports and other information reasonably requested by Subadvisor or as may reasonably be necessary to enable Subadvisor to discharge its obligations hereunder;

(c) Advisor shall recommend and support MGM's nomination as the Chief Executive Officer of CWI 2 and a voting member of CWI 2's Investment Committee; and

(d) Advisor shall use commercially reasonable best efforts to ensure that requests for reimbursement by the REIT of all Reimbursable Expenses are submitted promptly and shall diligently pursue the payment thereof by the REIT in accordance with the Advisory Agreement.

Section 21. Submission to Jurisdiction; Arbitration; Equitable Relief .

(a) Subject to Section 21(b) and the last sentence of this Section 21(a), any dispute, claim or controversy arising out of or relating to this Agreement or the breach, termination, enforcement, interpretation or validity thereof, including the determination of the scope or applicability of this agreement to arbitrate, shall be determined by arbitration in New York City, New York, before a panel of three (3) arbitrators. The arbitration shall be administered by JAMS pursuant to its Comprehensive Arbitration Rules and Procedures or pursuant to its Streamlined Arbitration Rules and Procedures, as determined by JAMS. The arbitrators shall hear and determine the controversy in accordance with New York law and upon the evidence produced at an arbitration hearing scheduled at the request of any party. It is the intention of the Parties to avoid the expense and delay that encumbers the normal litigation process, particularly with respect to discovery matters. Absent the agreement of the Parties to the arbitration to the contrary, the arbitrators shall permit only such discovery (with appropriate conditions and limitations) as is necessary to enable the hearing to proceed efficiently. The arbitrators shall have authority to grant any form of appropriate relief, whether legal or equitable in nature, including specific performance. The arbitrators shall be requested to render their decision within thirty (30) days from the date the arbitration proceedings are initiated, and a decision joined in by not less than two (2) of such arbitrators shall be deemed to be the decision of the panel. Judgment on the award of the arbitrators may be entered in any court having jurisdiction thereof.

(b) Notwithstanding anything contained in Section 21(a), each Party reserves the right to file with any court having jurisdiction an application for temporary or preliminary injunctive relief, writ of attachment, writ of possession, temporary protective order and/or appointment of a receiver on the grounds that the arbitration award to which the applicant may be entitled may be rendered ineffectual in the absence of such relief, but otherwise the Parties hereby waive their respective right to seek other remedies in a court of law (except as provided in the last sentence of Section 21(a)). Each Party agrees that any such filing shall be made with any court having jurisdiction. In addition, each Party acknowledges that monetary damages would be an insufficient remedy to a Party for the other Party's breach of any obligation under Section 4 (Investment Opportunities; Right of First Offer) and Sections 8(b), (c) and (e) (Confidentiality, Proprietary Information) of this Agreement and that such a breach would cause irreparable harm to the applicable Party. Accordingly, if a Party breaches any such obligation, the other Party shall be entitled to temporary and permanent injunctive relief from any court or other legally cognizable tribunal of competent jurisdiction, in addition to any other remedies prescribed by law or in equity. If a Party seeks such injunctive relief, such Party shall be obligated to prove only that the breaching Party violated one or more covenants of such Sections. Each Party waives the obligation of the applicable party to prove any other prerequisite to its entitlement to such injunctive relief. This Section shall survive the termination of this Agreement.

(c) Any arbitration hereunder may be consolidated by JAMS with the arbitration of any other dispute arising out of or relating to the same subject matter if the arbitrators determine that there are common issues of law or fact creating the possibility of conflicting rulings.

(d) The arbitrators shall not have the power to alter, amend, modify or change any of the terms of this Agreement or to grant any remedy that is either prohibited by the terms of this Agreement or unavailable in a court of law.

(e) The costs of any arbitration pursuant to this Section 21 shall be funded equally by the Parties when due, although the Parties shall bear their own attorneys' fees and costs. The prevailing party in the arbitration shall be repaid all of its costs and fees, including its reasonable attorneys' fees and costs, within fifteen (15) days after receiving the results of the arbitration. The arbitrators shall have the power both to determine the prevailing party and to determine the amount of attorneys' fees and expenses to be awarded to the prevailing party.

(f) This Section shall survive the termination of this Agreement.

Section 22. Notices . Any notice or other communication required or permitted hereunder shall be in writing and shall be delivered personally, sent by overnight courier or sent by certified, registered or express mail, postage prepaid. Any such notice shall be deemed given when so delivered or refused if sent personally or by overnight courier or, if mailed, three days after the date of deposit in the United States mail as follows:

(a) If to Subadvisor:

CWA2, LLC
c/o Watermark Capital Partners, LLC
272 East Deerpath Road, Suite 320
Lake Forest, IL 60045

Attention: Michael G. Medzigian

With a copy to:

Law Offices of Michael W. Black
70 West Madison Street
Suite 3500
Chicago, Illinois 60602


Attention:	Michael W. Black, Esq.

(b) If to Advisor:

Carey Lodging Advisors, LLC
c/o W.P. Carey Inc.
50 Rockefeller Plaza
New York, New York 10020
Attention: Head of Asset Management

Carey Lodging Advisors, LLC
c/o W.P. Carey Inc.
50 Rockefeller Plaza
New York, New York 10020
Attention: General Counsel

With copies to:

Clifford Chance US LLP
31 West 52nd Street
New York, New York 10019-6131
Attention: Kathleen L. Werner, Esq.

A party may alter the contact information to which communications or copies are to be sent by giving notice of such change of contact information in conformity with the provisions of this Section 22 for the giving of notice.

Section 23. Severability . Whenever possible, each provision of this Agreement will be interpreted in such manner as to be effective and valid under applicable Law, but if any provision of this Agreement is held to be invalid, illegal or unenforceable in any respect under any applicable Law in any jurisdiction, such invalidity, illegality or unenforceability will not affect any other provision of this Agreement but this Agreement will be reformed, construed and enforced in such jurisdiction (to preserve the original intention of the Parties to the greatest extent possible) as if such invalid, illegal or unenforceable provision had never been contained herein.

Section 24. Entire Agreement . This Agreement, together with any Exhibits and Schedules expressly contemplated hereby and attached hereto and any other agreements, certificates and documents delivered in connection herewith or otherwise in connection with the transactions contemplated hereby, contain the entire agreement between or among any of the Parties with respect to the transactions contemplated by this Agreement and supersede all prior agreements or understandings (including all term sheets negotiated between the parties), whether written or oral, between or among any of the parties with respect to the subject matter hereof. Each of the Parties acknowledges that in entering into this Agreement, it has not relied on any oral or written representation, warranty or other assurance (except as expressly provided for or referred to in this Agreement) and waives all rights and remedies which might otherwise be available in respect thereof, except that nothing in this Agreement shall limit or exclude any liability of a Party for fraud.

Section 25. Amendments and Waivers . This Agreement may not be amended, modified, altered or supplemented other than by means of a written instrument duly executed and delivered by the Parties in accordance with Section 22. No waiver of any provision of, or consent or approval required by, this Agreement, nor any consent to or approval of any departure herefrom, shall be effective unless it is in writing and signed by the Party against whom enforcement of any such waiver, consent or approval is sought. Such waiver, consent or approval shall be effective only in the specific instance and for the purpose for which given. Neither the failure of either Party to enforce, nor the delay of either Party in enforcing, any condition, provision or part of this Agreement at any time shall be construed as a waiver of that condition, provision or part or forfeit any rights to future enforcement thereof. No action taken pursuant to this Agreement, including any investigation by or on behalf of either Party hereto, shall be deemed to constitute a waiver by the Party taking action of compliance by the other party with any representation, warranty, covenant or agreement contained herein.

Section 26. Assignments . Advisor may assign this Agreement to any of its Affiliates in whole or in part. Except as provided in this Section and in Section 18, neither Party may assign its rights or delegate its obligations under this Agreement without the prior consent of the other Party.

Section 27. Cumulative Rights . Except as expressly provided herein, the Parties' respective rights under the various provisions of this Agreement shall be construed as cumulative, and no one of them is exclusive of the other or exclusive of any rights allowed by applicable Law.

Section 28. Governing Law . This Agreement shall be governed by, and construed and interpreted in accordance with, the laws of the State of New York, excluding any conflicts or choice of law rule or principle that might otherwise refer construction or interpretation of this Agreement to the substantive law of another jurisdiction

Section 29. Counterparts . This Agreement may be executed in two or more counterparts, each of which shall constitute an original, but all of which, when taken together, shall constitute but one instrument, and shall become effective when one or more counterparts have been signed by each party hereto delivered to the other parties. This Agreement may be executed by any party by the delivery by such party by facsimile or other electronic transmission of a copy of the signature page of this Agreement duly executed by such party . Any copy of this Agreement so executed by facsimile or other electronic transmission shall be deemed to be an originally executed copy of this Agreement.

Section 30. Construction . Except where the context otherwise requires, wherever used, (1) the singular includes the plural and the plural includes the singular; (2) the use of any gender shall be applicable to all genders; (3) the word "or" is used in the inclusive sense (and/or); (4) the term or symbol "Dollar," "dollar," "USD" and "$" shall mean the legal currency of the United States of America and (5) the words "include" and "including", and variations thereof shall not be deemed to be terms of limitation, but rather shall be deemed to be followed by the terms "without limitation". The headings of this Agreement are for convenience of reference only and in no way define, describe, extend or limit the scope or intent of this Agreement or the intent of any provision contained in this Agreement. The language of this Agreement shall be deemed to be the language mutually chosen by the parties and no rule of strict construction shall be applied against either Party hereto.

Section 31. Survival . The respective rights and obligations of the Parties hereunder, including, without limitation, Section 4 (Investment Opportunities; Right of First Offer), Section 8 (Confidentiality, Proprietary Information), Section 10 (Indemnification), Section 14 (Subadvisor Termination Option), Section 15 (Advisor Termination Option), and Section 16 (Action Upon Termination), Section 21 (Submission to Jurisdiction; Arbitration) shall survive the termination or expiration of this Agreement in accordance with the terms hereof.

Section 32. No Third Party Beneficiaries . Except for the indemnification obligations set forth in Section 10, this Agreement is for the sole benefit of the Parties and their successors and permitted assigns and not for the benefit of any third party.

[ Signature pages begin on the following page ]

IN WITNESS WHEREOF, the Parties hereto have executed this Agreement as of the date first written above.

ADVISOR:

CAREY LODGING ADVISORS, LLC

By: CAREY ASSET MANAGEMENT CORP.,
as sole member

By: /s/ Thomas E. Zacharias

Name: Thomas E. Zacharias
Title: Chief Operating Officer

SUBADVISOR:

CWA2, LLC


By:	Watermark Capital Partners, LLC, its Managing Member

By: /s/ Michael G. Medzigian

Michael G. Medzigian

EXHIBIT A

ADVISORY AGREEMENT



750444-4-33-v0.5	750444-4-33-v0.5	750444-4-33-v0.5

EXHIBIT B

FORM S-11



750444-4-33-v0.5	750444-4-33-v0.5	750444-4-33-v0.5

EXHIBIT C

MGM INDEMNIFICATION AGREEMENT



750444-4-33-v0.5	750444-4-33-v0.5	750444-4-33-v0.5

EXHIBIT D

SUBADVISOR INDEMNIFICATION AGREEMENT



750444-4-33-v0.5	750444-4-33-v0.5	750444-4-33-v0.5

Exhibit 10.3

AGREEMENT OF LIMITED PARTNERSHIP
OF
CWI 2 OP, LP

THIS AGREEMENT OF LIMITED PARTNERSHIP OF CWI 2 OP, LP, a Delaware limited partnership (the " Partnership "), dated as of February 9, 2015 (the "Effective Date"), is entered into by and among Carey Watermark Investors 2 Incorporated, a Maryland corporation holding both general partner and limited partner interests in the Partnership (the " General Partner "), and Carey Watermark Holdings 2, LLC, a Delaware limited liability company holding a special general partner interest in the Partnership (the " Special General Partner "), together with any other Persons who become Partners in the Partnership as provided herein.

WHEREAS, the Partnership was formed when a Certificate of Limited Partnership was filed and accepted by the Secretary of State of the State of Delaware; and

WHEREAS, the General Partner proposes to effect an initial offering of its common stock and to contribute the net proceeds of the offering to the Partnership to cause the Partnership to fund (i) certain acquisitions and investments, (ii) working capital requirements, (iii) redemptions of interests in the Partnership, and (iv) repayment of indebtedness incurred under various financing instruments.

NOW, THEREFORE, BE IT RESOLVED, that for good and adequate consideration, the receipt of which is hereby acknowledged, the parties hereto agree as follows:

Article 1 .
DEFINED TERMS

Section 1.1. Definitions .

The following definitions shall be for all purposes, unless otherwise clearly indicated to the contrary, applied to the terms used in this Agreement.

" Act " means the Delaware Revised Uniform Limited Partnership Act (6 Del. C. § 17-101 et seq.), as it may be amended from time to time, and any successor to such statute.

" Additional Funds " shall have the meaning set forth in Section 4.3.A.

" Additional Limited Partner " means a Person admitted to the Partnership as a Limited Partner pursuant to Section 12.2 and who is shown as such on the books and records of the Partnership.

" Adjusted Capital Account Deficit " means, with respect to any Partner, the deficit balance, if any, in such Partner's Capital Account as of the end of the relevant fiscal year, after giving effect to the following adjustments:


(i)	such deficit shall be decreased by any amounts which such Partner is obligated to restore pursuant to this Agreement or is deemed to be obligated to restore pursuant

to Regulations Section 1.704-1(b)(2)(ii)(c) or the penultimate sentence of each of Regulations Sections 1.704-2(i)(5) and 1.704-2(g)(1); and


(ii)	such deficit shall be increased by the items described in Regulations Section 1.704-1(b)(2)(ii)(d)(4), (5) and (6).

The foregoing definition of Adjusted Capital Account Deficit is intended to comply with the provisions of Regulations Section 1.704-1(b)(2)(ii)(d) and shall be interpreted consistently therewith. A positive balance in a Partner's Capital Account, after giving effect to the adjustments described above in clauses (i) and (ii), is referred to in this Agreement as an "Adjusted Capital Account Balance."

" Adjustment Date " means, with respect to any Capital Contribution, the close of business on the Business Day last preceding the date of the Capital Contribution, provided, that if such Capital Contribution is being made by the General Partner in respect of the proceeds from the issuance of REIT Shares (or the issuance of the General Partner's securities exercisable for, convertible into or exchangeable for REIT Shares), then the Adjustment Date shall be as of the close of business on the Business Day last preceding the date of the issuance of such securities.

" Advisor " means Carey Lodging Advisors, LLC, a Delaware limited liability company.

" Advisory Agreement " means that certain Advisory Agreement between the Advisor and the General Partner entered into contemporaneously with this Agreement, as the same may be amended from time to time.

" Affiliate " means, with respect to any Person, any Person directly or indirectly controlling, controlled by or under common control with such Person. Control of any Person means the power to direct the management and policies of such Person, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise, and the terms "controlling" and "controlled" have meanings correlative to the foregoing.

" Agreed Value " means (i) in the case of any Contributed Property set forth in Exhibit A and as of the Adjustment Date, the Agreed Value of such property as set forth in Exhibit A; (ii) in the case of any Contributed Property not set forth in Exhibit A and as of the Adjustment Date, the fair market value of such property or other consideration as determined by the General Partner, reduced by any liabilities either assumed by the Partnership upon such contribution or to which such property is subject when contributed; and (iii) in the case of any property distributed to a Partner by the Partnership, the fair market value of such property as determined by the General Partner at the time such property is distributed, reduced by any liabilities either assumed by such Partner upon such distribution or to which such property is subject at the time of the distribution as determined under Section 752 of the Code and the Regulations thereunder.

" Agreement " means this Agreement of Limited Partnership, as it may be amended, modified, supplemented or restated from time to time.

" Appraisal " means with respect to any assets, the opinion of an independent third party experienced in the valuation of similar assets, selected by the General Partner and the Special General

Partner in good faith; such opinion may be in the form of an opinion by such independent third party that the value for such property or asset as set by the General Partner is fair, from a financial point of view, to the Partnership.

" Assignee " means a Person to whom one or more OP Units have been transferred in a manner permitted under this Agreement, but who has not become a Substituted Limited Partner, and who has the rights set forth in Section 11.5.

" Available Cash " means, with respect to any period for which such calculation is being made, the cash flow generated by Partnership operations and investments as determined in the reasonable discretion of the General Partner taking into account all cash available for distribution from all sources excluding Capital Proceeds, after the payment of regular debt payments (including, without limitation, regularly scheduled payments of interest and amortization, but excluding balloon payments and early prepayment of debt principal) and Operating Expenses of the Partnership (as defined in the Advisory Agreement) but before the payment of distributions to Partners. Notwithstanding the foregoing, the operating cash flow of any entity in which the Partnership owns, directly or indirectly, less than a 100% interest shall be multiplied by the percentage ownership of such entity held, directly or indirectly, by the Partnership.

" Business Day " means any day except a Saturday, Sunday or other day on which commercial banks in New York, New York are authorized or required by law to be closed.

" Capital Account " means, with respect to any Partner, the Capital Account maintained for such Partner in accordance with the following provisions:

(a) To each Partner's Capital Account there shall be added such Partner's Capital Contributions, such Partner's share of Net Income and any items in the nature of income or gain which are specially allocated pursuant to Section 6.3 , and the amount of any Partnership liabilities assumed by such Partner or which are secured by any property distributed to such Partner.

(b) From each Partner's Capital Account there shall be subtracted the amount of cash and the Gross Asset Value of any property distributed to such Partner pursuant to any provision of this Agreement, such Partner's distributive share of Net Loss and any items in the nature of expenses or losses which are specially allocated pursuant to Section 6.3 , and the amount of any liabilities of such Partner assumed by the Partnership or which are secured by any property contributed by such Partner to the Partnership (except to the extent already reflected in the amount of such Partner's Capital Contribution).

(c) In the event any interest in the Partnership is transferred in accordance with the terms of this Agreement, the transferee shall succeed to the Capital Account of the transferor to the extent it relates to the transferred interest.

(d) In determining the amount of any liability for purposes of subsections (a) and (b) hereof, there shall be taken into account Code Section 752(c) and any other applicable provisions of the Code and Regulations.

(e) The foregoing provisions and the other provisions of this Agreement relating to the maintenance of Capital Accounts are intended to comply with Regulations Sections 1.704-1(b) and 1.704-2, and shall be interpreted and applied in a manner consistent with such Regulations. In the event the General Partner shall determine that it is prudent to modify the manner in which the Capital Accounts, or any debits or credits thereto (including, without limitation, debits or credits relating to liabilities which are secured by contributed or distributed property or which are assumed by the Partnership, the General Partner, or the Limited Partners) are computed in order to comply with such Regulations, the General Partner may make such modification, provided that it is not likely to have a material effect on the amounts distributable to any Person pursuant to Article 13 of this Agreement upon the dissolution of the Partnership. The General Partner also shall (i) make any adjustments that are necessary or appropriate to maintain equality between the Capital Accounts of the Partners and the amount of Partnership capital reflected on the Partnership's balance sheet, as computed for book purposes, in accordance with Regulations Section 1.704-1(b)(2)(iv)(q), and (ii) make any appropriate modifications in the event unanticipated events might otherwise cause this Agreement not to comply with Regulations Section 1.704-1(b) or Section 1.704-2.

" Capital Contribution " means, with respect to any Partner, the amount of money and the initial Gross Asset Value of any property (other than money) contributed to the Partnership by such Partner (net of any liabilities assumed by the Partnership relating to such property and any liability to which such property is subject).

" Capital Proceeds " means the gross receipts received (or deemed to be received) by the Partnership from a Capital Transaction, Change of Control Event or a Listing Event (including any borrowing or other transaction entered into in connection with, or as a part of, a Capital Transaction, Change of Control Event or Listing Event), less any expenses related to the Capital Transaction, Change of Control Event or Listing Event.

" Capital Transaction " means any transaction outside the ordinary course of the Partnership's business involving the sale, exchange, other disposition, or refinancing of any Partnership asset.

" Cash Amount " means, with respect to any OP Units subject to a Redemption, an amount of cash equal to the Deemed Partnership Interest Value attributable to such OP Units.

" Certificate " means the Certificate of Limited Partnership relating to the Partnership filed in the office of the Secretary of the State of the State of Delaware, as amended from time to time in accordance with the terms hereof and the Act.

" Change of Control " shall be deemed to have occurred at such time as (i) the date a "person" or "group" (within the meaning of Sections 13(d) and 14(d) of the Exchange Act) becomes the ultimate "beneficial owner" (as defined in Rules 13d-3 and 13d-5 under the Exchange Act, except that a person or group shall be deemed to have beneficial ownership of all shares of voting stock that such person or group has the right to acquire regardless of when such right is first exercisable), directly or indirectly, of voting stock representing more than fifty percent (50%) of the total voting power of the total voting stock of the General Partner; (ii) the date the General Partner sells, transfers or otherwise disposes of all or substantially all of its assets; or (iii) the date of the consummation of a merger or share exchange of the General Partner with another entity where the General Partner's

stockholders immediately prior to the merger or share exchange would not beneficially own, immediately after the merger or share exchange, shares representing fifty percent (50%) or more of all votes (without consideration of the rights of any class of stock to elect directors by a separate group vote) to which all stockholders of the corporation issuing cash or securities in the merger or share exchange would be entitled in the election of directors, or where members of the board of directors of the General Partner immediately prior to the merger or share exchange would not immediately after the merger or share exchange constitute a majority of the board of directors of the corporation issuing cash or securities in the merger or share exchange.

" Change of Control Event " means (i) the date on which another Person acquires more than fifty percent (50%) of the aggregate ordinary voting power represented by the equity securities of the General Partner by purchase, merger, consolidation, reorganization, recapitalization or otherwise, provided that the direct or indirect ownership of the General Partner immediately after the transaction differs from the direct ownership of the General Partner immediately before the acquisition by more than a de minimis amount; or (ii) the date on which the General Partner merges with another Person, provided that the ownership of the entity surviving the merger immediately after the merger differs from the ownership of the General Partner immediately before the merger by more than a de minimis amount.

" Charter " means the Articles of Incorporation of the General Partner filed with the State Department of Assessments and Taxation of Maryland on May 22, 2014, as amended or restated from time to time.

" Class " means a class of REIT Shares or OP Units, as the context may require.

" Class A REIT Shares " means the REIT Shares classified as "Class A" shares in the Charter.

" Class A OP Unit " means an OP Unit entitling the holder thereof to the rights of a holder of a Class A OP Unit as provided in this Agreement.

" Class C REIT Shares " means the REIT Shares classified as "Class C" shares in the Charter.

" Class C OP Unit " means an OP Unit entitling the holder thereof to the rights of a holder of a Class C OP Unit as provided in this Agreement.

" Code " means the Internal Revenue Code of 1986, as amended from time to time or any successor statute thereto. Any reference herein to a specific section or sections of the Code shall be deemed to include a reference to any corresponding provision of future law.

" Consent " means the consent to, approval of, or vote on a proposed action by a Partner given in accordance with Article 14.

" Consent of the Limited Partners " means the Consent of a Majority in Interest of the Limited Partners, which Consent shall be obtained prior to the taking of any action for which it is required by this Agreement and may be given or withheld by a Majority in Interest of the Limited Partners, unless otherwise expressly provided herein, in their sole and absolute discretion.

" Consent of the Partners " means the Consent of Partners holding Percentage Interests that in the aggregate are equal to or greater than fifty percent (50%) of the aggregate Percentage Interests of all Partners, which Consent shall be obtained prior to the taking of any action for which it is required by this Agreement and may be given or withheld by such Partners, in their sole and absolute discretion.

" Constructively Own " means ownership under the constructive ownership rules described in the Charter.

" Contributed Property " means each property or other asset, in such form as may be permitted by the Act, but excluding cash, contributed or deemed contributed to the Partnership.

" Debt " means, as to any Person, as of any date of determination, (i) all indebtedness of such Person for borrowed money or for the deferred purchase price of property or services; (ii) all amounts owed by such Person to banks or other Persons in respect of reimbursement obligations under letters of credit, surety bonds, guarantees and other similar instruments guaranteeing payment or other performance of obligations by such Person; (iii) all indebtedness for borrowed money or for the deferred purchase price of property or services secured by any lien on any property owned by such Person, to the extent attributable to such Person's interest in such property, even though such Person has not assumed or become liable for the payment thereof; and (iv) lease obligations of such Person which, in accordance with generally accepted accounting principles, should be capitalized.

" Deemed Partnership Interest Value " means, as of any date with respect to any Class of Partnership Interests, the Deemed Value of the Partnership Interests attributable to such class multiplied by the Partner's relative Percentage Interest of such class.

" Deemed Value of the Partnership Interests " means, as of any date with respect to any class or series of Partnership Interests, (i) the total number of OP Units of the General Partner issued and outstanding as of the close of business on such date multiplied by the Fair Market Value determined as of such date of a share of common stock of the General Partner which corresponds to such Partnership Interest, as adjusted (x) pursuant to Section 7.5 (in the event the General Partner acquires material assets, other than on behalf of the Partnership) and (y) for stock dividends and distributions, stock splits and subdivisions, reverse stock splits and combinations, distribution of warrants or options and distributions of evidences of indebtedness or assets not received by the General Partner pursuant to a pro rata distribution by the Partnership; (ii) divided by the Percentage Interest of the General Partner on such date; provided, that if no outstanding shares of capital stock of the General Partner correspond to a class or series of Partnership Interests, the Deemed Value of the Partnership Interests with respect to such class or series shall be equal to an amount reasonably determined by the General Partner.

" Depreciation " means, for each fiscal year or other period, an amount equal to the depreciation, amortization or other cost recovery deduction allowable with respect to an asset for such year or other period, except that if the Gross Asset Value of an asset differs from its adjusted basis for federal income tax purposes at the beginning of such year or other period, Depreciation shall be an amount which bears the same ratio to such beginning Gross Asset Value as the federal income tax depreciation, amortization or other cost recovery deduction for such year or other period

bears to such beginning adjusted tax basis; provided, however, that if the federal income tax depreciation, amortization or other cost recovery deduction for such year is zero, Depreciation shall be determined with reference to such beginning Gross Asset Value using any reasonable method selected by the General Partner.

" ERISA " means the Employee Retirement Income Security Act of 1974, as amended.

" Exchange Act " means the Securities Exchange Act of 1934, as amended, and the rules and regulations of the Securities and Exchange Commission promulgated thereunder and any successor statute thereto.

" Fair Market Value " means, with respect to any share of capital stock of the General Partner, (i) if such shares are listed or admitted to trading on any securities exchange or automated quotation system, the average of the daily market price for the ten (10) consecutive trading days immediately preceding the date with respect to which "Fair Market Value" must be determined hereunder or, if such date is not a Business Day, the immediately preceding Business Day, using as the market price for each such trading day the closing price, regular way, on such day, or if no such sale takes place on such day, the average of the closing bid and asked prices on such day, or (ii) if such shares are not listed or admitted to trading on any securities exchange or automated quotation system, the price at which such shares are then being offered to the public pursuant to any public offering of the General Partner or pursuant to its distribution reinvestment plan (before giving effect to any discounts in effect and made available to participants in such plan); provided that, if there is no ongoing public offering or if the General Partner is not then offering its shares pursuant to a distribution reinvestment plan, the Fair Market Value of such shares shall be determined by the General Partner acting in good faith on the basis of the most recent, publicly reported net asset value of the General Partner and other information as it considers, in its reasonable judgment, appropriate. In the event the REIT Shares Amount for such shares includes rights that a holder of such shares would be entitled to receive, then the Fair Market Value of such rights shall be determined by the General Partner acting in good faith on the basis of such quotations and other information as it considers, in its reasonable judgment, appropriate; and provided, further that, in connection with determining the Deemed Value of the Partnership Interests for purposes of determining the number of additional OP Units issuable upon a Capital Contribution funded by an underwritten public offering of shares of capital stock of the General Partner, the Fair Market Value of such shares shall be the public offering price per share of such class of capital stock sold. Notwithstanding the foregoing, the General Partner in its reasonable discretion may use a different "Fair Market Value" for purposes of making the determinations under subparagraph (b) of the definition of "Gross Asset Value" and Section 4.4.D in connection with the contribution of Property or cash to the Partnership by a third party, provided such value shall be based upon the value per REIT Share (or per OP Unit) agreed upon by the General Partner and such third party for purposes of such contribution.

" General Partner Interest " means a Partnership Interest held by the General Partner. A General Partner Interest may be expressed as a number of OP Units.

" General Partner Net Current Investment " means the General Partner's total Capital Contributions then paid to the Partnership, plus the amount of any Partnership liabilities assumed by the General Partner (or which are secured by Partnership property distributed to the General

Partner), less (i) the amount of any liabilities of the General Partner assumed by the Partnership (or which are secured by property contributed by the General Partner to the Partnership), (ii) all amounts actually distributed to the General Partner pursuant to Section 5.1.B(2), and (iii) all amounts representing a return of capital to the General Partner, including, but not limited to, the portion of any redemption proceeds distributed to the General Partner pursuant to Section 11.8 which represents a return of capital to the General Partner.

" General Partner Priority Return " means an amount equal to six percent (6%) per annum of the Weighted Average General Partner Net Current Investment, payable to the General Partner annually on a cumulative basis.

" General Partner Unpaid Priority Return " means the excess, if any, of the General Partner Priority Return over all amounts previously paid to the General Partner under Section 5.1.A, or paid in respect of the General Partner Priority Return under Section 5.1.B(1) as of the time in question.

" Gross Asset Value " means, with respect to any asset, the asset's adjusted basis for federal income tax purposes, except as follows:

(a) The initial Gross Asset Value of any asset contributed by a Partner to the Partnership shall be the gross fair market value of such asset, as determined by the contributing Partner and the General Partner (as set forth on Exhibit A attached hereto, as such Exhibit may be amended from time to time); provided , that if the contributing Partner is the General Partner, then, except with respect to the General Partner's initial Capital Contribution which shall be determined as set forth on Exhibit A, the determination of the fair market value of the contributed asset shall be determined (i) by the price paid by the General Partner if the asset is acquired by the General Partner contemporaneously with its contribution to the Partnership, (ii) by Appraisal, if otherwise acquired by the General Partner, (iii) by the amount of cash if the asset is cash, and (iv) as reasonably determined by the General Partner if the asset is REIT Shares or other shares of capital stock of the General Partner.

(b) The Gross Asset Values of all Partnership assets shall be adjusted to equal their respective gross fair market values, as determined by the General Partner using such reasonable method of valuation as it may adopt, provided , however , that for such purpose, the net value of all of the Partnership assets, in the aggregate, shall be equal to the Deemed Value of the Partnership Interests of all classes of Partnership Interests then outstanding, regardless of the method of valuation adopted by the General Partner, immediately prior to the times listed below:


(i)	the acquisition of an additional interest in the Partnership by a new or existing Partner in exchange for more than a de minimis Capital Contribution, if the General Partner reasonably determines that such adjustment is necessary or appropriate to reflect the relative economic interests of the Partners in the Partnership;


(ii)	the distribution by the Partnership to a Partner of more than a de minimis amount of Partnership property as consideration for an interest in the Partnership if the General Partner reasonably determines that such adjustment is necessary or appropriate to reflect the relative economic interests of the Partners in the Partnership;


(iii)	the liquidation of the Partnership within the meaning of Regulations Section 1.704-1(b)(2)(ii)(g);


(iv)	at such other times as the General Partner shall reasonably determine necessary or advisable in order to comply with Regulations Sections 1.704-1(b) and 1.704-2; and


(v)	in connection with the grant of an interest in the Partnership (other than a de minimis interest) as consideration for the provision of services to or for the benefit of the Partnership by an existing Partner acting in a partner capacity or by a new Partner acting in a partner capacity or in anticipation of becoming a Partner.

(c) The Gross Asset Value of any Partnership asset distributed to a Partner shall be the gross fair market value of such asset on the date of distribution as determined by the distributee and the General Partner, or if the distributee and the General Partner cannot agree on such a determination, by Appraisal.

(d) The Gross Asset Values of Partnership assets shall be increased (or decreased) to reflect any adjustments to the adjusted basis of such assets pursuant to Code Section 734(b) or Code Section 743(b), but only to the extent that such adjustments are taken into account in determining Capital Accounts pursuant to Regulations Section 1.704-1(b)(2)(iv)(m); provided , however , that Gross Asset Values shall not be adjusted pursuant to this subparagraph (d) to the extent that the General Partner reasonably determines that an adjustment pursuant to subparagraph (b) is necessary or appropriate in connection with a transaction that would otherwise result in an adjustment pursuant to this subparagraph (d).

(e) If the Gross Asset Value of a Partnership asset has been determined or adjusted pursuant to subparagraph (a), (b) or (d), such Gross Asset Value shall thereafter be adjusted by the Depreciation taken into account with respect to such asset for purposes of computing Net Income and Net Loss.

" Immediate Family " means, with respect to any natural Person, such natural Person's estate or heirs or current spouse or former spouse, parents, parents-in-law, children (whether natural, adopted or by marriage), siblings and grandchildren and any trust or estate, all of the beneficiaries of which consist of such Person or such Person's spouse or former spouse, parents, parents-in-law, children, siblings or grandchildren.

" Incapacity " or " Incapacitated " means, (i) as to any individual Partner, death, total physical disability or entry by a court of competent jurisdiction adjudicating him or her incompetent to manage his or her Person or his or her estate; (ii) as to any corporation which is a Partner, the filing of a certificate of dissolution, or its equivalent, for the corporation or the revocation of its charter; (iii) as to any partnership which is a Partner, the dissolution and commencement of winding up of the partnership; (iv) as to any estate which is a Partner, the distribution by the fiduciary of the estate's entire interest in the Partnership; (v) as to any trustee of a trust which is a Partner, the termination of the trust (but not the substitution of a new trustee); or (vi) as to any Partner, the bankruptcy of such Partner. For purposes of this definition, bankruptcy of a Partner shall be deemed to have occurred when (a) the Partner commences a voluntary proceeding seeking liquidation, reorganization or other relief under any bankruptcy, insolvency or other similar law now or hereafter

in effect, (b) the Partner is adjudged as bankrupt or insolvent, or a final and nonappealable order for relief under any bankruptcy, insolvency or similar law now or hereafter in effect has been entered against the Partner, (c) the Partner executes and delivers a general assignment for the benefit of the Partner's creditors, (d) the Partner files an answer or other pleading admitting or failing to contest the material allegations of a petition filed against the Partner in any proceeding of the nature described in clause (b) above, (e) the Partner seeks, consents to or acquiesces in the appointment of a trustee, receiver or liquidator for the Partner or for all or any substantial part of the Partner's properties, (f) any proceeding seeking liquidation, reorganization or other relief under any bankruptcy, insolvency or other similar law now or hereafter in effect has not been dismissed within one hundred twenty (120)days after the commencement thereof, (g) the appointment without the Partner's consent or acquiescence of a trustee, receiver or liquidator has not been vacated or stayed within ninety (90) days of such appointment, or (h) an appointment referred to in clause (g) is not vacated within ninety (90) days after the expiration of any such stay.

" Indemnitee " means (i) any Person subject to a claim or demand or made or threatened to be made a party to, or involved or threatened to be involved in, an action, suit or proceeding by reason of his or her status as (A) the General Partner or (B) a director, officer or employee of the Partnership or the General Partner, and (ii) such other Persons (including Affiliates of the General Partner or the Partnership) as the General Partner may designate from time to time (whether before or after the event giving rise to potential liability), in its sole and absolute discretion.

" Investments " means investments made by the Partnership, directly or indirectly, in a Property, Loan or Other Permitted Investment Asset.

" IRS " means the United States Internal Revenue Service.

" Limited Partner " means any Person named as a Limited Partner in Exhibit A attached hereto, as such Exhibit may be amended from time to time, or any Substituted Limited Partner or Additional Limited Partner, in such Person's capacity as a Limited Partner in the Partnership.

" Limited Partner Interest " means a Partnership Interest of a Limited Partner representing a fractional part of the Partnership Interests of all Limited Partners and includes any and all benefits to which the holder of such a Partnership Interest may be entitled as provided in this Agreement, together with all obligations of such Person to comply with the terms and provisions of this Agreement. A Limited Partner Interest may be expressed as a number of OP Units.

" Liquidating Event " shall have the meaning set forth in Section 13.1.

" Liquidator " shall have the meaning set forth in Section 13.2.A.

" Listing Event " means the date on which the General Partner's common equity securities are first listed on a securities exchange or admitted for trading in an automated quotation system.

" Listed Market Value " means the average closing price of the common equity securities of the General Partner as reported by the primary securities exchange or automated quotations system in which such securities are then listed or admitted to trading for the thirty (30) trading days beginning

with the first trading day after the one hundred and eightieth (180th) day after such securities are first listed or admitted to trading; provided, however, that if no sales take place on any of such thirty (30) days, the average of the closing bid and asked prices on such day shall be used.

" Loan " means any note and other evidence of indebtedness or obligation acquired, originated or entered into, directly or indirectly, by the Partnership as lender, noteholder, participant, note purchaser or other capacity, including but not limited to a first or subordinate mortgage loan, construction loan, development loan, loan participation, B note, loan secured by capital stock or any other assets or form of equity interest and any other type of loan or financial arrangement, such as providing or arranging for a letter of credit, providing a guarantee of obligations to third parties, or providing a commitment for loans. Loan shall not include any leases which are not recognized as leases for federal income tax reporting purposes.

" Majority in Interest of the Limited Partners " means Limited Partners holding in the aggregate Percentage Interests that are greater than fifty percent (50%) of the aggregate Percentage Interests of all Limited Partners.

" Net Income " or " Net Loss " means for each fiscal year of the Partnership, an amount equal to the Partnership's taxable income or loss for such fiscal year, determined in accordance with Code Section 703(a) (for this purpose, all items of income, gain, loss, or deduction required to be stated separately pursuant to Code Section 703(a)(1) shall be included in taxable income or loss), with the following adjustments:

(a) Any income of the Partnership that is exempt from federal income tax and not otherwise taken into account in computing Net Income or Net Loss pursuant to this definition of Net Income or Net Loss shall be added to such taxable income or loss;

(b) Any expenditures of the Partnership described in Code Section 705(a)(2)(B) or treated as Code Section 705(a)(2)(B) expenditures pursuant to Regulations Section 1.704-1(b)(2)(iv)(i), and not otherwise taken into account in computing Net Income or Net Loss pursuant to this definition of Net Income or Net Loss shall be subtracted from such taxable income or loss;

(c) In the event the Gross Asset Value of any Partnership asset is adjusted pursuant to subparagraph (b) or subparagraph (c) of the definition of Gross Asset Value, the amount of such adjustment shall be taken into account as gain or loss from the disposition of such asset for purposes of computing Net Income or Net Loss;

(d) Gain or loss resulting from any disposition of property with respect to which gain or loss is recognized for federal income tax purposes shall be computed by reference to the Gross Asset Value of the property disposed of, notwithstanding that the adjusted tax basis of such property differs from its Gross Asset Value;

(e) In lieu of the depreciation, amortization, and other cost recovery deductions taken into account in computing such taxable income or loss, there shall be taken into account Depreciation for such fiscal year;

(f) To the extent an adjustment to the adjusted tax basis of any Partnership asset pursuant to Code Section 734(b) or Code Section 743(b) is required pursuant to Regulations Section 1.704-1(b)(2)(iv)(m)(4) to be taken into account in determining Capital Accounts as a result of a distribution other than in liquidation of a Partner's interest in the Partnership, the amount of such adjustment shall be treated as an item of gain (if the adjustment increases the basis of the asset) or loss (if the adjustment decreases the basis of the asset) from the disposition of the asset and shall be taken into account for purposes of computing Net Income or Net Loss; and

(g) Notwithstanding any other provision of this definition of Net Income or Net Loss, any items which are specially allocated pursuant to Section 6.3 shall not be taken into account in computing Net Income or Net Loss. The amounts of the items of Partnership income, gain, loss, or deduction available to be specially allocated pursuant to Section 6.3 shall be determined by applying rules analogous to those set forth in this definition of Net Income or Net Loss.

" Net Income from a Capital Transaction " means that portion of Net Income attributable to a Capital Transaction.

" Net Loss from a Capital Transaction " means that portion of Net Loss attributable to a Capital Transaction.

" New Securities " means (i) any rights, options, warrants or convertible or exchangeable securities having the right to subscribe for or purchase REIT Shares or other shares of common stock of the General Partner, or (ii) any Debt issued by the General Partner that provides any of the rights described in clause (i).

" Nonrecourse Deductions " shall have the meaning set forth in Regulations Section 1.704-2(b)(1), and the amount of Nonrecourse Deductions for a Partnership Year shall be determined in accordance with the rules of Regulations Section 1.704-2(c).

" Nonrecourse Liability " shall have the meaning set forth in Regulations Section 1.752-1(a)(2).

" Notice of Redemption " means the Notice of Redemption substantially in the form of Exhibit B to this Agreement.

" OP Unit " means a fractional share of the Partnership Interests of all Partners issued pursuant to Article 4, including Class A OP Units and Class C OP Units. The allocation of OP Units of each Class among the Partners shall be as set forth in Exhibit A, as such Exhibit may be amended from time to time.

" Other Permitted Investment Asset " means assets, other than cash, cash equivalents, short term bonds, auction rate securities and similar short term investments, acquired by the Partnership for investment purposes that is not a Loan or a Property and is consistent with the investment objectives and policies of the Partnership.

" Partner " means a General Partner, a Special General Partner, or a Limited Partner, and "Partners" means the General Partner, the Special General Partner and the Limited Partners.

" Partner Minimum Gain " means an amount, with respect to each Partner Nonrecourse Debt, equal to the Partnership Minimum Gain that would result if such Partner Nonrecourse Debt was treated as a Nonrecourse Liability, determined in accordance with Regulations Section 1.704-2(i)(3).

" Partner Nonrecourse Debt " shall have the meaning set forth in Regulations Section 1.704-2(b)(4).

" Partner Nonrecourse Deductions " shall have the meaning set forth in Regulations Section 1.704-2(i)(2), and the amount of Partner Nonrecourse Deductions with respect to a Partner Nonrecourse Debt for a Partnership Year shall be determined in accordance with the rules of Regulations Section 1.704-2(i)(2).

" Partnership " means the limited partnership formed under the Act and pursuant to this Agreement and any successor thereto.

" Partnership Interest " means, an ownership interest in the Partnership of either a Limited Partner, the Special General Partner, or the General Partner and includes any and all benefits to which the holder of such a Partnership Interest may be entitled as provided in this Agreement, together with all obligations of such Person to comply with the terms and provisions of this Agreement. There may be one or more classes or series of Partnership Interests as provided in Sections 4.2 and 4.4. Except as otherwise provided for in this Agreement, a Partnership Interest may be expressed as a number of OP Units.

" Partnership Minimum Gain " shall have the meaning set forth in Regulations Section 1.704-2(b)(2), and the amount of Partnership Minimum Gain, as well as any net increase or decrease in Partnership Minimum Gain, for a Partnership Year shall be determined in accordance with the rules of Regulations Section 1.704-2(d).

" Partnership Record Date " means the record date established by the General Partner for the distribution of Available Cash pursuant to Section 5.1 which record date shall be the same as the record date established by the General Partner for a distribution to its stockholders of some or all of its portion of such distribution.

" Partnership Year " means the fiscal year of the Partnership, which shall be the calendar year.

" Percentage Interest " means, as to a Partner holding a class or series of Partnership Interests, its interest as determined, as of the first day of each Partnership Year, by dividing such Partner's Adjusted Capital Account Balance by aggregate Adjusted Capital Account Balances of all Partners. For purposes of the preceding sentence, the Adjusted Capital Account Balances of the Partners shall be determined after giving effect to all allocations of Net Income and Net Loss for all preceding Partnership Years, including allocations of Net Income and Net Loss resulting from adjustments to the Gross Asset Value of the Partnership's assets pursuant to the definition of Gross Asset Value.

" Permitted Transfer " means a transfer of a Limited Partner Interest in accordance with Section 11.3.

" Person " means an individual, corporation, partnership, limited liability company, trust, unincorporated organization, association or other entity.

" Plan Asset Regulation " means the regulations promulgated by the United States Department of Labor in Title 29, Code of Federal Regulations, Part 2510, Section 101.3, and any successor regulations thereto.

" Pledge " shall have the meaning set forth in Section 11.3.A.

" Property " or " Properties " means a partial or entire interest in real property (including leasehold interests) and personal or mixed property connected therewith. An Investment which obligates the Partnership to acquire a Property will be treated as a Property for purposes of this Agreement.

" Qualifying Party " means (a) an Additional Limited Partner; (b) a member of the Immediate Family of a Member (a "Family Member"), or a lending institution as the pledgee of a Pledge, who is the transferee in a Permitted Transfer; or (c) a Substituted Limited Partner succeeding to all or part of the Limited Partner Interest of (i) an Additional Limited Partner or (ii) a Family Member, or a lending institution who is the pledgee of a Pledge, who is the transferee in a Permitted Transfer.

" Qualified REIT Subsidiary " means any Subsidiary of the General Partner that is a "qualified REIT subsidiary" within the meaning of Section 856(i) of the Code.

" Qualified Transferee " means an "Accredited Investor" as such term is defined in Rule 501 promulgated under the Securities Act.

" Redemption " shall have the meaning set forth in Section 8.6.A.

" Regulations " means the Treasury Regulations promulgated under the Code, as such regulations may be amended from time to time (including corresponding provisions of succeeding regulations).

" Regulatory Allocations " shall have the meaning set forth in Section 6.3.

" REIT " means a real estate investment trust, as defined under Sections 856 through 860 of the Code.

" REIT Requirements " shall have the meaning set forth in Section 5.1.

" REIT Share " means a share of common stock, par value $0.001 per share, of the General Partner.

" REIT Shares Amount " means, with respect to Tendered Units of a Class, as of any date, an aggregate number of the corresponding Class of REIT Shares equal to the number of Tendered

Units of such Class, as adjusted (x) pursuant to Section 7.5 (in the event the General Partner acquires material assets, other than on behalf of the Partnership) and (y) for stock dividends and distributions, stock splits and subdivisions, reverse stock splits and combinations, distributions of rights, warrants or options, and distributions of evidences of indebtedness or assets relating to assets not received by the General Partner pursuant to a pro rata distribution by the Partnership.

" Securities Act " means the Securities Act of 1933, as amended, and the rules and regulations of the Securities and Exchange Commission promulgated thereunder and any successor statute thereto.

" Special Fees " means fees or expenses that are required or intended to be borne entirely or disproportionately by one or more particular Classes of OP Units, including but not limited to, selling commissions, dealer manager fees and distribution and shareholder servicing fees.

" Special General Partner Interest " means a Partnership Interest held by the Special General Partner. A Special General Partner Interest may be expressed as a number of OP Units, but only to the extent that the Special General Partner makes Capital Contributions to the Partnership.

" Specified Redemption Date " means the day of receipt by the General Partner of a Notice of Redemption.

" Subsidiary " means, with respect to any Person, any corporation, partnership, limited liability company, joint venture or other entity of which a majority of (i) the voting power of the voting equity securities or (ii) the outstanding equity interests is owned, directly or indirectly, by such Person.

" Subsidiary Partnership " means any partnership or limited liability company that is a Subsidiary of the Partnership.

" Substituted Limited Partner " means a Person who is admitted as a Limited Partner to the Partnership pursuant to Section 11.4.

" Tax Items " shall have the meaning set forth in Section 6.4.A.

" Tenant " means any tenant from which the General Partner derives rent either directly or indirectly through partnerships, including the Partnership, or Qualified REIT Subsidiaries.

" Tendered Units " shall have the meaning set forth in Section 8.6.A.

" Tendering Partner " shall have the meaning set forth in Section 8.6.A.

" Termination Event " shall mean the termination or non-renewal of the Advisory Agreement.

" Termination Note " shall have the meaning set forth in Section 5.1 E.

" Transaction Value " shall mean the aggregate equity value of the issued and outstanding REIT Shares implied by the Change of Control Event.

" Weighted Average General Partner Net Current Investment " means the annual average balance of the General Partner Net Current Investment computed on a daily basis.

ARTICLE 2 .
ORGANIZATIONAL MATTERS

Section 2.1. Organization .

The Partnership is a limited partnership formed pursuant to the provisions of the Act and upon the terms and conditions set forth in this Agreement. Except as expressly provided herein, the rights and obligations of the Partners and the administration and termination of the Partnership shall be governed by the Act. The Partnership Interest of each Partner shall be personal property for all purposes.

Section 2.2. Name .

The name of the Partnership is CWI Limited Partnership. The Partnership's business may be conducted under any other name or names deemed advisable by the General Partner, including the name of the General Partner or any Affiliate thereof. The words "Limited Partnership," "L.P.," "Ltd." or similar words or letters shall be included in the Partnership's name where necessary for the purposes of complying with the laws of any jurisdiction that so requires. The General Partner in its sole and absolute discretion may change the name of the Partnership at any time and from time to time and shall notify the Limited Partners of such change in the next regular communication to the Limited Partners.

Section 2.3. Registered Office and Agent; Principal Office .

The name and address of the registered office and registered agent of the Partnership is Corporation Service Company, 2711 Centerville Road, Suite 400, Wilmington, DE 19808. The principal office of the Partnership is located at 50 Rockefeller Plaza, New York, New York 10020, or such other place as the General Partner may from time to time designate by notice to the other Partners. The Partnership may maintain offices at such other place or places within or outside the State of Delaware as the General Partner deems advisable.

Section 2.4. Power of Attorney .

A . Each Limited Partner and each Assignee constitutes and appoints the General Partner, any Liquidator, and authorized officers and attorneys-in-fact of each, and each of those acting singly, in each case with full power of substitution, as its true and lawful agent and attorney-in-fact, with full power and authority in its name, place and stead to:

(1) execute, swear to, acknowledge, deliver, file and record in the appropriate public offices (a) all certificates, documents and other instruments (including, without limitation, this Agreement and the Certificate and all amendments or restatements thereof) that the General Partner or the Liquidator deems appropriate or necessary to form, qualify or continue the existence or qualification of the Partnership as a limited partnership (or a partnership in which the Limited

Partners have limited liability) in the State of Delaware and in all other jurisdictions in which the Partnership may conduct business or own property; (b) all instruments that the General Partner or any Liquidator deems appropriate or necessary to reflect any amendment, change, modification or restatement of this Agreement in accordance with its terms; (c) all conveyances and other instruments or documents that the General Partner or any Liquidator deems appropriate or necessary to reflect the dissolution and liquidation of the Partnership pursuant to the terms of this Agreement, including, without limitation, a certificate of cancellation; (d) all instruments relating to the admission, withdrawal, removal or substitution of any Partner pursuant to, or other events described in, Articles 11 , 12 or 13 or the Capital Contribution of any Partner; and (e) all certificates, documents and other instruments relating to the determination of the rights, preferences and privileges of Partnership Interests; and

(2) execute, swear to, acknowledge and file all ballots, consents, approvals, waivers, certificates and other instruments appropriate or necessary, in the sole and absolute discretion of the General Partner or any Liquidator, to make, evidence, give, confirm or ratify any vote, consent, approval, agreement or other action which is made or given by the Partners hereunder or is consistent with the terms of this Agreement or appropriate or necessary, in the sole discretion of the General Partner or any Liquidator, to effectuate the terms or intent of this Agreement. Nothing contained herein shall be construed as authorizing the General Partner or any Liquidator to amend this Agreement except in accordance with Article 14 or as may be otherwise expressly provided for in this Agreement.

B. The foregoing power of attorney is hereby declared to be irrevocable and a power coupled with an interest, in recognition of the fact that each of the Partners will be relying upon the power of the General Partner and any Liquidator to act as contemplated by this Agreement in any filing or other action by it on behalf of the Partnership, and it shall survive and not be affected by the subsequent Incapacity of any Limited Partner or Assignee and the transfer of all or any portion of such Limited Partner's or Assignee's OP Units and shall extend to such Limited Partner's or Assignee's heirs, successors, assigns and personal representatives. Each such Limited Partner or Assignee hereby agrees to be bound by any representation made by the General Partner or any Liquidator, acting in good faith pursuant to such power of attorney; and each such Limited Partner or Assignee hereby waives any and all defenses which may be available to contest, negate or disaffirm the action of the General Partner or any Liquidator, taken in good faith under such power of attorney. Each Limited Partner or Assignee shall execute and deliver to the General Partner or any Liquidator, within fifteen (15) days after receipt of the General Partner's or Liquidator's request therefor, such further designation, powers of attorney and other instruments as the General Partner or the Liquidator, as the case may be, deems necessary to effectuate this Agreement and the purposes of the Partnership.

Section 2.5. Term .

The term of the Partnership commenced on the date of its formation and the Partnership shall have a perpetual existence unless it is dissolved pursuant to the provisions of Article 13 or as otherwise provided by law.

ARTICLE 3 .
PURPOSE

Section 3.1. Purpose and Business .

The purpose and nature of the business to be conducted by the Partnership is to (i) conduct any business that may be lawfully conducted by a limited partnership organized pursuant to the Act, (ii) enter into any partnership, joint venture or other similar arrangement to engage in any business described in the foregoing clause (i) or to own interests in any entity engaged, directly or indirectly, in any such business and (iii) do anything necessary or incidental to the foregoing, provided , however , that such business shall be limited to and conducted in such a manner as to permit the General Partner at all times to be classified as a REIT for federal income tax purposes, unless the General Partner ceases to qualify as a REIT for reasons other than the conduct of the business of the Partnership. In connection with the foregoing, and without limiting the General Partner's right in its sole discretion to cease qualifying as a REIT, the Limited Partners acknowledge that the General Partner's current status as a REIT inures to the benefit of all the Limited Partners and not solely the General Partner. Without limiting the generality of the foregoing, it is understood that the Partnership will hold lodging and lodging-related properties and will generally lease such properties to one or more "taxable REIT subsidiaries" (or to subsidiary entities of such taxable REIT subsidiaries) within the meaning of Code Section 856(l).

Section 3.2. Powers .

The Partnership is empowered to do any and all acts and things necessary, appropriate, proper, advisable, incidental to or convenient for the furtherance and accomplishment of the purposes and business described herein and for the protection and benefit of the Partnership, including, without limitation, full power and authority, directly or through its ownership interest in other entities, to enter into, perform and carry out contracts of any kind, borrow money and issue evidences of indebtedness, whether or not secured by mortgage, deed of trust, pledge or other lien, acquire, own, manage, improve and develop real property, and lease, sell, transfer and dispose of real property; provided , however , notwithstanding anything to the contrary in this Agreement, the Partnership shall not take, or refrain from taking, any action which, in the judgment of the General Partner, in its sole and absolute discretion, (i) could adversely affect the ability of the General Partner to continue to qualify as a REIT, (ii) absent the consent of the General Partner, which may be given or withheld in its sole and absolute discretion, could subject the General Partner to any taxes under Section 857 or Section 4981 of the Code, or (iii) could violate any law or regulation of any governmental body or agency having jurisdiction over the General Partner or its securities, unless any such action (or inaction) under the foregoing clauses (i), (ii) or (iii) shall have been specifically consented to by the General Partner in writing.

Section 3.3. Partnership Only for Purposes Specified .

The Partnership shall be a partnership only for the purposes specified in Section 3.1 , and this Agreement shall not be deemed to create a partnership among the Partners with respect to any activities whatsoever other than the activities within the purposes of the Partnership as specified in Section 3.1 . Except as otherwise provided in this Agreement, no Partner shall have any authority to act for, bind, commit or assume any obligation or responsibility on behalf of the Partnership, its properties or any other Partner. No Partner, in its capacity as a Partner under this Agreement, shall be responsible or liable for any indebtedness or obligation of another Partner, nor shall the Partnership be responsible or liable for any indebtedness or obligation of any Partner, incurred either before or after the execution and delivery of this Agreement by such Partner, except as to those responsibilities, liabilities, indebtedness or obligations incurred pursuant to and as limited by the terms of this Agreement and the Act.

Section 3.4. Representations and Warranties by the Parties .

A . Each Partner that is an individual represents and warrants to each other Partner that (i) such Partner has the legal capacity to enter into this Agreement and perform such Partner's obligations hereunder, (ii) the consummation of the transactions contemplated by this Agreement to be performed by such Partner will not result in a breach or violation of, or a default under, any agreement by which such Partner or any of such Partner's property is or are bound, or any statute, regulation, order or other law to which such Partner is subject, (iii) such Partner is a "United States person" within the meaning of Section 7701(a)(30) of the Code, and (iv) this Agreement is binding upon, and enforceable against, such Partner in accordance with its terms.

B . Each Partner that is not an individual represents and warrants to each other Partner that (i) its execution and delivery of this Agreement and all transactions contemplated by this Agreement to be performed by it have been duly authorized by all necessary action, including without limitation, that of its general partner(s), committee(s), trustee(s), beneficiaries, directors and/or stockholder(s), as the case may be, as required, (ii) the consummation of such transactions shall not result in a breach or violation of, or a default under, its certificate of limited partnership, partnership agreement, trust agreement, limited liability company operating agreement, charter or bylaws, as the case may be, any agreement by which such Partner or any of such Partner's properties or any of its partners, beneficiaries, trustees or stockholders, as the case may be, is or are bound, or any statute, regulation, order or other law to which such Partner or any of such Partner's properties or any of its partners, trustees, beneficiaries or stockholders, as the case may be, is or are subject, (iii) such Partner is a "United States person" within the meaning of Section 7701(a)(30) of the Code and (iv) this Agreement is binding upon, and enforceable against, such Partner in accordance with its terms.

C . Each Partner represents, warrants, and agrees that it has acquired and continues to hold its interest in the Partnership for its own account for investment only and not for the purpose of, or with a view toward, the resale or distribution of all or any part thereof, nor with a view toward selling or otherwise distributing such interest or any part thereof at any particular time or under any predetermined circumstances. Each Partner further represents and warrants that it is a sophisticated investor, able and accustomed to handling sophisticated financial matters for itself, particularly real

estate investments, and that it has a sufficiently high net worth that it does not anticipate a need for the funds it has invested in the Partnership in what it understands to be a highly speculative and illiquid investment. Each Partner represents, warrants and agrees that such Partner is an "accredited investor" (as such term is defined in Rule 501(a) of Regulation D under the Securities Act).

D . Each Partner acknowledges that (i) the OP Units (and any REIT Shares that might be exchanged therefor) have not been registered under the Securities Act and may not be transferred unless they are subsequently registered under the Securities Act or an exemption from such registration is available (it being understood that the Partnership has no intention of so registering the OP Units), (ii) a restrictive legend in the form set forth in Exhibit C shall be placed on the certificates representing the OP Units, and (iii) a notation shall be made in the appropriate records of the Partnership indicating that the OP Units are subject to restrictions on transfer.

E . Each Limited Partner further represents, warrants, covenants and agrees as follows:

(1) Except as provided in Exhibit D, at any time such Partner actually or Constructively Owns a twenty-five percent (25%) or greater capital interest or profits interest in the Partnership, it does not and will not, without the prior written consent of the General Partner, actually own or Constructively Own (a) with respect to any Tenant that is a corporation, any stock of such Tenant, and (b) with respect to any Tenant that is not a corporation, any interests in either the assets or net profits of such Tenant.

(2) Except as provided in Exhibit E, at any time such Partner actually or Constructively Owns a twenty-five percent (25%) or greater capital interest or profits interest in the Partnership, it does not, and agrees that it will not without the prior written consent of the General Partner, actually own or Constructively Own, any stock in the General Partner, other than any REIT Shares or other shares of capital stock of the General Partner such Partner may acquire as a result of an exchange of Tendered Units pursuant to Section 8.6, subject to the ownership limitations set forth in the General Partner's Charter.

(3) Upon request of the General Partner, it will disclose to the General Partner the amount of REIT Shares or other shares of capital stock of the General Partner that it actually owns or Constructively Owns.

(4) It understands that if, for any reason, (a) the representations, warranties or agreements set forth in E(1) or (2) above are violated, or (b) the Partnership's actual or Constructive Ownership of REIT Shares or other shares of capital stock of the General Partner violates the limitations set forth in the Charter, then (x) some or all of the Redemption rights of the Partners may become non-exercisable, and (y) some or all of the REIT Shares owned by the Partners may be automatically transferred to a trust for the benefit of a charitable beneficiary, as provided in the Charter.

(5) Without the consent of the General Partner, which may be given or withheld in its sole discretion, no Partner shall take any action that would cause the Partnership at any time to have more than one hundred (100) partners (including as partners those persons indirectly owning an interest in the Partnership through a partnership, limited liability company, S corporation or

grantor trust (such entity, a "flow through entity"), but only if substantially all of the value of such person's interest in the flow through entity is attributable to the flow through entity's interest (direct or indirect) in the Partnership).

F. The representations and warranties contained in this Section 3.4 shall survive the execution and delivery of this Agreement by each Partner and the dissolution and winding-up of the Partnership.

G. Each Partner hereby acknowledges that no representations as to potential profit, cash flows, funds from operations or yield, if any, in respect of the Partnership or the General Partner have been made by any Partner or any employee or representative or Affiliate of any Partner, and that projections and any other information, including, without limitation, financial and descriptive information and documentation, which may have been in any manner submitted to such Partner shall not constitute any representation or warranty of any kind or nature, express or implied.

Section 3.5. Certain ERISA Matters .

Each Partner acknowledges that the Partnership is intended to qualify as a "real estate operating company" (as such term is defined in the Plan Asset Regulation). The General Partner may structure investments in, relationships with and conduct with respect to Investments and any other assets of the Partnership so that the Partnership will be a "real estate operating company" (as such term is defined in the Plan Asset Regulation).

ARTICLE 4 .
CAPITAL CONTRIBUTIONS

Section 4.1. Capital Contributions of the Partners .

At the time of their respective execution of this Agreement, the Partners shall make or shall have made Capital Contributions as set forth in Exhibit A to this Agreement. The Partners shall own OP Units of the class or series and in the amounts set forth in Exhibit A and shall have a Percentage Interest in the Partnership as set forth in Exhibit A, which Percentage Interest shall be adjusted in Exhibit A from time to time by the General Partner to the extent necessary to reflect accurately exchanges, redemptions, Capital Contributions, the issuance of additional OP Units or similar events having an effect on a Partner's Percentage Interest. Except as required by law, as otherwise provided in Sections 4.4 , 4.5 and 10.5 , or as otherwise agreed to by a Partner and the Partnership, no Partner shall be required or permitted to make any additional Capital Contributions or loans to the Partnership.

Section 4.2. Classes of OP Units .

The General Partner is hereby authorized to cause the Partnership to issue OP Units designated as Class A OP Units and Class C OP Units. Each such Class shall have the rights and obligations attributed to that Class under this Agreement.

Section 4.3. Loans by Third Parties .

Subject to Section 4.4 , the Partnership may incur Debt, or enter into other similar credit, guarantee, financing or refinancing arrangements for any purpose (including, without limitation, in connection with any further acquisition of Investments) with any Person that is not the General Partner upon such terms as the General Partner determines appropriate; provided that , the Partnership shall not incur any Debt that is recourse to the General Partner, except to the extent otherwise agreed to by the General Partner in its sole discretion.

Section 4.4. Additional Funding and Capital Contributions .

A . General . The General Partner may, at any time and from time to time determine that the Partnership requires additional funds (" Additional Funds ") for the acquisition of additional Investments or for such other Partnership purposes as the General Partner may determine. Additional Funds may be raised by the Partnership, at the election of the General Partner, in any manner provided in, and in accordance with, the terms of this Section 4.4 . No Person shall have any preemptive, preferential or similar right or rights to subscribe for or acquire any Partnership Interest, except as set forth in this Section 4.4 .

B . Issuance of Additional Partnership Interests . The General Partner, in its sole and absolute discretion, may raise all or any portion of the Additional Funds by accepting additional Capital Contributions of cash. The General Partner may also accept additional Capital Contributions of real property or any other non-cash assets. In connection with any such additional Capital Contributions (of cash or property), the General Partner is hereby authorized to cause the Partnership from time to time to issue to Partners (including the General Partner) or other Persons additional OP Units or other Partnership Interests in one or more classes, or one or more series of any of such classes, with such designations, preferences and relative, participating, optional or other special rights, powers, and duties, including rights, powers, and duties senior to then existing Limited Partner Interests, all as shall be determined by the General Partner in its sole and absolute discretion subject to Delaware law, and as set forth by amendment to this Agreement, including without limitation, (i) the allocations of items of Partnership income, gain, loss, deduction, and credit to such class or series of Partnership Interests; (ii) the right of each such class or series of Partnership Interests to share in Partnership distributions; (iii) the rights of each such class or series of Partnership Interests upon dissolution and liquidation of the Partnership; and (iv) the right to vote, including, without limitation, the Limited Partner approval rights set forth in Section 11.2.A ; provided , that no such additional OP Units or other Partnership Interests shall be issued to the General Partner unless either (a) (1) the additional Partnership Interests are issued in connection with the grant, award, or issuance of shares of the General Partner pursuant to Section 4.4.C below, which shares have designations, preferences, and other rights (except voting rights) such that the economic interests attributable to such shares are substantially similar to the designations, preferences and other rights of the additional Partnership Interests issued to the General Partner in accordance with this Section 4.4.B , and (2) the General Partner shall make a Capital Contribution to the Partnership in an amount equal to the net proceeds raised in connection with such issuance, or (b) the additional Partnership Interests are issued to all Partners holding Partnership Interests in the same class in proportion to their respective Percentage Interests in such class. The General Partner's determination that consideration is adequate shall be conclusive insofar as the adequacy of consideration relates to whether the Partnership Interests are validly issued and paid. In the event that the Partnership

issues additional Partnership Interests pursuant to this Section 4.4.B , the General Partner shall make such revisions to this Agreement (including but not limited to the revisions described in Section 5.4 and Section 8.6 ) as it determines are necessary to reflect the issuance of such additional Partnership Interests. Without limiting the foregoing, the General Partner is expressly authorized to cause the Partnership to issue OP Units for less than fair market value, so long as the General Partner concludes in good faith that such issuance of Partnership Interests is in the best interests of the Partnership.

C . Issuance of REIT Shares or Other Securities by the General Partner . The General Partner shall not issue any additional REIT Shares, other shares of capital stock of the General Partner or New Securities (other than REIT Shares issued pursuant to Section 8.6 or such shares, stock or securities pursuant to a dividend or distribution (including any stock split) to all of its stockholders or all of its stockholders who hold a particular class of stock of the General Partner) unless (i) the General Partner shall cause the Partnership to issue to the General Partner, Partnership Interests or rights, options, warrants or convertible or exchangeable securities of the Partnership having designations, preferences and other rights, all such that the economic interests thereof are substantially similar to those of the REIT Shares, other shares of capital stock of the General Partner or New Securities issued by the General Partner and (ii) the General Partner shall make a Capital Contribution of the net proceeds from the issuance of such additional REIT Shares of any Class (or combination of any Class), other shares of capital stock or New Securities, as the case may be, and from the exercise of the rights contained in such additional New Securities, as the case may be. Without limiting the foregoing, the General Partner is expressly authorized to issue REIT Shares, other shares of capital stock of the General Partner or New Securities for no tangible value or for less than fair market value, and the General Partner is expressly authorized to cause the Partnership to issue to the General Partner Partnership Interests of the corresponding Class, so long as (x) the General Partner concludes in good faith that such issuance of Partnership Interests is in the interests of the Partnership; and (y) the General Partner contributes all proceeds, if any, from such issuance and exercise to the Partnership. In connection with the General Partner's initial offering of REIT Shares, any other issuance of REIT Shares, other capital stock of the General Partner or New Securities, the General Partner shall contribute to the Partnership, any net proceeds raised in connection with such issuance; provided , that the General Partner may use a portion of the net proceeds from any offering to acquire OP Units or other assets (provided such other assets are contributed to the Partnership pursuant to the terms of this Agreement; and provided further that if the net proceeds actually received by the General Partner are less than the gross proceeds of such issuance as a result of any underwriter's discount or other expenses paid or incurred in connection with such issuance then, except to the extent such net proceeds are used to acquire OP Units, the General Partner shall be deemed to have made a Capital Contribution to the Partnership in the amount equal to the sum of the net proceeds of such issuance plus the amount of such underwriter's discount and other expenses paid by the General Partner (which discount and expense shall be treated as an expense for the benefit of the Partnership for purposes of Section 7.4 )).

D . Percentage Interest Adjustments in the Case of Capital Contributions for OP Units . Upon the acceptance of additional Capital Contributions in exchange for OP Units, the Percentage Interest in such OP Units shall be equal to a fraction, the numerator of which is equal to the amount of cash and the Agreed Value of the Property contributed as of the Adjustment Date and the denominator of which is equal to the sum of (i) the Deemed Value of the Partnership Interests of

such class or series (computed as of the Business Day immediately preceding the Adjustment Date) and (ii) the aggregate Agreed Value of additional Capital Contributions contributed by all Partners and/or third parties to the Partnership on such Adjustment Date in such class or series of Partnership Interests. The Percentage Interest of each other Partner holding Partnership Interests of such class or series not making a full pro rata Capital Contribution shall be adjusted to equal a fraction, the numerator of which is equal to the sum of (i) the Deemed Partnership Interest Value of such Limited Partner in respect of such class or series (computed as of the Business Day immediately preceding the Adjustment Date) and (ii) the Agreed Value of additional Capital Contributions, if any, made by such Partner to the Partnership in such class or series of Partnership Interests as of such Adjustment Date, and the denominator of which is equal to the sum of (i) the Deemed Value of the Partnership Interests of such class or series (computed as of the Business Day immediately preceding the Adjustment Date), plus (ii) the aggregate Agreed Value of additional Capital Contributions contributed by all Partners and/or third parties to the Partnership on such Adjustment Date in such class or series. Provided, however, solely for purposes of calculating a Partner's Percentage Interest pursuant to this Section 4.4.D , (i) in the case of cash Capital Contributions by the General Partner funded by an offering of REIT Shares or other shares of capital stock of the General Partner and (ii) in the case of the contribution of properties by the General Partner which were acquired by the General Partner in exchange for REIT Shares or other shares of capital stock of the General Partner immediately prior to such contribution, the General Partner shall be issued a number of OP Units equal and corresponding to the number of such shares issued by the General Partner in exchange for such cash or Investments, the OP Units held by the other Partners shall not be adjusted, and the Partners' Percentage Interests shall be adjusted accordingly. The General Partner shall promptly give each Partner written notice of its Percentage Interest, as adjusted.

E . Reinvestment of Special General Partner Distributions . The Special General Partner, in its sole and absolute discretion, may elect, on an annual basis, to reinvest all, or any portion, of the distributions of Available Cash and Capital Proceeds it receives under Section 5.1 in the Partnership in exchange for the issuance of OP Units. If the Special General Partner elects to reinvest any portion of Available Cash and Capital Proceeds distributed to the Special General Partner under this Agreement, the Special General Partner shall be treated no differently than any Limited Partner making a Capital Contribution to the Partnership under Section 4.4 .

Section 4.5. Other Contribution Provisions .

With the consent of the General Partner, in its sole discretion, one or more Limited Partners may enter into agreements with the Partnership, in the form of a guarantee or contribution agreement, which have the effect of providing a guarantee of certain obligations of the Partnership.

Section 4.6. No Preemptive Rights .

Except to the extent expressly granted by the Partnership pursuant to another agreement, no Person shall have any preemptive, preferential or other similar right with respect to (i) providing funds to the Partnership or (ii) issuance or sale of any OP Units or other Partnership Interests.

Section 4.7. No Interest; No Return .

No Partner shall be entitled to interest on its Capital Contribution or on such Partner's Capital Account. Except as provided herein or by law, no Partner shall have any right to demand or receive the return of its Capital Contribution from the Partnership.

Section 4.8. Profits Interest of Special General Partner .

To the extent that the Special General Partner receives a Partnership Interest with a disproportionate interest in Partnership Net Income or Net Loss, such Partnership Interest shall be treated as a "profits interest" received for services rendered, or to be rendered, within the meaning of IRS Rev. Proc. 93-27, 1993-2 C.B. 343.

Section 4.9. Special Fees .

The Partners acknowledge and agree that the following Special Fees shall be borne by the Classes of OP Units as follows:

7.00% selling commission for each Class A OP Unit

2.00% selling commission for each Class C OP Unit

3.00% dealer manager fee for each Class A OP Unit

2.75% dealer manager fee for each Class C OP Unit

1.00% annual distribution and shareholder servicing fee for each Class C OP Unit (other than Class C OP Units issued in connection with Class C REIT Shares purchased through the General Partner's distribution and reinvestment plan); provided, however, that such fees shall cease to accrue at the earlier of: (i) the date at which, in the aggregate, underwriting compensation from all sources payable in connection with the sale of REIT Shares in the General Partner's initial public offering equals to 10% of the gross proceeds of the General Partner's initial public offering (excluding through the General Partner's distribution and reinvestment plan); and (ii) the sixth anniversary of the last day of the fiscal quarter in which the General Partner's initial public offering (excluding through its distribution and reinvestment plan) terminates.

ARTICLE 5 .
DISTRIBUTIONS

Section 5.1. Requirement and Characterization of Distributions .

The General Partner shall cause the Partnership to distribute at least quarterly all, or such portion as the General Partner may in its discretion determine, Available Cash and Capital Proceeds generated by the Partnership to the Partners who are Partners on the applicable Partnership Record Date with respect to such distribution, in the following order and priority:

A . Available Cash . Available Cash shall be distributed ten percent (10%) to the Special General Partner and ninety percent (90%) to the Partners in proportion to their respective Percentage Interests.

B . Distribution of Capital Proceeds . Subject to Section 5.1.C , Section 5.1.D and Section 13.2 , distributions of Capital Proceeds shall be made as follows:

(1) First, Capital Proceeds shall be distributed one hundred percent (100%) to the General Partner until the General Partner has received distributions under this Section 5.1.B(1) equal to the General Partner Unpaid Priority Return;

(2) Second, Capital Proceeds shall be distributed one hundred percent (100%) to the General Partner until the General Partner Net Current Investment has been reduced to zero (0); and

(3) Third, any remaining Capital Proceeds shall be distributed fifteen percent (15%) to the Special General Partner and eighty-five percent (85%) to the Partners in proportion to their respective Percentage Interests.

C . Distribution of Capital Proceeds -- Listing Event . As soon as possible following the determination of the Listed Market Value following a Listing Event, the General Partner shall cause the Partnership to make a special distribution of Capital Proceeds to the Special General Partner in an amount equal to the Capital Proceeds distributable solely to the Special General Partner under Section 5.1.B if the Partnership sold all of its assets on the date of the Listing Event for its Listed Market Value and distributed the net proceeds from such sale to the Partners pursuant to Section 5.1.B . To avoid duplicating distributions to the Special General Partner, the General Partner shall take into account distributions made to the Special General Partner pursuant to this Section 5.1.C in determining the appropriate amount of any subsequent distributions of Capital Proceeds to the Special General Partner under Section 5.1.B(3) and Section 5.1.D .

D . Distribution of Capital Proceeds – Change of Control Event . As soon as possible following the occurrence of a Change of Control Event, the General Partner, or its successor in interest, shall cause the Partnership, or its successor in interest, to make a special distribution of Capital Proceeds to the Special General Partner in an amount equal to the Capital Proceeds distributable solely to the Special General Partner under Section 5.1.B if the Partnership sold all of its assets for the Transaction Value immediately prior to the Change of Control Event and distributed the net proceeds from such sale to the Partners pursuant to Section 5.1.B . To avoid duplicating distributions to the Special General Partner, the General Partner shall take into account distributions made to the Special General Partner pursuant to this Section 5.1.D in determining the appropriate amount of any subsequent distributions of Capital Proceeds to the Special General partner under Section 5.1.B(3) and Section 5.1.C .

E . Distribution of Capital Proceeds – Termination Event . As soon as possible following the occurrence of a Termination Event, the General Partner, or its successor in interest, shall cause the Partnership, or its successor in interest, to make a special distribution of Capital Proceeds to the Special General Partner in an amount equal to the Capital Proceeds distributable solely to the Special General Partner under Section 5.1.B if the Partnership sold all of its assets for their fair value (less the amounts of all indebtedness secured by such assets and less any fees payable to the Advisor under the Advisory Agreement) immediately prior to the Termination Event and distributed the net proceeds from such sale to the Partners pursuant to Section 5.1.B . To avoid duplicating distributions

to the Special General Partner, the General Partner shall take into account distributions made to the Special General Partner pursuant to this Section 5.1.E in determining the appropriate amount of any subsequent distributions of Capital Proceeds to the Special General Partner under Section 5.1.B(3) , Section 5.1.C and Section 5.1D . The distribution to be made pursuant to this Section shall be in the form of a promissory note, bearing interest at a rate equal to the average prime rate published in the Wall Street Journal for the six completed calendar months prior to the Termination Event (the " Termination Note "). The Termination Note shall be payable in full upon the occurrence of a Listing Event and a Change of Control Event, provided that such Listing Event results in a Listed Market Value, or such change of Control Event results in a Transaction Value, equal to or greater than the sum of the General Partner Net Current Investment plus the General Partner Unpaid Priority Return at the time of such Listing Event or change of Control Event. In addition, after the General Partner Unpaid Priority Return has been paid and the General Partner Net Current Investment has been reduced to zero, all Capital Proceeds from sales of Partnership assets shall be applied first to pay amounts outstanding under the Termination Note. If the Termination Note has not been paid in full on a due date, and in any event within three years after its issuance, then the holder of the Termination Note (and any of its successors and assigns) may elect to convert the principal balance of the Termination Note and any accrued and unpaid interest into OP Units or REIT Shares at a price per OP Unit/REIT Share equal to: (i) the average closing price of the REIT Shares on the principal trading exchange on which they are listed for the 10 trading days prior to delivery of a conversion notice; or (ii) if the REIT Shares are not then listed, at the net asset value of a REIT Share most recently published by the General Partner and based on an Appraisal. Upon the issuance of a Termination Note, the Special General Partner shall no longer be entitled to distributions of Capital Proceeds or Available Cash hereunder, except in satisfaction of the Termination Note.

F . Sufficient Distributions to the General Partner for REIT Qualification . Notwithstanding any other provision of this Article 5 to the contrary, the General Partner shall take such reasonable efforts, as determined by it in its sole and absolute discretion and consistent with its qualification as a REIT, to cause the Partnership to distribute sufficient amounts to enable the General Partner, for so long as the General Partner has determined to qualify as a REIT, to pay stockholder dividends that will (a) satisfy the requirements for qualifying as a REIT under the Code and Regulations ("REIT Requirements"), and (b) except to the extent otherwise determined by the General Partner, avoid the imposition of any federal income or excise tax liability on the General Partner.

G. Special Fees . Consistent with Section 4.9, if the Partnership directly or indirectly incurs Special Fees, (i) Available Cash or Capital Proceeds, as the case may be, available for distribution under this Section 5.1 shall be increased by the Special Fees to the extent that Available Cash or Capital Proceeds have been previously reduced by such fees; and (ii) the amounts otherwise distributable among the Classes of OP Units shall then be reduced to reflect their appropriate shares of the Special Fees. For example, if the Partnership has Available Cash of $1,000 after taking into account a distribution and shareholder servicing fee of $200 that is required to be borne entirely by the Partners holding Class C OP Units, Available Cash shall be increased to $1,200 for purposes of this Section 5.1 and the amounts otherwise distributable to the Class C OP Units under this Section 5.1 shall be reduced by $200.

Section 5.2. Distributions in Kind .

Except as expressly provided herein, no right is given to any Partner to demand and receive property other than cash. The General Partner may determine, in its sole and absolute discretion, to make a distribution in-kind to the Partners of Partnership assets, and such assets shall be distributed in such a fashion as to ensure that the fair market value is distributed and allocated in accordance with Articles 5 , 6 and 10 .

Section 5.3. Distributions Upon Liquidation .

Notwithstanding Section 5.1 , proceeds from a Liquidating Event shall be distributed to the Partners in accordance with Section 13.2 .

Section 5.4. Distributions to Reflect Issuance of Additional Partnership Interests .

In the event that the Partnership issues additional Partnership Interests to the General Partner, the Special General Partner, or any Additional Limited Partner pursuant to Section 4.4.B , 4.4.C , or 4.4E , the General Partner shall make such revisions to this Article 5 as it determines are necessary to reflect the issuance of such additional Partnership Interests. In the absence of any agreement to the contrary, an Additional Limited Partner shall be entitled to the distributions set forth in Section 5.1 (without regard to this Section 5.4 ) with respect to the period during which the closing of its contribution to the Partnership occurs, multiplied by a fraction the numerator of which is the number of days from and after the date of such closing through the end of the applicable period, and the denominator of which is the total number of days in such period.

Section 5.5. Distribution Limitation .

Notwithstanding any other provision in this Article 5 , the General Partner shall have the power, in its reasonable discretion, to adjust the distributions to the Special General Partner to the extent necessary to avoid violations of the "2%/25% Guidelines" as described in the Advisory Agreement.

ARTICLE 6 .
ALLOCATIONS

Section 6.1. Timing and Amount of Allocations of Net Income and Net Loss .

Net Income and Net Loss of the Partnership shall be determined and allocated with respect to each Partnership Year of the Partnership as of the end of each such year. Subject to the other provisions of this Article 6 , an allocation to a Partner of a share of Net Income or Net Loss shall be treated as an allocation of the same share of each item of income, gain, loss or deduction that is taken into account in computing Net Income or Net Loss.

Section 6.2. General Allocations .

A. Allocation of Net Income and Net Loss Other Than From a Capital Transaction .

(1) Net Income other than from a Capital Transaction . Except as otherwise provided in Section 6.3 , Net Income other than from a Capital Transaction for any Partnership Year

shall be allocated ten percent (10%) to the Special General Partner and ninety percent (90%) to the Partners in proportion to their respective Percentage Interests.

(2) Net Loss other than from a Capital Transaction . Except as otherwise provided in Section 6.3, Net Loss other than from a Capital Transaction for any Partnership Year shall be allocated to the Partners in the following manner and order of priority:

(a) First, to the Partners, in proportion to their relative allocations of Net Income other than from a Capital Transaction pursuant to Section 6.2.A(1) until the aggregate allocations of Net Loss other than from a Capital Transaction pursuant to this Section 6.2.A(2) for all Partnership Years equal the aggregate allocations of Net Income other than from a Capital Transaction pursuant to Section 6.2.A(1) for all prior Partnership Years;

(b) Second, to the Partners in proportion to their respective Adjusted Capital Account Balances until the Adjusted Capital Account Balance of each such Partner is zero (0); and

B. Allocation of Net Income and Net Loss From a Capital Transaction .

(1) Net Income from a Capital Transaction . Except as otherwise provided in Section 6.2.D and Section 6.3 , Net Income from a Capital Transaction for any Partnership Year shall be allocated to the Partners in the following manner and order of priority:

(a) First, to the Partners, in proportion to their relative allocations of Net Loss from a Capital Transaction pursuant to Section 6.2.B(2)(b) and (c) until the aggregate allocations of Net Income from a Capital Transaction pursuant to this Section 6.2.B(1)(a) for all Partnership Years equal the aggregate allocations of Net Loss from a Capital Transaction pursuant to Section 6.2.B(2)(b) and (c) for all prior Partnership Years;

(b) Second, one hundred percent (100%) to the General Partner until the Adjusted Capital Account Balance of the General Partner equals the sum of the General Partner Net Current Investment and the General Partner Unpaid Priority Return; and

(c) Third, fifteen percent (15%) to the Special General Partner and eighty-five percent (85%) to the Partners in proportion to their respective Percentage Interests.

(2) Net Loss from a Capital Transaction . Except as otherwise provided in Section 6.3 , Net Loss from a Capital Transaction for any Partnership Year shall be allocated to the Partners in the following manner and order of priority:

(a) First, to the Partners, in proportion to their relative allocations of Net Income from a Capital Transaction pursuant to Section 6.2.B(1)(c) until the aggregate allocations of Net Loss from a Capital Transaction pursuant to this Section 6.2.B(2)(a) for all Partnership Years equal the aggregate allocations of Net Income from a Capital Transaction pursuant to Section 6.2.B(1)(c) for all prior Partnership Years;

(b) Second, to the Partners in proportion to their respective Adjusted Capital Account Balances until the Adjusted Capital Account Balance of each such Partner is zero (0); and

C . Allocations to Reflect Issuance of Additional Partnership Interests . In the event that the Partnership issues additional Partnership Interests to the General Partner, the Special General Partner, a Limited Partner or any Additional Limited Partner pursuant to Section 4.3 , the General Partner shall make such revisions to this Section 6.2 as it determines are necessary to reflect the terms of the issuance of such additional Partnership Interests, including making preferential allocations to certain classes of Partnership Interests, in accordance with any method selected by the General Partner.

D . Allocations Related to a Listing Event . If a Listing Event occurs, the Partnership shall allocate Net Income from a Capital Transaction first to the Special General Partner in an amount equal to the Net Income from a Capital Transaction allocable to the Special General Partner under Section 6.2.B(1) if the Partnership sold all of its assets on the date of the Listing Event for its Listed Market Value and allocated the gain from such sale to the Partners pursuant to Section 6.2.B(1) . To avoid duplicating allocations to the Special General Partner, the General Partner shall take into account allocations made to the Special General Partner pursuant to this Section 6.2.D in determining the appropriate amount of any subsequent allocations of Net Income from a Capital Transaction to the Special General Partner under Section 6.2.B(1) and Section 6.2.E .

E . Allocations Related to a Change of Control Event . If a Change of Control Event occurs, the Partnership shall allocate Net Income from a Capital Transaction first to the Special General Partner in an amount equal to the Net Income from a Capital Transaction allocable to the Special General Partner under Section 6.2.B(1) if the Partnership sold all of its assets on the date of the Change of Control Event for their fair value (less the amount of all indebtedness secured by such assets and less any fees payable to the Advisor under the Advisory Agreement) immediately prior to the Change of Control Event and allocated the gain from such sale to the Partners pursuant to Section 6.2.B(1) . To avoid duplicating allocations to the Special General Partner, the General Partner shall take into account allocations made to the Special General Partner pursuant to this Section 6.2.E in determining the appropriate amount of any subsequent allocations of Net Income from a Capital Transaction to the Special General Partner under Section 6.2.B(1) and Section 6.2.D .

F . Allocations Related to a Termination Event . If a Termination Event occurs, the Partnership shall allocate Net Income from a Capital Transaction first to the Special General Partner in an amount equal to the Net Income from a Capital Transaction allocable to the Special General Partner under Section 6.2.B(1) if the Partnership sold all of its assets on the date of the Change of Control Event for their Transaction Value immediately prior to the Change of Control Event and allocated the gain from such sale to the Partners pursuant to Section 6.2.B(1) . To avoid duplicating allocations to the Special General Partner, the General Partner shall take into account allocations made to the Special General Partner pursuant to this Section 6.2.F in determining the appropriate

amount of any subsequent allocations of Net Income from a Capital Transaction to the Special General Partner under Section 6.2.B(1), Section 6.2.D and Section 6.2E .

Section 6.3. Regulatory Allocations .

Notwithstanding the foregoing provisions of this Article 6 :

(i) Minimum Gain Chargeback . Except as otherwise provided in Regulations Section 1.704-2(f), notwithstanding the provisions of Section 6.2 , or any other provision of this Article 6 , if there is a net decrease in Partnership Minimum Gain during any Partnership Year, each Partner shall be specially allocated items of Partnership income and gain for such year (and, if necessary, subsequent years) in an amount equal to such Partner's share of the net decrease in Partnership Minimum Gain, as determined under Regulations Section 1.704-2(g). Allocations pursuant to the previous sentence shall be made in proportion to the respective amounts required to be allocated to each Partner pursuant thereto. The items to be allocated shall be determined in accordance with Regulations Sections 1.704-2(f)(6) and 1.704-2(j)(2). This Section 6.3(i) is intended to qualify as a "minimum gain chargeback" within the meaning of Regulation Section 1.704-2(f) which shall be controlling in the event of a conflict between such Regulation and this Section 6.3(i) .

(ii) Partner Minimum Gain Chargeback . Except as otherwise provided in Regulations Section 1.704-2(i)(4), and notwithstanding the provisions of Section 6.2 , or any other provision of this Article 6 (except Section 6.3(i) ), if there is a net decrease in Partner Minimum Gain attributable to a Partner Nonrecourse Debt during any Partnership Year, each Partner who has a share of the Partner Minimum Gain attributable to such Partner Nonrecourse Debt, determined in accordance with Regulations Section 1.704-2(i)(5), shall be specially allocated items of Partnership income and gain for such year (and, if necessary, subsequent years) in an amount equal to such Partner's share of the net decrease in Partner Minimum Gain attributable to such Partner Nonrecourse Debt, determined in accordance with Regulations Section 1.704-2(i)(4). Allocations pursuant to the previous sentence shall be made in proportion to the respective amounts required to be allocated to each Partner pursuant thereto. The items to be so allocated shall be determined in accordance with Regulations Sections 1.704-2(i)(4) and 1.704-2(j)(2). This Section 6.3(ii) is intended to qualify as a "chargeback of partner nonrecourse debt minimum gain" within the meaning of Regulation Section 1.704-2(i) which shall be controlling in the event of a conflict between such Regulation and this Section 6.3(ii) .

(iii) Nonrecourse Deductions and Partner Nonrecourse Deductions . Any Nonrecourse Deductions for any Partnership Year shall be specially allocated to the Partners in accordance with their respective Percentage Interests. Any Partner Nonrecourse Deductions for any Partnership Year shall be specially allocated to the Partner(s) who bears the economic risk of loss with respect to the Partner Nonrecourse Debt to which such Partner Nonrecourse Deductions are attributable, in accordance with Regulations Sections 1.704-2(b)(4) and 1.704-2(i).

(iv) Qualified Income Offset . If any Partner unexpectedly receives an adjustment, allocation or distribution described in Regulations Section 1.704-1(b)(2)(ii)(d)(4), (5) or (6), items of Partnership income and gain shall be allocated, in accordance with Regulations Section 1.704-1(b)(2)(ii)(d), to the Partner in an amount and manner sufficient to eliminate, to the extent required

by such Regulations, the Adjusted Capital Account Deficit of the Partner as quickly as possible provided that an allocation pursuant to this Section 6.3(iv) shall be made if and only to the extent that such Partner would have an Adjusted Capital Account Deficit after all other allocations provided in this Article 6 have been tentatively made as if this Section 6.3(iv) were not in this Agreement. It is intended that this Section 6.3(iv) qualify and be construed as a "qualified income offset" within the meaning of Regulations 1.704-1(b)(2)(ii)(d), which shall be controlling in the event of a conflict between such Regulations and this Section 6.3(iv) .

(v) Gross Income Allocation . In the event any Partner has a deficit Capital Account at the end of any Partnership Year which is in excess of the sum of (1) the amount (if any) such Partner is obligated to restore to the Partnership, and (2) the amount such Partner is deemed to be obligated to restore pursuant to Regulations Section 1.704-1(b)(2)(ii)(c) or the penultimate sentences of Regulations Sections 1.704-2(g)(1) and 1.704-2(i)(5), each such Partner shall be specially allocated items of Partnership income and gain in the amount of such excess as quickly as possible, provided , that an allocation pursuant to this Section 6.3(v) shall be made if and only to the extent that such Partner would have a deficit Capital Account in excess of such sum after all other allocations provided in this Article 6 have been tentatively made as if this Section 6.3(v) and Section 6.3(iv) were not in this Agreement.

(vi) Limitation on Allocation of Net Loss . To the extent any allocation of Net Loss would cause or increase an Adjusted Capital Account Deficit as to any Partner, such allocation of Net Loss shall be reallocated among the other Partners in accordance with their respective Percentage Interests, subject to the limitations of this Section 6.3(vi) .

(vii) Section 754 Adjustment . To the extent an adjustment to the adjusted tax basis of any Partnership asset pursuant to Code Section 734(b) or Code Section 743(b) is required, pursuant to Regulations Section 1.704-1(b)(2)(iv)(m)(2) or Regulations Section 1.704-1(b)(2)(iv)(m)(4), to be taken into account in determining Capital Accounts as the result of a distribution to a Partner in complete liquidation of his interest in the Partnership, the amount of such adjustment to the Capital Accounts shall be treated as an item of gain (if the adjustment increases the basis of the asset) or loss (if the adjustment decreases such basis) and such gain or loss shall be specially allocated to the Partners in accordance with their interests in the Partnership in the event that Regulations Section 1.704-1(b)(2)(iv)(m)(2) applies, or to the Partners to whom such distribution was made in the event that Regulations Section 1.704-1(b)(2)(iv)(m)(4) applies.

(viii) Curative Allocation . The allocations set forth in Sections 6.3(i) , (ii) , (iii) , (iv) , (v) , (vi) , and (vii) (the " Regulatory Allocations ") are intended to comply with certain regulatory requirements, including the requirements of Regulations Sections 1.704-1(b) and 1.704-2. Notwithstanding the provisions of Sections 6.1 and 6.2 , the Regulatory Allocations shall be taken into account in allocating other items of income, gain, loss and deduction among the Partners so that, to the extent possible, the net amount of such allocations of other items and the Regulatory Allocations to each Partner shall be equal to the net amount that would have been allocated to each such Partner if the Regulatory Allocations had not occurred. For purposes of determining a Partner's proportional share of the "excess nonrecourse liabilities" of the Partnership within the meaning of

Regulations Section 1.752-3(a)(3), each Partner's interest in Partnership profits shall be such Partner's Percentage Interest.

(ix) Special Allocation of Special Fees . Consistent with Section 4.9, if the Partnership directly or indirectly incurs Special Fees, such Special Fees shall be specially allocated among the Classes of OP Units to correspond with their appropriate shares of such fees and then proportionately allocated among the burdened Units within each burdened Class. For example, if the Partnership incurs a distribution and shareholder servicing fee of $200 that is required to be borne entirely by the Partners holding Class C OP Units, the $200 servicing fee shall be specially allocated to the burdened holders of Class C OP Units in proportion to their Class C OP Units. To the extent that an allocation of Special Fees under this Section 6.3(ix) would create or increase an Adjusted Capital Account Deficit for a Partner, such allocation instead shall be made proportionately to the other burdened Partners within the burdened Class who do not have Adjusted Capital Account Deficits.

Section 6.4. Tax Allocations .

A . In General . Except as otherwise provided in this Section 6.4 , for income tax purposes each item of income, gain, loss and deduction (collectively, " Tax Items ") shall be allocated among the Partners in the same manner as its correlative item of "book" income, gain, loss or deduction is allocated pursuant to Sections 6.2 and 6.3 .

B . Allocations Respecting Section 704(c) Revaluations . Notwithstanding Section 6.4.A , Tax Items with respect to Partnership property that is contributed to the Partnership by a Partner with a Gross Asset Value that differs from its adjusted tax basis in the hands of the Contributing Partner immediately preceding the date of contribution shall be allocated among the Partners for income tax purposes pursuant to Regulations promulgated under Section 704(c) of the Code, so as to take into account the variation between book Capital Accounts and tax capital accounts. The Partnership shall account for such variation under the "traditional method" under Regulations Section 1.704-3(b) with respect to Partnership property that is contributed to the Partnership in connection with the General Partner's initial offering. With respect to other properties contributed to the Partnership, the Partnership shall account for such variation under any reasonable method consistent with Section 704(c) of the Code and the applicable regulations as chosen by the General Partner. In the event the Gross Asset Value of any Partnership asset is adjusted pursuant to subparagraph (b) of the definition of Gross Asset Value (provided in Article 1), subsequent allocations of Tax Items with respect to such asset shall take account of the variation, if any, between the adjusted basis of such asset and its Gross Asset Value in the same manner as under Section 704(c) of the Code and the applicable regulations consistent with the requirements of Regulations Section 1.704-1(b)(2)(iv)(g) using any method approved under Section 704(c) of the Code and the applicable regulations as chosen by the General Partner.

ARTICLE 7 .
MANAGEMENT AND OPERATIONS OF BUSINESS

Section 7.1. Management .

A . Except as otherwise expressly provided in this Agreement, all management powers over the business and affairs of the Partnership are and shall be exclusively vested in the General Partner, and no Limited Partner shall have any right to participate in or exercise control or management power over the business and affairs of the Partnership. The General Partner may not be removed by the Limited Partners with or without cause, except with the consent of the General Partner. In addition to the powers now or hereafter granted a general partner of a limited partnership under applicable law or which are granted to the General Partner under any other provision of this Agreement, the General Partner, subject to the other provisions hereof including Sections 7.3 and 11.2 , shall have full power and authority to do all things deemed necessary or desirable by it to conduct the business of the Partnership (including, without limitation, all actions consistent with allowing the General Partner at all times to qualify as a REIT unless the General Partner voluntarily terminates its REIT status), to exercise all powers set forth in Section 3.2 and to effectuate the purposes set forth in Section 3.1, including, without limitation:

(1) the making of any expenditures, the lending or borrowing of money (including, without limitation, making prepayments on loans and borrowing money to permit the Partnership to make distributions to its Partners in such amounts as will permit the General Partner (so long as the General Partner has determined to qualify as a REIT) to avoid the payment of any federal income tax (including, for this purpose, any excise tax pursuant to Section 4981 of the Code) and to make distributions to its stockholders sufficient to permit the General Partner to maintain REIT status), the assumption or guarantee of, or other contracting for, indebtedness and other liabilities, the issuance of evidences of indebtedness (including the securing of same by mortgage, deed of trust or other lien or encumbrance on all or any of the Partnership's assets) and the incurring of any obligations it deems necessary for the conduct of the activities of the Partnership;

(2) the making of tax, regulatory and other filings, or rendering of periodic or other reports to governmental or other agencies having jurisdiction over the business or assets of the Partnership, the registration of any class of securities of the Partnership under the Exchange Act, and the listing of any debt securities of the Partnership on any exchange;

(3) subject to the provisions of Section 11.2, the acquisition, disposition, mortgage, pledge, encumbrance, hypothecation or exchange of any assets of the Partnership or the merger or other combination of the Partnership with or into another entity;

(4) the acquisition, disposition, mortgage, pledge, encumbrance or hypothecation of all or any assets of the Partnership, and the use of the assets of the Partnership (including, without limitation, cash on hand) for any purpose consistent with the terms of this Agreement and on any terms it sees fit, including, without limitation, the financing of the conduct or the operations of the General Partner or the Partnership, the lending of funds to other Persons (including, without limitation, the General Partner or any Subsidiaries of the Partnership) and the repayment of obligations of the Partnership, any of its Subsidiaries and any other Person in which it has an equity investment, and the making of capital contributions to its Subsidiaries;

(5) the management, operation, leasing, landscaping, repair, alteration, demolition or improvement of any real property or improvements owned by the Partnership or any Subsidiary of the Partnership;

(6) the negotiation, execution, and performance of any contracts, leases, conveyances or other instruments that the General Partner considers useful or necessary to the conduct of the Partnership's operations or the implementation of the General Partner's powers under this Agreement, including contracting with contractors, developers, consultants, accountants, legal counsel, other professional advisors and other agents and the payment of their expenses and compensation out of the Partnership's assets;

(7) the distribution of Partnership cash or other Partnership assets in accordance with this Agreement;

(8) the establishment of one or more divisions of the Partnership, the selection and dismissal of employees of the Partnership (including, without limitation, employees having titles such as "president," "vice president," "secretary" and "treasurer"), and agents, outside attorneys, accountants, consultants and contractors of the Partnership, the determination of their compensation and other terms of employment or hiring, including waivers of conflicts of interest and the payment of their expenses and compensation out of the Partnership's assets;

(9) the maintenance of such insurance for the benefit of the Partnership and the Partners and directors and officers of the Partnership or the General Partner as it deems necessary or appropriate;

(10) the formation of, or acquisition of an interest in, and the contribution of property to, any further limited or general partnerships, limited liability companies, joint ventures, corporations or other relationships that it deems desirable (including, without limitation, the acquisition of interests in, and the contributions of property to any Subsidiary and any other Person in which it has an equity investment from time to time); provided, that, as long as the General Partner has determined to continue to qualify as a REIT, the Partnership may not engage in any such formation, acquisition or contribution that could cause the General Partner to fail to qualify as a REIT;

(11) the control of any matters affecting the rights and obligations of the Partnership, including the settlement, compromise, submission to arbitration or any other form of dispute resolution, or abandonment of, any claim, cause of action, liability, debt or damages, due or owing to or from the Partnership, the commencement or defense of suits, legal proceedings, administrative proceedings, arbitration or other forms of dispute resolution, and the representation of the Partnership in all suits or legal proceedings, administrative proceedings, arbitrations or other forms of dispute resolution, the incurring of legal expense, and the indemnification of any Person against liabilities and contingencies to the extent permitted by law;

(12) the undertaking of any action in connection with the Partnership's direct or indirect investment in any Person (including, without limitation, contributing or loaning Partnership funds to, incurring indebtedness on behalf of, or guarantying the obligations of any such Persons);

(13) subject to the other provisions in this Agreement, the determination of the fair market value of any Partnership property distributed in kind using such reasonable method of

valuation as it may adopt, provided, that such methods are otherwise consistent with requirements of this Agreement;

(14) the management, operation, leasing, landscaping, repair, alteration, demolition or improvement of any real property or improvements owned by the Partnership or any Subsidiary of the Partnership or any Person in which the Partnership has made a direct or indirect equity investment;

(15) holding, managing, investing and reinvesting cash and other assets of the Partnership;

(16) the collection and receipt of revenues and income of the Partnership;

(17) the exercise, directly or indirectly through any attorney-in-fact acting under a general or limited power of attorney, of any right, including the right to vote, appurtenant to any asset or investment held by the Partnership;

(18) the exercise of any of the powers of the General Partner enumerated in this Agreement on behalf of or in connection with any Subsidiary of the Partnership or any other Person in which the Partnership has a direct or indirect interest, or jointly with any such Subsidiary or other Person;

(19) the exercise of any of the powers of the General Partner enumerated in this Agreement on behalf of any Person in which the Partnership does not have an interest pursuant to contractual or other arrangements with such Person;

(20) the making, execution and delivery of any and all deeds, leases, notes, deeds to secure debt, mortgages, deeds of trust, security agreements, conveyances, contracts, guarantees, warranties, indemnities, waivers, releases or legal instruments or agreements in writing necessary or appropriate in the judgment of the General Partner for the accomplishment of any of the powers of the General Partner enumerated in this Agreement;

(21) the issuance of additional Partnership Interests, as appropriate, in connection with the contribution of Additional Funds pursuant to Section 4.4;

(22) the distribution of cash to acquire OP Units held by a Limited Partner in connection with a Limited Partner's exercise of its Redemption Right under Section 8.6 hereof;

(23) the amendment and restatement of Exhibit A hereto to reflect accurately at all times the Capital Contributions and Percentage Interests of the Partners as the same are adjusted from time to time to the extent necessary to reflect redemptions, Capital Contributions, the issuance of OP Units, the admission of any Additional Limited Partner or any Substituted Limited Partner or otherwise, which amendment and restatement, notwithstanding anything in this Agreement to the contrary, shall not be deemed an amendment to this Agreement, as long as the matter or event being reflected in Exhibit A hereto otherwise is authorized by this Agreement;

(24) the taking of any and all acts and things necessary or prudent to ensure that the Partnership will not be classified as a "publicly traded partnership" under Section 7704 of the Code; and

(25) the delegation to another Person of any powers now or hereafter granted to the General Partner.

B . Each of the Limited Partners agrees that the General Partner is authorized to execute, deliver and perform the above-mentioned agreements and transactions on behalf of the Partnership without any further act, approval or vote of the Partners, notwithstanding any other provisions of this Agreement (except as provided in Section 7.3 or 11.2 ), the Act or any applicable law, rule or regulation to the fullest extent permitted under the Act or other applicable law, rule or regulation. The execution, delivery or performance by the General Partner or the Partnership of any agreement authorized or permitted under this Agreement shall not constitute a breach by the General Partner of any duty that the General Partner may owe the Partnership or the Limited Partners or any other Persons under this Agreement or of any duty stated or implied by law or equity.

C . At all times from and after the date hereof, the General Partner may cause the Partnership to obtain and maintain (i) casualty, liability and other insurance on the Investments and (ii) liability insurance for the Indemnities hereunder.

D . At all times from and after the date hereof, the General Partner may cause the Partnership to establish and maintain working capital and other reserves in such amounts as the General Partner, in its sole and absolute discretion, deems appropriate and reasonable from time to time.

E . Each of the Limited Partners acknowledges that, in exercising its authority under this Agreement, the General Partner may, but shall be under no obligation to, take into account the tax consequences to any Partner (including the General Partner) of any action taken (or not taken) by the General Partner. The General Partner and the Partnership shall not have liability to a Partner under this Agreement as a result of any income tax liability incurred by a Limited Partner as a result of an action (or inaction) by the General Partner pursuant to its authority under this Agreement. There may be circumstances in which the fiduciary duties that the General Partner owes to the Limited Partners conflicts with any duties that the officers and directors of the General Partner owe to its stockholders. For so long as the General Partner owns a controlling interest in the Partnership, any such conflict that cannot be resolved in a manner not adverse to either the stockholders or the Limited Partners shall be resolved in favor of the General Partner's stockholders.

F . Except as otherwise provided herein, to the extent the duties of the General Partner require expenditures of funds to be paid to third parties, the General Partner shall not have any obligations hereunder except to the extent that Partnership funds are reasonably available to it for the performance of such duties, and nothing herein contained shall be deemed to authorize or require the General Partner, in its capacity as such, to expend its individual funds for payment to third parties or to undertake any individual liability or obligation on behalf of the Partnership.

Section 7.2. Certificate of Limited Partnership .

To the extent that such action is determined by the General Partner to be reasonable and necessary or appropriate, the General Partner shall file amendments to and restatements of the Certificate and do all the things to maintain the Partnership as a limited partnership (or a partnership in which the limited partners have limited liability) under the laws of the State of Delaware and to maintain the Partnership's qualification to do business as a foreign limited partnership in each other state, the District of Columbia or other jurisdiction, in which the Partnership may elect to do business or own property. Subject to the terms of Section 8.5.A(4) , the General Partner shall not be required, before or after filing, to deliver or mail a copy of the Certificate or any amendment thereto to any Limited Partner. The General Partner shall use all reasonable efforts to cause to be filed such other certificates or documents as may be reasonable and necessary or appropriate for the formation, continuation, qualification and operation of a limited partnership (or a partnership in which the limited partners have limited liability) in the State of Delaware, any other state, or the District of Columbia or other jurisdiction, in which the Partnership may elect to do business or own property.

Section 7.3. Restrictions on General Partner's Authority .

A . The General Partner may not take any action in contravention of an express prohibition or limitation of this Agreement without the written Consent of the Limited Partners and the Special General Partner, and may not (i) perform any act that would subject a Limited Partner to liability as a general partner in any jurisdiction or any other liability except as provided herein or under the Act; or (ii) enter into any contract, mortgage, loan or other agreement that prohibits or restricts, or has the effect of prohibiting or restricting, the ability of a Limited Partner to exercise its rights to a Redemption in full, except in each case with the written consent of such Limited Partner.

B . The General Partner shall not, without the prior Consent of the Partners (in addition to any Consent of the Limited Partners required by any other provision hereof), or except as provided in Section 7.3.D , amend, modify or terminate this Agreement.

C . The General Partner may not cause the Partnership to take any action which the General Partner would be prohibited from taking directly under the General Partner's bylaws as in effect from time to time.

D . Notwithstanding Section 7.3.B , the General Partner shall have the exclusive power to amend this Agreement as may be required to facilitate or implement any of the following purposes:

(1) to add to the obligations of the General Partner or surrender any right or power granted to the General Partner or any Affiliate of the General Partner for the benefit of the Limited Partners;

(2) to reflect the issuance of additional Partnership Interests pursuant to Sections 4.4.B, 5.4 and 6.2.C. or the admission, substitution, termination, or withdrawal of Partners in accordance with this Agreement (which may be effected through the replacement of Exhibit A with an amended Exhibit A);

(3) to set forth or amend the designations, rights, powers, duties and preferences of the holders of any additional Partnership Interests issued pursuant to Article 4;

(4) to reflect a change that is of an inconsequential nature and does not adversely affect the Limited Partners in any material respect, or to cure any ambiguity, correct or supplement any provision in this Agreement not inconsistent with law or with other provisions, or make other changes with respect to matters arising under this Agreement that will not be inconsistent with law or with the provisions of this Agreement;

(5) to satisfy any requirements, conditions, or guidelines contained in any order, directive, opinion, ruling or regulation of a federal or state agency or contained in federal or state law;

(6) to reflect such changes as are reasonably necessary for the General Partner to maintain its status as a REIT, including changes which may be necessitated due to a change in applicable law (or an authoritative interpretation thereof) or a ruling of the IRS;

(7) to modify, as set forth in the definition of "Capital Account," the manner in which Capital Accounts are computed; and

(8) to amend or modify any provision of this Agreement to reflect a statutory or regulatory change regarding the federal income tax treatment of the "profits interest" of the Special General Partner or to ensure that the receipt of the Special General Partner's profits interest will not result in taxation to the Special General Partner.

The General Partner will provide notice to the Limited Partners when any action under this Section 7.3.D is taken.

E . Notwithstanding Sections 7.3.B and 7.3.D , this Agreement shall not be amended with respect to any Partner adversely affected, and no action may be taken by the General Partner, without the Consent of such Partner adversely affected if such amendment or action would (i) convert a Limited Partner's interest in the Partnership into a general partner's interest (except as the result of the General Partner acquiring such interest), (ii) modify the limited liability of a Limited Partner, (iii) alter rights of the Partner to receive distributions pursuant to Article 5 or Section 13.2.A(4) , or the allocations specified in Article 6 (except as permitted pursuant to Sections 4.4 , 5.4 , 6.2.C and Section 7.3.D(2) ), (iv) materially alter or modify the rights to a Redemption or the REIT Shares Amount as set forth in Section 8.6 , and related definitions hereof, or (v) amend this Section 7.3.E . Further, no amendment may alter the restrictions on the General Partner's authority set forth elsewhere in this Section 7.3 or in Section 11.2.A without the Consent specified in such section. This Section 7.3.E does not require unanimous consent of all Partners adversely affected unless the amendment is to be effective against all partners adversely affected.

Section 7.4. Reimbursement of the General Partner .

A . Except as provided in this Section 7.4 and elsewhere in this Agreement (including the provisions of Articles 5 and 6 regarding distributions, payments and allocations to which it may

be entitled), the General Partner shall not be compensated for its services as general partner of the Partnership.

B . The Partnership shall be responsible for and shall pay all expenses relating to the Partnership's and the General Partner's organization, the ownership of its assets and its operations. The General Partner is hereby authorized to pay compensation for accounting, administrative, legal, technical, management and other services rendered to the Partnership. Except to the extent provided in this Agreement, the General Partner and its Affiliates shall be reimbursed on a monthly basis, or such other basis as the General Partner may determine in its sole and absolute discretion, for all expenses that the General Partner and its Affiliates incur relating to the ownership and operation of, or for the benefit of, the Partnership (including, without limitation, administrative expenses); provided , that the amount of any such reimbursement shall be reduced by any interest earned by the General Partner with respect to bank accounts or other instruments or accounts held by it on behalf of the Partnership. The Partners acknowledge that all such expenses of the General Partner are deemed to be for the benefit of the Partnership. Such reimbursement shall be in addition to any reimbursement made as a result of indemnification pursuant to Section 7.7 hereof. In the event that certain expenses are incurred for the benefit of the Partnership and other entities (including the General Partner), such expenses will be allocated to the Partnership and such other entities in such a manner as the General Partner in its sole and absolute discretion deems fair and reasonable. All payments and reimbursements hereunder shall be characterized for federal income tax purposes as expenses of the Partnership incurred on its behalf, and not as expenses of the General Partner.

C . If the General Partner shall elect to purchase from its stockholders REIT Shares for the purpose of delivering such REIT Shares to satisfy an obligation under any dividend reinvestment program adopted by the General Partner, any employee stock purchase plan adopted by the General Partner, or any similar obligation or arrangement undertaken by the General Partner in the future or for the purpose of retiring such REIT Shares, the purchase price paid by the General Partner for such REIT Shares and any other expenses incurred by the General Partner in connection with such purchase shall be considered expenses of the Partnership and shall be advanced to the General Partner or reimbursed to the General Partner, subject to the condition that: (i) if such REIT Shares subsequently are sold by the General Partner, the General Partner shall pay to the Partnership any proceeds received by the General Partner for such REIT Shares (which sales proceeds shall include the amount of dividends reinvested under any dividend reinvestment or similar program; provided , that a transfer of REIT Shares for OP Units pursuant to Section 8.6 would not be considered a sale for such purposes); and (ii) if such REIT Shares are not retransferred by the General Partner within thirty (30) days after the purchase thereof, or the General Partner otherwise determines not to retransfer such REIT Shares, the General Partner, shall cause the Partnership to redeem a number of OP Units held by the General Partner equal to the number of such REIT Shares, as adjusted (x) pursuant to Section 7.5 (in the event the General Partner acquires material assets, other than on behalf of the Partnership) and (y) for stock dividends and distributions, stock splits and subdivisions, reverse stock splits and combinations, distributions of rights, warrants or options, and distributions of evidences of indebtedness or assets relating to assets not received by the General Partner pursuant to a pro rata distribution by the Partnership (in which case such advancement or reimbursement of expenses shall be treated as having been made as a distribution in redemption of such number of OP Units held by the General Partner).

D . As set forth in Section 4.4 , the General Partner shall be treated as having made a Capital Contribution in the amount of all expenses that it incurs relating to the General Partner's offering of REIT Shares, other shares of capital stock of the General Partner or New Securities.

E . If and to the extent any reimbursements to the General Partner pursuant to this Section 7.4 constitute gross income of the General Partner (as opposed to the repayment of advances made by the General Partner on behalf of the Partnership), such amounts shall constitute guaranteed payments within the meaning of Section 707(c) of the Code, shall be treated consistently therewith by the Partnership and all Partners, and shall not be treated as distributions for purposes of computing the Partners' Capital Accounts.

Section 7.5. Outside Activities of the General Partner .

A . Except in connection with a transaction authorized in Section 11.2 , without the Consent of the Limited Partners, the General Partner shall not, directly or indirectly, enter into or conduct any business, other than in connection with the ownership, acquisition and disposition of Partnership Interests as a General Partner and the management of the business of the Partnership, its operation as a public reporting company with a class (or classes) of securities registered under the Exchange Act, its operation as a REIT and such activities as are incidental to the same. Without the Consent of the Limited Partners, the General Partner shall not, directly or indirectly, participate in or otherwise acquire any interest in any real or personal property, except its General Partner Interest, its minority interest in any Subsidiary Partnership(s) that the General Partner holds in order to maintain such Subsidiary Partnership's status as a partnership, and such bank accounts, similar instruments or other short term investments as it deems necessary to carry out its responsibilities contemplated under this Agreement and the Charter. In the event the General Partner desires to contribute cash to any Subsidiary Partnership to acquire or maintain an interest of 1% or less in the capital of such partnership, the General Partner may acquire or maintain an interest of 1% or less in the capital of such partnership, and the General Partner may acquire such cash from the Partnership as a loan or in exchange for a reduction in the General Partner's OP Units, in an amount equal to the amount of such cash divided by the Fair Market Value of a REIT Share on the day such cash is received by the General Partner. Notwithstanding the foregoing, the General Partner may acquire Investments or other assets in exchange for REIT Shares or cash, to the extent such Investments or other assets are immediately contributed by the General Partner to the Partnership, pursuant to the terms described in Section 4.4.D . Any Limited Partner Interests acquired by the General Partner, whether pursuant to exercise by a Limited Partner of its right of Redemption, or otherwise, shall be automatically converted into a General Partner Interest comprised of an identical number of OP Units with the same rights, priorities and preferences as the class or series so acquired. The General Partner may also own one hundred percent (100%) of the stock or interests of one or more Qualified REIT Subsidiaries or limited liability companies, respectively, provided that any such entity shall be subject to the limitations of this Section 7.5.A. If, at any time, the General Partner acquires material assets (other than Partnership Interests or other assets on behalf of the Partnership) the definition of " REIT Shares Amount " and the definition of "Deemed Value of Partnership Interests" shall be adjusted, as reasonably determined by the General Partner, to reflect the relative Fair Market Value of a share of capital stock of the General Partner relative to the Deemed Partnership Interest Value of the related Partnership Unit. The General Partner's General Partner Interest in the

Partnership, its minority interest in any Subsidiary Partnership(s) (held directly or indirectly through a Qualified REIT Subsidiary) that the General Partner holds in order to maintain such Subsidiary Partnership's status as a partnership, and interests in such short-term liquid investments, bank accounts or similar instruments as the General Partner deems necessary to carry out its responsibilities contemplated under this Agreement and the Charter are interests which the General Partner is permitted to acquire and hold for purposes of this Section 7.5.A .

B . In the event the General Partner exercises its rights under the Charter to purchase REIT Shares, other common stock of the General Partner or New Securities, as the case may be, then the General Partner shall cause the Partnership to purchase from it a number of OP Units equal to the number of REIT Shares, other capital stock of the General Partner or New Securities, as the case may be, so purchased on the same terms that the General Partner purchased such REIT Shares, other capital stock of the General Partner or New Securities, as the case may be.

Section 7.6. Contracts with Affiliates .

A . The Partnership may lend or contribute to Persons in which it has an equity investment, and such Persons may borrow funds from the Partnership, on terms and conditions established in the sole and absolute discretion of the General Partner. The foregoing authority shall not create any right or benefit in favor of any Person.

B . Except as provided in Section 7.5.A , the Partnership may transfer assets to joint ventures, other partnerships, corporations or other business entities in which it is or thereby becomes a participant upon such terms and subject to such conditions consistent with this Agreement and applicable law as the General Partner in its sole discretion deems advisable.

C . The General Partner, in its sole and absolute discretion and without the approval of the Limited Partners, may propose and adopt on behalf of the Partnership employee benefit plans funded by the Partnership for the benefit of employees of the General Partner, the Partnership, Subsidiaries of the Partnership or any Affiliate of any of them in respect of services performed, directly or indirectly, for the benefit of the Partnership, the General Partner, or any of the Partnership's Subsidiaries.

D . Except as expressly permitted by this Agreement, neither the General Partner nor any of its Affiliates shall sell, transfer or convey any property to, or purchase any property from, the Partnership, directly or indirectly, except pursuant to transactions that are determined by the General Partner in good faith to be fair and reasonable.

E . The General Partner is expressly authorized to enter into, in the name and on behalf of the Partnership, a right of first opportunity arrangement and other conflict avoidance agreements with various Affiliates of the Partnership and the General Partner, on such terms as the General Partner, in its sole and absolute discretion, believes are advisable.

Section 7.7. Indemnification .

A . To the fullest extent permitted by law, the Partnership shall indemnify an Indemnitee from and against any and all losses, claims, damages, liabilities, joint or several, expenses (including legal fees and expenses), judgments, fines, settlements, and other amounts arising from any and all claims, demands, actions, suits or proceedings, civil, criminal, administrative or investigative, that relate to the operations of the Partnership as set forth in this Agreement in which any Indemnitee may be involved, or is threatened to be involved, as a party or otherwise, unless (1) Section 12.2.2 of the Charter of the General Partner prohibits the corporation from indemnifying the Indemnitee for a matter, in which case the Partnership shall likewise be prohibited from indemnifying the Indemnitee for the matter, or (2) it is established that: (i) the act or omission of the Indemnitee was material to the matter giving rise to the proceeding and either was committed in bad faith, fraud or was the result of active and deliberate dishonesty; (ii) the Indemnitee actually received an improper personal benefit in money, property or services; or (iii) in the case of any criminal proceeding, the Indemnitee had reasonable cause to believe that the act or omission was unlawful. Without limitation, the foregoing indemnity shall extend to any liability of any Indemnitee, pursuant to a loan guaranty or otherwise, for any indebtedness of the Partnership or any Subsidiary of the Partnership (including, without limitation, any indebtedness which the Partnership or any Subsidiary of the Partnership has assumed or taken subject to), and the General Partner is hereby authorized and empowered, on behalf of the Partnership, to enter into one or more indemnity agreements consistent with the provisions of this Section 7.7 in favor of any Indemnitee having or potentially having liability for any such indebtedness. The termination of any proceeding by judgment, order, settlement, conviction or upon a plea of nolo contendere or its equivalent, or any entry of an order of probation prior to judgment, does not create a presumption that the Indemnitee did not meet the requisite standard of conduct set forth in this Section 7.7.A . Any indemnification pursuant to this Section 7.7 shall be made only out of the assets of the Partnership, and any insurance proceeds from the liability policy covering the General Partner and any Indemnitee, and neither the General Partner nor any Limited Partner shall have any obligation to contribute to the capital of the Partnership or otherwise provide funds to enable the Partnership to fund its obligations under this Section 7.7 , except to the extent otherwise expressly agreed to by such Partner and the Partnership.

B . Reasonable expenses incurred by an Indemnitee who is a party to a proceeding may be paid or reimbursed by the Partnership in advance of the final disposition of the proceeding upon receipt by the Partnership of (i) a written affirmation by the Indemnitee of the Indemnitee's good faith belief that the standard of conduct necessary for indemnification by the Partnership as authorized in this Section 7.7 has been met, and (ii) a written undertaking by or on behalf of the Indemnitee to repay the amount if it shall ultimately be determined that the standard of conduct has not been met.

C . The indemnification provided by this Section 7.7 shall be in addition to any other rights to which an Indemnitee or any other Person may be entitled under any agreement, pursuant to any vote of the Partners, as a matter of law or otherwise, and shall continue as to an Indemnitee who has ceased to serve in such capacity unless otherwise provided in a written agreement pursuant to which such Indemnitee is indemnified.

D . The Partnership may, but shall not be obligated to, purchase and maintain insurance, on behalf of the Indemnitees and such other Persons as the General Partner shall determine, against

any liability that may be asserted against or expenses that may be incurred by such Person in connection with the Partnership's activities, regardless of whether the Partnership would have the power to indemnify such Person against such liability under the provisions of this Agreement.

E. For purposes of this Section 7.7 , the Partnership shall be deemed to have requested an Indemnitee to serve as fiduciary of an employee benefit plan whenever the performance by it of its duties to the Partnership also imposes duties on, or otherwise involves services by, it to the plan or participants or beneficiaries of the plan; excise taxes assessed on an Indemnitee with respect to an employee benefit plan pursuant to applicable law shall constitute fines within the meaning of Section 7.7 ; and actions taken or omitted by the Indemnitee with respect to an employee benefit plan in the performance of its duties for a purpose reasonably believed by it to be in the interest of the participants and beneficiaries of the plan shall be deemed to be for a purpose which is not opposed to the best interests of the Partnership.

F . In no event may an Indemnitee subject the Limited Partners to personal liability by reason of the indemnification provisions set forth in this Agreement.

G . An Indemnitee shall not be denied indemnification in whole or in part under this Section 7.7 because the Indemnitee had an interest in the transaction with respect to which the indemnification applies if the transaction was otherwise permitted by the terms of this Agreement.

H . The provisions of this Section 7.7 are for the benefit of the Indemnitees, their heirs, successors, assigns and administrators and shall not be deemed to create any rights for the benefit of any other Persons. Any amendment, modification or repeal of this Section 7.7 or any provision hereof shall be prospective only and shall not in any way affect the limitations on the Partnership's liability to any Indemnitee under this Section 7.7 as in effect immediately prior to such amendment, modification or repeal with respect to claims arising from or relating to matters occurring, in whole or in part, prior to such amendment, modification or repeal, regardless of when such claims may arise or be asserted.

I . If and to the extent any reimbursements to the General Partner pursuant to this Section 7.7 constitute gross income of the General Partner (as opposed to the repayment of advances made by the General Partner on behalf of the Partnership) such amounts shall constitute guaranteed payments within the meaning of Section 707(c) of the Code, shall be treated consistently therewith by the Partnership and all Partners, and shall not be treated as distributions for purposes of computing the Partners' Capital Accounts.

J . Any indemnification hereunder is subject to, and limited by, the provisions of Section 17-108 of the Act and Section 12.2.2 of the Charter.

K . In the event the Partnership is made a party to any litigation or otherwise incurs any loss or expense as a result of or in connection with any Partner's personal obligations or liabilities unrelated to Partnership business, such Partner shall indemnify and reimburse the Partnership for all such loss and expense incurred, including legal fees, and the Partnership interest of such Partner may be charged therefor. The liability of a Partner under this Section 7.7.K shall not be limited to such Partner's Partnership Interest, but shall be enforceable against such Partner personally.

Section 7.8. Liability of the General Partner .

A . Notwithstanding anything to the contrary set forth in this Agreement, none of the General Partner nor any of its officers, directors, agents or employees shall be liable or accountable in damages or otherwise to the Partnership, any Partners or any Assignees, or their successors or assigns, for losses sustained, liabilities incurred or benefits not derived as a result of errors in judgment or mistakes of fact or law or any act or omission if the General Partner acted in good faith.

B . The Limited Partners expressly acknowledge that the General Partner is acting for the benefit of the Partnership, the Limited Partners and the General Partner's stockholders collectively. The General Partner is under no obligation to give priority to the separate interests of the Limited Partners or the General Partner's stockholders (including, without limitation, the tax consequences to Limited Partners or Assignees or to stockholders) in deciding whether to cause the Partnership to take (or decline to take) any actions. If there is a conflict between the interests of the stockholders of the General Partner on one hand and the Limited Partners on the other, the General Partner shall endeavor in good faith to resolve the conflict in a manner not adverse to either the stockholders of the General Partner or the Limited Partners; provided , however , that for so long as the General Partner, owns a controlling interest in the Partnership, any such conflict that cannot be resolved in a manner not adverse to either the stockholders of the General Partner or the Limited Partners shall be resolved in favor of the stockholders. The General Partner shall not be liable under this Agreement to the Partnership or to any Partner for monetary damages for losses sustained, liabilities incurred, or benefits not derived by Limited Partners in connection with such decisions; provided , that the General Partner has acted in good faith.

C . Subject to its obligations and duties as General Partner set forth in Section 7.1.A , the General Partner may exercise any of the powers granted to it by this Agreement and perform any of the duties imposed upon it hereunder either directly or by or through its agents. The General Partner shall not be responsible for any misconduct or negligence on the part of any such agent appointed by it in good faith.

D . Any amendment, modification or repeal of this Section 7.8 or any provision hereof shall be prospective only and shall not in any way affect the limitations on the liability of the General Partner and any of its officers, directors, agents and employee's liability to the Partnership and the Limited Partners under this Section 7.8 as in effect immediately prior to such amendment, modification or repeal with respect to claims arising from or relating to matters occurring, in whole or in part, prior to such amendment, modification or repeal, regardless of when such claims may arise or be asserted.

Section 7.9. Other Matters Concerning the General Partner .

A . The General Partner may rely and shall be protected in acting or refraining from acting upon any resolution, certificate, statement, instrument, opinion, report, notice, request, consent, order, bond, debenture, or other paper or document believed by it to be genuine and to have been signed or presented by the proper party or parties.

B . The General Partner may consult with legal counsel, accountants, appraisers, management consultants, investment bankers and other consultants and advisers selected by it, and any act taken or omitted to be taken in reliance upon the opinion of such Persons as to matters which such General Partner reasonably believes to be within such Person's professional or expert competence shall be conclusively presumed to have been done or omitted in good faith and in accordance with such opinion.

C . The General Partner shall have the right, in respect of any of its powers or obligations hereunder, to act through any of its duly authorized officers and a duly appointed attorney or attorneys-in-fact. Each such attorney shall, to the extent provided by the General Partner in the power of attorney, have full power and authority to do and perform all and every act and duty which is permitted or required to be done by the General Partner hereunder.

D . Notwithstanding any other provisions of this Agreement or any non-mandatory provision of the Act, any action of the General Partner on behalf of the Partnership or any decision of the General Partner to refrain from acting on behalf of the Partnership, undertaken in the good faith belief that such action or omission is necessary or advisable in order to protect the ability of the General Partner, for so long as the General Partner has determined to qualify as a REIT, to (i) continue to qualify as a REIT or (ii) avoid the General Partner incurring any taxes under Section 857 or Section 4981 of the Code, is expressly authorized under this Agreement and is deemed approved by all of the Limited Partners.

Section 7.10. Title to Partnership Assets .

Title to Partnership assets, whether real, personal or mixed and whether tangible or intangible, shall be deemed to be owned by the Partnership as an entity, and no Partners, individually or collectively, shall have any ownership interest in such Partnership assets or any portion thereof. Title to any or all of the Partnership assets may be held in the name of the Partnership, the General Partner or one or more nominees, as the General Partner may determine, including Affiliates of the General Partner. The General Partner hereby declares and warrants that any Partnership assets for which legal title is held in the name of the General Partner or any nominee or Affiliate of the General Partner shall be held by the General Partner for the use and benefit of the Partnership in accordance with the provisions of this Agreement; provided , however , that the General Partner shall use its best efforts to cause beneficial and record title to such assets to be vested in the Partnership as soon as reasonably practicable. All Partnership assets shall be recorded as the property of the Partnership in its books and records, irrespective of the name in which legal title to such Partnership assets is held.

Section 7.11. Reliance by Third Parties .

Notwithstanding anything to the contrary in this Agreement, any Person dealing with the Partnership shall be entitled to assume that the General Partner has full power and authority to encumber, sell or otherwise use in any manner any and all assets of the Partnership and to enter into any contracts on behalf of the Partnership, and such Person shall be entitled to deal with the General Partner as if it were the Partnership's sole party in interest, both legally and beneficially. Each Limited Partner hereby waives any and all defenses or other remedies which may be available

against such Person to contest, negate or disaffirm any action of the General Partner in connection with any such dealing. In no event shall any Person dealing with the General Partner or its representatives be obligated to ascertain that the terms of this Agreement have been complied with or to inquire into the necessity or expedience of any act or action of the General Partner or its representatives. Each and every certificate, document or other instrument executed on behalf of the Partnership by the General Partner or its representatives shall be conclusive evidence in favor of any and every Person relying thereon or claiming thereunder that (i) at the time of the execution and delivery of such certificate, document or instrument, this Agreement was in full force and effect, (ii) the Person executing and delivering such certificate, document or instrument was duly authorized and empowered to do so for and on behalf of the Partnership and (iii) such certificate, document or instrument was duly executed and delivered in accordance with the terms and provisions of this Agreement and is binding upon the Partnership.

Section 7.12. Management Assistance Provided by Special General Partner .

In addition to the requirement to obtain the Consent of the Special General Partner with respect to certain matters as provided for in this Agreement, the Special General Partner shall provide consulting services and assistance to the Partnership at various times, in conjunction with the Advisor, for no additional consideration, on matters relating to the following:

(1) the strategic planning of the Partnership;

(2) the creation of business plans of the Partnership;

(3) the sale, merger, or the sale of substantially all of the assets, of the Partnership; and

(4) any other matters concerning the Partnership as determined appropriate by the General Partner and the Special General Partner.

ARTICLE 8 .
RIGHTS AND OBLIGATIONS OF LIMITED PARTNERS

Section 8.1. Limitation of Liability .

The Limited Partners shall have no liability under this Agreement except as expressly provided in this Agreement or under the Act.

Section 8.2. Management of Business .

No Limited Partner or Assignee (other than the General Partner, any of its Affiliates or any officer, director, employee, partner, agent or trustee of the General Partner, the Partnership or any of their Affiliates, in their capacity as such) shall take part in the operations, management or control (within the meaning of the Act) of the Partnership's business, transact any business in the Partnership's name or have the power to sign documents for or otherwise bind the Partnership. The transaction of any such business by the General Partner, any of its Affiliates or any officer, director, employee, partner, agent or trustee of the General Partner, the Partnership or any of their Affiliates,

in their capacity as such, shall not affect, impair or eliminate the limitations on the liability of the Limited Partners or Assignees under this Agreement.

Section 8.3. Outside Activities of Limited Partners .

Subject to any agreements entered into by a Limited Partner or its Affiliates with the General Partner, Partnership or a Subsidiary, any Limited Partner and any officer, director, employee, agent, trustee, Affiliate or stockholder of any Limited Partner shall be entitled to and may have business interests and engage in business activities in addition to those relating to the Partnership, including business interests and activities in direct competition with the Partnership or that are enhanced by the activities of the Partnership. Neither the Partnership nor any Partners shall have any rights by virtue of this Agreement in any business ventures of any Limited Partner or Assignee. Subject to such agreements, none of the Limited Partners nor any other Person shall have any rights by virtue of this Agreement or the partnership relationship established hereby in any business ventures of any other Person, other than the Limited Partners benefiting from the business conducted by the General Partner, and such Person shall have no obligation pursuant to this Agreement to offer any interest in any such business ventures to the Partnership, any Limited Partner or any such other Person, even if such opportunity is of a character which, if presented to the Partnership, any Limited Partner or such other Person, could be taken by such Person.

Section 8.4. Return of Capital .

Except pursuant to the rights of Redemption set forth in Section 8.6 , no Limited Partner shall be entitled to the withdrawal or return of his or her Capital Contribution, except to the extent of distributions made pursuant to this Agreement or upon termination of the Partnership as provided herein. No Limited Partner or Assignee shall have priority over any other Limited Partner or Assignee either as to the return of Capital Contributions, or as otherwise expressly provided in this Agreement, or as to profits, losses, distributions or credits.

Section 8.5. Rights of Limited Partners Relating to the Partnership .

A . In addition to other rights provided by this Agreement or by the Act, and except as limited by Section 8.5.C , each Limited Partner shall have the right, for a purpose reasonably related to such Limited Partner's interest as a limited partner in the Partnership, upon written demand with a statement of the purpose of such demand and at such Limited Partner's expense:

(1) to obtain a copy of the most recent annual and quarterly reports filed with the Securities and Exchange Commission by the General Partner pursuant to the Exchange Act, and each communication sent to the stockholders of the General Partner;

(2) to obtain a copy of the Partnership's federal, state and local income tax returns for each Partnership Year;

(3) to obtain a current list of the name and last known business, residence or mailing address of each Partner;

(4) to obtain a copy of this Agreement and the Certificate and all amendments thereto, together with executed copies of all powers of attorney pursuant to which this Agreement, the Certificate and all amendments thereto have been executed; and

(5) to obtain true and full information regarding the amount of cash and a description and statement of any other property or services contributed by each Partner and which each Partner has agreed to contribute in the future, and the date on which each became a Partner.

B . The Partnership shall notify each Limited Partner in writing of any adjustment made in the calculation of the REIT Shares Amount within a reasonable time after the date such change becomes effective.

C . Notwithstanding any other provision of this Section 8.5 , the General Partner may keep confidential from the Limited Partners, for such period of time as the General Partner determines in its sole and absolute discretion to be reasonable, any information that (i) the General Partner believes to be in the nature of trade secrets or other information the disclosure of which the General Partner in good faith believes is not in the best interests of the Partnership or (ii) the Partnership or the General Partner is required by law or by agreements with unaffiliated third parties to keep confidential.

Section 8.6. Redemption Rights .

A . At any time after one year following the date of issuance of any OP Units to a Limited Partner or a Special General Partner, such Partner shall have the right (subject to the terms and conditions set forth herein and in any other such agreement, as applicable) to require the Partnership to redeem all or a portion of the OP Units held by such Partner (such OP Units being hereafter referred to as " Tendered Units ") in exchange for the Cash Amount (a " Redemption "); provided that the terms of such OP Units do not provide that such OP Units are not entitled to a right of Redemption. Unless otherwise expressly provided in this Agreement or in a separate agreement entered into between the Partnership and the holders of such OP Units, all OP Units, including Class A OP Units and Class C OP Units, shall be entitled to a right of Redemption hereunder. The Tendering Partner shall have no right, with respect to any OP Units so redeemed, to receive any distributions paid on or after the Specified Redemption Date. Any Redemption shall be exercised pursuant to a Notice of Redemption delivered to the General Partner by the Special General Partner or Limited Partner who is exercising the right (the " Tendering Partner "). The Cash Amount shall be payable to the Tendering Partner within ten (10) days of the Specified Redemption Date in accordance with the instructions set forth in the Notice of Redemption.

B . Notwithstanding Section 8.6.A above, if the Special General Partner or a Limited Partner has delivered to the General Partner a Notice of Redemption then the General Partner may, in its sole and absolute discretion (subject to the limitations on ownership and transfer of REIT Shares set forth in the Charter), elect to acquire some or all of the Tendered Units from the Tendering Partner in exchange for the REIT Shares Amount (as of the Specified Redemption Date) and, if the General Partner so elects, the Tendering Partner shall sell the Tendered Units to the General Partner in exchange for the REIT Shares Amount. In such event, the Tendering Partner shall have no right to cause the Partnership to redeem such Tendered Units. The General Partner shall promptly give

such Tendering Partner written notice of its election, and the Tendering Partner may elect to withdraw its redemption request at any time prior to the acceptance of the cash or REIT Shares Amount by such Tendering Partner.

C . The REIT Shares Amount, if applicable, shall be delivered as duly authorized, validly issued, fully paid and nonassessable REIT Shares and, if applicable, free of any pledge, lien, encumbrance or restriction, other than those provided in the Charter, the Bylaws of the General Partner, the Securities Act, relevant state securities or blue sky laws and any applicable registration rights agreement with respect to such REIT Shares entered into by the Tendering Partner. Notwithstanding any delay in such delivery (but subject to Section 8.6.E ), the Tendering Partner shall be deemed the owner of such REIT Shares for all purposes, including without limitation, rights to vote or consent, and receive dividends, as of the Specified Redemption Date.

D. The Special General Partner and each Limited Partner covenants and agrees with the General Partner that all Tendered Units shall be delivered to the General Partner free and clear of all liens, claims and encumbrances whatsoever and should any such liens, claims and/or encumbrances exist or arise with respect to such Tendered Units, the General Partner shall be under no obligation to acquire the same. The Special General Partner and each Limited Partner further agrees that, in the event any state or local property transfer tax is payable as a result of the transfer of its Tendered Units to the General Partner (or its designee), such Partner shall assume and pay such transfer tax.

E . Notwithstanding the provisions of Section 8.6.A , 8.6.B , 8.6.C or any other provision of this Agreement, the Special General Partner or a Limited Partner (i) shall not be entitled to effect a Redemption for cash or an exchange for REIT Shares to the extent the ownership or right to acquire REIT Shares pursuant to such exchange by such Partner on the Specified Redemption Date could cause such Partner or any other Person, or, in the opinion of counsel selected by the General Partner, may cause such Partner or any other Person, to violate the restrictions on ownership and transfer of REIT Shares set forth in the Charter and (ii) shall have no rights under this Agreement to acquire REIT Shares which would otherwise be prohibited under the Charter. To the extent any attempted Redemption or exchange for REIT Shares would be in violation of this Section 8.6.E , it shall be null and void ab initio and such Partner shall not acquire any rights or economic interest in the cash otherwise payable upon such Redemption or the REIT Shares otherwise issuable upon such exchange.

F . Notwithstanding anything herein to the contrary (but subject to Section 8.6.E ), with respect to any Redemption or exchange for REIT Shares pursuant to this Section 8.6 :

(1) All OP Units acquired by the General Partner pursuant thereto shall automatically, and without further action required, be converted into and deemed to be Limited Partner Interests comprised of the same number and class of OP Units.

(2) The Special General Partner and each Limited Partner may not effect a Redemption for less than one thousand (1,000) OP Units or, if such Partner holds less than one thousand (1,000) OP Units, such Partner may effect a Redemption only with respect to all OP Units held by such Partner.

(3) A Tendering Partner may not effect more than two (2) Redemptions in a single calendar year.

(4) Without the consent of the General Partner, the Special General Partner and each Limited Partner may not effect a Redemption during the period after the Partnership Record Date with respect to a distribution and before the record date established by the General Partner for a distribution to its stockholders of some or all of its portion of such distribution.

(5) The consummation of any Redemption or exchange for REIT Shares shall be subject to the expiration or termination of the applicable waiting period, if any, under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended.

(6) Each Tendering Partner shall continue to own all OP Units subject to any Redemption or exchange for REIT Shares, and be treated as a Partner with respect to such OP Units for all purposes of this Agreement, until such OP Units are transferred to the General Partner and paid for or exchanged on the Specified Redemption Date. Until a Specified Redemption Date, the Tendering Partner shall have no rights as a stockholder of the General Partner with respect to such Tendering Partner's OP Units.

G. In the event that the Partnership issues additional Partnership Interests to any Additional Limited Partner pursuant to Section 4.4.B , the General Partner shall make such revisions to this Section 8.6 as it determines are necessary to reflect the issuance of such additional Partnership Interests.

H . Notwithstanding any other provision of this Agreement, the General Partner is authorized to take any action that it determines to be necessary or appropriate to cause the partnership to comply with any withholding requirements established under the Code or any other federal, state or local law that apply upon a Redemption or exchange of Tendered Units. If a Tendering Partner believes that it is exempt from withholding upon a Redemption or exchange of Tendered Units, such Partner must furnish the General Partner a FIRPTA certificate or other documentation requested by the General Partner is a form acceptable to the General Partner. If the Partnership or the General Partner is required to withhold and pay over to any taxing authority any amount upon a Redemption or exchange of Tendered Units and the Cash Amount or the REIT Shares Amount, as the case may be, equals or exceeds the amount of tax required to be withheld, the amount withheld shall be treated as an amount received by such Partner in redemption of its Tendered Units. If the Cash Amount or the REIT Shares Amount, as the case may be, is less than the amount of tax required to be withheld, the Tendering Partner shall not receive any Cash Amount or REIT Shares Amount, and the Tendering Partner shall contribute the excess of the amount of tax required to be withheld over the Cash Amount or REIT Shares Amount before such excess taxes are required to be paid to the taxing authority.

ARTICLE 9 .
BOOKS, RECORDS, ACCOUNTING AND REPORTS

Section 9.1. Records and Accounting .

The General Partner shall keep, or cause to be kept, at the principal office of the Partnership appropriate books and records with respect to the Partnership's business, including without limitation, all books and records necessary to provide to the Special General Partner and the Limited Partners any information, lists and copies of documents required to be provided pursuant to Section 9.3 . Any records maintained by or on behalf of the Partnership in the regular course of its business may be kept on, or be in the form of any information storage device, provided , that the records so maintained are convertible into clearly legible written form within a reasonable period of time. The books of the Partnership shall be maintained, for financial and tax reporting purposes, on an accrual basis in accordance with generally accepted accounting principles.

Section 9.2. Fiscal Year .

The fiscal year of the Partnership shall be the calendar year.

Section 9.3. Reports .

A . As soon as practicable, but in no event later than one hundred and five (105) days after the close of each Partnership Year, or such earlier date as they are filed with the Securities and Exchange Commission, the General Partner shall cause to be delivered to the Special General Partner and each Limited Partner as of the close of the Partnership Year, an annual report containing financial statements of the Partnership, or of the General Partner if such statements are prepared solely on a consolidated basis with the General Partner, for such Partnership Year, presented in accordance with generally accepted accounting principles, such statements to be audited by a nationally recognized firm of independent public accountants selected by the General Partner.

B . As soon as practicable, but in no event later than forty five (45) days after the close of each calendar quarter (except the last calendar quarter of each year), or such earlier date as they are filed with the Securities and Exchange Commission, the General Partner shall cause to be delivered to the Special General Partner and each Limited Partner as of the last day of the calendar quarter, a report containing unaudited financial statements of the Partnership, or of the General Partner, if such statements are prepared solely on a consolidated basis with the applicable law or regulation, or as the General Partner determines to be appropriate.

Section 9.4. Nondisclosure of Certain Information

Notwithstanding the provisions of Sections 9.1 and 9.3 , the General Partner may keep confidential from the Special General Partner and the Limited Partners any information that the General Partner believes to be in the nature of trade secrets or other information the disclosure of which the General Partner in good faith believes is not in the best interest of the Partnership or which the Partnership is required by law or by agreements with unaffiliated third parties to keep confidential.

ARTICLE 10 .
TAX MATTERS

Section 10.1. Preparation of Tax Returns .

The General Partner shall arrange for the preparation and timely filing of all returns of Partnership income, gains, deductions, losses and other items required of the Partnership for federal and applicable state income tax purposes and shall use all reasonable efforts to furnish, within ninety (90) days of the close of each taxable year, the tax information reasonably required by the Special General Partner and the Limited Partners for federal and applicable state income tax reporting purposes. The Special General Partner and each Limited Partner shall promptly provide the General Partner with any information reasonably requested by the General Partner relating to any Contributed Property contributed (directly or indirectly) by such Partner to the Partnership.

Section 10.2. Tax Elections .

Except as otherwise provided herein, the General Partner shall, in its sole and absolute discretion, determine whether to make any available election pursuant to the Code, including the election under Section 754 of the Code. The General Partner shall have the right to seek to revoke any such election (including without limitation, any election under Section 754 of the Code) upon the General Partner's determination in its sole and absolute discretion that such revocation is the best interests of the Partners.

Section 10.3. Tax Matters Partner .

A. The General Partner shall be the " tax matters partner " of the Partnership for federal income tax purposes. Pursuant to Section 6230(e) of the Code, upon receipt of notice from the IRS of the beginning of an administrative proceeding with respect to the Partnership, the tax matters partner shall furnish the IRS with the name, address and profit interest of the Special General Partner and each of the Limited Partners and Assignees; provided , however , that such information is provided to the Partnership by the Partners and Assignees.

B . The tax matters partner is authorized, but not required:

(1) to enter into any settlement with the IRS with respect to any administrative or judicial proceedings for the adjustment of Partnership items required to be taken into account by a Partner for income tax purposes (such administrative proceedings being referred to as a "tax audit" and such judicial proceedings being referred to as "judicial review"), and in the settlement agreement the tax matters partner may expressly state that such agreement shall bind all Partners, except that such settlement agreement shall not bind any Partner (i) who (within the time prescribed pursuant to the Code and Regulations) files a statement with the IRS providing that the tax matters partner shall not have the authority to enter into a settlement agreement on behalf of such Partner or (ii) who is a "notice partner" (as defined in Section 6231 of the Code) or a member of a "notice group" (as defined in Section 6223(b)(2) of the Code);

(2) in the event that a notice of a final administrative adjustment at the Partnership level of any item required to be taken into account by a Partner for tax purposes (a "final adjustment") is mailed to the tax matters partner, to seek judicial review of such final adjustment, including the filing of a petition for readjustment with the Tax Court or the United States Claims Court, or the filing of a complaint for refund with the District Court of the United States for the district in which the Partnership's principal place of business is located;

(3) to intervene in any action brought by any other Partner for judicial review of a final adjustment;

(4) to file a request for an administrative adjustment with the IRS at any time and, if any part of such request is not allowed by the IRS, to file an appropriate pleading (petition or complaint) for judicial review with respect to such request;

(5) to enter into an agreement with the IRS to extend the period for assessing any tax which is attributable to any item required to be taken into account by a Partner for tax purposes, or an item affected by such item; and

(6) to take any other action on behalf of the Partners of the Partnership in connection with any tax audit or judicial review proceeding to the extent permitted by applicable law or regulations.

The taking of any action and the incurring of any expense by the tax matters partner in connection with any such proceeding, except to the extent required by law, is a matter in the sole and absolute discretion of the tax matters partner and the provisions relating to indemnification of the General Partner set forth in Section 7.7 shall be fully applicable to the tax matters partner in its capacity as such.

C . The tax matters partner shall receive no compensation for its services. All third party costs and expenses incurred by the tax matters partner in performing its duties as such (including legal and accounting fees) shall be borne by the Partnership. Nothing herein shall be construed to restrict the Partnership from engaging an accounting firm to assist the tax matters partner in discharging its duties hereunder, so long as the compensation paid by the Partnership for such services is reasonable.

Section 10.4. Organizational Expenses .

The Partnership shall elect to deduct expenses, if any, incurred by it in organizing the Partnership as provided in Section 709 of the Code.

Section 10.5. Withholding .

The Special General Partner and each Limited Partner hereby authorize the Partnership to withhold from or pay on behalf of or with respect to such Partner any amount of federal, state, local, or foreign taxes that the General Partner determines that the Partnership is required to withhold or pay with respect to any amount distributable or allocable to such Partner pursuant to this Agreement, including, without limitation, any taxes required to be withheld or paid by the Partnership pursuant to Sections 1441, 1442, 1445 or 1446 of the Code. Any amount paid on behalf of or with respect to the Special General Partner or a Limited Partner shall constitute a receivable of the Partnership from such Partner, which receivable shall be paid by such Partner within fifteen (15) days after notice from the General Partner that such payment must be made unless (i) the Partnership withholds such payment from a distribution which would otherwise be made to the Partner or (ii) the General Partner determines, in its sole and absolute discretion, that such payment may be satisfied out of

the available funds of the Partnership which would, but for such payment, be distributed to the Partner. Any amounts withheld pursuant to the foregoing clauses (i) or (ii) shall be treated as having been distributed to such Partner. The Special General Partner and each Limited Partner hereby unconditionally and irrevocably grants to the Partnership a security interest in such Partner's Partnership Interest to secure such Partner's obligation to pay to the Partnership any amounts required to be paid pursuant to this Section 10.5 . Any amounts payable by the Special General Partner or a Limited Partner hereunder shall bear interest at the base rate on corporate loans at large United States money center commercial banks, as published from time to time in the Wall Street Journal , plus two percentage points (but not higher than the maximum lawful rate) from the date such amount is due ( i.e. , fifteen (15) days after demand) until such amount is paid in full. The Special General Partner and each Limited Partner shall take such actions as the Partnership or the General Partner shall request in order to perfect or enforce the security interest created hereunder.

ARTICLE 11 .
TRANSFERS AND WITHDRAWALS

Section 11.1. Transfer .

A. The term " transfer ," when used in this Article 11 with respect to a Partnership Interest, shall be deemed to refer to a transaction by which a Partner purports to assign its Partnership Interest to another Person and includes a sale, assignment, gift (outright or in trust), pledge, encumbrance, hypothecation, mortgage, exchange or any other disposition by law or otherwise. The term "transfer" when used in this Article 11 does not include any Redemption or exchange for REIT Shares pursuant to Section 8.6 , except as otherwise provided herein. No part of the interest of a Limited Partner shall be subject to the claims of any creditor, any spouse for alimony or support, or to legal process, and may not be voluntarily or involuntarily alienated or encumbered except as may be specifically provided for in this Agreement or consented to by the General Partner and the Special General Partner.

B . No Partnership Interest shall be transferred, in whole or in part, except in accordance with the terms and conditions set forth in this Article 11 . Any transfer or purported transfer of a Partnership Interest not made in accordance with this Article 11 shall be null and void ab initio unless otherwise consented to by the General Partner and the Special General Partner in their sole and absolute discretion.

Section 11.2. Transfer of the Partnership Interest of the General Partner and the Special General Partner .

A . The General Partner shall not (i) voluntarily withdraw from the Partnership, (ii) directly or indirectly transfer all or any portion of its interest in the Partnership (except to an entity wholly owned by the General Partner) , or (iii) engage in any merger, consolidation, or other combination with or into another Person, sale of all or substantially all of its assets or any reclassification or recapitalization of its outstanding equity interests or undertake any Listing Event (an "Extraordinary Transaction"), without the Consent of the Partners, which may be given or withheld by each Partner in his, her or its sole and absolute discretion. In addition, if an Extraordinary Transaction would result in the termination of the Advisory Agreement, the Partnership must either

(i) exercise its right to redeem the Special General Partner Interest as provided under Section 11.7 , or (ii) obtain the Consent of the Special General Partner. Upon any transfer of a Partnership Interest in accordance with the provisions of this Section 11.2 , the transferee shall become a Substitute General Partner for all purposes herein, and shall be vested with the powers and rights of the transferor General Partner, and shall be liable for all obligations and responsible for all duties of the General Partner, once such transferee has executed such instruments as may be necessary to effectuate such admission and to confirm the agreement of such transferee to be bound by all the terms and provisions of this Agreement with respect to the Partnership Interest so acquired. It is a condition to any transfer otherwise permitted hereunder that the transferee assumes, by operation of law or express agreement, all of the obligations of the transferor General Partner under this Agreement with respect to such transferred Partnership Interest, and no such transfer (other than pursuant to a statutory merger or consolidation wherein all obligations and liabilities of the transferor General Partner are assumed by a successor corporation by operation of law) shall relieve the transferor General Partner of its obligations under this Agreement without the Consent of the Limited Partners, in their reasonable discretion. In the event the General Partner withdraws from the Partnership in violation of this Agreement or otherwise, or otherwise dissolves or terminates, or upon the Incapacity of the General Partner, all of the remaining Partners may elect to continue the Partnership business by selecting a Substitute General Partner in accordance with the Act

B . Notwithstanding any other provision of this Agreement, the Special General Partner shall not transfer all or any portion of its Partnership Interest to any transferee without the consent of the General Partner, which consent may be withheld in the sole and absolute discretion of the General Partner. Notwithstanding the preceding sentence, however, the Special General Partner shall have the right, at any time, to transfer its Partnership Interest to the General Partner, an Affiliate of the General Partner, W. P. Carey Inc. ("W. P. Carey"), Watermark Capital Partners, LLC ("Watermark Capital Partners"), or an Affiliate of W. P. Carey or Watermark Capital Partners.

Section 11.3. Limited Partners' Rights to Transfer .

A . Prior to the first anniversary of the Effective Date, no Limited Partner shall transfer all or any portion of its Partnership Interest to any transferee without the consent of the General Partner and the Special General Partner, which consent may be withheld in their sole and absolute discretion; provided, however , that any Limited Partner may, at any time, without the consent of the General Partner and the Special General Partner, (i) transfer all or any portion of its Partnership Interest to the General Partner, (ii) transfer all or any portion of its Partnership Interest to an Affiliate, another original Limited Partner or to a Family Member, subject to the provisions of Section 11.6 , (iii) transfer all or any portion of its Partnership Interest to a trust for the benefit of a charitable beneficiary or to a charitable foundation, subject to the provisions of Section 11.6, and (iv) subject to the provisions of Section 11.6, pledge (a "Pledge") all or any portion of its Partnership Interest to a lending institution, which is not an Affiliate of such Limited Partner, as collateral or security for a bona fide loan or other extension of credit, and transfer such pledged Partnership Interest to such lending institution in connection with the exercise of remedies under such loan or extension or credit, and the transfer of such pledged Partnership Interest by the lender to any transferee. After such anniversary, each Limited Partner or Assignee (resulting from a transfer made pursuant to clauses (i)-(iv) of the proviso of the preceding sentence) shall have the right to transfer all or any

portion of its Partnership Interest, subject to the provisions of Section 11.6 and the satisfaction of each of the following conditions (in addition to the right of each such Limited Partner or Assignee to continue to make any such transfer permitted by clauses (i)-(iv) of such proviso without satisfying either of the following conditions):

(1) General Partner Right of First Refusal . The transferring Partner shall give written notice of the proposed transfer to the General Partner, which notice shall state (i) the identity of the proposed transferee, and (ii) the amount and type of consideration proposed to be received for the transferred OP Units. The General Partner shall have ten (10) business days upon which to give the transferring Partner notice of its election to acquire the OP Units on the proposed terms. If it so elects, it shall purchase the OP Units on such terms within ten (10) business days after giving notice of such election. If it does not so elect, the transferring Partner may transfer such OP Units to a third party, on economic terms no more favorable to the transferee than the proposed terms, subject to the other conditions of this Section 11.3.

(2) Qualified Transferee . Any transfer of a Partnership Interest shall be made only to Qualified Transferees. It is a condition to any transfer otherwise permitted hereunder that the transferee assumes by operation of law or express agreement all of the obligations of the transferor Limited Partner under this Agreement with respect to such transferred Partnership Interest and no such transfer (other than pursuant to a statutory merger or consolidation wherein all obligations and liabilities of the transferor Partner are assumed by a successor corporation by operation of law) shall relieve the transferor Partner of its obligations under this Agreement without the approval of the General Partner, in its reasonable discretion. Notwithstanding the foregoing, any transferee of any transferred Partnership Interest shall be subject to any and all ownership limitations contained in the Charter, which may limit or restrict such transferee's ability to exercise its Redemption rights, and to the representations in Section 3.4.D. Any transferee, whether or not admitted as a Substituted Limited Partner, shall take subject to the obligations of the transferor hereunder. Unless admitted as a Substituted Limited Partner, no transferee, whether by a voluntary transfer, by operation of law or otherwise, shall have any rights hereunder, other than the rights of an Assignee as provided in Section 11.5.

B. If a Limited Partner is subject to Incapacity, the executor, administrator, trustee, committee, guardian, conservator, or receiver of such Limited Partner's estate shall have all the rights of a Limited Partner, but not more rights than those enjoyed by other Limited Partners, for the purpose of settling or managing the estate, and such power as the Incapacitated Limited Partner possessed to transfer all or any part of his or its interest in the Partnership. The Incapacity of a Limited Partner, in and of itself, shall not dissolve or terminate the Partnership.

C . The General Partner may prohibit any transfer otherwise permitted under Section 11.3 by a Limited Partner of his or her OP Units if, in the opinion of legal counsel to the Partnership, such transfer would require the filing of a registration statement under the Securities Act by the Partnership or would otherwise violate any federal or state securities laws or regulations applicable to the Partnership or the Partnership Unit.

Section 11.4. Substituted Limited Partners .

A . No Limited Partner shall have the right to substitute a transferee as a Limited Partner in his or her place (including any transferee permitted by Section 11.3 ). The General Partner shall, however, have the right to consent to the admission of a transferee of the interest of a Limited Partner pursuant to this Section 11.4 as a Substituted Limited Partner, which consent may be given or withheld by the General Partner in its sole and absolute discretion. The General Partner's failure or refusal to permit a transferee of any such interests to become a Substituted Limited Partner shall not give rise to any cause of action, whether at law or in equity, against the Partnership or any Partner.

B . A transferee who has been admitted as a Substituted Limited Partner in accordance with this Article 11 shall have all the rights and powers and be subject to all the restrictions and liabilities of a Limited Partner under this Agreement. The admission of any transferee as a Substituted Limited Partner shall be subject to the transferee executing and delivering to the General Partner an acceptance of all of the terms and conditions of this Agreement (including without limitation, the provisions of Section 2.4 and such other documents or instruments as may be required to effect the admission), each in form and substance satisfactory to the General Partner) and the acknowledgment by such transferee that each of the representations and warranties set forth in Section 3.4 are true and correct with respect to such transferee as of the date of the transfer of the Partnership Interest to such transferee and will continue to be true to the extent required by such representations and warranties.

C . Upon the admission of a Substituted Limited Partner, the General Partner shall amend Exhibit A to reflect the name, address, number of OP Units, and Percentage Interest of such Substituted Limited Partner and to eliminate or adjust, if necessary, the name, address and interest of the predecessor of such Substituted Limited Partner.

Section 11.5. Assignees .

If the General Partner, in its sole and absolute discretion, does not consent to the admission of any permitted transferee under Section 11.3 as a Substituted Limited Partner, as described in Section 11.4 , such transferee shall be considered an Assignee for purposes of this Agreement. An Assignee shall be entitled to all the rights of an assignee of a limited partnership interest under the Act, including the right to receive distributions from the Partnership and the share of Net Income, Net Loss, gain and loss attributable to the OP Units assigned to such transferee, the rights to transfer the OP Units provided in this Article 11 , the right of Redemption provided in Section 8.6 , but shall not be deemed to be a holder of OP Units for any other purpose under this Agreement, and shall not be entitled to effect a Consent with respect to such OP Units on any matter presented to the Limited Partners for approval (such Consent remaining with the transferor Limited Partner). In the event any such transferee desires to make a further assignment of any such Partnership Units, such transferee shall be subject to all the provisions of this Article 11 to the same extent and in the same manner as any Limited Partner desiring to make an assignment of OP Units. Notwithstanding anything contained in this Agreement to the contrary, as a condition to becoming an Assignee, any prospective Assignee must first execute and deliver to the Partnership an acknowledgment that each of the representations and warranties set forth in Section 3.4 are true and correct with respect to such prospective Assignee as of the date of the prospective assignment of the Partnership Interest

to such prospective Assignee and will continue to be true to the extent required by such representations or warranties.

Section 11.6. General Provisions .

A. No Limited Partner may withdraw from the Partnership other than as a result of (i) a permitted transfer of all of such Limited Partner's OP Units in accordance with this Article 11 and the transferee(s) of such Partnership Units being admitted to the Partnership as a Substituted Limited Partner or (ii) pursuant to the exercise of its right of Redemption of all of such Limited Partner's OP Units under Section 8.6 ; provided that after such transfer, exchange or redemption such Limited Partner owns no Partnership Interest.

B . Any Limited Partner who shall transfer all of such Limited Partner's OP Units in a transfer permitted pursuant to this Article 11 where such transferee was admitted as a Substituted Limited Partner or pursuant to the exercise of its rights of Redemption of all of such Limited Partner's OP Units under Section 8.6 shall cease to be a Limited Partner; provided that after such transfer, exchange or redemption such Limited Partner owns no Partnership Interest.

C . Transfers pursuant to this Article 11 may only be made on the first day of a fiscal quarter of the Partnership, unless the General Partner otherwise agrees.

D . If any Partnership Interest is transferred, assigned or redeemed during any quarterly segment of the Partnership's Partnership Year in compliance with the provisions of this Article 11 or transferred or redeemed pursuant to Section 8.6 , on any day other than the first day of a Partnership Year, then Net Income, Net Loss, each item thereof and all other items attributable to such Partnership Interest for such Partnership Year shall be divided and allocated between the transferor Partner and the transferee Partner by taking into account their varying interests during the Partnership Year using a method selected by the General Partner that is in accordance with Section 706(d) of the Code. Except as otherwise agreed by the General Partner, all distributions of Available Cash with respect to which the Partnership Record Date is before the date of such transfer, assignment, exchange or redemption shall be made to the transferor Partner, and all distributions of Available Cash thereafter, in the case of a transfer or assignment other than a redemption, shall be made to the transferee Partner.

E . In addition to any other restrictions on transfer herein contained, including without limitation the provisions of this Article 11 , in no event may any transfer or assignment of a Partnership Interest by any Partner (including pursuant to a Redemption or exchange for REIT Shares by the Partnership or the General Partner) be made (i) to any person or entity who lacks the legal right, power or capacity to own a Partnership Interest; (ii) in violation of applicable law; (iii) except with the consent of the General Partner, which may be given or withheld in its sole and absolute discretion, of any component portion of a Partnership Interest, such as the Capital Account, or rights to distributions, separate and apart from all other components of a Partnership Interest; (iv) except with the consent of the General Partner, which may be given or withheld in its sole and absolute discretion, if in the opinion of legal counsel to the Partnership such transfer could cause a termination of the Partnership for federal or state income tax purposes (except as a result of the Redemption or exchange for REIT Shares of all Partnership Interests held by all Limited Partners

or pursuant to a transaction expressly permitted under Section 11.2 ); (v) if in the opinion of counsel to the Partnership such transfer could cause the Partnership to cease to be classified as a partnership for federal income tax purposes (except as a result of the Redemption or exchange for REIT Shares of all Partnership Interests held by all Limited Partners); (vi) if such transfer could, in the opinion of counsel to the Partnership, cause the Partnership to become, with respect to any employee benefit plan subject to Title I of ERISA, a "party-in-interest" (as defined in Section 3(14) of ERISA) or a "disqualified person" (as defined in Section 4975(c) of the Code); (vii) if such transfer could, in the opinion of counsel to the Partnership, cause any portion of the assets of the Partnership to constitute assets of any employee benefit plan pursuant to Department of Labor Regulations Section 2510.2-101; (viii) if such transfer requires the registration of such Partnership Interest pursuant to any applicable federal or state securities laws; (ix) except with the consent of the General Partner, which may be given or withheld in its sole and absolute discretion, if such transfer (1) could be treated as effectuated through an "established securities market" or a "secondary market" (or the substantial equivalent thereof) within the meaning of Section 7704 of the Code, (2) could cause the Partnership to become a "publicly traded partnership," as such term is defined in Sections 469(k)(2) or 7704(b) of the Code, (3) could be in violation of Section 3.4.E(5) , or (4) could cause the Partnership to fail one or more of the Safe Harbors (as defined below); (x) if such transfer subjects the Partnership to be regulated under the Investment Company Act of 1940, the Investment Advisors Act of 1940 or the Employee Retirement Income Security Act of 1974, each as amended; (xi) except with the consent of the General Partner, which may be given or withheld in its sole discretion, if the transferee or assignee of such Partnership Interest is unable to make the representations set forth in Section 3.4.C ; (xii) if such transfer is made to a lender to the Partnership or any Person who is related (within the meaning of Section 1.752-4(b) of the Regulations) to any lender to the Partnership whose loan constitutes a Nonrecourse Liability, except with the consent of the General Partner, which may be given or withheld in its sole and absolute discretion; and provided, that, as a condition to granting such consent the lender may be required to enter into an arrangement with the Partnership and the General Partner to redeem or exchange for the REIT Shares Amount any OP Units in which a security interest is held simultaneously with the time at which such lender would be deemed to be a partner in the Partnership for purposes of allocating liabilities to such lender under Section 752 of the Code; or (xiii) if in the opinion of legal counsel for the Partnership such transfer could adversely affect the ability of the General Partner to continue to qualify as a REIT or, except with the consent of the General Partner, which may be given or withheld in its sole and absolute discretion, subject the General Partner to any additional taxes under Section 857 or Section 4981 of the Code.

F . The General Partner shall monitor the transfers of interests in the Partnership (including any acquisition of OP Units by the Partnership or the General Partner) to determine (i) if such interests could be treated as being traded on an "established securities market" or a "secondary market (or the substantial equivalent thereof)" within the meaning of Section 7704 of the Code and (ii) whether such transfers of interests could result in the Partnership being unable to qualify for the "safe harbors" set forth in Regulations Section 1.7704-1 (or such other guidance subsequently published by the IRS setting forth safe harbors under which interests will not be treated as "readily tradable on a secondary market (or the substantial equivalent thereof)" within the meaning of Section 7704 of the Code) (the " Safe Harbors "). The General Partner shall have the authority (but shall not be required) to take any steps it determines are necessary or appropriate in its sole and absolute discretion to prevent any trading of interests which could cause the Partnership to become a "publicly

traded partnership" within the meaning of Code Section 7704, or any recognition by the Partnership of such transfers, or to ensure that one or more of the Safe Harbors is met.

Section 11.7. Call Right Attributable to the Special General Partner Interest .

A. In the event of a " Trigger Event " (as defined in Section 11.7.B hereof), the Partnership shall have the right (the "Call Right") to redeem all, or any portion, of the Special General Partner Interest. The Partnership shall exercise the Call Right by providing the Special General Partner with written notice of its desire to exercise the Call Right within sixty (60) days of the occurrence of a Trigger Event. The purchase price to be paid by the Partnership for the portion of the Special General Partner Interest that is subject to the Call Right shall equal the fair market value of such Interest as determined by Appraisal, shall exclude any right of the Special General Partner to receive a Distribution of Capital Proceeds under Section 5.1 in connection with the Trigger Event (which distribution shall be paid separately in accordance with Section 5.1) and, subject to Section 11.7.C below, shall be paid in cash or in REIT Shares (at the option of the Special General Partner) within one hundred twenty (120) days after the Partnership provides the written notice required under this Section 11.7.A .

B . For purposes of this Section 11.7 , a Trigger Event means, at any time after the second anniversary of the Effective Date, the:

(1) non-renewal of the Advisory Agreement upon the expiration of its then-current term;

(2) termination of the Advisory Agreement for any reason under circumstances where an Affiliate of the Advisor does not serve as the advisor under any replacement advisory agreement; or

(3) resignation of the Advisor under the Advisory Agreement.

C. In the event that the Partnership exercises the Call Right as a result of a termination of the Advisory Agreement for "Cause" (as defined in the Advisory Agreement) or a resignation by the Advisor without Good Reason, the Partnership shall have the option to redeem all or a portion of the Special General Partner Interest for $1.00 of consideration, after the payment (in the form of a Termination Note) of any distribution required under Section 5.2(E) .

Section 11.8. Put Right of General Partner .

The General Partner shall have the right at any time (the "GP Put Right") to require the Partnership to redeem any portion of the General Partner Interest for the purpose of providing the General Partner with sufficient funds to enable it to make redemptions of its stock. The General Partner shall exercise the GP Put Right at any time by providing the Partnership with written notice of its desire to exercise the GP Put Right. The purchase price to be paid by the Partnership for the portion of the General Partner Interest that the General Partner desires to be redeemed shall equal the fair market value of such portion as determined by Appraisal, and shall be paid in cash within one hundred twenty (120) days after the General Partner provides the written notice required under

this Section 11.8 . In the event that the General Partner exercises the GP Put Right, the OP Units held by the General Partner shall be reduced as appropriate.

ARTICLE 12 .
ADMISSION OF PARTNERS

Section 12.1. Admission of Successor General Partner .

A successor to all of the General Partner's General Partner Interest pursuant to Section 11.2 who is proposed to be admitted as a successor General Partner shall be admitted to the Partnership as the General Partner, effective upon such transfer. Any such transferee shall carry on the business of the Partnership without dissolution. In each case, the admission shall be subject to the successor General Partner executing and delivering to the Partnership an acceptance of all of the terms and conditions of this Agreement and such other documents or instruments as may be required to effect the admission. In the case of such admission on any day other than the first day of a Partnership Year, all items attributable to the General Partner Interest for such Partnership Year shall be allocated between the transferring General Partner and such successor as provided in Article 11 .

Section 12.2. Admission of Additional Limited Partners .

A . After the admission to the Partnership of the initial Limited Partners on the date hereof, a Person who makes a Capital Contribution to the Partnership in accordance with this Agreement shall be admitted to the Partnership as an Additional Limited Partner only upon furnishing to the General Partner (i) evidence of acceptance in form satisfactory to the General Partner of all of the terms and conditions of this Agreement, including, without limitation, the power of attorney granted in Section 2.4 and (ii) such other documents or instruments as may be required in the discretion of the General Partner in order to effect such Person's admission as an Additional Limited Partner.

B . Notwithstanding anything to the contrary in this Section 12.2 , no Person shall be admitted as an Additional Limited Partner without the consent of the General Partner, which consent may be given or withheld in the General Partner's sole and absolute discretion. The admission of any Person as an Additional Limited Partner shall become effective on the date upon which the name of such Person is recorded on the books and records of the Partnership, following the receipt of the Capital Contribution in respect of such Limited Partner and the consent of the General Partner to such admission. If any Additional Limited Partner is admitted to the Partnership on any day other than the first day of a Partnership Year, then Net Income, Net Loss, each item thereof and all other items allocable among Partners and Assignees for such Partnership Year shall be allocated among such Limited Partner and all other Partners and Assignees by taking into account their varying interests during the Partnership Year using a method selected by the General Partner that is in accordance with Section 706(d) of the Code. All distributions of Available Cash with respect to which the Partnership Record Date is before the date of such admission shall be made solely to Partners and Assignees other than the Additional Limited Partner (other than in its capacity as an Assignee) and, except as otherwise agreed to by the Additional Limited Partners and the General Partner, all distributions of Available Cash thereafter shall be made to all Partners and Assignees including such Additional Limited Partner.

Section 12.3. Amendment of Agreement and Certificate of Limited Partnership .

For the admission to the Partnership of any Partner, the General Partner shall take all steps necessary and appropriate under the Act to amend the records of the Partnership and, if necessary, to prepare as soon as practical an amendment of this Agreement (including an amendment of Exhibit A) and, if required by law, shall prepare and file an amendment to the Certificate and may for this purpose exercise the power of attorney granted pursuant to Section 2.4 .

ARTICLE 13 .
DISSOLUTION AND LIQUIDATION

Section 13.1. Dissolution .

The Partnership shall not be dissolved by the admission of Substituted Limited Partners or Additional Limited Partners or by the admission of a successor General Partner in accordance with the terms of this Agreement. Upon the withdrawal of the General Partner, any successor General Partner (selected as described in Section 13.1.B below) shall continue the business of the Partnership. The Partnership shall dissolve, and its affairs shall be wound up, upon the first to occur of any of the following (each a " Liquidating Event "):

A . the expiration of its term as provided in Section 2.5 ;

B. an event of withdrawal of the General Partner, as defined in the Act, unless, within ninety (90) days after the withdrawal, all of the remaining Partners agree in writing, in their sole and absolute discretion, to continue the business of the Partnership and to the appointment, effective as of the date of withdrawal, of a substitute General Partner;

C . subject to compliance with Section 11.2 an election to dissolve the Partnership made by the General Partner, in its sole and absolute discretion;

D . entry of a decree of judicial dissolution of the Partnership pursuant to the provisions of the Act;

E . any sale or other disposition of all or substantially all of the assets of the Partnership or a related series of transactions that, taken together, result in the sale or other disposition of all or substantially all of the assets of the Partnership;

F . the Incapacity of the General Partner, unless all of the remaining Partners in their sole and absolute discretion agree in writing to continue the business of the Partnership and to the appointment, effective as of a date prior to the date of such Incapacity, of a substitute General Partner;

G . the redemption or exchange for REIT Shares of all Partnership Interests (other than those of the General Partner) pursuant to this Agreement; or

H . a final and non-appealable judgment is entered by a court of competent jurisdiction ruling that the General Partner is bankrupt or insolvent, or a final and non-appealable order for relief

is entered by a court with appropriate jurisdiction against the General Partner, in each case under any federal or state bankruptcy or insolvency laws as now or hereafter in effect, unless prior to the entry of such order or judgment all of the remaining Partners agree in writing to continue the business of the Partnership and to the appointment, effective as of a date prior to the date of such order or judgment, of a substitute General Partner.

Section 13.2. Winding Up .

A . Upon the occurrence of a Liquidating Event, the Partnership shall continue solely for the purposes of winding up its affairs in an orderly manner, liquidating its assets, and satisfying the claims of its creditors and Partners. No Partner shall take any action that is inconsistent with, or not necessary to or appropriate for, the winding up of the Partnership's business and affairs. The General Partner (or, in the event there is no remaining General Partner, any Person elected by a Majority in Interest of the Limited Partners (the " Liquidator ")) shall be responsible for overseeing the winding up and dissolution of the Partnership and shall take full account of the Partnership's liabilities and property and the Partnership property shall be liquidated as promptly as is consistent with obtaining the fair value thereof, and the proceeds therefrom (which may, to the extent determined by the General Partner, include shares of stock in the General Partner) shall be applied and distributed in the following order:

(1) First, to the payment and discharge of all of the Partnership's debts and liabilities to creditors other than the Partners;

(2) Second, to the payment and discharge of all of the Partnership's debts and liabilities to the General Partner;

(3) Third, to the payment and discharge of all of the Partnership's debts and liabilities to the other Partners; and

(4) The balance, if any, to the General Partner, the Special General Partner and the Limited Partners in proportion to their positive Capital Account balances, determined after taking into account all Capital Account adjustments for all prior periods and the Partnership taxable year during which the liquidation occurs (other than those made as a result of the liquidating distribution set forth in this Section 13.2.A(4) ).

B. Notwithstanding the provisions of Section 13.2.A which require liquidation of the assets of the Partnership, but subject to the order of priorities set forth therein, if prior to or upon dissolution of the Partnership the Liquidator determines that an immediate sale of part or all of the Partnership's assets would be impractical or would cause undue loss to the Partners, the Liquidator may, in its sole and absolute discretion, defer for a reasonable time the liquidation of any assets except those necessary to satisfy liabilities of the Partnership (including to those Partners as creditors) and/or distribute to the Partners, in lieu of cash, as tenants in common and in accordance with the provisions of Section 13.2.A , undivided interests in such Partnership assets as the Liquidator deems not suitable for liquidation. Any such distributions in-kind shall be made only if, in the good faith judgment of the Liquidator, such distributions in-kind are in the best interest of the Partners, and shall be subject to such conditions relating to the disposition and management of such properties

as the Liquidator deems reasonable and equitable and to any agreements governing the operation of such properties at such time. The Liquidator shall determine the fair market value of any property distributed in kind using such reasonable method of valuation as it may adopt.

Section 13.3. Capital Contribution Obligation .

If any Partner has a deficit balance in his, her, or its Capital Account (after giving effect to all contributions, distributions and allocations for the taxable years, including the year during which such liquidation occurs), such Partner shall have no obligation to make any contribution to the capital of the Partnership with respect to such deficit, and such deficit at any time shall not be considered a debt owed to the Partnership or to any other Person for any purpose whatsoever, except to the extent otherwise expressly agreed to by such Partner and the Partnership.

Section 13.4. Compliance with Timing Requirements of Regulations .

In the discretion of the Liquidator or the General Partner, a pro rata portion of the distributions that would otherwise be made to the General Partner and Limited Partners pursuant to this Article 13 may be:

(1) distributed to a trust established for the benefit of the General Partner and Limited Partners for the purposes of liquidating Partnership assets, collecting amounts owed to the Partnership, and paying any contingent or unforeseen liabilities or obligations of the Partnership or of the General Partner arising out of or in connection with the Partnership. The assets of any such trust shall be distributed to the General Partner and Limited Partners from time to time, in the reasonable discretion of the Liquidator or the General Partner, in the same proportions and the amount distributed to such trust by the Partnership would otherwise have been distributed to the General Partner and Limited Partners pursuant to this Agreement; or

(2) withheld or escrowed to provide a reasonable reserve for Partnership liabilities (contingent or otherwise) and to reflect the unrealized portion of any installment obligations owed to the Partnership, provided, that such withheld or escrowed amounts shall be distributed to the General Partner and Limited Partners in the manner and priority set forth in Section 13.2.A as soon as practicable.

Section 13.5. Deemed Contribution and Distribution .

Notwithstanding any other provision of this Article 13, in the event the Partnership is liquidated within the meaning of Regulations Section 1.704-1(b)(2)(ii)(g) but no Liquidating Event has occurred, the Partnership's property shall not be liquidated, the Partnership's liabilities shall not be paid or discharged, and the Partnership's affairs shall not be wound up. Instead, the Partnership shall be deemed to have contributed all of its assets and liabilities to a new partnership in exchange for an interest in the new partnership. Immediately thereafter, the Partnership shall be deemed to distribute interests in the new partnership to the General Partner and Limited Partners in proportion to their respective interests in the Partnership in liquidation of the Partnership.

Section 13.6. Rights of Limited Partners .

Except as otherwise provided in this Agreement, each Limited Partner shall look solely to the assets of the Partnership for the return of his Capital Contribution and shall have no right or power to demand or receive property from the General Partner. No Limited Partner shall have priority over any other Limited Partner as to the return of his Capital Contributions, distributions or allocations.

Section 13.7. Notice of Dissolution .

In the event a Liquidating Event occurs or an event occurs that would, but for provisions of Section 13.1 , result in a dissolution of the Partnership, the General Partner shall, within thirty (30) days thereafter, provide written notice thereof to each of the Partners and to all other parties with whom the Partnership regularly conducts business (as determined in the discretion of the General Partner) and shall publish notice thereof in a newspaper of general circulation in each place in which the Partnership regularly conducts business (as determined in the discretion of the General Partner).

Section 13.8. Cancellation of Certificate of Limited Partnership .

Upon the completion of the liquidation of the Partnership cash and property as provided in Section 13.2 , the Partnership shall be terminated and the Certificate and all qualifications of the Partnership as a foreign limited partnership in jurisdictions shall be cancelled and such other actions as may be necessary to terminate the Partnership shall be taken.

Section 13.9. Reasonable Time for Winding-Up .

A reasonable time shall be allowed for the orderly winding-up of the business and affairs of the Partnership and the liquidation of its assets pursuant to Section 13.2 , in order to minimize any losses otherwise attendant upon such winding-up, and the provisions of this Agreement shall remain in effect between the Partners during the period of liquidation.

Section 13.10. Waiver of Partition .

Each Partner hereby waives any right to partition of the Partnership property.

ARTICLE 14 .
AMENDMENT OF PARTNERSHIP AGREEMENT; CONSENTS

Section 14.1. Amendments .

A . The actions requiring consent or approval of the Partners or of the Limited Partners pursuant to this Agreement, including Section 7.3 , or otherwise pursuant to applicable law, are subject to the procedures in this Article 14 .

B . Amendments to this Agreement requiring the consent or approval of Limited Partners may be proposed by the General Partner or by Limited Partners holding twenty-five percent (25%)

or more of the Partnership Interests held by Limited Partners. Following such proposal, the General Partner shall submit any proposed amendment to the Partners or to the Limited Partners, as applicable. The General Partner shall seek the written consent of the Limited Partners on the proposed amendment or shall call a meeting to vote thereon and to transact any other business that it may deem appropriate. For purposes of obtaining a written consent, the General Partner may require a response within a reasonable specified time, but not less than fifteen (15) days, and failure to respond in such time period shall constitute a consent which is consistent with the General Partner's recommendation (if so recommended) with respect to the proposal; provided , that , an action shall become effective at such time as requisite consents are received even if prior to such specified time.

C. No amendment to this Agreement that would adversely affect the rights and interests of the Special General Partner may be made without the prior written consent of the Special General Partner.

Section 14.2. Action by the Partners .

A . Meetings of the Partners may be called by the General Partner and shall be called upon the receipt by the General Partner of a written request by Limited Partners holding twenty-five percent (25%) or more of the Partnership Interests held by Limited Partners. The notice shall state the nature of the business to be transacted. Notice of any such meeting shall be given to all Partners not less than seven (7) days nor more than thirty (30) days prior to the date of such meeting. Partners may vote in person or by proxy at such meeting. Whenever the vote or Consent of the Limited Partners or of the Partners is permitted or required under this Agreement, such vote or Consent may be given at a meeting of Partners or may be given in accordance with the procedure prescribed in Section 14.1 .

B . Any action required or permitted to be taken at a meeting of the Partners may be taken without a meeting if a written consent setting forth the action so taken is signed by the percentage as is expressly required by this Agreement for the action in question. Such consent may be in one instrument or in several instruments, and shall have the same force and effect as a vote of the Percentage Interests of the Partners (expressly required by this Agreement). Such consent shall be filed with the General Partner. An action so taken shall be deemed to have been taken at a meeting held on the effective date so certified.

C . Each Limited Partner may authorize any Person or Persons to act for him by proxy on all matters in which a Limited Partner is entitled to participate, including waiving notice of any meeting, or voting or participating at a meeting. Every proxy must be signed by the Limited Partner or his attorney-in-fact. No proxy shall be valid after the expiration of 11 months from the date thereof unless otherwise provided in the proxy. Every proxy shall be revocable at the pleasure of the Limited Partner executing it.

D . Each meeting of Partners shall be conducted by the General Partner or such other Person as the General Partner may appoint pursuant to such rules for the conduct of the meeting as the General Partner or such other Person deems appropriate.

E . On matters on which Limited Partners are entitled to vote, each Limited Partner shall have a vote equal to the number of OP Units held.

ARTICLE 15 .
GENERAL PROVISIONS

Section 15.1. Addresses and Notice .

Any notice, demand, request or report required or permitted to be given or made to a Partner or Assignee under this Agreement shall be in writing and shall be deemed given or made when delivered in person or when sent by first class United States mail or by other means of written communication to the Partner or Assignee at the address set forth in Exhibit A or such other address as the Partners shall notify the General Partner in writing.

Section 15.2. Titles and Captions .

All article or section titles or captions in this Agreement are for convenience only. They shall not be deemed part of this Agreement and in no way define, limit, extend or describe the scope or intent of any provisions hereof. Except as specifically provided otherwise, references to "Articles" and "Sections" are to Articles and Sections of this Agreement.

Section 15.3. Pronouns and Plurals .

Whenever the context may require, any pronoun used in this Agreement shall include the corresponding masculine, feminine or neuter forms, and the singular form of nouns, pronouns and verbs shall include the plural and vice versa.

Section 15.4. Further Action .

The parties shall execute and deliver all documents, provide all information and take or refrain from taking action as may be necessary or appropriate to achieve the purposes of this Agreement.

Section 15.5. Binding Effect .

This Agreement shall be binding upon and inure to the benefit of the parties hereto and their heirs, executors, administrators, successors, legal representatives and permitted assigns.

Section 15.6. Creditors .

Other than as expressly set forth herein with respect to Indemnitees, none of the provisions of this Agreement shall be for the benefit of, or shall be enforceable by, any creditor of the Partnership.

Section 15.7. Waiver .

No failure or delay by any party to insist upon the strict performance of any covenant, duty, agreement or condition of this Agreement or to exercise any right or remedy consequent upon any

breach thereof shall constitute waiver of any such breach or any other covenant, duty, agreement or condition.

Section 15.8. Counterparts .

This Agreement may be executed in counterparts, all of which together shall constitute one agreement binding on all the parties hereto, notwithstanding that all such parties are not signatories to the original or the same counterpart. Each party shall become bound by this Agreement immediately upon affixing its signature hereto.

Section 15.9. Applicable Law .

This Agreement shall be construed in accordance with and governed by the laws of the State of Delaware, without regard to the principles of conflicts of law.

Section 15.10. Invalidity of Provisions .

If any provision of this Agreement is or becomes invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions contained herein shall not be affected thereby.

Section 15.11. Entire Agreement .

This Agreement contains the entire understanding and agreement among the Partners with respect to the subject matter hereof and supersedes any other prior written or oral understandings or agreements among them with respect thereto.

Section 15.12. No Rights as Stockholders .

Nothing contained in this Agreement shall be construed as conferring upon the holders of OP Units any rights whatsoever as stockholders of the General Partner, including without limitation any right to receive dividends or other distributions made to stockholders of the General Partner or to vote or to consent or to receive notice as stockholders in respect of any meeting of stockholders for the election of directors of the General Partner or any other matter.

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IN WITNESS WHEREOF , the parties hereto have executed this Agreement of Limited Partnership as of the date first written above.



General Partner:	CAREY WATERMARK INVESTORS 2 INCORPORATED, a Maryland corporation
	By:	/s/ Thomas E. Zacharias

		Name: Thomas E. Zacharias
		Title: Chief Operating Officer



Special General Partner:	CAREY WATERMARK HOLDINGS 2, LLC, a Delaware limited liability company By: WPC Holdco LLC, its sole member By: W.P. Carey Inc., its sole member
	By:	/s/ Susan C. Hyde

		Name: Susan C. Hyde
		Title: Managing Director and Secretary

EXHIBIT 10.4

CAREY FINANCIAL, LLC

DEALER MANAGER AGREEMENT

April 13, 2015

Carey Financial, LLC

50 Rockefeller Plaza

New York, New York 10020


RE:	CAREY WATERMARK INVESTORS 2 INCORPORATED

Ladies and Gentlemen:

Carey Watermark Investors 2 Incorporated (the “Company”) is a Maryland corporation that intends to qualify to be taxed as a real estate investment trust (a “REIT”) for federal income tax purposes beginning with the taxable year ending December 31, 2015, or the first year during which the Company begins material operations. The Company proposes to offer (a) up to $1,400,000,000 in shares of common stock, $.001 par value per share in the primary offering (the “Primary Offering”) in any combination of the following two classes of common stock: Class A and Class T common stock, which are referred to individually as “Class A Shares” and “Class T Shares,” and collectively as the “Shares,” at an initial price of $10.00 per share and $9.45 per share, respectively (subject in certain circumstances to discounts based upon the volume of shares purchased and for certain categories of purchasers), and (b) up to $600,000,000 in Shares for a purchase price of $9.60 per share for issuance through the Company’s distribution reinvestment program (the “DRIP” and together with the Primary Offering, the “Offering”) at an initial price of $9.60 per Class A Share and $9.07 per Class T Share, all upon the other terms and subject to the conditions set forth in the Prospectus (as defined in Section 1(a)). The Company has reserved the right to reallocate the Shares offered between the DRIP and the Primary Offering.

Upon the terms and subject to the conditions contained in this Dealer Manager Agreement (this “Agreement”), the Company hereby appoints Carey Financial, LLC, a Delaware limited liability company (the “Dealer Manager”), to act as the exclusive dealer manager for the Offering, and the Dealer Manager desires to accept such engagement.


1.	Representations And Warranties Of The Company. The Company hereby represents, warrants and agrees during the term of this Agreement as follows:

(a)

Registration Statement and Prospectus . In connection with the Offering, the Company has prepared and filed with the Securities and Exchange Commission (the “Commission”) a registration statement (File No. 333-196681) on Form S-11 for the registration of the Shares under the Securities Act of 1933, as amended (the “Securities Act”), and the rules and regulations of the Commission promulgated thereunder (the “Securities Act Rules and Regulations”); and one or more amendments to such registration statement have been or may be so prepared and filed. The registration statement on Form S-11 and the prospectus contained therein, as finally amended at the date the registration statement is declared effective by the Commission (the “Effective Date”) are respectively hereinafter referred to as the “Registration Statement” and the “Prospectus”, except that:

(i)

if the Company files a post-effective amendment to such registration statement, then the term “Registration Statement” shall, from and after the declaration of the effectiveness of such post-effective amendment by the Commission, refer to such registration statement as amended by such post-effective amendment, and the term “Prospectus” shall refer to the amended prospectus then on file with the Commission; and

(ii)

if the prospectus filed by the Company pursuant to either Rule 424(b) or 424(c) of the Securities Act Rules and Regulations shall differ from the prospectus on file at the time the Registration Statement or the most recent post-effective amendment thereto, if any, shall have become effective, then the term “Prospectus” shall refer to such prospectus filed pursuant to either Rule 424(b) or 424(c), as the case may be, from and after the date on which it shall have been filed. The term “preliminary Prospectus” as used herein shall mean a preliminary prospectus related to the Shares as contemplated by Rule 430 or Rule 430A of the Securities Act Rules and Regulations included at any time as part of the Registration Statement. As used herein, the terms “Registration Statement”, “preliminary Prospectus” and “Prospectus” shall include the documents, if any, incorporated by reference therein.

As used herein, the term “Effective Date” also shall refer to the effective date of each post-effective amendment to the Registration Statement, unless the context otherwise requires.

Further, if a separate prospectus is filed and becomes effective with respect solely to the DRIP (a “DRIP Prospectus”), the term “Prospectus” shall refer to such DRIP Prospectus from and after the declaration of effectiveness of such DRIP Prospectus.


(b)	Compliance With the Securities Act. During the term of this Agreement:


(i)	the Registration Statement, the Prospectus and any amendments or supplements thereto have complied, and will comply, in all material respects with the Securities Act, the Securities Act Rules and Regulations, the Securities Exchange Act of 1934, as amended (the “Exchange Act”) and the rules and regulations promulgated thereunder (the “Exchange Act Rules and Regulations”);

(ii)

the Registration Statement does not, and any amendment thereto will not, in each case as of the applicable Effective Date, include any untrue statement of material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading and the Prospectus does not, and any amendment or supplement thereto will not, as of the applicable filing date, include any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they are made, not misleading; provided, however, that the foregoing provisions of this Section 1(b) will not extend to any statements contained in or omitted from the Registration Statement or the Prospectus that are based upon written information furnished to the Company by the Dealer Manager expressly for use in the Registration Statement or Prospectus; and


(iii)	the documents incorporated or deemed to be incorporated by reference in the Prospectus, at the time they are hereafter filed with the Commission, will comply in all material respects with the requirements of the Exchange Act and the Exchange Act Rules and Regulations, and, when read together with the other information in the Prospectus, at the

time the Registration Statement became effective and as of the applicable Effective Date of each post-effective amendment to the Registration Statement, did not and will not include an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading.


(c)	Securities Matters. There has not been:


(i)	any request by the Commission for any further amendment to the Registration Statement or the Prospectus or for any additional information;


(ii)	any issuance by the Commission of any stop order suspending the effectiveness of the Registration Statement or the institution or, to the Company’s knowledge, threat of any proceeding for that purpose; or


(iii)	any notification with respect to the suspension of the qualification of the Shares for sale in any jurisdiction or any initiation or, to the Company’s knowledge, threat of any proceeding for such purpose.

The Company is in compliance in all material respects with all federal and state securities laws, rules and regulations applicable to it and its activities, including, without limitation, with respect to the Offering and the sale of the Shares.


(d)	Corporate Status and Good Standing . The Company is a corporation duly organized and validly existing under the laws of the State of Maryland and is in good standing with the State Department of Assessments and Taxation of Maryland, with all requisite power and authority to enter into this Agreement and to carry out its obligations hereunder.

(e)

Authorization of Agreement. This Agreement is duly and validly authorized, executed and delivered by or on behalf of the Company and constitutes a valid and binding agreement of the Company enforceable in accordance with its terms, except as such enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium or other similar laws of the United States, any state or any political subdivision thereof which affect creditors’ rights generally or by equitable principles relating to the availability of remedies or except to the extent that the enforceability of the indemnity and contribution provisions contained in this Agreement may be limited under applicable securities laws.


(f)	Absence of Conflict or Default. The execution and delivery of this Agreement and the performance of this Agreement, the consummation of the transactions contemplated herein and the fulfillment of the terms hereof, do not and will not conflict with, or result in a breach of any of the terms and provisions of, or constitute a default under:


(i)	the Company’s or any of its subsidiaries’ charter, bylaws, or other organizational documents, as the case may be;


(ii)	any indenture, mortgage, deed of trust, voting trust agreement, note, lease or other agreement or instrument to which the Company or any of its subsidiaries is a party or by which the Company or any of its subsidiaries or any of their properties is bound except, for purposes of this clause (ii) only, for such conflicts, breaches or defaults that do not

result in and could not reasonably be expected to result in, individually or in the aggregate, a Company MAE (as defined below in this Section 1(f)); or


(iii)	any statute, rule or regulation or order of any court or other governmental agency or body having jurisdiction over the Company, any of its subsidiaries or any of their properties.

No consent, approval, authorization or order of any court or other governmental agency or body has been or is required for the performance of this Agreement or for the consummation by the Company of any of the transactions contemplated hereby (except as have been obtained under the Securities Act, the Exchange Act, from the Financial Industry Regulatory Authority (“FINRA”) or as may be required under state securities or applicable blue sky laws in connection with the offer and sale of the Shares or under the laws of states in which the Company may own real properties in connection with its qualification to transact business in such states or as may be required by subsequent events which may occur). Neither the Company nor any of its subsidiaries is in violation of its charter, bylaws or other organizational documents, as the case may be.

As used in this Agreement, “Company MAE” means any event, circumstance, occurrence, fact, condition, change or effect, individually or in the aggregate, that is, or could reasonably be expected to be, materially adverse to (A) the condition, financial or otherwise, earnings, business affairs or business prospects of the Company and its subsidiaries considered as one enterprise, or (B) the ability of the Company to perform its obligations under this Agreement or the validity or enforceability of this Agreement or the Shares.


(g)	Actions or Proceedings. As of the initial Effective Date, there are no actions, suits or proceedings against, or investigations of, the Company or its subsidiaries pending or, to the knowledge of the Company, threatened, before any court, arbitrator, administrative agency or other tribunal:


(iv)	asserting the invalidity of this Agreement;


(v)	seeking to prevent the issuance of the Shares or the consummation of any of the transactions contemplated by this Agreement;


(vi)	that would reasonably be expected to materially and adversely affect the performance by the Company of its obligations under or the validity or enforceability of, this Agreement or the Shares;


(vii)	that would reasonably be expected to result in a Company MAE, or


(viii)	seeking to affect adversely the federal income tax attributes of the Shares except as described in the Prospectus.

The Company promptly will give notice to the Dealer Manager of the occurrence of any action, suit, proceeding or investigation of the type referred to above arising or occurring on or after the initial Effective Date.


(h)	Escrow Agreement. The Company will enter into an escrow agreement (the “Escrow Agreement”) with the Dealer Manager and UMB Bank, N.A. (the “Escrow Agent”), substantially in the form included as an exhibit to the Registration Statement.

(i)

Sales Literature. Any supplemental sales literature or advertisement (including, without limitation any “broker-dealer use only” or institutional material), regardless of how labeled or described, used in addition to the Prospectus in connection with the Offering which previously has been, or hereafter is, furnished or approved by the Company (collectively, “Approved Sales Literature”), shall, to the extent required, be filed with and approved by the appropriate securities agencies and bodies, provided that the Dealer Manager will make all FINRA filings, to the extent required. Any and all Approved Sales Literature, when used in connection with the Prospectus, did not or will not at the time provided for use include any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading.


(j)	Authorization of Shares. The Shares have been duly authorized and, when issued and sold as contemplated by the Prospectus and upon payment therefor as provided in this Agreement and the Prospectus, will be validly issued, fully paid and nonassessable and will conform in all material aspects to the description thereof contained in the Prospectus.


(k)	Taxes. Any taxes, fees and other governmental charges in connection with the execution and delivery of this Agreement or the execution, delivery and sale of the Shares have been or will be paid when due.


(l)	Investment Company. The Company is not, and neither the offer or sale of the Shares nor any of the activities of the Company will cause the Company to be, an “investment company” or under the control of an “investment company” as such terms are defined in the Investment Company Act of 1940, as amended.

(m)

Tax Returns. The Company has filed or will file all material federal, state and foreign income tax returns required to be filed by or on behalf of the Company on or before the due dates therefor (taking into account all extensions of time to file) and has paid or provided for the payment of all such material taxes, except those being contested in good faith, indicated by such tax returns and all assessments received by the Company to the extent that such taxes or assessments have become due.

(n)

REIT Qualifications. The Company will make a timely election to be subject to tax as a REIT pursuant to Sections 856 through 860 of the Internal Revenue Code of 1986, as amended (the “Code”) for its taxable year ended December 31, 2015, or the first year during which the Company begins material operations. The Company has been organized and operated in conformity with the requirements for qualification and taxation as a REIT. The Company’s current and proposed method of operation as described in the Registration Statement and the Prospectus will enable it to continue to meet the requirements for qualification and taxation as a REIT under the Code.

(o)

Independent Registered Public Accounting Firm. The accountants who have certified certain financial statements appearing in the Prospectus are an independent registered public accounting firm within the meaning of the Securities Act and the Securities Act Rules and Regulations. Such accountants have not been engaged by the Company to perform any “prohibited activities” (as defined in Section 10A of the Exchange Act).


(p)	Preparation of the Financial Statements. The financial statements filed with the Commission as a part of the Registration Statement and included in the Prospectus present fairly the consolidated financial position of the Company and its subsidiaries as of and at the dates indicated and the results of their operations and cash flows for the periods specified. Such financial statements have

been prepared in conformity with generally accepted accounting principles as applied in the United States applied on a consistent basis throughout the periods involved, except as may be expressly stated in the related notes thereto. No other financial statements or supporting schedules are required to be included in the Registration Statement or any applicable Prospectus.


(q)	Material Adverse Change. Since the respective dates as of which information is given in the Registration Statement and the Prospectus, except as may otherwise be stated therein or contemplated thereby, there has not occurred a Company MAE, whether or not arising in the ordinary course of business.

(r)

Government Permits. The Company and its subsidiaries possess such certificates, authorities or permits issued by the appropriate state, federal or foreign regulatory agencies or bodies necessary to conduct the business now operated by them, other than those the failure to possess or own would not have, individually or in the aggregate, a Company MAE. Neither the Company nor any of its subsidiaries has received any notice of proceedings relating to the revocation or modification of any such certificate, authority or permit which, individually or in the aggregate, if the subject of an unfavorable decision, ruling or finding, would result in a Company MAE.


(s)	Properties. Except as otherwise disclosed in the Prospectus and except as would not result in, individually or in the aggregate, a Company MAE:


(ix)	all properties and assets described in the Prospectus are owned with good and marketable title by the Company and its subsidiaries; and


(x)	all liens, charges, encumbrances, claims or restrictions on or affecting any of the properties and assets of any of the Company or its subsidiaries which are required to be disclosed in the Prospectus are disclosed therein.


(t)	Hazardous Materials. The Company does not have any knowledge of:


(xi)	the unlawful presence of any hazardous substances, hazardous materials, toxic substances or waste materials (collectively, “Hazardous Materials”) on any of the properties owned by it or its subsidiaries or subject to mortgage loans owned by the Company or any of its subsidiaries; or


(xii)	any unlawful spills, releases, discharges or disposal of Hazardous Materials that have occurred or are presently occurring off such properties as a result of any construction on or operation and use of such properties, which presence or occurrence in the case of clauses (i) and (ii) would result in, individually or in the aggregate, a Company MAE.

In connection with the properties owned by the Company and its subsidiaries or subject to mortgage loans owned by the Company or any of its subsidiaries, the Company has no knowledge of any material failure to comply with all applicable local, state and federal environmental laws, regulations, ordinances and administrative and judicial orders relating to the generation, recycling, reuse, sale, storage, handling, transport and disposal of any Hazardous Materials.


1.	Representations and Warranties of the Dealer Manager. The Dealer Manager represents and warrants to the Company during the term of this Agreement that:


(a)	Organization Status. The Dealer Manager is a limited liability company duly organized, validly existing and in good standing under the laws of the State of Delaware, with all requisite power and authority to enter into this Agreement and to carry out its obligations hereunder.

(b)

Authorization of Agreement. This Agreement has been duly authorized, executed and delivered by the Dealer Manager, and assuming due authorization, execution and delivery of this Agreement by the Company, will constitute a valid and legally binding agreement of the Dealer Manager enforceable against the Dealer Manager in accordance with its terms, except as enforceability may be limited by applicable bankruptcy, insolvency or similar laws affecting the enforcement of creditors' rights generally or by equitable principles relating to enforceability and except that rights to indemnity and contribution hereunder may be limited by applicable law and public policy.


(c)	Absence of Conflict or Default. The execution and delivery of this Agreement, the consummation of the transactions herein contemplated and compliance with the terms of this Agreement by the Dealer Manager will not conflict with or constitute a default under:


(i)	its organizational documents;


(ii)	any indenture, mortgage, deed of trust or lease to which the Dealer Manager is a party or by which it may be bound, or to which any of the property or assets of the Dealer Manager is subject; or

(iii)

any statute, rule, regulation, writ, injunction or decree of any government, governmental instrumentality or court, domestic or foreign, having jurisdiction over the Dealer Manager or its assets, properties or operations, except in the case of clause (ii) or (iii) for such conflicts or defaults that would not individually or in the aggregate have a material adverse effect on the condition (financial or otherwise), business, properties or results of operations of the Dealer Manager.

(d)

Broker-Dealer Registration; FINRA Membership. The Dealer Manager is, and during the term of this Agreement will be, duly registered as a broker-dealer pursuant to the provisions of the Exchange Act, a member in good standing of FINRA, and a broker or dealer duly registered as such in those states where the Dealer Manager is required to be registered in order to carry out the Offering as contemplated by this Agreement. Moreover, the Dealer Manager’s employees and representatives have all required licenses and registrations to act under this Agreement. There is no provision in the Dealer Manager’s FINRA membership agreement that would restrict the ability of the Dealer Manager to carry out the Offering as contemplated by this Agreement.

Offering and Sale of the Shares. Upon the terms and subject to the conditions set forth in this Agreement, the Company hereby appoints the Dealer Manager as its agent and exclusive distributor to solicit and to retain the Selected Dealers (as defined in Section 3(a)) to solicit subscriptions for the Shares at the subscription price to be paid in cash. Upon the terms and subject to the conditions set forth in this Agreement, the Dealer Manager hereby accepts such agency and exclusive distributorship and agrees to use its best efforts to sell or cause to be sold the Shares in such quantities and to such persons in accordance with such terms as are set forth in this Agreement, the Prospectus and the Registration Statement.

The Dealer Manager shall do so during the period commencing on the initial Effective Date and ending on the earliest to occur of the following: (1) the later of (x) two years after the initial Effective Date of the Registration Statement and (y) at the Company’s election, the date on which the Company is permitted to extend the Offering in accordance with the rules of the Commission; (2) the acceptance by the Company of

subscriptions for the amount offered in the Primary Offering, which for this section includes any DRIP shares reallocated to the Primary Offering; (3) the termination of the Offering by the Company, which the Company shall have the right to terminate in its sole and absolute discretion at any time; (4) the termination of the effectiveness of the Registration Statement; and (5) the liquidation or dissolution of the Company (such period being the “Offering Period”).

The number of Shares, if any, to be reserved for sale by each Selected Dealer may be determined by mutual agreement, from time to time, by the Dealer Manager and the Company. In the absence of such determination, the Company shall, subject to the provisions of Section 3(b), accept Order Forms based upon a first-come, first accepted reservation or other similar method. Under no circumstances will the Dealer Manager be obligated to underwrite or purchase any Shares for its own account and, in soliciting purchases of Shares, the Dealer Manager shall act solely as the Company’s agent and not as an underwriter or principal.


(a)	Selected Dealers. The Shares offered and sold through the Dealer Manager under this Agreement shall be offered and sold only by the Dealer Manager and other securities dealers the Dealer Manager may retain (collectively the “Selected Dealers”); provided, however, that:


(i)	the Dealer Manager reasonably believes that all Selected Dealers are registered with the Commission, members of FINRA and are duly licensed or registered by the regulatory authorities in the jurisdictions in which they will offer and sell Shares; and


(ii)	all such engagements are evidenced by written agreements, the terms and conditions of which substantially conform to the Selected Dealer Agreement substantially in Exhibit A hereto (the “Selected Dealer Agreement”).


(b)	Subscription Documents. Each person desiring to purchase Shares through the Dealer Manager, or any other Selected Dealer, will be required to complete and execute the subscription documents described in the Prospectus.

Until the minimum offering of $2,000,000 in Shares has been sold, payments for Shares shall be made by checks payable to “UMB Bank, N.A., as Escrow Agent for Carey Watermark Investors 2 Incorporated.” During such time, a Selected Dealer shall forward original checks together with an original Order Form, executed and initialed by the subscriber as provided for in the Order Form, to UMB Bank, N.A. (the “Escrow Agent”) at the address provided in the Order Form.

When a Selected Dealer’s internal supervisory procedures are conducted at the site at which the Order Form and check were initially received by the Selected Dealer from the subscriber, the Selected Dealer shall transmit the Order Form and check to the Escrow Agent by the end of the next business day following receipt of the check and Order Form. When, pursuant to the Selected Dealer’s internal supervisory procedures, the Selected Dealer’s final internal supervisory procedures are conducted at a different location (the “Final Review Office”), the Selected Dealer shall transmit the check and Order Form to the Final Review Office by the end of the next business day following the Selected Dealer’s receipt of the Order Form and check. The Final Review Office will, by the end of the next business day following its receipt of the Order Form and check, forward both the Order Form and check to the Escrow Agent. If any Order Form solicited by the Selected Dealer is rejected by the Dealer Manager or the Company, then the Order Form and check will be returned to the rejected subscriber within 10 business days from the date of rejection.

Once the minimum offering of $2,000,000 in Shares has been sold, subject to any continuing escrow obligations imposed by certain states as described in the Prospectus, payments for Shares shall be made payable to “Carey Watermark Investors 2 Incorporated.” At such time, the Selected Dealer shall forward original checks together with an original Order Form, executed and initialed by the subscriber as provided for in the Order Form, to Carey Watermark Investors 2 Incorporated, c/o W.P. Carey/DST Systems, Inc., at the address provided in the Order Form.

If the minimum offering of $2,000,000 in Shares has not been obtained within six months from the Effective Date, which the Company may elect to extend to a date no later than one year from the Effective Date (the “Closing Date”), pursuant to the Escrow Agreement, the Escrow Agent shall, promptly following the Closing Date, refund to each investor by check funds deposited in the escrow account or shall return the instruments of payment delivered to the Escrow Agent if such instruments have not been processed for collection prior to such time, directly to each investor at the address provided in the list of investors.


(c)	Completed Sale. A sale of a Share shall be deemed by the Company to be completed for purposes of Section 3(d) if and only if:

(i)

the Company or an agent of the Company has received a properly completed and executed Order Form, together with payment of the full purchase price of each purchased Share, from an investor who satisfies the applicable suitability standards and minimum purchase requirements set forth in the Registration Statement as determined by the Selected Dealer or the Dealer Manager, as applicable, in accordance with the provisions of this Agreement;


(ii)	the Company has accepted such subscription; and


(iii)	such investor has been admitted as a shareholder of the Company.

In addition, no sale of Shares shall be completed until at least five (5) business days after the date on which the subscriber receives a copy of the Prospectus. The Dealer Manager hereby acknowledges and agrees that the Company, in its sole and absolute discretion, may accept or reject any subscription, in whole or in part, for any reason whatsoever or no reason, and no commission or dealer manager fee will be paid to the Dealer Manager with respect to that portion of any subscription which is rejected.


(d)	Dealer-Manager Compensation.

(iv)

Subject to the volume discounts and other special circumstances described in or otherwise provided in the “The Offering/Plan of Distribution” section of the Prospectus or this Section 3(d), the Company agrees to pay the Dealer Manager selling commissions in the amount of seven percent (7.0%) of the selling price of each Class A Share for which a sale is completed from the Class A Shares offered in the Primary Offering and selling commissions in the amount of two percent (2.0%) of the selling price of each Class T Share for which a sale is completed from the Class T Shares offered in the Primary Offering. The Company will not pay selling commissions for sales of Class A Shares or Class T Shares pursuant to the DRIP. The Company will pay reduced selling commissions or may eliminate commissions on certain sales of Class A Shares, including the reduction or elimination of selling commissions in accordance with, and on the terms set forth in, the Prospectus. The Dealer Manager will re-allow all the selling

commissions, subject to federal and state securities laws, to the Selected Dealer who sold the Shares.

An annual distribution and shareholder servicing fee will be paid to the Dealer Manager in connection with purchases of the Class T Shares. The annual distribution and shareholder servicing fee of 1% of the purchase price per share (or, once reported, the amount of the estimated net asset value per share) will accrue daily as provided in the “The Offering/Plan of Distribution” section of the Prospectus. The Dealer Manager may reallow the distribution and shareholder servicing fee to the Selected Dealer who initially sold the Class T Shares giving rise to such distribution and shareholder servicing fees to the extent the Selected Dealer Agreement with such Selected Dealer provides for such a reallowance. Notwithstanding, if the Dealer Manager is notified that the Selected Dealer who sold such Class T Shares is no longer the broker-dealer of record with respect to such Class T Shares, then such Selected Dealer’s entitlement to the distribution and shareholder servicing fee related to such Class T Shares shall cease, and such Selected Dealer shall not receive the distribution and shareholder servicing fee for any portion of the quarter in which such Selected Dealer is not the broker dealer of record on the last day of the quarter. Thereafter, such distribution and shareholder servicing fee may be reallowed by the Dealer Manager to the then-current broker-dealer of record of the Class T Shares, if any, if such broker-dealer of record has entered into a Selected Dealer Agreement with the Dealer Manager that provides for such reallowance. In this regard, all determinations will be made by the Dealer Manager in good faith in its sole discretion.

The Company will cease paying the distribution and shareholder servicing fee with respect to the Class T Shares sold in the Primary Offering upon the earlier of (i) the date at which, in the aggregate, underwriting compensation from all sources, including the distribution and shareholder servicing fee, any organization and offering fee paid for underwriting and underwriting compensation paid by the sponsor and its affiliates, equals 10% of the gross proceeds from the Primary Offering (i.e., the gross proceeds from the offering of Class A and Class T Shares excluding proceeds from sales pursuant to the distribution reinvestment plan), calculated as of the same date that the Company calculates the aggregate distribution and shareholder servicing fee; and (ii) the sixth anniversary of the last day of the fiscal quarter in which the Primary Offering (excluding the DRIP) terminates.

A distribution and shareholder servicing fee will not be paid on Class A Shares or Class T Shares issued under the DRIP.

(v)

Subject to the special circumstances described in or otherwise provided in the “The Offering/Plan of Distribution” section of the Prospectus or this Section 3(d), as compensation for acting as the dealer manager, the Company will pay the Dealer Manager, a dealer manager fee in the amount of three percent (3.0%) of the selling price of each Class A Share and two and three-fourths percent (2.75%) of the selling price of each Class T Share for which a sale is completed from the Shares offered in the Primary Offering (the “Dealer Manager Fee”). No Dealer Manager Fee will be paid in connection with Shares sold pursuant to the DRIP.

The Dealer Manager may retain or re-allow a portion of the Dealer Manager Fee, subject to federal and state securities laws, to the Selected Dealer who sold the Shares, as described more fully in the Selected Dealer Agreement.

(vi)

All selling commissions and Dealer Manager fees payable to the Dealer Manager will be paid at least within ten (10) business days after the investor subscribing for the Share is admitted as a shareholder of the Company, in an amount equal to the sales commissions payable with respect to such Shares. The Dealer Manager acknowledges that no commissions, payments or amount will be paid to the Dealer Manager unless and until the gross proceeds of the Shares sold are disbursed to the Company in accordance with the terms of the Escrow Agreement.


(vii)	In no event shall the total aggregate underwriting compensation payable to the Dealer Manager and any Selected Dealers participating in the Offering, including, but not limited to, selling commissions, the Dealer Manager Fee and the annual distribution and shareholder servicing fee exceed ten percent (10.0%) of gross offering proceeds from the Primary Offering in the aggregate.

(viii)

Notwithstanding anything to the contrary contained herein, if the Company pays any selling commission to the Dealer Manager for sale by a Selected Dealer of one or more Shares and the subscription is rescinded as to one or more of the Shares covered by such subscription, then the Company shall decrease the next payment of selling commissions or other compensation otherwise payable to the Dealer Manager by the Company under this Agreement by an amount equal to the commission rate established in this Section 3(d), multiplied by the number of Shares as to which the subscription is rescinded. If no payment of selling commissions or other compensation is due to the Dealer Manager after such withdrawal occurs, then the Dealer Manager shall pay the amount specified in the preceding sentence to the Company within a reasonable period of time not to exceed thirty (30) days following receipt of notice by the Dealer Manager from the Company stating the amount owed as a result of rescinded subscriptions.

(e)

Reasonable Bona Fide Due Diligence Expenses. In addition to any payments to the Dealer Manager pursuant to Section 3(d), the Company shall reimburse the Dealer Manager or any Selected Dealer for reasonable bona fide due diligence expenses incurred by the Dealer Manager or any Selected Dealer to the extent permitted pursuant to the rules and regulations of FINRA, provided, however, that no due diligence expenses shall be reimbursed by the Company pursuant to this Section 3(e) which would cause the aggregate of all of the Company’s expenses described in Section 3(f) and compensation paid to the Dealer Manager and any Selected Dealer pursuant to Section 3(d) to exceed 15% of the gross proceeds from the sale of the Primary Shares. Also, the Company shall only reimburse the Dealer Manager or any Selected Dealer for such approved bona fide due diligence expenses to the extent such expenses have actually been incurred and are supported by detailed and itemized invoice(s) provided to the Company.


(f)	Company Expenses. Subject to the limitations described above, the Company agrees to pay all costs and expenses incident to the Offering, whether or not the transactions contemplated hereunder are consummated or this Agreement is terminated, including expenses, fees and taxes in connection with:


(ix)	the registration fee, the preparation and filing of the Registration Statement (including without limitation financial statements, exhibits, schedules and consents), the Prospectus, and any amendments or supplements thereto, and the printing and furnishing of copies of each thereof to the Dealer Manager and to Selected Dealers (including costs of mailing and shipment);


(x)	the preparation, issuance and delivery of certificates, if any, for the Shares, including any stock or other transfer taxes or duties payable upon the sale of the Shares;


(xi)	all fees and expenses of the Company’s legal counsel, independent public or certified public accountants and other advisors;


(xii)	the qualification of the Shares for offering and sale under state laws in the states that the Company shall designate as appropriate and the determination of their eligibility for sale under state law as aforesaid and the printing and furnishing of copies of blue sky surveys;


(xiii)	the filing fees in connection with filing for review by FINRA of all necessary documents and information relating to the Offering and the Shares;


(xiv)	the fees and expenses of any transfer agent or registrar for the Shares and miscellaneous expenses referred to in the Registration Statement;

(xv)

all costs and expenses incident to the travel and accommodation of the personnel of Carey Lodging Advisors, LLC, advisor to the Company (the “Advisor”), and the personnel of any sub-advisor designated by the Advisor and acting on behalf of the Company, in making road show presentations and presentations to Selected Dealers and other broker-dealers and financial advisors with respect to the offering of the Shares; and


(xvi)	the performance of the Company’s other obligations hereunder.

Notwithstanding the foregoing, the Company shall not directly pay, or reimburse the Advisor for, the costs and expenses described in this Section 3(f) if the payment or reimbursement of such expenses would cause the aggregate of the Company’s “organization and offering expenses” as defined by FINRA Rule 2310 (including the Company expenses paid or reimbursed pursuant to this Section 3(f), all items of underwriting compensation including Dealer Manager expenses described in Section 3(d) and due diligence expenses described in Section 3(e)) to exceed 15.0% of the gross proceeds from the sale of the Primary Shares.


3.	Conditions to the Dealer Manager’s Obligations. The Dealer Manager’s obligations hereunder shall be subject to the following terms and conditions:


(a)	The representations and warranties on the part of the Company contained in this Agreement hereof shall be true and correct in all material respects and the Company shall have complied with its covenants, agreements and obligations contained in this Agreement in all material respects;


(b)	The Registration Statement shall have become effective and no stop order suspending the effectiveness of the Registration Statement shall have been issued by the Commission and, to the best knowledge of the Company, no proceedings for that purpose shall have been instituted, threatened or contemplated by the Commission; and any request by the Commission for additional

information (to be included in the Registration Statement or Prospectus or otherwise) shall have been complied with to the reasonable satisfaction of the Dealer Manager.


4.	Covenants of the Company. The Company covenants and agrees with the Dealer Manager as follows:

(a)

Registration Statement. The Company will use its best efforts to cause the Registration Statement and any subsequent amendments thereto to become effective as promptly as possible and will furnish a copy of any proposed amendment or supplement of the Registration Statement or the Prospectus to the Dealer Manager. The Company will comply in all material respects with all federal and state securities laws, rules and regulations which are required to be complied with in order to permit the continuance of offers and sales of the Shares in accordance with the provisions hereof and of the Prospectus.

(b)

Commission Orders. If the Commission shall issue any stop order or any other order preventing or suspending the use of the Prospectus, or shall institute any proceedings for that purpose, then the Company will promptly notify the Dealer Manager and use its best efforts to prevent the issuance of any such order and, if any such order is issued, to use its best efforts to obtain the removal thereof as promptly as possible.

(c)

Blue Sky Qualifications. The Company will use its best efforts to qualify the Shares for offering and sale under the securities or blue sky laws of such jurisdictions as the Dealer Manager and the Company shall mutually agree upon and to make such applications, file such documents and furnish such information as may be reasonably required for that purpose. The Company will, at the Dealer Manager’s request, furnish the Dealer Manager with a copy of such papers filed by the Company in connection with any such qualification. The Company will promptly advise the Dealer Manager of the issuance by such securities administrators of any stop order preventing or suspending the use of the Prospectus or of the institution of any proceedings for that purpose, and will use its best efforts to prevent the issuance of any such order and if any such order is issued, to use its best efforts to obtain the removal thereof as promptly as possible. The Company will furnish the Dealer Manager with a Blue Sky Survey dated as of the initial Effective Date, which will be supplemented to reflect changes or additions to the information disclosed in such survey.

(d)

Amendments and Supplements. If, at any time when a Prospectus relating to the Shares is required to be delivered under the Securities Act, any event shall have occurred to the knowledge of the Company, or the Company receives notice from the Dealer Manager that it believes such an event has occurred, as a result of which the Prospectus or any Approved Sales Literature as then amended or supplemented would include any untrue statement of a material fact, or omit to state a material fact necessary to make the statements therein, in light of the circumstances under which they were made, not misleading, or if it is necessary at any time to amend the Registration Statement or supplement the Prospectus relating to the Shares to comply with the Securities Act, then the Company will promptly notify the Dealer Manager thereof (unless the information shall have been received from the Dealer Manager) and will prepare and file with the Commission an amendment or supplement which will correct such statement or effect such compliance to the extent required, and shall make available to the Dealer Manager thereof sufficient copies for its own use and/or distribution to the Selected Dealers.


(e)	Requests from Commission. The Company will promptly advise the Dealer Manager of any request made by the Commission or a state securities administrator for amending the Registration Statement, supplementing the Prospectus or for additional information.

(f)

Copies of Registration Statement. The Company will furnish the Dealer Manager with one signed copy of the Registration Statement, including its exhibits, and such additional copies of the Registration Statement, without exhibits, and the Prospectus and all amendments and supplements thereto, which are finally approved by the Commission, as the Dealer Manager may reasonably request for sale of the Shares.


(g)	Qualification to Transact Business. The Company will take all steps necessary to ensure that at all times the Company will validly exist as a Maryland corporation and will be qualified to do business in all jurisdictions in which the conduct of its business requires such qualification and where such qualification is required under local law.

(h)

Authority to Perform Agreements. The Company undertakes to obtain all consents, approvals, authorizations or orders of any court or governmental agency or body which are required for the Company’s performance of this Agreement and under the Company’s Articles of Amendment and Restatement (as the same may be amended, supplemented or otherwise modified from time to time, the “Company’s Charter”) and the Company's by-laws, each in the form included as exhibits to the Registration Statement for the consummation of the transactions contemplated hereby and thereby, respectively, or the conducting by the Company of the business described in the Prospectus.

(i)

Sales Literature. The Company will furnish to the Dealer Manager as promptly as shall be practicable upon request any Approved Sales Literature (provided that the use of said material has been first approved for use to the extent required by all appropriate regulatory agencies). Any supplemental sales literature or advertisement, regardless of how labeled or described, used in addition to the Prospectus in connection with the Offering which is furnished or approved by the Company (including, without limitation, Approved Sales Literature) shall, to the extent required, be filed with and, to the extent required, approved by the appropriate securities agencies and bodies, provided that the Dealer Manager will make all FINRA filings, to the extent required. The Company will not (and will instruct its affiliates not to): show or give to any investor or prospective investor or reproduce any material or writing that is marked “broker-dealer use only,” institutional or otherwise bears a legend denoting that it is not to be used in connection with the sale of Shares to members of the public; or show or give to any investor or prospective investor in a particular jurisdiction any material or writing if such material bears a legend denoting that it is not to be used in connection with the sale of Shares to members of the public in such jurisdiction.


(j)	Use of Proceeds. The Company will apply the proceeds from the sale of the Shares as set forth in the Prospectus.


(k)	Customer Information. The Dealer Manager and the Company shall, when applicable:

(i)

abide by and comply with (A) the privacy standards and requirements of the Gramm-Leach-Bliley Act of 1999 (the “GLB Act”) and applicable regulations promulgated thereunder, (B) the privacy standards and requirements of any other applicable federal or state law, including but not limited to, the Fair Credit Reporting Act (“FCRA”), and (C) its own internal privacy policies and procedures, each as may be amended from time to time;


(ii)	refrain from the use or disclosure of nonpublic personal information (as defined under the GLB Act) of all customers who have opted out of such disclosures except as necessary to service the customers or as otherwise necessary or required by applicable law;


(iii)	except as expressly permitted under the FCRA, the Dealer Manager and the Company shall not disclose any information that would be considered a “consumer report” under the FCRA; and

(iv)

determine which customers have opted out of the disclosure of nonpublic personal information by periodically reviewing and, if necessary, retrieving an aggregated list of such customers from the Selected Dealers (the “List”) to identify customers that have exercised their opt-out rights. If either party uses or discloses nonpublic personal information of any customer for purposes other than servicing the customer, or as otherwise required by applicable law, that party will consult the List to determine whether the affected customer has exercised his or her opt-out rights. Each party understands that it is prohibited from using or disclosing any nonpublic personal information of any customer that is identified on the List as having opted out of such disclosures.

(l)

Dealer Manager’s Review of Proposed Amendments and Supplements. Prior to amending or supplementing the Registration Statement, any preliminary prospectus or the Prospectus (including any amendment or supplement through incorporation of any report filed under the Exchange Act), the Company shall furnish to the Dealer Manager for review, a reasonable amount of time prior to the proposed time of filing or use thereof, a copy of each such proposed amendment or supplement, and the Company shall not file or use any such proposed amendment or supplement without the Dealer Manager’s consent, which consent shall not be unreasonably withheld or delayed.


5.	Covenants of the Dealer Manager. The Dealer Manager covenants and agrees with the Company as follows:

(a)

Compliance With Laws. With respect to the Dealer Manager’s participation and the participation by each Selected Dealer in the offer and sale of the Shares (including, without limitation, any resales and transfers of Shares), the Dealer Manager agrees, and each Selected Dealer in its Selected Dealer Agreement will agree, to comply in all material respects with all applicable requirements of the Securities Act, the Securities Act Rules and Regulations, the Exchange Act, the Exchange Act Rules and Regulations and all other federal regulations applicable to the Offering, the sale of Shares and with all applicable state securities or blue sky laws, and the Rules of FINRA applicable to the Offering, from time to time in effect, specifically including, but not in any way limited to, NASD Conduct Rules 2340 (Customer Account Statements) and 2420 (Dealing with Non-Members), and FINRA Rules 2111 (Suitability), 2310 (Direct Participation Programs), 5130 (Restrictions on the Purchase and Sale of Initial Equity Public Offerings), and 5141 (Sale of Securities in a Fixed Price Offering) therein. The Dealer Manager will not offer the Shares for sale in any jurisdiction unless and until it has been advised that the Shares are either registered in accordance with, or exempt from, the securities and other laws applicable thereto.

In addition, the Dealer Manager shall, in accordance with applicable law or as prescribed by any state securities administrator, provide, or require in the Selected Dealer Agreement that the Selected Dealer shall provide, to any prospective investor copies of any prescribed document which is part of the Registration Statement and any supplements thereto during the course of the Offering and prior to the sale. The Company may provide the Dealer Manager with certain Approved Sales Literature to be used by the Dealer Manager and the Selected Dealers in connection with the solicitation of purchasers of the Shares. The Dealer Manager agrees not to deliver the Approved Sales Literature to any person prior to the initial Effective Date. If the Dealer

Manager elects to use such Approved Sales Literature after the initial Effective Date, then the Dealer Manager agrees that such material shall not be used by it in connection with the solicitation of purchasers of the Shares and that it will direct Selected Dealers not to make such use unless accompanied or preceded by the Prospectus, as then currently in effect, and as it may be amended or supplemented in the future.

The Dealer Manager agrees that it will not use any Approved Sales Literature other than those provided to the Dealer Manager by the Company for use in the Offering. The use of any other sales material is expressly prohibited.


(b)	No Additional Information. In offering the Shares for sale, the Dealer Manager shall not, and each Selected Dealer shall agree not to, give or provide any information or make any representation other than those contained in the Prospectus or the Approved Sales Literature.


(c)	Sales of Shares. The Dealer Manager shall, and each Selected Dealer shall agree to, solicit purchases of the Shares only in the jurisdictions in which the Dealer Manager and such Selected Dealer are legally qualified to so act and in which the Dealer Manager and each Selected Dealer have been advised by the Company or counsel to the Company that such solicitations can be made.

(d)

Order Form. The Dealer Manager will comply in all material respects with the subscription procedures and “The Offering/Plan of Distribution” set forth in the Prospectus. Subscriptions will be submitted by the Dealer Manager and each Selected Dealer to the Company only on the order form, a form of which is included as Annex B to the Prospectus. The Dealer Manager understands and acknowledges, and each Selected Dealer shall acknowledge, that the Order Form must be executed and initialed by the subscriber as provided for by the Order Form.

(e)

Suitability. The Dealer Manager will offer Shares, and in its agreement with each Selected Dealer will require that the Selected Dealer offer Shares, only to persons that it has reasonable grounds to believe meet the financial qualifications set forth in the Prospectus or in any suitability letter or memorandum sent to it by the Company and will only make offers to persons in the states in which it is advised in writing by the Company that the Shares are qualified for sale or that such qualification is not required. In offering Shares, the Dealer Manager will comply, and in its agreements with the Selected Dealers, the Dealer Manager will require that the Selected Dealers comply, with the provisions of all applicable rules and regulations relating to suitability of investors, including without limitation the FINRA Rules and the provisions of Article III.C. of the Statement of Policy Regarding Real Estate Investment Trusts of the North American Securities Administrators Association, Inc., as revised and amended on May 7, 2007 and as may be further revised and amended (the “NASAA Guidelines”).

The Dealer Manager agrees that in recommending the purchase of the Shares in the Primary Offering to an investor, the Dealer Manager and each person associated with the Dealer Manager that make such recommendation shall have, and each Selected Dealer in its Selected Dealer Agreement shall agree with respect to investors to which it makes a recommendation shall agree that it shall have, reasonable grounds to believe, on the basis of information obtained from the investor concerning the investor’s investment objectives, other investments, financial situation and needs, and any other information known by the Dealer Manager, the person associated with the Dealer Manager or the Selected Dealer that:


(i)	the investor is or will be in a financial position appropriate to enable the investor to realize to a significant extent the benefits described in the Prospectus, including the tax benefits where they are a significant aspect of the Company;


(ii)	the investor has a fair market net worth sufficient to sustain the risks inherent in the program, including loss of investment and lack of liquidity; and


(iii)	an investment in the Shares offered in the Primary Offering is otherwise suitable for the investor.

The Dealer Manager agrees as to investors to whom it makes a recommendation with respect to the purchase of the Shares in the Primary Offering (and each Selected Dealer in its Selected Dealer Agreement shall agree, with respect to Investors to whom it makes such recommendations) to maintain in the files of the Dealer Manager (or the Selected Dealer, as applicable) documents disclosing the basis upon which the determination of suitability was reached as to each investor.

In making the determinations as to financial qualifications and as to suitability required by the NASAA Guidelines, the Dealer Manager and Selected Dealers may rely on (A) representations from investment advisers who are not affiliated with a Selected Dealer, and banks acting as trustees or fiduciaries, and (B) information it has obtained from a prospective investor, including such information as the investment objectives, other investments, financial situation and needs of the person or any other information known by the Dealer Manager (or Selected Dealer, as applicable), after due inquiry. Notwithstanding the foregoing, the Dealer Manager shall not, and each Selected Dealer shall agree not to, execute any transaction in the Company in a discretionary account without prior written approval of the transaction by the customer.


(f)	Selected Dealer Agreements. All engagements of the Selected Dealers will be evidenced by a Selected Dealer Agreement.


(g)	Electronic Delivery. If the Dealer Manager uses electronic delivery to distribute the Prospectus to any person, that it will comply with all applicable requirements of the Commission, the Blue Sky laws and/or FINRA and any other laws or regulations related to the electronic delivery of documents.

(h)

AML Compliance. The Dealer Manager represents to the Company that it has established and implemented an anti-money laundering compliance program (“AML Program”) in accordance with Section 352 of the USA PATRIOT Act of 2001 (the “PATRIOT Act”) and FINRA Rule 3310, that complies with applicable anti-money laundering laws and regulations, including, but not limited to, the customer identification program requirements of Section 326 of the PATRIOT Act, and the suspicious activity reporting requirements of Section 356 of the PATRIOT Act, and the laws, regulations and Executive Orders administered by the Office of Foreign Assets Control (“OFAC”) of the U.S. Department of Treasury (collectively, “AML/OFAC Laws”). The Dealer Manager hereby covenants to remain in compliance with the AML/OFAC Laws and shall, upon request by the Company, provide a certification to the Company that, as of the date of such certification, its AML Program is compliant with the AML/OFAC Laws.


(i)	Customer Information. The Dealer Manager will use its best efforts to provide the Company with any and all subscriber information that the Company requests in order for the Company to satisfy its obligations under the AML/OFAC Laws and comply with the requirements under Section 5(k) above.

(j)

Recordkeeping. The Dealer Manager will comply, and will require each Selected Dealer to comply, with the record keeping requirements of the Exchange Act, including, but not limited to, Rules 17a-3 and 17a-4 promulgated under the Exchange Act, and shall maintain, for at least six years or for a period of time not less than that required in order to comply with all applicable federal, state and other regulatory requirements, whichever is later, such records with respect to each investor who purchases Primary Shares, information used to determine that the investor meets the suitability standards imposed on the offer and sale of the Primary Shares, the amount of Primary Shares sold, and a representation of the investor that the investor is investing for the investor’s own account or, in lieu of such representation, information indicating that the investor for whose account the investment was made met the suitability standards.


(k)	Suspension or Termination of Offering. The Dealer Manager agrees, and will require that each of the Selected Dealers agree, to suspend or terminate the offering and sale of the Primary Shares upon request of the Company at any time and to resume the offering and sale of the Primary Shares upon subsequent request of the Company.


6.	Indemnification.

(a)

Indemnified Parties Defined. For the purposes of this Agreement, an “Indemnified Party” shall mean a person or entity entitled to indemnification under Section 7, as well as such person’s or entity’s officers, directors, employees, members, partners, affiliates, agents and representatives, and each person, if any, who controls such person or entity within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act.

(b)

Indemnification of the Dealer Manager and Selected Dealers. The Company will indemnify, defend and hold harmless the Dealer Manager and the Selected Dealers, and their respective Indemnified Parties, from and against any losses, claims, expenses (including reasonable legal and other expenses incurred in investigating and defending such claims or liabilities), damages or liabilities, joint or several, to which any such Selected Dealers or the Dealer Manager, or their respective Indemnified Parties, may become subject under the Securities Act, the Securities Act Rules and Regulations, the Exchange Act, the Exchange Act Rules and Regulations or otherwise, insofar as such losses, claims, expenses, damages or liabilities (or actions in respect thereof) arise out of or are based upon:


(i)	in whole or in part, any material inaccuracy in a representation or warranty contained herein by the Company, any material breach of a covenant contained herein by the Company, or any material failure by the Company to perform its obligations hereunder or to comply with state or federal securities laws applicable to the Offering;

(ii)

any untrue statement or alleged untrue statement of a material fact contained (A) in any Registration Statement or any post-effective amendment thereto or in the Prospectus or any amendment or supplement to the Prospectus, (B) in any Approved Sales Literature or (C) in any blue sky application or other document executed by the Company or on its behalf specifically for the purpose of qualifying any or all of the Shares for sale under the securities laws of any jurisdiction or based upon written information furnished by the Company under the securities laws thereof (any such application, document or information being hereinafter called a “Blue Sky Application”); or


(iii)	the omission or alleged omission to state a material fact required to be stated in the Registration Statement or any post-effective amendment thereof to make the statements

therein not misleading or the omission or alleged omission to state a material fact required to be stated in the Prospectus or any amendment or supplement to the prospectus to make the statements therein, in light of the circumstances under which they were made, not misleading.

The Company will reimburse each Selected Dealer or the Dealer Manager, and their respective Indemnified Parties, for any reasonable legal or other expenses incurred by such Selected Dealer or the Dealer Manager, and their respective Indemnified Parties, in connection with investigating or defending such loss, claim, expense, damage, liability or action; provided, however, that the Company will not be liable in any such case to the extent that any such loss, claim, expense, damage or liability arises out of, or is based upon an untrue statement or alleged untrue statement or omission or alleged omission made in reliance upon and in conformity with written information furnished to the Company by the Dealer Manager expressly for use in the Registration Statement or any post-effective amendment thereof or the Prospectus or any such amendment thereof or supplement thereto. This indemnity agreement will be in addition to any liability which the Company may otherwise have.

Notwithstanding the foregoing, as required by Section II.G. of the NASAA Guidelines, the indemnification and agreement to hold harmless provided in this Section 7(b) is further limited to the extent that no such indemnification by the Company of a Selected Dealer or the Dealer Manager, or their respective Indemnified Parties, shall be permitted under this Agreement for, or arising out of, an alleged violation of federal or state securities laws, unless one or more of the following conditions are met: (a) there has been a successful adjudication on the merits of each count involving alleged securities law violations as to the particular Indemnified Party; (b) such claims have been dismissed with prejudice on the merits by a court of competent jurisdiction as to the particular Indemnified Party; or (c) a court of competent jurisdiction approves a settlement of the claims against the particular Indemnified Party and finds that indemnification of the settlement and the related costs should be made, and the court considering the request for indemnification has been advised of the position of the Commission and of the published position of any state securities regulatory authority in which the securities were offered or sold as to indemnification for violations of securities laws.

(c)

Dealer Manager Indemnification of the Company. The Dealer Manager will indemnify, defend and hold harmless the Company and each of its Indemnified Parties and each person who has signed the Registration Statement, from and against any losses, claims, expenses (including the reasonable legal and other expenses incurred in investigating and defending any such claims or liabilities), damages or liabilities to which any of the aforesaid parties may become subject under the Securities Act, the Securities Act Rules and Regulations, the Exchange Act, the Exchange Act Rules and Regulations or otherwise, insofar as such losses, claims, expenses, damages (or actions in respect thereof) arise out of or are based upon:


(i)	in whole or in part, any material inaccuracy in a representation or warranty contained herein by the Dealer Manager or any material breach of a covenant contained herein by the Dealer Manager;


(ii)	any untrue statement or any alleged untrue statement of a material fact contained (A) in any Registration Statement or any post-effective amendment thereto or in the Prospectus or any amendment or supplement to the Prospectus, (B) in any Approved Sales Literature, or (C) any Blue Sky Application; or

(iii)

the omission or alleged omission to state a material fact required to be stated in the Registration Statement or any post-effective amendment thereof to make the statements therein not misleading, or the omission or alleged omission to state a material fact required to be stated in the Prospectus or any amendment or supplement to the Prospectus to make the statements therein, in light of the circumstances under which they were made, not misleading; provided, however, that in each case described in clauses (ii) and (iii) to the extent, but only to the extent, that such untrue statement or omission was made in reliance upon and in conformity with written information furnished to the Company by the Dealer Manager expressly for use in the Registration Statement or any such post-effective amendments thereof or the Prospectus or any such amendment thereof or supplement thereto;


(iv)	any use of sales literature, including “broker-dealer use only” materials, by the Dealer Manager that is not Approved Sales Literature; or

(v)

any untrue statement made by the Dealer Manager or omission by the Dealer Manager to state a fact necessary in order to make the statements made, in light of the circumstances under which they were made, not misleading in connection with the Offering provided, however, this clause (v) shall not apply to any statements or omissions made in conformity with the Registration Statement, the Prospectus, any Approved Sales Literature or any other materials or information furnished by or on behalf of the Company.

The Dealer Manager will reimburse the aforesaid parties for any reasonable legal or other expenses incurred in connection with investigation or defense of such loss, claim, expense, damage, liability or action. This indemnity agreement will be in addition to any liability which the Dealer Manager may otherwise have.

(d)

Selected Dealer Indemnification of the Company. By virtue of entering into the Selected Dealer Agreement, each Selected Dealer severally will agree to indemnify, defend and hold harmless the Company, the Dealer Manager, each of their respective Indemnified Parties, and each person who signs the Registration Statement, from and against any losses, claims, expenses, damages or liabilities to which the Company, the Dealer Manager, or any of their respective Indemnified Parties, or any person who signed the Registration Statement, may become subject, under the Securities Act or otherwise, as more fully described in the Selected Dealer Agreement.

(e)

Action Against Parties; Notification. Promptly after receipt by any Indemnified Party under this Section 7 of notice of the commencement of any action, such Indemnified Party will, if a claim in respect thereof is to be made against any indemnifying party under this Section 7, promptly notify the indemnifying party of the commencement thereof; provided, however, that the failure to give such notice shall not relieve the indemnifying party of its obligations hereunder except to the extent it shall have been actually prejudiced by such failure. In case any such action is brought against any Indemnified Party, and it notifies an indemnifying party of the commencement thereof, the indemnifying party will be entitled, to the extent it may wish, jointly with any other indemnifying party similarly notified, to participate in the defense thereof, with separate counsel.

Such participation shall not relieve such indemnifying party of the obligation to reimburse the Indemnified Party for reasonable legal and other expenses incurred by such Indemnified Party in defending itself, except for such expenses incurred after the indemnifying party has deposited

funds sufficient to effect the settlement, with prejudice, of, and unconditional release of all liabilities from, the claim in respect of which indemnity is sought. Any such indemnifying party shall not be liable to any such Indemnified Party on account of any settlement of any claim or action effected without the consent of such indemnifying party, such consent not to be unreasonably withheld or delayed.


(f)	Reimbursement of Fees and Expenses. An indemnifying party under Section 7 of this Agreement shall be obligated to reimburse an Indemnified Party for reasonable legal and other expenses as follows:

(i)

In the case of the Company indemnifying the Dealer Manager, the advancement of funds to the Dealer Manager for legal expenses and other costs incurred as a result of any legal action for which indemnification is being sought shall be permissible (in accordance with Section II.G. of the NASAA Guidelines) only if all of the following conditions are satisfied: (A) the legal action relates to acts or omissions with respect to the performance of duties or services on behalf of the Company; (B) the legal action is initiated by a third party who is not a shareholder of the Company or the legal action is initiated by a shareholder of the Company acting in his or her capacity as such and a court of competent jurisdiction specifically approves such advancement; and (C) the Dealer Manager undertakes to repay the advanced funds to the Company, together with the applicable legal rate of interest thereon, in cases in which the Dealer Manager is found not to be entitled to indemnification.

(ii)

In any case of indemnification other than that described in Section 7(f)(i) above, the indemnifying party shall pay all legal fees and expenses reasonably incurred by the Indemnified Party in the defense of such claims or actions; provided, however, that the indemnifying party shall not be obligated to pay legal expenses and fees to more than one law firm in connection with the defense of similar claims arising out of the same alleged acts or omissions giving rise to such claims notwithstanding that such actions or claims are alleged or brought by one or more parties against more than one Indemnified Party. If such claims or actions are alleged or brought against more than one Indemnified Party, then the indemnifying party shall only be obliged to reimburse the expenses and fees of the one law firm (in addition to local counsel) that has been participating by a majority of the indemnified parties against which such action is finally brought; and if a majority of such indemnified parties is unable to agree on which law firm for which expenses or fees will be reimbursable by the indemnifying party, then payment shall be made to the first law firm of record representing an Indemnified Party against the action or claim. Such law firm shall be paid only to the extent of services performed by such law firm and no reimbursement shall be payable to such law firm on account of legal services performed by another law firm.


7.	Contribution.

(a)

If Indemnification is Unavailable. If the indemnification provided for in Section 7 is for any reason unavailable to or insufficient to hold harmless an Indemnified Party in respect of any losses, liabilities, claims, damages or expenses referred to therein, then each indemnifying party shall contribute to the aggregate amount of such losses, liabilities, claims, damages and expenses incurred by such Indemnified Party, as incurred:


(iv)	in such proportion as is appropriate to reflect the relative benefits received by the Company, the Dealer Manager and the Selected Dealer, respectively, from the proceeds received in Primary Offering pursuant to this Agreement and the relevant Selected Dealer Agreement; or

(v)

if the allocation provided by clause (i) is not permitted by applicable law, in such proportion as is appropriate to reflect not only the relative benefits referred to in clause (i) above but also the relative fault of the Company, the Dealer Manager and the Selected Dealer, respectively, in connection with the statements or omissions which resulted in such losses, liabilities, claims, damages or expenses, as well as any other relevant equitable considerations.

(b)

Relative Benefits. The relative benefits received by the Company, the Dealer Manager and the Selected Dealer, respectively, in connection with the proceeds received in the Primary Offering pursuant to this Agreement and the relevant Selected Dealer Agreement shall be deemed to be in the same respective proportion as the total net proceeds from the Primary Offering pursuant to this Agreement and the relevant Selected Dealer Agreement (before deducting expenses), received by the Company, and the total selling commissions and dealer manager fees received by the Dealer Manager and the Selected Dealer, respectively, in each case as set forth on the cover of the Prospectus bear to the aggregate offering price of the Shares sold in the Primary Offering as set forth on such cover.

(c)

Relative Fault. The relative fault of the Company, the Dealer Manager and the Selected Dealer, respectively, shall be determined by reference to, among other things, whether any such untrue or alleged untrue statement of a material fact or omission or alleged omission to state a material fact related to information supplied by the Company, by the Dealer Manager or by the Selected Dealer, respectively, and the parties’ relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission.

(d)

Pro Rata is Unreasonable. The Company, the Dealer Manager and the Selected Dealer (by virtue of entering into the Selected Dealer Agreement) agree that it would not be just and equitable if contribution pursuant to this Section 8 were determined by pro rata allocation or by any other method of allocation which does not take account of the equitable contributions referred to above in this Section 8. The aggregate amount of losses, liabilities, claims, damages and expenses incurred by an Indemnified Party and referred to above in this Section 8 shall be deemed to include any legal or other expenses reasonably incurred by such Indemnified Party in investigating, preparing or defending against any litigation, or any investigation or proceeding by any governmental agency or body, commenced or threatened, or any claim whatsoever based upon any such untrue statement or omission or alleged omission.

(e)

Limits. Notwithstanding the provisions of this Section 8, the Dealer Manager and the Selected Dealer shall not be required to contribute any amount by which the total price at which the Shares sold in the Primary Offering to the public by them exceeds the amount of any damages which the Dealer Manager and the Selected Dealer have otherwise been required to pay by reason of any untrue or alleged untrue statement or omission or alleged omission.


(f)	Fraudulent Misrepresentation. No party guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any party who was not guilty of such fraudulent misrepresentation.

(g)

Benefits of Contribution. For the purposes of this Section 8, the Dealer Manager’s officers, directors, employees, members, partners, agents and representatives, and each person, if any, who controls the Dealer Manager within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act shall have the same rights to contribution of the Dealer Manager, and each officers, directors, employees, members, partners, agents and representatives of the Company, each officer of the Company who signed the Registration Statement and each person, if any, who controls the Company, within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act shall have the same rights to contribution of the Company. The Selected Dealers’ respective obligations to contribute pursuant to this Section 8 are several in proportion to the number of Shares sold by each Selected Dealer in the Primary Offering and not joint.


8.	Termination of this Agreement.

(a)

Term; Expiration. This Agreement shall become effective on the initial Effective Date and the obligations of the parties hereunder shall not commence until the initial Effective Date. This Agreement may be terminated by either party upon 60 calendar days’ written notice to the other party. This Agreement shall automatically expire on the termination date of the Offering as described in the Prospectus.


(b)	Delivery of Records Upon Expiration or Early Termination. Upon the expiration or early termination of this Agreement for any reason, the Dealer Manager shall:


(iv)	promptly forward any and all funds, if any, in its possession which were received from investors for the sale of Shares for deposit;


(v)	to the extent not previously provided to the Company a list of all investors who have subscribed for or purchased shares and all broker-dealers with whom the Dealer Manager has entered into a Selected Dealer Agreement;


(vi)	notify Selected Dealers of such termination; and


(vii)	promptly deliver to the Company copies of any sales literature designed for use specifically for the Offering that it is then in the process of preparing. Upon expiration or earlier termination of this Agreement, the Company shall pay to the Dealer Manager all compensation to which the Dealer Manager is or becomes entitled under Section 3(d) at such time as such compensation becomes payable.


9.	Miscellaneous

(a)

Survival. The following provisions of the Agreement shall survive the expiration or earlier termination of this Agreement: Section 3(d) (Dealer-Manager Compensation); Section 3(e) (Reasonable Bona Fide Due Diligence Expenses); Section 5(l) (Dealer-Manager’s Review of Proposed Amendments and Supplements); Section 6(i) (AML Compliance); Section 7 (Indemnification); Section 8 (Contribution); Section 9 (Termination of This Agreement) and this Section 10 (Miscellaneous). Notwithstanding anything else that may be to the contrary herein, the expiration or earlier termination of this Agreement shall not relieve a party for liability for any breach occurring prior to such expiration or earlier termination. In no event shall the Dealer Manager be entitled to payment of any compensation in connection with the Offering that is not completed according to this Agreement; provided, however, that the reimbursement of out-of-pocket accountable expenses actually incurred by the Dealer Manager or person associated with

the Dealer Manager shall not be presumed to be unfair or unreasonable and shall be payable under normal circumstances.

(b)

Notices. All notices or other communications required or permitted hereunder, except as herein otherwise specifically provided, shall be in writing and shall be deemed given or delivered: (i) when delivered personally or by commercial messenger; (ii) one business day following deposit with a recognized overnight courier service, provided such deposit occurs prior to the deadline imposed by such service for overnight delivery; (iii) when transmitted, if sent by facsimile copy, provided confirmation of receipt is received by sender and such notice is sent by an additional method provided hereunder; in each case above provided such communication is addressed to the intended recipient thereof as set forth below:

If to the Company:

Carey Watermark Investors 2 Incorporated

50 Rockefeller Plaza

New York, New York 10020

Facsimile No.: (212) 492-8922

Attention: Mr. Thomas Zacharias

with a copy to:

Clifford Chance US LLP

31 West 52nd Street

New York, New York 10019

Facsimile No.: (212) 878-8375

Attention: Kathleen L. Werner, Esq.

If to the Dealer Manager:

Carey Financial, LLC

50 Rockefeller Plaza

New York, New York 10020

Facsimile No.: (212) 492-8922

Attention: Mr. C. Jay Steigerwald III

with a copy to:

Kunzman & Bollinger, Inc.

5100 N. Brookline Avenue, Suite 600

Oklahoma City, Oklahoma 73112

Facsimile No: (405) 942-3501

Attention: Wallace W. Kunzman, Jr.

Any party may change its address specified above by giving each party notice of such change in accordance with this Section 10(b).


(c)	Successors and Assigns. No party shall assign (voluntarily, by operation of law or otherwise) this Agreement or any right, interest or benefit under this Agreement without the prior written consent

of each other party. Subject to the foregoing, this Agreement shall be fully binding upon, inure to the benefit of, and be enforceable by, the parties hereto and their respective successors and assigns.


(d)	Invalid Provision. The invalidity or unenforceability of any provision of this Agreement shall not affect the other provisions hereof, and this Agreement shall be construed in all respects as if such invalid or unenforceable provision were omitted.


(e)	Applicable Law. This Agreement and any disputes relative to the interpretation or enforcement hereto shall be governed by and construed under the internal laws, as opposed to the conflicts of laws provisions, of the State of New York.

(f)

Waiver. EACH OF THE PARTIES HERETO WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, SUIT, PROCEEDING OR COUNTERCLAIM (WHETHER BASED UPON CONTRACT, TORT OR OTHERWISE) RELATED TO OR ARISING OUT OF THIS AGREEMENT. The parties hereto each hereby irrevocably submits to the exclusive jurisdiction of the courts of the State of New York and the Federal courts of the United States of America located in the Borough of Manhattan, New York City, in respect of the interpretation and enforcement of the terms of this Agreement, and in respect of the transactions contemplated hereby, and each hereby waives, and agrees not to assert, as a defense in any action, suit or proceeding for the interpretation or enforcement hereof, that it is not subject thereto or that such action, suit or proceeding may not be brought or is not maintainable in said courts or that the venue thereof may not be appropriate or that this Agreement may not be enforced in or by such courts, and the parties hereto each hereby irrevocably agrees that all claims with respect to such action or proceeding shall be heard and determined in such a New York State or Federal court.

(g)

Attorneys’ Fees. If a dispute arises concerning the performance, meaning or interpretation of any provision of this Agreement or any document executed in connection with this Agreement, then the prevailing party in such dispute shall be awarded any and all costs and expenses incurred by the prevailing party in enforcing, defending or establishing its rights hereunder or thereunder, including, without limitation, court costs and attorneys and expert witness fees. In addition to the foregoing award of costs and fees, the prevailing also shall be entitled to recover its attorneys’ fees incurred in any post-judgment proceedings to collect or enforce any judgment.

(h)

No Partnership. Nothing in this Agreement shall be construed or interpreted to constitute the Dealer Manager or the Selected Dealer as being in association with or in partnership with the Company or one another, and instead, this Agreement only shall constitute the Selected Dealer as a broker authorized by the Company to sell and to manage the sale by others of the Shares according to the terms set forth in the Registration Statement, the Prospectus or this Agreement. Nothing herein contained shall render the Dealer Manager or the Company liable for the obligations of any of the Selected Dealers or one another.

(i)

Third Party Beneficiaries. Except for the persons and entities referred to in Section 7 (Indemnification) and Section 8 (Contribution), there shall be no third party beneficiaries of this Agreement, and no provision of this Agreement is intended to be for the benefit of any person or entity not a party to this Agreement, and no third party shall be deemed to be a beneficiary of any provision of this Agreement. Except for the persons and entities referred to in Section 7 and Section 8, no third party shall by virtue of any provision of this Agreement have a right of action or an enforceable remedy against any party to this Agreement. Each of the persons and entities referred to in Section 7 and Section 8 shall be a third party beneficiary of this Agreement.

(j)

Entire Agreement. This Agreement contains the entire agreement and understanding among the parties hereto with respect to the subject matter hereof, and supersedes all prior and contemporaneous agreements, understandings, inducements and conditions, express or implied, oral or written, of any nature whatsoever with respect to the subject matter hereof. The express terms hereof control and supersede any course of performance and/or usage of the trade inconsistent with any of the terms hereof. This Agreement may not be modified or amended other than by an agreement in writing.

(k)

Nonwaiver. The failure of any party to insist upon or enforce strict performance by any other party of any provision of this Agreement or to exercise any right under this Agreement shall not be construed as a waiver or relinquishment to any extent of such party’s right to assert or rely upon any such provision or right in that or any other instance; rather, such provision or right shall be and remain in full force and effect.

(l)

Access to Information. The Company may authorize the Company’s transfer agent to provide information to the Dealer Manager and each Selected Dealer regarding recordholder information about the clients of such Selected Dealer who have invested with the Company on an on-going basis for so long as such Selected Dealer has a relationship with such clients. The Dealer Manager shall require in the Selected Dealer Agreement that Selected Dealers not disclose any password for a restricted website or portion of website provided to such Selected Dealer in connection with the Offering and not disclose to any person, other than an officer, director, employee or agent of such Selected Dealers, any material downloaded from such a restricted website or portion of a restricted website.


(m)	Counterparts. This Agreement may be executed (including by facsimile transmission) with counterpart signature pages or in counterpart copies, each of which shall be deemed an original but all of which together shall constitute one and the same instrument comprising this Agreement.


(n)	Absence of Fiduciary Relationships. The parties acknowledge and agree that:


(i)	the Dealer Manager’s responsibility to the Company is solely contractual in nature; and


(ii)	the Dealer Manager does not owe the Company, any of its affiliates or any other person or entity any fiduciary (or other similar) duty as a result of this Agreement or any of the transactions contemplated hereby.

If the foregoing is in accordance with your understanding of our agreement, kindly sign and return it to us, whereupon this instrument will become a binding agreement between you and the Company in accordance with its terms.

[Signatures on following page]

IN WITNESS WHEREOF, the parties hereto have each duly executed this Dealer Manager Agreement as of the day and year set forth above.

THE COMPANY:

CAREY WATERMARK INVESTORS 2 INCORPORATED

By: /s/ Thomas E. Zacharias

Name: Mr. Thomas E. Zacharias

Title: Chief Operating Officer

Accepted as of the date first above written:

THE DEALER MANAGER:

CAREY FINANCIAL, LLC

By: /s/ Jay Steigerwald III

Name: Mr. C. Jay Steigerwald III

Title: Co-President

[Signature Page to Dealer Manager Agreement]

EXHIBIT A

SELECTED DEALER AGREEMENT

EXHIBIT 10.5

ESCROW AGREEMENT

THIS ESCROW AGREEMENT (this “ Agreement ”) made and entered into as of this 19 ^th day of February , 2015 by and among Carey Financial, LLC, a Delaware limited liability company (the “ Dealer Manager ”), Carey Watermark Investors 2 Incorporated, a Maryland corporation (the “ Company ”), and UMB Bank, N.A., as escrow agent, a national banking association organized and existing under the laws of the United States of America (the “ Escrow Agent ”).

RECITALS

WHEREAS , the Company proposes to offer and sell up to $1.4 billion of its shares of common stock (the “ Shares ”) on a best efforts basis (excluding the shares of its common stock to be offered and sold pursuant to the Company’s distribution reinvestment and stock purchase plan), at an initial purchase price of $10.00 per Class A Share (the “ Offering ”) to investors pursuant to the Company’s Registration Statement on Form S-11 (File No. 333-196681), as amended or supplemented from time to time (the “ Offering Document ”).

WHEREAS , the Dealer Manager has been engaged by the Company to offer and sell the Shares on a best efforts basis through a network of participating broker-dealers (the “ Dealers ”).

WHEREAS , the Company has agreed that the subscription price paid by subscribers for shares will be refunded promptly to such subscribers if at least $2.0 million (the “ Minimum Offering ”) has not been raised within six months from the date the Offering Document is first declared effective by the Securities and Exchange Commission (the " SEC "), or if the Company elects to extend the date to a period no longer than one year from the date the Offering Document is first declared effective by the SEC (the “ Closing Date ”).

WHEREAS , the Dealer Manager and the Company desire to establish an escrow account (the “ Escrow Account ”), as further described herein in which funds received from subscribers will, except as otherwise specified herein, be deposited into an interest-bearing account entitled “Carey Watermark Investors 2 Incorporated” and the Company desires that UMB Bank, N.A. act as escrow agent to the Escrow Account and Escrow Agent is willing to act in such capacity.

WHEREAS, deposits received from residents of the State of Pennsylvania (the “ Pennsylvania Subscribers ”) will remain in the Escrow Account until the conditions of Section 3 has been met.

WHEREAS, deposits received from residents of the State of Washington (the “ Washington Subscribers ”) will remain in the Escrow Account until the conditions of Section 4 has been met.



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WHEREAS , the Escrow Agent has engaged DST Systems, Inc. (the “ Transfer Agent ”) to receive, examine for “good order” and facilitate subscriptions into the Escrow Account as further described herein and to act as record keeper, maintaining on behalf of the Escrow Agent the ownership records for the Escrow Account. In so acting the Transfer Agent shall act solely in the capacity of agent for the Escrow Agent and not in any capacity on behalf of the Company or the Dealer Manager, nor shall they have any interest other than that provided in this Agreement in assets in Transfer Agent’s possession as the agent of the Escrow Agent.

WHEREAS , in order to subscribe for Shares during the Escrow Period (as defined below), a subscriber must deliver an executed order form, a form of which is included as Annex B to the Offering Document (the "Subscription Agreement") with the full amount of its subscription: (i) by check made payable to the order of UMB Bank, N.A., as Escrow Agent for Carey Watermark Investors 2 Incorporated, in U.S. dollars or (ii) by wire transfer of immediately available funds or Automated Clearing House (ACH) in U.S. dollars .

AGREEMENT

NOW, THEREFORE, the Dealer Manager, the Company and Escrow Agent agree to the terms of this Agreement as follows:

1. Establishment of Escrow Account; Escrow Period . On or prior to the commencement of the offering of Shares pursuant to the Offering Document, the Company shall establish the Escrow Account with the Escrow Agent, which shall be entitled “UMB Bank, N.A., as Escrow Agent for Carey Watermark Investors 2 Incorporated.” This Agreement shall be effective on the date on which the Offering Document becomes effective. Except as otherwise set forth herein for the Pennsylvania Subscribers and Washington Subscribers, the escrow period shall commence upon the effectiveness of this Agreement and shall continue until the earlier of (i) the date upon which the Escrow Agent receives confirmation from the Company and the Dealer Manager that the Company has raised the Minimum Offering, (ii) the Closing Date, or (iii) the termination of the Offering by the Company prior to the receipt of the Minimum Offering (the “ Escrow Period ”).

2. Operation of the Escrow .

(a) Deposits in the Escrow Account . During the Escrow Period, persons subscribing to purchase Shares will be instructed by the Company, the Dealer Manager and the Dealers to make checks for subscriptions payable to the order of “UMB Bank, N.A., as Escrow Agent for Carey Watermark Investors 2 Incorporated”. When a Dealer’s internal supervisory procedures are conducted at the site at which the Subscription Agreement and check were initially received by a Dealer from the subscriber, the Dealer shall transmit the Subscription Agreement and check to the Escrow Agent by the end of the next business day following receipt of the check and Subscription Agreement. When, pursuant to the Dealer’s internal supervisory procedures, the Dealer’s final internal supervisory procedures are conducted at a different location (the “Final Review Office”), the Dealer shall transmit the check and Subscription Agreement to the Final Review Office by the end of the next business day following the Dealer’s receipt of the Subscription Agreement and check. The Final Review Office will, by the end of the next business day following its receipt of the Subscription



	2	``

Agreement and check, forward both the Subscription Agreement and check to the Escrow Agent. If any Subscription Agreement solicited by the Dealer is rejected by the Dealer Manager or the Company, then the Subscription Agreement and check will be returned to the rejected subscriber within 10 business days from the date of rejection. The Escrow Agent shall have no liability or responsibility regarding a Dealer’s internal supervisory procedures. Completed subscription agreements and checks in payment for the purchase price shall be remitted to the P.O. Box designated for the receipt of such agreements and funds, and wires, or Automated Clearing House (ACH) payments shall be transmitted directly to the Escrow Account. The Escrow Agent shall cause the Transfer Agent to promptly deliver all monies received in good order from subscribers (or from the Dealer Manager or Dealers transmitting moneys and subscriptions from subscribers) for the payment of Shares to the Escrow Agent for deposit in the Escrow Account. Deposits shall be held in the Escrow Account until such funds are disbursed in accordance with this Agreement. Prior to disbursement of the funds deposited in the Escrow Account (the " Escrowed Funds "), such funds shall not be subject to claims by creditors of the Company or any of its affiliates. If any of the instruments of payment are returned to the Escrow Agent for nonpayment prior to receipt of the Break Escrow Affidavit (as described below), the Escrow Agent shall promptly notify the Transfer Agent and the Company in writing via mail, email or facsimile of such nonpayment, and the Escrow Agent is authorized to debit the Escrow Account in the amount of such returned payment and the Escrow Agent shall cause the Transfer Agent to delete the appropriate account from the records maintained by the Transfer Agent. The Escrow Agent shall cause the Transfer Agent to maintain a written account of each sale, which account shall set forth, among other things, the following information: (i) the subscriber’s name and address, (ii) the subscriber’s social security number, (iii) the number of Shares purchased by such subscriber, and (iv) the amount paid by such subscriber for such Shares. During the Escrow Period neither the Company nor the Dealer Manager will be entitled to any principal funds received into the Escrow Account.

(b) Distribution of the Funds in the Escrow Account to Subscribers other than Pennsylvania Subscribers and Washington Subscribers . If at any time on or prior to the Closing Date, the Minimum Offering has been raised, then upon the happening of such event, the funds in the Escrow Account shall remain in the Escrow Account until the Escrow Agent receives written direction provided by the Company and the Dealer Manager instructing the Escrow Agent to deliver such funds as the Company shall direct (other than any funds received from Pennsylvania Subscribers and Washington Subscribers which cannot be released until the conditions of Sections 3 and 4, respectively, have been met) (“ Initial Closing ”). An affidavit or certification from an officer of the Company and an officer of the Dealer Manager to the Escrow Agent and Transfer Agent stating that at least the Minimum Offering has been timely raised, shall constitute sufficient evidence for the purpose of this Agreement that such event has occurred (the “ Break Escrow Affidavit ”). The Affidavit shall indicate (i) the date on which the Minimum Offering was raised and (ii) the actual total number of Shares sold as of such date. Thereafter, the Escrow Agent shall release funds and any interest or other income earned, based on the conditions of Section 5, thereon from the Escrow Account as directed by the Company pursuant to written instruction that the



	3	``

Company shall provide to the Escrow Agent from time to time. Accrued and unpaid interest on such Escrowed Funds shall be paid pursuant to Section 5 below.

(c) If the Escrow Agent has not received a Break Escrow Affidavit on or prior to the Closing Date, the Escrow Agent shall cause the Transfer Agent to promptly provide the Escrow Agent with the information needed to return the funds in the Escrow Account, together with any remaining interest thereon, to each respective subscriber, and the Escrow Agent shall promptly create and dispatch checks and wires drawn on the Escrow Account to return the full amount of the funds deposited in the Escrow Account, together with their pro rata share of any remaining interest thereon, to the respective subscribers, and the Escrow Agent shall notify the Company and the Dealer Manager of its distribution of the funds. For the purposes of this Agreement “remaining interest” shall mean any interest that remains in the Escrow Account after deducting the full amount of the escrow fees and expenses which have been or are due under this Agreement or have been paid hereunder. Any amounts previously paid hereunder will be reimbursed by the Escrow Agent to such party after applying the interest to any escrow fees and expenses that are or will be due under this Agreement as of the Closing Date. The subscription payments returned to each subscriber shall be free and clear of any and all claims of the Company or any of its creditors.

(d) After the Initial Closing, upon receipt by the Escrow Agent of instructions signed by the Dealer Manager and the Company, the Escrow Agent shall release to the Company the Escrowed Funds (other than any funds received from Pennsylvania Subscribers and Washington Subscribers which cannot be released until the conditions of Sections 3 and 4, respectively, have been met) in accordance with such instructions. The Company shall give the Escrow Agent one business day oral notification of the contents of such instructions. Accrued and unpaid interest on such Escrowed Funds shall be paid pursuant to Section 5 below.

3. Distribution of the Funds from Pennsylvania Subscribers .

(a) Notwithstanding anything to the contrary herein, disbursements of funds contributed by Pennsylvania Subscribers may only be distributed in compliance with the provisions of this Section 3. Irrespective of any disbursement of funds from the Escrow Account pursuant to Section 2 hereof, the Escrow Agent will continue to place deposits from the Pennsylvania Subscribers into the Escrow Account, until such time as the Company notifies the Escrow Agent in writing that total subscriptions (including amounts previously disbursed as directed by the Company and the amounts then held in the Escrow Account) equal or exceed $70,000,000, whereupon the Escrow Agent shall disburse to the Company, at the Company’s request, any funds from the Pennsylvania Subscribers received by the Escrow Agent for accepted subscriptions, but not those funds of a subscriber whose subscription has been rejected or rescinded of which the Escrow Agent has been notified by the Company, or otherwise in accordance with the Company’s written request.

(b) If the Company has not received total subscriptions of at least $70,000,000 within 120 days of the date the Company first receives a subscription from a Pennsylvania Subscriber (the “Initial Escrow Period”), the Company shall notify each Pennsylvania Subscriber of the right of Pennsylvania Subscribers to have their investment returned to them. If, pursuant to such notice, a Pennsylvania Subscriber requests the return of his or her subscription funds within ten (10) days after receipt of the notification (the “Request Period”), the Escrow



	4	``

Agent shall promptly refund, including the prorata share of any interest earned thereon, directly to each Pennsylvania Subscriber the funds deposited in the Escrow Account on behalf of the Pennsylvania Subscriber.

(c) The funds of Pennsylvania Subscribers who do not request the return of their funds within the Request Period shall remain in the Escrow Account for successive 120-day escrow periods (each a “Successive Escrow Period”), each commencing automatically upon the termination of the prior Successive Escrow Period, and the Company and Escrow Agent shall follow the notification and payment procedure set forth in Section 3(b) above with respect to the Initial Escrow Period for each Successive Escrow Period, provided that any refunds made to a Pennsylvania Subscriber after a Successive Escrow Period shall include a pro rata share of any interest earned thereon after the Initial Escrow Period, until the occurrence of the earliest of (i) the termination of the Offering, (ii) the receipt and acceptance by the Company of total subscriptions that equal or exceed $70,000,000 and the disbursement of the Escrow Account on the terms specified in this Section 3, or (iii) all funds held in the Escrow Account that were contributed by Pennsylvania Subscribers having been returned to the Pennsylvania Subscribers in accordance with the provisions hereof.

If, upon termination of the Offering, the Company has not received and accepted total subscriptions that equal or exceed $70,000,000, all funds in the Escrow Account that were contributed by Pennsylvania Subscribers will be promptly returned in full to such Pennsylvania Subscribers, together with their pro rata share of any interest earned thereon pursuant to instructions made by the Company, upon which the Escrow Agent may conclusively rely.

4. Distribution of the Funds from Washington Subscribers .

(a) Notwithstanding anything to the contrary herein, disbursements of funds contributed by Washington Subscribers may only be distributed in compliance with the provisions of this Section 4. Irrespective of any disbursement of funds from the Escrow Account pursuant to Section 2 hereof, the Escrow Agent will continue to place deposits from the Washington Subscribers into the Escrow Account, until such time as the Company notifies the Escrow Agent in writing that total subscriptions (including amounts previously disbursed as directed by the Company and the amounts then held in the Escrow Account) equal or exceed $10,000,000, whereupon the Escrow Agent shall disburse to the Company, at the Company’s request, any funds from the Washington Subscribers received by the Escrow Agent for accepted subscriptions, but not those funds of a subscriber whose subscription has been rejected or rescinded of which the Escrow Agent has been notified by the Company, or otherwise in accordance with the Company’s written request.

If, upon termination of the Offering, the Company has not received and accepted total subscriptions that equal or exceed $10,000,000, all funds in the Escrow Account that were contributed by Washington Subscribers will be promptly returned in full to such Washington Subscribers, together with their pro rata share of any interest earned thereon pursuant to instructions made by the Company, upon which the Escrow Agent may conclusively rely.



	5	``

5. Distribution of Escrow Interest . As soon as practical but no more than 45 days after the release of the funds to the Company pursuant to the conditions in Sections 2, 3 and 4, the Escrow Agent shall calculate and distribute to each subscriber whose subscription funds were held in the Escrow Account for at least 20 days its prorata share of interest based on the length of time its subscription funds have been held in the Escrow Account. Escrow interest earned, but not payable to subscribers pursuant to this Section, shall be paid to the Company, as instructed by the Company in writing.

6. Funds in the Escrow Account . Upon receipt of funds from subscribers, the Escrow Agent shall hold such funds in escrow pursuant to the terms of this Agreement. All such funds held in the Escrow Account shall be invested in UMB Money Market Special, a UMB interest-bearing account unless otherwise determined by the Company. During the Escrow Period, subscriber funds shall not be invested in anything other than short term investments in compliance with Rule 15c2-4 of the Securities Exchange Act of 1934, as amended. The following are not permissible investments: money market mutual funds, corporate debt or securities, repurchase agreements, banker’s acceptance, commercial paper, and municipal securities.

The Escrow Agent shall be entitled to sell or redeem any such investment as necessary to make any distributions required under this Agreement and shall not be liable or responsible for any loss resulting from any such sale or redemption.

Income, if any, resulting from the investment of the funds in the Escrow Account shall be distributed according to this Agreement.

The Escrow Agent shall provide to the Company monthly statements (or more frequently as reasonably requested by the Company) on the account balance in the Escrow Account and the activity in such accounts since the last report.

7. Tax Reporting . The Escrow Agent shall provide, in a timely manner, subscribers with applicable Form 1099 for amounts paid pursuant to Section 5 above.

8. Duties of the Escrow Agent . The Escrow Agent shall have no duties or responsibilities other than those expressly set forth in this Agreement, and no implied duties or obligations shall be read into this Agreement against the Escrow Agent. The Escrow Agent is not a party to, or bound by, any other agreement among the other parties hereto with respect to the subject matter hereof, and the Escrow Agent’s duties shall be determined solely by reference to this Agreement. The Escrow Agent shall have no duty to enforce any obligation of any person, other than as provided herein. The Escrow Agent shall be under no liability to anyone by reason of any failure on the part of any party hereto or any maker, endorser or other signatory of any document or any other person to perform such person’s obligations under any such document.

9. Liability of the Escrow Agent; Indemnification . The Escrow Agent acts hereunder as a depository only. The Escrow Agent is not responsible or liable in any manner for the sufficiency, correctness, genuineness or validity of this Agreement or with respect to the form of execution of the same. The Escrow Agent shall not be liable for any action taken or omitted by it, or any action suffered by it to be taken or omitted, in good faith, and in the exercise of its own best judgment, and may rely conclusively and shall be protected in acting upon any order, notice,



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demand, certificate, opinion or advice of counsel (including counsel chosen by the Escrow Agent), statement, instrument, report or other paper or document (not only as to its due execution and the validity and effectiveness of its provisions, but also as to the truth and acceptability of any information therein contained) which is believed by the Escrow Agent to be genuine and to be signed or presented by the proper person(s). The Escrow Agent shall not be held liable for any error in judgment made in good faith by an officer or employee of either unless it shall be proved that the Escrow Agent was grossly negligent or reckless in ascertaining the pertinent facts or acted intentionally in bad faith. The Escrow Agent shall not be bound by any notice of demand, or any waiver, modification, termination or rescission of this Agreement or any of the terms hereof, unless evidenced by a writing delivered to the Escrow Agent signed by the proper party or parties and, if the duties or rights of the Escrow Agent are affected, unless it shall give its prior written consent thereto.

The Escrow Agent may consult legal counsel and shall exercise reasonable care in the selection of such counsel, in the event of any dispute or question as to the construction of any provisions hereof or its duties hereunder, and it shall incur no liability and shall be fully protected in acting in accordance with the reasonable opinion or instructions of such counsel.

The Escrow Agent shall not be responsible, may conclusively rely upon and shall be protected, indemnified and held harmless by the Company, for the sufficiency or accuracy of the form of, or the execution, validity, value or genuineness of any document or property received, held or delivered by it hereunder, or of the signature or endorsement thereon, or for any description therein; nor shall the Escrow Agent be responsible or liable in any respect on account of the identity, authority or rights of the persons executing or delivering or purporting to execute or deliver any document, property or this Agreement.

In the event that either the Escrow Agent or the Transfer Agent shall become involved in any arbitration or litigation relating to the funds in the Escrow Account, each is authorized to comply with any decision reached through such arbitration or litigation.

The Company hereby agrees to indemnify the Escrow Agent for, and to hold it harmless against, any loss, liability or expense incurred in connection herewith without gross negligence, recklessness or willful misconduct on the part of the Escrow Agent, including without limitation legal or other fees arising out of or in connection with its entering into this Agreement and carrying out its duties hereunder, including without limitation the costs and expenses of defending itself against any claim of liability in the premises or any action for interpleader. The Escrow Agent shall not be under any obligation to institute or defend any action, suit, or legal proceeding in connection herewith, unless first indemnified and held harmless to its satisfaction in accordance with the foregoing, except that the Escrow Agent shall not be indemnified against any loss, liability or expense arising out of its own gross negligence, recklessness or willful misconduct. Such indemnity shall survive the termination or discharge of this Agreement or resignation of the Escrow Agent.

10. The Escrow Agent’s Fee . Escrow Agent shall be entitled to fees and expenses for its regular services as Escrow Agent as set forth in Exhibit A . Additionally, Escrow Agent is entitled to reasonable fees for extraordinary services and reimbursement of any reasonable out of pocket and extraordinary costs and expenses related to its obligations as Escrow Agent under this



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Agreement, including, but not limited to, reasonable attorneys’ fees. All of the Escrow Agent’s compensation, costs and expenses shall be paid by the Company.

11. Security Interests . No party to this Agreement shall grant a security interest in any monies or other property deposited with the Escrow Agent under this Agreement, or otherwise create a lien, encumbrance or other claim against such monies or borrow against the same.

12. Dispute . In the event of any disagreement between the undersigned or the person or persons named in the instructions contained in this Agreement, or any other person, resulting in adverse claims and demands being made in connection with or for any papers, money or property involved herein, or affected hereby, the Escrow Agent shall be entitled to refuse to comply with any demand or claim, as long as such disagreement shall continue, and in so refusing to make any delivery or other disposition of any money, papers or property involved or affected hereby, the Escrow Agent shall not be or become liable to the undersigned or to any person named in such instructions for its refusal to comply with such conflicting or adverse demands, and the Escrow Agent shall be entitled to refuse and refrain to act until: (a) The rights of the adverse claimants shall have been fully and finally adjudicated in a Court assuming and having jurisdiction of the parties and money, papers and property involved herein or affected hereby, or (b) All differences shall have been adjusted by agreement and the Escrow Agent shall have been notified thereof in writing, signed by all the interested parties.

13. Resignation of Escrow Agent. Escrow Agent may resign or be removed, at any time, for any reason, by written notice of its resignation or removal to the proper parties at their respective addresses as set forth herein, at least 60 days before the date specified for such resignation or removal to take effect; upon the effective date of such resignation or removal:

(a) All cash and other payments and all other property then held by the Escrow Agent hereunder shall be delivered by it to such successor escrow agent as may be designated in writing by the Company, whereupon the Escrow Agent’s obligations hereunder shall cease and terminate.

(b) If no such successor escrow agent has been designated by such date, all obligations of the Escrow Agent hereunder shall, nevertheless, cease and terminate, and the Escrow Agent’s sole responsibility thereafter shall be to keep all property then held by it and to deliver the same to a person designated in writing by the Company or in accordance with the directions of a final order or judgment of a court of competent jurisdiction.

(c) Further, if no such successor escrow agent has been designated by such date, the Escrow Agent may petition any court of competent jurisdiction for the appointment of a successor agent; further the Escrow Agent may pay to any such court all monies and property deposited with Escrow Agent under this Agreement.

14. Notices . All notices, demands and requests required or permitted to be given under the provisions hereof must be in writing and shall be deemed to have been sufficiently given, upon receipt, if (i) personally delivered, (ii) sent by telecopy and confirmed by phone or (iii) mailed by registered or certified mail, with return receipt requested, or by overnight courier with signature required, delivered to the addresses set forth below, or to such other address as a party shall have designated by notice in writing to the other parties in the manner provided by this paragraph:



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(1) If to Company:		Carey Watermark Investors 2 Incorporated
		Attn: Rebecca Reaves
		50 Rockefeller Plaza
		New York, New York 10020 Telephone: (212) 492-8983 Facsimile: (212) 492-8922

(2) If to the Escrow Agent:		UMB Bank, N.A.
		1010 Grand Blvd., 4th Floor
		Mail Stop: 1020409
		Kansas City, Missouri 64106
		Attention: Lara Stevens, Corporate Trust & Escrow Services
		Telephone: (816) 860-3017
		Facsimile: (816) 860-3029

(3) If to Dealer Manager:		Carey Financial, LLC 50 Rockefeller Plaza New York, NY 10020
		Attn: Mark Goldberg Telephone (212) 492-1143 Facsimile: (2120 492-8922

15. Governing Law . This Agreement shall be construed and enforced in accordance with the laws of the State of New York without regard to the principles of conflicts of law.

16. Binding Effect; Benefit . This Agreement shall be binding upon and inure to the benefit of the permitted successors and assigns of the parties hereto.

17. Modification . This Agreement may be amended, modified or terminated at any time by a writing executed by the Dealer Manager, the Company and the Escrow Agent.

18. Assignability . This Agreement shall not be assigned by the Escrow Agent without the Company’s prior written consent.

19. Counterparts . This Agreement may be executed in one or more counterparts, each of which will be deemed an original, but all of which together will constitute one and the same instrument. Copies, telecopies, facsimiles, electronic files and other reproductions of original executed documents shall be deemed to be authentic and valid counterparts of such original documents for all purposes, including the filing of any claim, action or suit in the appropriate court of law.

20. Headings . The section headings contained in this Agreement are inserted for convenience only, and shall not affect in any way, the meaning or interpretation of this Agreement.



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21. Severability . This Agreement constitutes the entire agreement among the parties and supersedes all prior and contemporaneous agreements and undertakings of the parties in connection herewith. No failure or delay of the Escrow Agent in exercising any right, power or remedy may be, or may be deemed to be, a waiver thereof; nor may any single or partial exercise of any right, power or remedy preclude any other or further exercise of any right, power or remedy. In the event that any one or more of the provisions contained in this Agreement, shall, for any reason, be held to be invalid, illegal or unenforceable in any respect, then to the maximum extent permitted by law, such invalidity, illegality or unenforceability shall not affect any other provision of this Agreement.

22. Earnings Allocation; Tax Matters; Patriot Act Compliance; OFAC Search Duties . The Company or its agent shall be responsible for all tax reporting under this Agreement. The Company shall provide to Escrow Agent upon the execution of this Agreement any documentation requested and any information reasonably requested by the Escrow Agent to comply with the USA Patriot Act of 2001, as amended from time to time. The Escrow Agent, or its agent, shall complete an Office of Foreign Asset Control (" OFAC ") search, in compliance with its policy and procedures, of each subscription check and shall inform the Company if a subscription check fails the OFAC search. The Dealer Manager shall provide a copy of each subscription check in order that the Escrow Agent, or its agent, may perform such OFAC search.

23. Miscellaneous . This Agreement shall not be construed against the party preparing it, and shall be construed without regard to the identity of the person who drafted it or the party who caused it to be drafted and shall be construed as if all parties had jointly prepared this Agreement and it shall be deemed their joint work product, and each and every provision of this Agreement shall be construed as though all of the parties hereto participated equally in the drafting hereof; and any uncertainty or ambiguity shall not be interpreted against any one party. As a result of the foregoing, any rule of construction that a document is to be construed against the drafting party shall not be applicable.

24. Termination of the Escrow Agreement . This Agreement, except for Sections 9 and 12 hereof, which shall continue in effect, shall terminate upon written notice from the Company to the Escrow Agent. Unless otherwise provided, final termination of this Agreement shall occur on the date that all funds held in the Escrow Account are distributed either (a) to the Company or to subscribers and the Company has informed the Escrow Agent in writing to close the Escrow Account or (b) to a successor escrow agent upon written instructions from the Company.

25. Relationship of Parties . The Dealer Manager, the Company and the Escrow Agent are unaffiliated parties, and this Agreement does not create any partnership or joint venture among them.



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[SIGNATURE PAGES FOLLOW]



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IN WITNESS WHEREOF, the undersigned have caused this Agreement to be executed by their duly authorized representatives as of the date first written hereinabove:

DEALER MANAGER:

CAREY FINANCIAL, LLC

By: /s/ Mark Goldberg

Name: Mark Goldberg

Title: President

COMPANY:

CAREY WATERMARK INVESTORS 2 INCORPORATED

By: /s/ Rebecca Reaves

Name: Rebecca Reaves

Title: Executive Director

ESCROW AGENT:

UMB BANK, N.A .

By: /s/ Randy McPhail

Name: Randy McPhail

Title: Senior Vice President



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EXHIBIT A

ESCROW FEES AND EXPENSES

Acceptance Fee

Review document, establish accounts, and $3,250

Set up recon file/feeds with Transfer Agent

Annual Fee

Annual Escrow Agent $3,000

Transactional Fees

Outgoing Wire Transfer $15 each

Daily BAI File to DST $2.50 per Bus Day

Wire Ripping File to DST $10 per Bus Day

Web Exchange Access $15 per month

Overnight Delivery/Mailings $16.50 each

IRS Tax Reporting $10 per 1099

Acceptance fee will be payable at the initiation of the escrow. Annual Escrow Agent fee and Transactional fees will be billed quarterly in arrears. Other fees and expenses will be billed as incurred.

Fees specified are for the regular, routine services contemplated by the Escrow Agreement, and any additional or extraordinary services, including, but not limited to disbursements involving a dispute or arbitration, or administration while a dispute, controversy or adverse claim is in existence, will be charged based upon time required at the then standard hourly rate. In addition to the specified fees, all expenses related to the administration of the Escrow Agreement (other than normal overhead expenses of the regular staff) such as, but not limited to, travel, postage, shipping, courier, telephone, facsimile, supplies, legal fees, accounting fees, etc., will be reimbursable.



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EXHIBIT 10.6

CAREY WATERMARK INVESTORS 2 INCORPORATED

2015 EQUITY INCENTIVE PLAN

TABLE OF CONTENTS

Page


1.	DEFINATIONS. 1


2.	EFFECTIVE DATE AND TERMINATION OF PLAN. 5


3.	ADMINISTRATION OF PLAN. 5


4.	SHARES AND UNITS SUBJECT TO THE PLAN. 6


5.	RESTRICTED STOCK UNITS. 6


6.	DIVIDEND EQUIVALENT RIGHTS. 10


7.	PERFORMANCE GOALS. 11


8.	TAX WITHHOLDING. 11


9.	REGULATIONS AND APPROVALS. 12


10.	INTERPRETATION AND AMENDMENTS; OTHER RULES. 12


11.	CHANGES IN CAPITAL STRUCTURE. 13


12.	MISCELLANEOUS. 14


EXHIBIT A	17



	i

CAREY WATERMARK INVESTORS 2 INCORPORATED

2015 EQUITY INCENTIVE PLAN

Carey Watermark Investors 2 Incorporated, a Maryland corporation, wishes to further align the interests of the Company's stockholders with those of its non-employee directors and certain employees (if any) and officers of the Company and others expected to provide significant services to the Company, whether directly or through Subsidiaries, including the personnel, employees and officers of the Subadvisor. The objectives of the Plan include to encourage a proprietary interest of Eligible Persons in the Company, to encourage certain key personnel to remain in the service of the Company and the Subadvisor and their respective Affiliates, to attract new personnel with outstanding qualifications, and to afford additional incentive to personnel to increase their efforts in providing services to the Company and the Subadvisor and their respective Affiliates. In furtherance thereof, the Carey Watermark Investors 2 Incorporated 2015 Equity Incentive Plan is designed to provide equity-based incentives to certain Eligible Persons. Awards under the Plan may be made to selected Eligible Persons in the form of Restricted Stock Units, Dividend Equivalent Rights and/or other equity-based awards.


1.	DEFINATIONS .

Whenever used herein, the following terms shall have the meanings set forth below:

"Advisor" means Carey Lodging Advisors, LLC.

"Affiliate" means any entity other than a Subsidiary that is controlled by or under common control with the Company that is designated as an "Affiliate" by the Plan Administrator in its discretion.

"Award," shall include Restricted Stock Units, Dividend Equivalent Rights and/or other equity-based awards.

"Award Agreement" means a written agreement in a form approved by the Plan Administrator to be entered into between the Company and the Grantee as provided in Section 3.

"Board" means the Board of Directors of the Company.

"Cause" means, unless otherwise provided in the Grantee's Award Agreement: (i) engaging in (A) willful or gross misconduct or (B) willful or gross neglect; (ii) repeatedly failing to adhere to the directions of superiors or the Board or the written policies and practices of the Advisor, the Subadvisor, the Company, any Subsidiaries or their Affiliates; (iii) the commission of a felony or a crime of moral turpitude, dishonesty, breach of trust or unethical business conduct, or any crime involving the Advisor, the Subadvisor, the Company or any Subsidiaries, or any Affiliate thereof; (iv) fraud, misappropriation or embezzlement; (v) a material breach of the Grantee's employment agreement (if any) with the Subadvisor, the Company or any Subsidiaries or their Affiliates; (vi) acts or omissions constituting a material failure to perform substantially and adequately the duties assigned to the Grantee; (vii) any illegal act detrimental to the Advisor, the Subadvisor, the Company or any Subsidiaries or their Affiliates; or (viii) repeated failure to devote the appropriate amount of Grantee's business time and efforts to the Company, any Subsidiaries or their Affiliates; provided, however, that, if at any particular time the Grantee is subject to an effective employment agreement with the Subadvisor or the Company, then, in lieu of the foregoing definition, "Cause" shall at that time have such meaning as may be specified in such employment agreement.



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"Change in Control" means, unless otherwise provided in the Grantee's Award Agreement, the happening of any of the following:

(i)

any "person," including a "group" (as such terms are used in Sections 13(d) and 14(d) of the Exchange Act, but excluding the Company, the Advisor or the Subadvisor, any entity controlling, controlled by or under common control with the Company, the Advisor, the Subadvisor, any trustee, fiduciary or other person or entity holding securities under any employee benefit plan or trust of the Company, the Advisor or the Subadvisor or any such entity, and, with respect to any particular Grantee, the Grantee and any "group" (as such term is used in Section 13(d)(3) of the Exchange Act) of which the Grantee is a member), is or becomes the "beneficial owner" (as defined in Rule 13(d)(3) under the Exchange Act), directly or indirectly, of securities of the Company representing 50% or more of either (A) the combined voting power of the Company's then outstanding securities or (B) the then outstanding Shares (in either such case other than as a result of an acquisition of securities directly from the Company); provided, however, that, in no event shall a Change in Control be deemed to have occurred upon an initial public offering of the Common Stock under the Securities Act; or

(ii)

any consolidation or merger of the Company where the stockholders of the Company, immediately prior to the consolidation or merger, would not, immediately after the consolidation or merger, beneficially own (as such term is defined in Rule 13d-3 under the Exchange Act), directly or indirectly, shares representing in the aggregate 50% or more of the combined voting power of the securities of the corporation issuing cash or securities in the consolidation or merger (or of its ultimate parent corporation, if any); or

(iii)

there shall occur (A) any sale, lease, exchange or other transfer (in one transaction or a series of transactions contemplated or arranged by any party as a single plan) of all or substantially all of the assets of the Company, other than a sale or disposition by the Company of all or substantially all of the Company's assets to an entity, at least 50% of the combined voting power of the voting securities of which are owned by "persons" (as defined above) in substantially the same proportion as their ownership of the Company immediately prior to such sale or (B) the approval by stockholders of the Company of any plan or proposal for the liquidation or dissolution of the Company; or

(iv)

the members of the Board at the beginning of any consecutive 24-calendar-month period (the "Incumbent Directors") cease for any reason other than due to death to constitute at least a majority of the members of the Board; provided that any director whose election, or nomination for election by the Company's stockholders, was approved or ratified by a vote of at least a majority of the Incumbent Directors shall be deemed to be an Incumbent Director.

Notwithstanding the foregoing, no event or condition described in clauses (i) through (iv) above shall constitute a Change in Control if it results from (A) a transaction between the Company and the Advisor or the Subadvisor, or an Affiliate of the Advisor or the Subadvisor, or (B) a termination of the advisory agreement by and between the Company and the Advisor for Cause.

Notwithstanding the foregoing, no event or condition shall constitute a Change in Control to the extent that, if it were, a 20% tax would be imposed upon or with respect to any Award under Section 409A of the Code; provided that, in such a case, the event or condition shall continue to constitute a Change in Control to the



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maximum extent possible (e.g., if applicable, in respect of vesting without an acceleration of distribution) without causing the imposition of such 20% tax.

"Class A Common Stock" means the class A common stock, $.001 par value per share, of the Company.

"Class C Common Stock" means the class C common stock, $.001 par value per share, of the Company.

"Code" means the Internal Revenue Code of 1986, as amended, and the regulations promulgated thereunder.

"Common Stock" means the Class A Common Stock and the Class C Common Stock, either currently existing or authorized hereafter.

"Company" means Carey Watermark Investors 2 Incorporated, a Maryland corporation.

"Disability" means that a Grantee is (i) unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment that can be expected to result in death or last for a continuous period of at least twelve (12) months; or (ii) by reason of any medically determinable physical or mental impairment that can be expected to result in death or last for a continuous period of at least twelve (12) months, receiving income replacement benefits for at least three (3) months under an accident and health plan covering the Company's, a Subsidiary's or the Subadvisor's employees. Notwithstanding the foregoing, no circumstances or condition shall constitute a Disability to the extent that, if it were, a 20% tax would be imposed upon or with respect to any Award under Section 409A of the Code; provided that, in such a case, the event or condition shall continue to constitute a Disability to the maximum extent possible (e.g., if applicable, in respect of vesting without an acceleration of distribution) without causing the imposition of such 20% tax.

"Dividend Equivalent Right" means a right awarded under Section 6 of the Plan to receive (or have credited) the equivalent value of dividends paid on Class A Common Stock or Class C Common Stock, as applicable.

"Eligible Person" means (i) a non-employee director if the Company, (ii) an officer or employee (if any) of the Company or its Subsidiaries, (iii) an officer or employee of the Subadvisor or its Affiliates, which includes Watermark Capital Partners, LLC or (iv) a Member, or other person expected to provide significant services (of a type expressly approved by the Plan Administrator as covered services for these purposes) to the Company or its Subsidiaries. In the case of the grant of Awards directly or indirectly to officers or employees of entities described in clause (iii) of the foregoing sentence, the Plan Administrator may make arrangements with such entities in its discretion, in light of tax and other considerations. For the avoidance of doubt, officers and employees of the Advisor and its affiliates are not Eligible Persons, even if they are also officers or employees of the Company and its subsidiaries or Members.

"Exchange Act" means the Securities Exchange Act of 1934, as amended.

"Fair Market Value" means, with respect to each Class of Common Stock, per Share as of a particular date (i) if Shares are then listed on a national securities exchange or quoted or reported on a national quotation system, the closing sales price per Share on the exchange or system for the applicable date or, if there are no sales on such date, for the last preceding date on which there was a sale of Shares on such exchange or system; (ii) if Shares are not then listed on a national securities exchange or quoted on a national quotation



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system but are then traded on an over-the-counter market, the average of the closing bid and asked prices for the Shares in such over-the-counter market for the date in question, or, if there are no bid and asked prices on such date, for the last preceding date on which there was a sale of such Shares in such market; or (iii) if Shares are not then listed on a national securities exchange, quoted on a national quotation system or traded on an over-the-counter market, such value as may be determined by the Plan Administrator in its discretion or as may be determined in accordance with such methodologies, procedures or other rules (which may provide, without limitation, that determinations of Fair Market Value shall be made by an independent third party) as may be established by the Plan Administrator in its discretion; provided that, where the Shares are so listed or traded, the Plan Administrator may make such discretionary determinations, or implement such methodologies, procedures or other rules, where the Shares have not been traded for 10 trading days.

"Grantee" means an Eligible Person to whom an Award is granted.

"Member" means a non-director member of the investment committee of the Board, who is not an officer of the Company.

"Performance Goals" has the meaning set forth in Section 7 of the Plan.

"Plan" means the Company's 2015 Equity Incentive Plan, as set forth herein and as the same may from time to time be amended.

"Plan Administrator" means the independent directors of the Board.

"Restricted Stock Unit" means a right, pursuant to the Plan, of the Grantee to payment of the Restricted Stock Unit Value in accordance with Section 5.

"Restricted Stock Unit Value," per Restricted Stock Unit, means the Fair Market Value of a Share or, if so provided by the Plan Administrator, such Fair Market Value to the extent in excess of a base value established by the Plan Administrator at the time of grant.

"Retirement" means, unless otherwise provided in the applicable Award Agreement, the Termination of Service of a Grantee under circumstances which would entitle the Grantee to an immediate pension under an approved retirement plan of the Company, the Subadvisor, or, in the absence of such a plan, the Termination of Service (other than for Cause) of a Grantee on or after the Grantee's attainment of age 65 or on or after the Grantee's attainment of age 55 with five consecutive years of service with the Company, the Subadvisor, any Subsidiaries or their Affiliates.

"Securities Act" means the Securities Act of 1933, as amended.

"Settlement Date" means the date determined under Section 5.4(c).

"Shares" means shares of Class A Common Stock and shares of Class C Common.

"Subadvisor" means CWA 2, LLC, an Illinois limited liability company.

"Subsidiary" means any corporation, partnership or other entity of which at least 50% of the economic interest in the equity or voting power is owned (directly or indirectly) by the Company or another subsidiary. In the event the Company becomes such a subsidiary of another company (directly or indirectly), the provisions hereof applicable to subsidiaries shall, unless otherwise determined by the Plan Administrator, also be applicable to such parent company.



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"Termination of Service" means a Grantee's termination of services as a director, or termination of employment or other service, as applicable, including Disability or Retirement, with the Company, Subsidiaries, the Subadvisor or their Affiliates. Notwithstanding the foregoing, a Grantee's Termination of Service shall be a "separation from service" as interpreted within the meaning of Section 409A of the Code and Treasury Regulation 1.409A-1(h). Unless otherwise provided in the Award Agreement, cessation of service as director, officer, employee or Member shall not be treated as a Termination of Service if the Grantee continues without interruption to serve thereafter in another one (or more) of such other capacities, and Termination of Service shall be deemed to have occurred when service in the final covered capacity ceases.


2.	EFFECTIVE DATE AND TERMINATION OF PLAN .

The effective date of the Plan is February 9, 2015; provided, however, that the Plan shall not become effective unless and until it is approved by the requisite percentage of the holders of the Common Stock of the Company. The Plan shall terminate on, and no Award shall be granted hereunder on or after, the 10-year anniversary of the earlier of the approval of the Plan by (i) the Board or (ii) the stockholders of the Company; provided, however, that the Board may at any time prior to that date terminate the Plan.


3.	ADMINISTRATION OF PLAN .

(a) The Plan shall be administered by the Plan Administrator. The Plan Administrator, upon and after such time as it is subject to Section 16 of the Exchange Act, shall consist of at least two individuals each of whom shall be a "nonemployee director" as defined in Rule 16b-3 as promulgated by the Securities and Exchange Commission ("Rule 16b-3") under the Exchange Act, and shall, at such times as the Company is subject to Section 162(m) of the Code (to the extent relief from the limitation of Section 162(m) of the Code is sought with respect to Awards), qualify as "outside directors" for purposes of Section 162(m) of the Code; provided that no action taken by the Plan Administrator (including, without limitation, grants) shall be invalidated because any or all of the members of the Plan Administrator fails to satisfy the foregoing requirements of this sentence. The acts of a majority of the members present at any meeting of the Plan Administrator at which a quorum is present, or acts approved in writing by a majority of the Plan Administrator, shall be the acts of the Plan Administrator for purposes of the Plan. If and to the extent applicable, no member of the Plan Administrator may act as to matters under the Plan specifically relating to such member. Notwithstanding the other foregoing provisions of this Section 3(a), any Award under the Plan to a person who is a member of the Plan Administrator shall be made and administered by the Board. If no Plan Administrator is designated by the Board to act for these purposes, the Board shall have the rights and responsibilities of the Plan Administrator hereunder and under the Award Agreements.

(b) Subject to the provisions of the Plan, the Plan Administrator shall in its discretion as reflected by the terms of the Award Agreements (i) authorize the granting of Awards to Eligible Persons (or to an entity for the benefit of Eligible Persons) and (ii) determine the eligibility of an Eligible Person to receive an Award, as well as determine the number of Shares to be covered under any Award Agreement, considering the position and responsibilities of the Eligible Person, the nature and value to the Company of the Eligible Person's present and potential contribution to the success of the Company, whether directly or through Subsidiaries, the other compensation and distributions received by the Subadvisor and its affiliates directly or indirectly from the Company and its Subsidiaries and such other factors as the Plan Administrator may deem relevant. In granting Awards under the Plan, the Plan Administrator may impose conditions on the transfer of Awards received under the Plan, and may impose other restrictions and requirements as it may deem appropriate.



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(c) The Award Agreement shall contain such other terms, provisions and conditions not inconsistent herewith as shall be determined by the Plan Administrator. In the event that any Award Agreement or other agreement hereunder provides (without regard to this sentence) for the obligation of the Company or any Affiliate thereof to purchase or repurchase Shares from a Grantee or any other person, then, notwithstanding the provisions of the Award Agreement or such other agreement, such obligation shall not apply to the extent that the purchase or repurchase would not be permitted under Maryland law. The Grantee shall take whatever additional actions and execute whatever additional documents the Plan Administrator may in its reasonable judgment deem necessary or advisable in order to carry out or effect one or more of the obligations or restrictions imposed on the Grantee pursuant to the express provisions of the Plan and the Award Agreement.


4.	SHARES AND UNITS SUBJECT TO THE PLAN .

(a) Subject to adjustments as provided in Section 11 of the Plan, the total number of Shares subject to Awards granted under the Plan, in the aggregate may not exceed 2.0% of the shares of Class A Common Stock and Class C Common Stock outstanding from time to time, on a combined and fully diluted basis, up to a maximum amount of 2,000,000. Subject to adjustments pursuant to Section 11 of the Plan, the maximum number of Shares subject to Awards granted under the Plan in any one year to any Eligible Person, shall not exceed 2,000,000. Shares distributed under the Plan may be treasury Shares or authorized but unissued Shares. Any Shares that have been reserved for distribution in payment for Awards but are later forfeited or for any other reason are not payable under the Plan may again be made the subject of Awards under the Plan.

(b) Shares subject to Dividend Equivalent Rights, other than Dividend Equivalent Rights based directly on the dividends payable on a number of Shares corresponding to the number of Restricted Stock Units awarded, shall be subject to the limitation of Section 4(a). Notwithstanding Section 4(a), except in the case of Awards intended to qualify for relief from the limitations of Section 162(m) of the Code, there shall be no limit on the number of Awards, to the extent they are paid out in cash, that may be granted under the Plan. If any Awards are paid out in cash, then, notwithstanding the first sentence of Section 4(a) above (but subject to the second sentence thereof), the underlying Shares may again be made the subject of Awards under the Plan.

(c) The certificates for Shares issued hereunder may include any legend which the Plan Administrator deems appropriate to reflect any restrictions on transfer hereunder or under the Award Agreement, or as the Plan Administrator may otherwise deem appropriate.


5.	RESTRICTED STOCK UNITS .

5.1 Grant of Restricted Stock Units .

(a) Subject to the other terms of the Plan, the Plan Administrator shall, in its discretion as reflected by the terms of the applicable Award Agreement: (i) authorize the granting of Restricted Stock Units to Eligible Persons; (ii) provide a specified purchase price for the Restricted Stock Units (whether or not the payment of a purchase price is required by any state law applicable to the Company); (iii) determine the period of forfeiture and related restrictions, if any, applicable to Restricted Stock Units; and (iv) determine or impose other conditions, including any applicable Performance Goals, to the grant of Restricted Stock Units under the Plan as it may deem appropriate.



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5.2 Term .

The Plan Administrator may provide in an Award Agreement that any particular Restricted Stock Unit shall expire at the end of a specified term.

5.3 Vesting .

(a) In connection with the grant of Restricted Stock Units, whether or not Performance Goals (as provided for under Section 7 of the Plan) apply thereto, the Plan Administrator may determine that Restricted Stock Units are vested immediately upon grant or may establish one or more vesting periods with respect to the Restricted Stock Units granted, the length of which shall be determined in the discretion of the Plan Administrator. Subject to the provisions of this Section 5, the applicable Award Agreement and the other provisions of the Plan, restrictions on Restricted Stock Units shall lapse if the Grantee satisfies all applicable employment or other service requirements through the end of the applicable vesting period.

(b) Restricted Stock Units shall vest as provided in the applicable Award Agreement. Unless otherwise stated in the Award Agreement, upon the Grantee's Termination of Service, all unvested Restricted Stock Units shall be forfeited.

5.4 Settlement of Restricted Stock Units .

(a) Each vested and outstanding Restricted Stock Unit shall be settled by the transfer to the Grantee of one Share; provided that the Plan Administrator at the time of grant (or, in the appropriate case, as determined by the Plan Administrator, thereafter) may provide that, after consideration of possible accounting issues, a Restricted Stock Unit may be settled (i) in cash at the applicable Restricted Stock Unit Value, (ii) in cash or by transfer of Shares as elected by the Grantee in accordance with procedures established by the Plan Administrator or (iii) in cash or by transfer of Shares as elected by the Company.

(b) Payment (whether of cash or Shares) in respect of Restricted Stock Units shall be made in a single sum or in periodic payments by the Company, as set forth in the Award; provided that, with respect to Restricted Stock Units of a Grantee which have a common Settlement Date, the Plan Administrator may permit the Grantee to elect in accordance with procedures established by the Plan Administrator (taking into account, without limitation, Section 409A of the Code, as the Plan Administrator may deem appropriate) to receive installment payments over a period not to exceed 10 years, rather than a single-sum payment.

(i) Unless otherwise provided in the applicable Award Agreement, the "Settlement Date" with respect to a Restricted Stock Unit is the first day of the month to follow the date on which the Restricted Stock Unit vests; provided, however, that a Grantee may elect at or prior to grant, if permitted by and in accordance with procedures to be established by the Plan Administrator, that such Settlement Date will be deferred as elected by the Grantee to the first day of the month to follow the Grantee's Termination of Service, or such other time as may be permitted by the Plan Administrator. Notwithstanding the prior sentence, all initial elections to defer the Settlement Date shall be made in accordance with the requirements of Section 409A of the Code. In addition, unless otherwise determined by the Plan Administrator, elections under this Section 5.4(c)(i) must, except as may otherwise be permitted under the rules applicable under Section 409A of the Code, (A) be effective at least one year after they are made, or, in the case of payments to commence at a specific time, be made at least one year before the first scheduled



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payment and (B) defer the commencement of distributions (and each affected distribution) for at least five years.

(ii) Notwithstanding the foregoing, the Settlement Date, if not earlier pursuant to this Section 5.4(c), is the date of the Grantee's death.

(d) Notwithstanding the other provisions of this Section 5, taking into account, without limitation, the application of Section 409A of the Code, as the Plan Administrator may deem appropriate, in the event of a Change in Control, the Settlement Date shall be the date of such Change in Control and all amounts due with respect to Restricted Stock Units to a Grantee hereunder shall be paid as soon as practicable (but in no event more than 30 days) after such Change in Control, unless such Grantee elects otherwise in accordance with procedures established by the Plan Administrator.

(e) Notwithstanding any other provision of the Plan, a Grantee may receive any amounts to be paid in installments as provided in Section 5.4(b) or deferred by the Grantee as provided in Section 5.4(c) in the event of an "Unforeseeable Emergency." For these purposes, an "Unforeseeable Emergency," as determined by the Plan Administrator in its sole discretion, is a severe financial hardship to the Grantee resulting from (1) a sudden and unexpected illness or accident of the Grantee or "dependent," as defined in Section 152(a) of the Code, of the Grantee, (2) loss of the Grantee's property due to casualty, or (3) other similar extraordinary and unforeseeable circumstances arising as a result of events beyond the control of the Grantee. The circumstances that will constitute an Unforeseeable Emergency will depend upon the facts of each case, but, in any case, payment may not be made to the extent that such hardship is or may be relieved:

(i) through reimbursement or compensation by insurance or otherwise,

(ii) by liquidation of the Grantee's assets, to the extent the liquidation of such assets would not itself cause severe financial hardship, or

(iii) by future cessation of the making of additional deferrals under Section 5.4 (b) and (c).

Without limitation, the need to send a Grantee's child to college or the desire to purchase a home shall not constitute an Unforeseeable Emergency. Distributions of amounts because of an Unforeseeable Emergency shall be permitted to the extent reasonably needed to satisfy the emergency need.

5.5 Other Restricted Stock Unit Provisions .

(a) Except as permitted by the Plan Administrator, rights to payments with respect to Restricted Stock Units granted under the Plan shall not be subject in any manner to anticipation, alienation, sale, transfer, assignment, pledge, encumbrance, attachment, garnishment, levy, execution, or other legal or equitable process, either voluntary or involuntary; and any attempt to anticipate, alienate, sell, transfer, assign, pledge, encumber, attach or garnish, or levy or execute on any right to payments or other benefits payable hereunder, shall be void.

(b) A Grantee may designate in writing, on forms to be prescribed by the Plan Administrator, a beneficiary or beneficiaries to receive any payments payable after his or her death and may amend or revoke such designation at any time. If no beneficiary designation is in effect at the time of a Grantee's death, payments hereunder shall be made to the Grantee's estate. If a Grantee with a vested Restricted Stock Unit dies, such Restricted Stock Unit shall be settled and the Restricted Stock Unit Value in respect of such Restricted Stock Units paid, and any payments deferred pursuant to an election under



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Section 5.4(c) shall be accelerated and paid, as soon as practicable (but no later than 60 days) after the date of death to such Grantee's beneficiary or estate, as applicable.

(c) The Plan Administrator may, taking into account, without limitation, the application of Section 409A of the Code, as the Plan Administrator may deem appropriate, establish a program under which distributions with respect to Restricted Stock Units may be deferred for periods in addition to those otherwise contemplated by foregoing provisions of this Section 5. Such program may include, without limitation, provisions for the crediting of earnings and losses on unpaid amounts, and, if permitted by the Plan Administrator, provisions under which Grantees may select from among hypothetical investment alternatives for such deferred amounts in accordance with procedures established by the Plan Administrator.

(d) No Restricted Stock Unit shall be construed to give any Grantee any rights with respect to Shares or any ownership interest in the Company. Except as may be provided in accordance with Section 6, no provision of the Plan shall be interpreted to confer upon any Grantee of Restricted Stock Units any voting, dividend or derivative or other similar rights with respect to any Restricted Stock Unit.

5.6 Claims Procedures .

(a) To the extent that the Plan is determined by the Plan Administrator to be subject to the Employee Retirement Income Security Act of 1974, as amended, the Grantee, or his beneficiary hereunder or authorized representative, may file a claim for payments with respect to Restricted Stock Units under the Plan by written communication to the Plan Administrator or its designee. A claim is not considered filed until such communication is actually received. Within 90 days (or, if special circumstances require an extension of time for processing, 180 days, in which case notice of such special circumstances should be provided within the initial 90-day period) after the filing of the claim, the Plan Administrator will either:

(iii) approve the claim and take appropriate steps for satisfaction of the claim; or

(iv) if the claim is wholly or partially denied, advise the claimant of such denial by furnishing to him a written notice of such denial setting forth (A) the specific reason or reasons for the denial; (B) specific reference to pertinent provisions of the Plan on which the denial is based and, if the denial is based in whole or in part on any rule of construction or interpretation adopted by the Plan Administrator, a reference to such rule, a copy of which shall be provided to the claimant; (C) a description of any additional material or information necessary for the claimant to perfect the claim and an explanation of the reasons why such material or information is necessary; and (D) a reference to this Section 5.6 as the provision setting forth the claims procedure under the Plan.

(b) The claimant may request a review of any denial of his claim by written application to the Plan Administrator within 60 days after receipt of the notice of denial of such claim. Within 60 days (or, if special circumstances require an extension of time for processing, 120 days, in which case notice of such special circumstances should be provided within the initial 60-day period) after receipt of written application for review, the Plan Administrator will provide the claimant with its decision in writing, including, if the claimant's claim is not approved, specific reasons for the decision and specific references to the Plan provisions on which the decision is based.



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6.	DIVIDEND EQUIVALENT RIGHTS .

6.1 Grant of Dividend Equivalent Rights .

Subject to the other terms of the Plan, the Plan Administrator shall, in its discretion as reflected by the terms of the Award Agreements, authorize the granting of Dividend Equivalent Rights to Eligible Persons based on the regular cash dividends declared on Common Stock, to be credited as of the dividend payment dates, during the period between the date an Award is granted, and the date such Award is exercised, vests or expires, as determined by the Plan Administrator. Such Dividend Equivalent Rights shall be converted to cash or additional Shares by such formula and at such time and subject to such limitation as may be determined by the Plan Administrator. If a Dividend Equivalent Right is granted in respect of an Award hereunder, then, unless otherwise stated in the Award Agreement, or, in the appropriate case, as determined by the Plan Administrator, in no event shall the Dividend Equivalent Right be in effect for a period beyond the time during which the applicable portion of the underlying Award is in effect.

6.2 Certain Terms .

(d) Unless otherwise determined by the Plan Administrator, except as contemplated by Section 6.4, a Dividend Equivalent Right is exercisable or payable only while the Grantee is an Eligible Person.

(e) Payment of the amount determined in accordance with Section 6.1 shall be in cash, in Common Stock or a combination of the two, as determined by the Plan Administrator.

(f) The Plan Administrator may impose such employment-related conditions on the grant of a Dividend Equivalent Right as it deems appropriate in its discretion.

6.3 Other Types of Dividend Equivalent Rights .

The Plan Administrator may establish a program under which Dividend Equivalent Rights of a type whether or not described in the foregoing provisions of this Section 6 may be granted to Grantees. For example, and without limitation, the Plan Administrator may grant a Dividend Equivalent Right with respect to a Restricted Stock Unit, which right would consist of the right (subject to Section 6.4) to receive a cash payment in an amount equal to the dividend distributions paid on a Share from time to time.

6.4 Deferral .

The Plan Administrator may establish a program or programs (taking into account, without limitation, the possible application of Section 409A of the Code, as the Plan Administrator may deem appropriate) under which Grantees (i) will have Restricted Stock Units credited, subject to the terms of Sections 5.4 and 5.5 as though directly applicable with respect thereto, upon the granting of Dividend Equivalent Rights, or (ii) will have payments with respect to Dividend Equivalent Rights deferred. In the case of the foregoing clause (ii), such program may include, without limitation, provisions for the crediting of earnings and losses on unpaid amounts, and, if permitted by the Plan Administrator, provisions under which Grantees may select from among hypothetical investment alternatives for such deferred amounts in accordance with procedures established by the Plan Administrator.



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7.	OTHER AWARDS .

The Plan Administrator shall have the right to grant other Awards based on Shares having such terms and conditions as the Plan Administrator may determine, including, without limitation, the grant of Shares (which may be subject to conditions), the grant of securities convertible with Shares and the grant of restricted Shares.


8.	PERFORMANCE GOALS .

The Plan Administrator, in its discretion, may, in the case of any Awards intended to qualify for an exception from the limitation imposed by Section 162(m) of the Code at any time that Section 162(m) applies to the Company, or otherwise ("Performance-Based Awards"), (i) establish one or more performance goals ("Performance Goals") as a precondition to the issuance or vesting of Awards, and (ii) provide, in connection with the establishment of the Performance Goals, for predetermined Awards to those Grantees (who continue to meet all applicable eligibility requirements) with respect to whom the applicable Performance Goals are satisfied. The Performance Goals shall be based upon the criteria set forth in Exhibit A hereto which is hereby incorporated herein by reference as though set forth in full. The Performance Goals shall be established in a timely fashion such that they are considered pre-established for purposes of the rules governing performance-based compensation under Section 162(m) of the Code at any time that Section 162(m) applies to the Company, and compliance with such rules is sought. Prior to the award or vesting, as applicable, of affected Awards hereunder, the Plan Administrator shall have certified that any applicable Performance Goals, and other material terms of the Award, have been satisfied. Performance Goals which do not satisfy the foregoing provisions of this Section 7 may be established by the Plan Administrator with respect to Awards not intended to qualify for an exception from the limitations imposed by Section 162(m) of the Code.


9.	TAX WITHHOLDING .

9.1 In General .

The Company, or, a properly designated paying agent, shall be entitled to withhold from any payments or deemed payments any amount of tax withholding determined by the Plan Administrator to be required by law. Without limiting the generality of the foregoing, the Plan Administrator may, in its discretion, require the Grantee to pay to the Company at such time as the Plan Administrator determines the amount that the Plan Administrator deems necessary to satisfy the Company's obligation to withhold federal, state or local income or other taxes incurred by reason of (i) the receipt of a distribution in respect of Awards or (ii) any other applicable income-recognition event under the Plan or (iii) the lapsing of any restrictions applicable to any Awards.

9.2 Share Withholding .

Upon the making of a distribution in respect of Awards, the Grantee may, if approved (or pre-approved) by the Plan Administrator in its discretion, make a written election to have amounts (which may include Shares) withheld by the Company from the distribution otherwise to be made, or to deliver previously owned Shares (not subject to restrictions hereunder), in order to satisfy the liability for such withholding taxes. In the event that the Grantee makes, and the Plan Administrator permits, such an election, any Shares so withheld or delivered shall have an aggregate Fair Market Value on the date of exercise sufficient to satisfy the applicable withholding taxes.

9.3 Withholding Required .



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Notwithstanding anything contained in the Plan or the Award Agreement to the contrary, the Grantee's satisfaction of any tax-withholding requirements imposed by the Plan Administrator shall be a condition precedent to the Company's obligation as may otherwise be provided hereunder to provide Shares to the Grantee and to the release of any restrictions as may otherwise be provided hereunder; and the Awards shall be forfeited upon the failure of the Grantee to satisfy such requirements with respect to the distributions in respect of any Award or the lapsing of any restrictions applicable to any Award (or other income-recognition event).


10.	REGULATIONS AND APPROVALS .

(c) The obligation of the Company to sell Shares with respect to an Award granted under the Plan shall be subject to all applicable laws, rules and regulations, including all applicable federal and state securities laws, and the obtaining of all such approvals by governmental agencies as may be deemed necessary or appropriate by the Plan Administrator.

(d) The Plan Administrator may make such changes to the Plan as may be necessary or appropriate to comply with the rules and regulations of any government authority or to obtain tax benefits applicable to an Award.

(e) Each grant of an Award (or issuance of Shares in respect thereof) is subject to the requirement that, if at any time the Plan Administrator determines, in its discretion, that the listing, registration or qualification of Shares issuable pursuant to the Plan is required by any securities exchange or under any state or federal law, or the consent or approval of any governmental regulatory body is necessary or desirable as a condition of, or in connection with, the issuance of the Award (or Shares in respect thereof), no payment shall be made, or Award or Shares issued, in whole or in part, unless listing, registration, qualification, consent or approval has been effected or obtained free of any conditions in a manner acceptable to the Plan Administrator.

(f) In the event that the disposition of stock acquired pursuant to the Plan is not covered by a then current registration statement under the Securities Act, and is not otherwise exempt from such registration, such Shares shall be restricted against transfer to the extent required under the Securities Act, and the Plan Administrator may require any individual receiving Shares pursuant to the Plan, as a condition precedent to receipt of such Shares, to represent to the Company in writing that such Shares are acquired for investment only and not with a view to distribution and that such Shares will be disposed of only if registered for sale under the Securities Act or if there is an available exemption for such disposition.

(g) Notwithstanding any other provision of the Plan, the Company shall not be required to take or permit any action under the Plan or any Award Agreement which, in the good-faith determination of the Company, would result in a material risk of a violation by the Company of Section 13(k) of the Exchange Act.


11.	INTERPRETATION AND AMENDMENTS; OTHER RULES .

The Plan Administrator may make such rules and regulations and establish such procedures for the administration of the Plan as it deems appropriate. Without limiting the generality of the foregoing, the Plan Administrator may (i) determine the extent, if any, to which Awards shall be forfeited (whether or not such forfeiture is expressly contemplated hereunder); (ii) interpret the Plan and the Award Agreements hereunder, with such interpretations to be conclusive and binding on all persons and otherwise accorded the maximum deference permitted by law, provided that the Plan Administrator's interpretation shall not be entitled to deference on and after a Change in Control except to the extent that such interpretations are made exclusively



	12

by members of the Plan Administrator who are individuals who served as Plan Administrator members before the Change in Control; and (iii) take any other actions and make any other determinations or decisions that it deems necessary or appropriate in connection with the Plan or the administration or interpretation thereof. In the event of any dispute or disagreement as to the interpretation of the Plan or of any rule, regulation or procedure, or as to any question, right or obligation arising from or related to the Plan, the decision of the Plan Administrator, except as provided in clause (ii) of the foregoing sentence, shall be final and binding upon all persons. Unless otherwise expressly provided hereunder, the Plan Administrator, with respect to any grant, may exercise its discretion hereunder at the time of the Award or thereafter. The Board may amend the Plan as it shall deem advisable, except that no amendment may adversely affect a Grantee with respect to an Award previously granted without such Grantee's written consent unless such amendments are required in order to comply with applicable laws; provided, however, that the Plan may not be amended without stockholder approval (a) to materially increase the total number of Shares that may be subject to Awards set forth in Section 4(a), (b) to materially modify the requirements of eligibility for participation in the Plan, (c) to materially increase the benefits accruing to Grantees under the Plan, or (d) in any other manner that in the absence of stockholder approval would cause the Plan to fail to comply with any applicable legal requirement or applicable exchange or similar rule.


12.	CHANGES IN CAPITAL STRUCTURE .

(a) If (i) the Company or Subsidiaries shall at any time be involved in a merger, consolidation, dissolution, liquidation, reorganization, exchange of shares, sale of all or substantially all of the assets or stock of the Company or Subsidiaries or a transaction similar thereto, (ii) any stock dividend, stock split, reverse stock split, stock combination, reclassification, recapitalization or other similar change in the capital structure of the Company or Subsidiaries, or any distribution to holders of Common Stock other than cash dividends, shall occur or (iii) any other event shall occur which in the judgment of the Plan Administrator necessitates action by way of adjusting the terms of the outstanding Awards, then:

(x) the maximum aggregate number and kind of Awards which may be granted and/or subject to Dividend Equivalent Rights under the Plan shall be appropriately adjusted by the Plan Administrator in its discretion; and

(y) the Plan Administrator shall take any such action as in its discretion shall be necessary to maintain each Grantee's rights hereunder (including under their Award Agreements) so that their respective Awards are substantially proportionate to the rights existing in such Awards prior to such event, including, without limitation, adjustments in (A) the number of Restricted Stock Units, Shares and Dividend Equivalent Rights and other Awards granted, (B) the number and kind of shares or other property to be distributed in respect of Awards, (C) the Restricted Stock Unit Value or Fair Market Value of other Awards, and (D) performance-based criteria established in connection with Awards (to the extent consistent with Section 162(m) of the Code, as applicable); provided that, in the discretion of the Plan Administrator, the foregoing clause (D) may also be applied in the case of any event relating to a Subsidiary if the event would have been covered under this Section 11(a) had the event related to the Company.

To the extent that such action shall include an increase or decrease in the number of Shares (or units of other property then available) subject to all outstanding Awards, the number of Shares (or units) available under Section 4 shall be increased or decreased, as the case may be, proportionately, as shall be determined by the Plan Administrator in its discretion.



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(b) If a Change in Control shall occur, then the Plan Administrator, as constituted immediately before the Change in Control, may make such adjustments as it, in its discretion, determines are necessary or appropriate in light of the Change in Control, provided that the Plan Administrator determines that such adjustments do not have an adverse economic impact on the Grantee as determined at the time of the adjustments. The Plan Administrator shall have the discretion to provide that upon a Change in Control, (i) all or a portion of any outstanding Awards shall become vested and transferable, and all or a portion of any outstanding Performance-Based Awards will be earned, or (iii) all or a portion of any outstanding Awards may be cancelled in exchange for a payment of cash, or all or a portion of any outstanding Awards may be substituted for Awards that will substantially preserve the otherwise applicable terms of any affected Awards previously granted under the Plan.

(c) The judgment of the Plan Administrator with respect to any matter referred to in this Section 11 shall be conclusive and binding upon each Grantee without the need for any amendment to the Plan.


13.	MISCELLANEOUS .

13.1 No Rights to Employment or Other Service .

Nothing in the Plan or in any grant made pursuant to the Plan shall confer on any individual any right to continue in the employ or other service of the Company, the Subsidiaries, the Advisor, the Subadvisor or their Affiliates, or interfere in any way with the right of the Company, the Subsidiaries or the Advisor, the Subadvisor and their stockholders to terminate the individual's employment or other service at any time.

13.2 No Fiduciary Relationship .

Nothing contained in the Plan (including without limitation Section 5.5(c) and 6.4), and no action taken pursuant to the provisions of the Plan, shall create or shall be construed to create a trust of any kind, or a fiduciary relationship between the Company or Subsidiaries or their officers or the Plan Administrator, on the one hand, and the Grantee, the Company, Subsidiaries or any other person or entity, on the other.

13.3 Compliance with Section 409A of the Code .

(a) Any Award Agreement issued under the Plan that is subject to Section 409A of the Code may include such additional terms and conditions as the Plan Administrator determines are required to satisfy the requirements of Section 409A of the Code.

(b) With respect to any Award issued under the Plan that is subject to Section 409A of the Code, and with respect to which a payment or distribution is to be made upon a Termination of Service, if the Grantee is determined by the Company to be a “specified employee” within the meaning of Section 409A(a)(2)(B)(i) of the Code and any of the Company’s stock is publicly traded on an established securities market or otherwise, such payment or distribution, to the extent it would constitute a payment of nonqualified deferred compensation within the meaning of Section 409A of the Code that is ineligible for an exemption from treatment as such, may not be made before the date which is six months after the date of Termination of Service (to the extent required under Section 409A of the Code). Any payments or distributions delayed in accordance with the prior sentence shall be paid to the Grantee on the first day of the seventh month following the Grantee’s Termination of Service.



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(c) To the extent compliance with Section 409A of the Code is intended, the Board and the Plan Administrator shall administer the Plan, and exercise authority and discretion under the Plan, consistent with the requirements of Section 409A of the Code or any exemption thereto.

(d) The Company makes no representation or warranty and shall have no liability to any Grantee or any other person if any provisions of this Plan or any Award Agreement issued pursuant hereto are determined to constitute deferred compensation subject to Section 409A of the Code but do not satisfy an exemption from, or the conditions of, such Section.

13.4 No Fund Created .

Any and all payments hereunder to any Grantee shall be made from the general funds of the Company (or, if applicable, a participating subsidiary), no special or separate fund shall be established or other segregation of assets made to assure such payments, and the Restricted Stock Units (including for purposes of this Section 13.4 any accounts established to facilitate the implementation of Section 5.4(c)) and any other similar devices issued hereunder to account for Plan obligations do not constitute Common Stock and shall not be treated as (or as giving rise to) property or as a trust fund of any kind; provided, however, that the Company may establish a mere bookkeeping reserve to meet its obligations hereunder or a trust or other funding vehicle that would not cause the Plan to be deemed to be funded for tax purposes or for purposes of Title I of the Employee Retirement Income Security Act of 1974, as amended. The obligations of the Company under the Plan are unsecured and constitute a mere promise by the Company to make benefit payments in the future and, to the extent that any person acquires a right to receive payments under the Plan from the Company, such right shall be no greater than the right of a general unsecured creditor of the Company. (If any Affiliate of the Company is or is made responsible with respect to any Awards, the foregoing sentence shall apply with respect to such Affiliate.) Without limiting the foregoing, Restricted Stock Units and any other similar devices issued hereunder to account for Plan obligations are solely a device for the measurement and determination of the amounts to be paid to a Grantee under the Plan, and each Grantee's right in the Restricted Stock Units and any such other devices is limited to the right to receive payment, if any, as may herein be provided.

13.5 Notices .

All notices under the Plan shall be in writing, and if to the Company, shall be delivered to the Board or mailed to its principal office, addressed to the attention of the Board; and if to the Grantee, shall be delivered personally, sent by facsimile transmission or mailed to the Grantee at the address appearing in the records of the Company. Such addresses may be changed at any time by written notice to the other party given in accordance with this Section 13.5.

13.6 Exculpation and Indemnification .

The Company shall indemnify and hold harmless the members of the Board and the members of the Plan Administrator from and against any and all liabilities, costs and expenses incurred by such persons as a result of any act or omission to act in connection with the performance of such person's duties, responsibilities and obligations under the Plan, to the maximum extent permitted by law, other than such liabilities, costs and expenses as may result from the gross negligence, bad faith, willful misconduct or criminal acts of such persons.

13.7 Captions .



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The use of captions in the Plan is for convenience. The captions are not intended to provide substantive rights.

13.8 Governing Law .

THE PLAN SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF MARYLAND WITHOUT REGARD TO ANY PRINCIPLES OF CONFLICTS OF LAW WHICH COULD CAUSE THE APPLICATION OF THE LAWS OF ANY JURISDICTION OTHER THAN THE STATE OF MARYLAND.

13.9 Gender Neutral .

Wherever used herein, a pronoun in the masculine gender shall be considered as including the feminine gender unless the context clearly indicates otherwise.



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EXHIBIT A

PERFORMANCE CRITERIA

Performance-Based Awards intended to qualify as "performance based" compensation under Section 162(m) of the Code, may be payable upon the attainment of objective Performance Goals that are established by the Plan Administrator and relate to one or more Performance Criteria, in each case on specified date or over any period, up to 10 years, as determined by the Plan Administrator. Performance Criteria may (but need not) be based on the achievement of the specified levels of performance under one or more of the measures set out below relative to the performance of one or more other corporations or indices.

"Performance Criteria" means the following business criteria (or any combination thereof) with respect to one or more of the Company, any participating company or any division or operating unit thereof:


(i)	pre-tax income;


(ii)	after-tax income;


(iii)	net income (meaning net income as reflected in the Company's financial reports for the applicable period, on an aggregate, diluted and/or per share basis);


(iv)	operating income;


(v)	cash flow;


(vi)	earnings per share;


(vii)	return on equity;


(viii)	return on invested capital or assets;


(ix)	cash and/or funds available for distribution;


(x)	appreciation in the fair market value of the Common Stock;


(xi)	return on investment;


(xii)	total return to stockholders (meaning the aggregate Common Stock price appreciation and dividends paid (assuming full reinvestment of dividends) during the applicable period);


(xiii)	net earnings growth;


(xiv)	stock appreciation (meaning an increase in the price or value of the Common Stock after the date of grant of an award and during the applicable period);


(xv)	related return ratios;


(xvi)	increase in revenues;


(xvii)	net earnings;



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(xviii)	changes (or the absence of changes) in the per share or aggregate market price of the Company's Common Stock;


(xix)	number of securities sold;


(xx)	earnings before any one or more of the following items: interest, taxes, depreciation, amortization and other non-cash items for the applicable period, as reflected in the Company's financial reports for the applicable period;


(xxi)	total revenue growth (meaning the increase in total revenues after the date of grant of an award and during the applicable period, as reflected in the Company's financial reports for the applicable period);


(xxii)	the Company's published ranking against its peer group of real estate investment trusts based on total stockholder return;


(xxiii)	funds from operations;


(xxiv)	adjusted funds from operations and operating activities;


(xxv)	adjusted cash flow from operations;


(xxvi)	expense targets;


(xxvii)	completion of asset sales


(xxviii)	completion of asset acquisitions; and


(xxix)	completion of financing transactions.

Performance Goals may be absolute amounts or percentages of amounts, may be relative to the performance of other companies or of indexes or may be based upon absolute values or values determined on a per-share basis.

Except as otherwise expressly provided, all financial terms are used as defined under Generally Accepted Accounting Principles ("GAAP") and all determinations shall be made in accordance with GAAP, as applied by the Company in the preparation of its periodic reports to stockholders.

To the extent permitted by Section 162(m) of the Code, unless the Plan Administrator provides otherwise at the time of establishing the Performance Goals, for each fiscal year of the Company, there shall be objectively determinable adjustments, as determined in accordance with GAAP, to any of the Performance Criteria described above for one or more of the items of gain, loss, profit or expense: (A) determined to be extraordinary or unusual in nature or infrequent in occurrence, (B) related to the disposal of a segment of a business, (C) related to a change in accounting principle under GAAP, (D) related to discontinued operations that do not qualify as a segment of a business under GAAP, and (E) attributable to the business operations of any entity acquired by the Company during the fiscal year.



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Exhibit 10.7

INDEMNIFICATION AGREEMENT

THIS INDEMNIFICATION AGREEMENT is made and entered into this 9 ^th day of February, 2015 ("Agreement"), by and between Carey Watermark Investors 2 Incorporated, a Maryland corporation (the "Company"), and CWA2, LLC, an Illinois limited liability company (the "Subadvisor").

WHEREAS, pursuant to that certain Advisory Agreement dated as of that date hereof (as amended from time to time, the "Advisory Agreement"), among Carey Lodging Advisors, LLC, a Delaware limited liability company (the "Advisor"), the Company and CWI 2 OP, LP, a Delaware limited partnership, of which the Company is a general partner (the "Operating Partnership," and together with the Company, the "REIT"), Advisor has agreed to perform certain services for the REIT, including the identification, evaluation, negotiation, financing, purchase, asset management and disposition of the REIT's lodging and lodging related investments (collectively, the "Services"); and

WHEREAS, pursuant to that certain Subadvisory Agreement dated as of that date hereof (as amended from time to time, the "Subadvisory Agreement"), between the Advisor and the Subadvisor, the Subadvisor has agreed to assist the Advisor in performing the Services by providing to the Subadvisor certain services and support and may, therefore, be subjected to claims, suits or proceedings arising as a result of its service; and

WHEREAS, as an inducement to Subadvisor to continue to serve as such subadvisor, the Company has agreed to indemnify and to advance expenses and costs incurred by the Subadvisor Indemnitees (as defined below) in connection with any such claims, suits or proceedings, subject to certain limitations set forth herein; and

WHEREAS, the parties by this Agreement desire to set forth their agreement regarding indemnification and advance of expenses; and

NOW, THEREFORE, in consideration of the premises and the covenants contained herein, the Company and the Subadvisor do hereby covenant and agree as follows:

Section 1. Definitions . For purposes of this Agreement:

(a) "Affiliate" means any of the following: (i) any Person directly or indirectly owning, controlling, or holding, with power to vote ten percent or more of the outstanding voting securities of such other Person; (ii) any Person ten percent or more of whose outstanding voting securities are directly or indirectly owned, controlled, or held, with power to vote, by such other Person; (iii) any Person directly or indirectly controlling, controlled by, or under common control with such other Person; (iv) any executive officer, director, trustee or general partner of such other Person; or (v) any legal entity for which such Person acts as an executive officer, director, trustee or general partner.

(b) "Person" means any individual, entity, corporation, partnership, joint venture, limited liability company, estate, trust, unincorporated association, any federal, state, county or municipal

government or any bureau, department or agency thereof and any fiduciary acting in such capacity on behalf of any of the foregoing.

(c) "Subadvisor Indemnitees" means the Subadvisor, its Affiliates, and the directors, officers, employees, agents and equity holders of the Subadvisor and its Affiliates.

Section 2. Services by Subadvisor . Pursuant to the Subadvisory Agreement, the Subadvisor will serve as subadvisor to the Advisor. However, this Agreement shall not impose any obligation on the Subadvisor or the Advisor to continue the Subadvisor's service to the Advisor beyond any period otherwise required by the Subadvisory Agreement.

Section 3. Limitations on Activities .

(a) Anything else in this Agreement to the contrary notwithstanding, the Subadvisor shall refrain from taking any action which, in its sole judgment made in good faith, would (i) adversely affect the status of the Company as a real estate investment trust or of the Operating Partnership as a partnership for Federal income tax purposes, (ii) subject the Company or the Operating Partnership to regulation under the Investment Company Act of 1940, as amended, or (iii) would violate any law, rule, regulation or statement of policy of any governmental body or agency having jurisdiction over the Company, its shares of common stock, par value $0.001, or any other securities of the Company, or otherwise not be permitted by the Company's Amended and Restated Articles of Incorporation or Bylaws or agreement of limited partnership of the Operating Partnership, except if such action shall be ordered by the Advisor, pursuant to an order by the Board of Directors (the "Board") of the Company. In such event the Subadvisor shall have no liability for acting in accordance with the specific instructions of the Advisor so given.

(b) Notwithstanding the foregoing, the Company shall indemnify and hold harmless the Subadvisor Indemnitees for any loss or liability suffered by them, and the Subadvisor Indemnitees shall not be liable to the Company, the Operating Partnership or to the members of the Board or the Company's shareholders for any act or omission by the Subadvisor Indemnitees, if in each case the following conditions are met:

(1) the Subadvisor Indemnitees have determined, in good faith, that the course of conduct which caused the loss or liability was in the best interests of the Company;

(2) the Subadvisor Indemnitees were acting on behalf of or performing services for the Company; and

(3) such liability or loss was not the result of negligence or misconduct by the Subadvisor Indemnitees.

(c) Notwithstanding the foregoing, the Subadvisor Indemnitees shall not be indemnified by the Company or the Operating Partnership for any losses, liabilities or expenses arising from or out of the alleged violation of federal or state securities laws unless one or more of the following conditions are met:

(1) there has been a successful adjudication on the merits of each count involving alleged securities law violations as to the particular indemnitee;

(2) such claims have been dismissed with prejudice on the merits by a court of competent jurisdiction as to the particular indemnitee; or

(3) a court of competent jurisdiction approves a settlement of the claims against a particular indemnitee and finds that indemnification of the settlement and the related costs should be made, and the court considering the request for indemnification has been advised of the position of the Securities and Exchange Commission and of the published position of any state securities regulatory authority in which securities of Company were offered or sold as to indemnification for violation of securities laws.

Section 4. Advance of Expenses . The Company and the Operating Partnership shall, within ten (10) days after the receipt by the Company of a statement or statements from any Subadvisor Indemnitee requesting such advance or advances from time to time, whether prior to or after final disposition of any legal activities for which indemnification is being sought, advance funds to the Subadvisor Indemnitees for legal expenses and other costs incurred as a result of any legal action for which indemnification is being sought only if all of the following conditions are satisfied:

(a) the legal action relates to acts or omissions with respect to the performance of duties or services on behalf of the Company;

(b) the Subadvisor Indemnitee has provided the Company or the Operating Partnership with a written affirmation of his, her or its good faith belief that the standard of conduct necessary for indemnification has been met;

(c) the legal action is initiated by a third party who is not a shareholder of the Company or the legal action is initiated by a shareholder of the Company acting in his or her capacity as such and a court of competent jurisdiction specifically approves such advancement; and

(d) the Subadvisor Indemnitee undertakes to repay the advanced funds to the Company, together with the applicable legal rate of interest thereon, in cases in which such Subadvisor Indemnitee is found not to be entitled to indemnification.

Section 5. Indemnification by the Company and the Operating Partnership . Neither the Company nor the Operating Partnership shall indemnify any Subadvisor Indemnitee for any loss or liability suffered by the Subadvisor Indemnitee, or hold the Subadvisor Indemnitee harmless for any loss or liability suffered by the Company, except as permitted under Sections 3 and 4 hereof.

Section 6. Indemnification by the Subadvisor . The Subadvisor shall indemnify and hold harmless the Company and the Operating Partnership from liability, claims, damages, taxes or losses and related expenses including attorneys' fees, to the extent that such liability, claims, damages, taxes or losses and related expenses are not fully reimbursed by insurance and are incurred by reason

of the bad faith, fraud, willful misfeasance, misconduct, negligence or reckless disregard of the duties of any Subadvisor Indemnitee.

Section 7. Limitations on Indemnification .

(a) Anything else in this Agreement to the contrary notwithstanding, the Subadvisor Indemnitees shall not be entitled to indemnification or be held harmless pursuant to Sections 3 and 4 hereof for any activity which the Subadvisor shall be required to indemnify or hold harmless the Company pursuant to Section 6 hereof.

(b) Any amounts paid pursuant to Sections 3 and 4 hereof shall be recoverable or paid only out the net assets of the Company and not from shareholders of the Company.

Section 8. Severability . If any provision or provisions of this Agreement shall be held to be invalid, illegal or unenforceable for any reason whatsoever: (a) the validity, legality and enforceability of the remaining provisions of this Agreement (including, without limitation, each portion of any section of this Agreement containing any such provision held to be invalid, illegal or unenforceable that is not itself invalid, illegal or unenforceable) shall not in any way be affected or impaired thereby; and (b) to the fullest extent possible, the provisions of this Agreement (including, without limitation, each portion of any section of this Agreement containing any such provision held to be invalid, illegal or unenforceable, that is not itself invalid, illegal or unenforceable) shall be construed so as to give effect to the intent manifested thereby.

Section 9. Identical Counterparts . This Agreement may be executed in one or more counterparts, each of which shall for all purposes be deemed to be an original but all of which together shall constitute one and the same Agreement. One such counterpart signed by the party against whom enforceability is sought shall be sufficient to evidence the existence of this Agreement.

Section 10. Headings . The headings of the paragraphs of this Agreement are inserted for convenience only and shall not be deemed to constitute part of this Agreement or to affect the construction thereof.

Section 11. Modification and Waiver . No supplement, modification or amendment of this Agreement shall be binding unless executed in writing by both of the parties hereto. No waiver of any of the provisions of this Agreement shall be deemed or shall constitute a waiver of any other provisions hereof (whether or not similar) nor shall such waiver constitute a continuing waiver.

Section 12. Notices . All notices, requests, demands and other communications hereunder shall be in writing and shall be deemed to have been duly given if (i) delivered by hand and receipted for by the party to whom said notice or other communication shall have been directed, or (ii) mailed by certified or registered mail with postage prepaid, on the third business day after the date on which it is so mailed:

(a) If to the Subadvisor, to:

CWA2, LLC

c/o Watermark Capital Partners, LLC

272 East Deerpath Road

Suite 320

Lake Forest, IL 60045

Attn: Michael G. Medzigian

With a copy to:

Law Offices of Michael W. Black, Esq.

70 West Madison Street

Suite 3500

Chicago, Illinois 60602

Attention: Michael W. Black, Esq.

(b) If to the Company to:

Carey Watermark Investors 2 Incorporated

c/o W. P. Carey Inc.

50 Rockefeller Plaza

New York, New York 10020
Attn: General Counsel

or to such other address as may have been furnished to the Subadvisor by the Company or to the Company by the Subadvisor, as the case may be.

Section 13. Governing Law . The parties agree that this Agreement shall be governed by, and construed and enforced in accordance with, the laws of the State of New York, without regard to its conflicts of laws rules.

[SIGNATURE PAGE FOLLOWS]

IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the day and year first above written.

CAREY WATERMARK INVESTORS 2 INCORPORATED

By: /s/ Thomas E. Zacharias

Name: Thomas E. Zacharias

Title: Chief Operating Officer

CWA2, LLC

By: Watermark Capital Partners, LLC,
its Managing Member

By: /s/ Michael G. Medzigian

Name: Michael G. Medzigian

Title: Managing Member

EXHIBIT 10.8

FORM OF INDEMNIFICATION AGREEMENT

THIS INDEMNIFICATION AGREEMENT is made and entered into this ___ day of _____________, 2015 (" Agreement "), by and between Carey Watermark Investors 2 Incorporated, a Maryland corporation (the " Company "), and ____________ (" Indemnitee ").

WHEREAS, at the request of the Company, Indemnitee currently serves as a director and/or officer of the Company and may, therefore, be subjected to claims, suits or proceedings arising as a result of his or her service; and

WHEREAS, as an inducement to Indemnitee to continue to serve as such director and/or officer, the Company has agreed to indemnify and to advance expenses and costs incurred by Indemnitee in connection with any such claims, suits or proceedings, subject to certain limitations set forth herein; and

WHEREAS, the parties by this Agreement desire to set forth their agreement regarding indemnification and advance of expenses;

NOW, THEREFORE, in consideration of the premises and the covenants contained herein, the Company and Indemnitee do hereby covenant and agree as follows:

Section 1. Definitions . For purposes of this Agreement:

(a) " Affiliates " means, with respect to a specified person or entity, another person or entity that directly, or indirectly through one or more persons or entities, Controls or is Controlled by or is under common Control with the person or entity specified.

(b) " Control " means the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of a person or entity, whether through the ability to exercise voting power, by contract or otherwise. "Controlling" and "Controlled" have meanings correlative thereto.

(c) " Change of Control " means a change in control of the Company occurring after the Effective Date of a nature that would be required to be reported in response to Item 6(e) of Schedule 14A of Regulation 14A (or in response to any similar item on any similar schedule or form) promulgated under the Securities Exchange Act of 1934, as amended (the " Act "), whether or not the Company is then subject to such reporting requirement; provided , however , that , without limitation, such a Change in Control shall be deemed to have occurred if after the Effective Date (i) any "person" (as such term is used in Sections 13(d) and 14(d) of the Act) is or becomes the "beneficial owner" (as defined in Rule 13d-3 under the Act), directly or indirectly, of securities of the Company representing 15% or more of the combined voting power of the Company's then outstanding securities without the prior approval of at least two-thirds of the members of the Board of Directors in office immediately prior to such person attaining such percentage interest; (ii) there occurs a proxy contest, or the Company is a party to a merger, consolidation, sale of assets, plan of

liquidation or other reorganization not approved by at least two-thirds of the members of the Board of Directors then in office, as a consequence of which members of the Board of Directors in office immediately prior to such transaction or event constitute less than a majority of the Board of Directors thereafter; or (iii) during any period of two consecutive years, other than as a result of an event described in clause (a)(ii) of this Section 1, individuals who at the beginning of such period constituted the Board of Directors (including for this purpose any new director whose election or nomination for election by the Company's stockholders was approved by a vote of at least two-thirds of the directors then still in office who were directors at the beginning of such period) cease for any reason to constitute at least a majority of the Board of Directors.

(d) " Corporate Status " means the status of a person who is or was a director, officer, employee or agent of the Company or of any other corporation, partnership, joint venture, trust, employee benefit plan or other enterprise for which such person is or was serving at the request of the Company.

(e) " Disinterested Director " means a director of the Company who is not and was not a party to the Proceeding in respect of which indemnification is sought by Indemnitee.

(f) " Effective Date " means the date set forth in the first paragraph of this Agreement.

(g) " Expenses " shall include all reasonable and out-of-pocket attorneys' fees, retainers, court costs, transcript costs, fees of experts, witness fees, travel expenses, duplicating costs, printing and binding costs, telephone charges, postage, delivery service fees, and all other disbursements or expenses of the types customarily incurred in connection with prosecuting, defending, preparing to prosecute or defend, investigating, or being or preparing to be a witness in a Proceeding.

(h) " Independent Counsel " means a law firm, or a member of a law firm, that is experienced in matters of corporation law and neither is, nor in the past five years has been, retained to represent: (i) the Company, Affiliates of the Company, any entity for which the Company's external advisor or its Affiliates acts as investment advisor, or Indemnitee in any matter material to either such party, or (ii) any other party to or witness in the Proceeding giving rise to a claim for indemnification hereunder. Notwithstanding the foregoing, the term "Independent Counsel" shall not include any person who, under the applicable standards of professional conduct then prevailing, would have a conflict of interest in representing either the Company or Indemnitee in an action to determine Indemnitee's rights under this Agreement. If a Change of Control has not occurred, Independent Counsel shall be selected by the Board of Directors, with the approval of Indemnitee, which approval will not be unreasonably withheld. If a Change of Control has occurred, Independent Counsel shall be selected by Indemnitee, with the approval of the Board of Directors, which approval will not be unreasonably withheld.

(i) " Proceeding " includes any threatened, pending or completed action, suit, arbitration, alternate dispute resolution mechanism, investigation, administrative hearing or any other proceeding, whether civil, criminal, administrative or investigative (including on appeal).

Section 2. Services by Indemnitee . Indemnitee will serve as a director and/or officer of the Company. However, this Agreement shall not impose any obligation on Indemnitee or the

Company to continue Indemnitee's service to the Company beyond any period otherwise required by law or by other agreements or commitments of the parties, if any.

Section 3. Indemnification - General . Subject to the limitations in Section 7, the Company shall indemnify, and advance Expenses to, Indemnitee (a) as provided in this Agreement and (b) as otherwise permitted by Maryland law in effect on the date hereof and as amended from time to time; provided , however , that no change in Maryland law shall have the effect of reducing the benefits available to Indemnitee hereunder based on Maryland law as in effect on the Effective Date. Subject to the limitations in Section 7, the rights of Indemnitee provided in this Section 3 shall include the rights set forth in the other sections of this Agreement, including any additional indemnification permitted by Section 2-418(g) of the Maryland General Corporation Law (" MGCL ").

Section 4. Rights to Indemnification . Subject to the limitations in Section 7, if, by reason of his or her Corporate Status, Indemnitee is, or is threatened to be, made a party to or a witness in any Proceeding, Indemnitee shall be indemnified against all judgments, penalties, fines and amounts paid in settlement and all Expenses actually and reasonably incurred by him or her or on his or her behalf unless it is established by clear and convincing evidence that (i) the act or omission of Indemnitee was material to the matter giving rise to the Proceeding and (a) was committed in bad faith or (b) was the result of active and deliberate dishonesty, (ii) Indemnitee actually received an improper personal benefit in money, property or services, or (iii) in the case of any criminal Proceeding, Indemnitee had reasonable cause to believe that his or her conduct was unlawful.

Section 5. Court-Ordered Indemnification . Subject to the limitations in Section 7, a court of appropriate jurisdiction, upon application of Indemnitee and such notice as the court shall require, may order indemnification in the following circumstances:

(a) if it determines Indemnitee is entitled to reimbursement under Section 2-418(d)(1) of the MGCL, the court shall order indemnification, in which case Indemnitee shall be entitled to recover the expenses of securing such reimbursement; or

(b) if it determines that Indemnitee is fairly and reasonably entitled to indemnification in view of all the relevant circumstances, whether or not Indemnitee (i) has met the standards of conduct set forth in Section 2-418(b) of the MGCL or (ii) has been adjudged liable for receipt of an improper personal benefit under Section 2-418(c) of the MGCL, in which case the court may order such indemnification as the court shall deem proper.

Section 6. Indemnification for Expenses of a Party Who is Wholly or Partly Successful . Subject to the limitations in Section 7, to the extent that Indemnitee is, by reason of his or her Corporate Status, made a party to and is successful, on the merits or otherwise, in the defense of any Proceeding, he or she shall be indemnified for all Expenses actually and reasonably incurred by him or her or on his or her behalf in connection therewith. If Indemnitee is not wholly successful in such Proceeding but is successful, on the merits or otherwise, as to one or more but less than all claims, issues or matters in such Proceeding, the Company shall indemnify Indemnitee under this Section 6 for all Expenses actually and reasonably incurred by him or her or on his or

her behalf in connection with each successfully resolved claim, issue or matter, allocated on a reasonable and proportionate basis. For purposes of this Section and without limitation, the termination of any claim, issue or matter in such a Proceeding by dismissal, with or without prejudice, shall be deemed to be a successful result as to such claim, issue or matter.

Section 7. Limitations on Indemnification . Notwithstanding any other provision of this Agreement, the Company shall not be obligated under this Agreement to make any payment to Indemnitee for indemnification with respect to any Proceeding:

(a) for any loss or liability unless all of the following conditions are met: (i) Indemnitee has determined, in good faith, that the course of conduct that caused the loss or liability was in the best interests of the Company, (ii) Indemnitee was acting on behalf of or performing services for the Company, (iii) if Indemnitee is an inside director of the Company, such loss or liability was not the result of negligence or misconduct, or, if Indemnitee is an independent director, gross negligence or willful misconduct, and (iv) such indemnification is recoverable only out of the Company's net assets and not from the Company's stockholders; or

(b) for any loss or liability arising from an alleged violation of federal or state securities laws unless one or more of the following conditions are met: (i) there has been a successful adjudication on the merits of each count involving alleged securities law violations as to Indemnitee, (ii) such claims have been dismissed with prejudice on the merits by a court of competent jurisdiction as to Indemnitee; or (iii) a court of competent jurisdiction approves a settlement of the claims against Indemnitee and finds that indemnification of the settlement and the related costs should be made, and the court considering the request for indemnification has been advised of the position of the Securities and Exchange Commission and of the published position of any state securities regulatory authority in which securities of the Company were offered or sold as to indemnification for violations of securities laws.

Section 8. Advance of Expenses . The Company shall advance all reasonable Expenses actually and reasonably incurred by or on behalf of Indemnitee in connection with any Proceeding (other than a Proceeding brought to enforce indemnification under this Agreement, applicable law, the charter or Bylaws of the Company, any agreement or a resolution of the stockholders entitled to vote generally in the election of directors or of the Board of Directors) to which Indemnitee is, or is threatened to be, made a party or a witness, which is initiated by a third party who is not a stockholder of the Company, or which is initiated by a stockholder of the Company acting in his or her capacity as such and a court of competent jurisdiction specifically approves such advancement, and which relates to acts or omissions with respect to the performance of duties or services on behalf of the Company, within ten days after the receipt by the Company of a statement or statements from Indemnitee requesting such advance or advances from time to time, whether prior to or after final disposition of such Proceeding. Such statement or statements shall reasonably evidence the Expenses incurred by Indemnitee and shall include or be preceded or accompanied by a written affirmation by Indemnitee of Indemnitee's good faith belief that the standard of conduct necessary for indemnification by the Company as authorized by law and by this Agreement has been met and a written undertaking by or on behalf of Indemnitee, in substantially the form attached hereto as Exhibit A or in such form as may be required under applicable law as in effect at the time of the

execution thereof, to reimburse the portion of any Expenses advanced to Indemnitee, together with the applicable legal rate of interest thereon, relating to claims, issues or matters in the Proceeding as to which it shall ultimately be established, by clear and convincing evidence, that the standard of conduct for indemnification, as set forth in Section 4, has not been met and which have not been successfully resolved as described in Section 6. To the extent that Expenses advanced to Indemnitee do not relate to a specific claim, issue or matter in the Proceeding, such Expenses shall be allocated on a reasonable and proportionate basis. The undertaking required by this Section 8 shall be an unlimited general obligation by or on behalf of Indemnitee and shall be accepted without reference to Indemnitee's financial ability to repay such advanced Expenses and without any requirement to post security therefor. In any Proceeding initiated by a stockholder of the Company acting in his or her capacity as such, the Company shall promptly petition a court of competent jurisdiction for approval of the advancement of all reasonable Expenses actually and reasonably incurred by or on behalf of Indemnitee upon the receipt by the Company of a statement or statements from Indemnitee requesting such advance or advances.

Section 9. Procedure for Determination of Entitlement to Indemnification .

(a) To obtain indemnification under Section 4 of this Agreement, Indemnitee shall submit to the Company a written request, including such documentation and information as is reasonably available to Indemnitee and is reasonably necessary to determine whether and to what extent Indemnitee is entitled to indemnification. The Secretary of the Company shall, promptly upon receipt of such a request for indemnification, advise the Board of Directors in writing that Indemnitee has requested indemnification.

(b) Upon written request by Indemnitee for indemnification pursuant to the first sentence of Section 9(a) hereof, a determination, if required by applicable law, with respect to Indemnitee's entitlement thereto shall promptly be made in the specific case: (i) if a Change of Control shall have occurred, by Independent Counsel in a written opinion to the Board of Directors, a copy of which shall be delivered to Indemnitee; or (ii) if a Change of Control shall not have occurred, (A) by the Board of Directors (or a duly authorized committee thereof) by a majority vote of a quorum consisting of Disinterested Directors (as herein defined), or (B) if a quorum of the Board of Directors consisting of Disinterested Directors is not obtainable or, even if obtainable, such quorum of Disinterested Directors so directs, by Independent Counsel in a written opinion to the Board of Directors, a copy of which shall be delivered to Indemnitee, or (C) if so directed by a majority of the members of the Board of Directors, by the stockholders of the Company. If it is so determined that Indemnitee is entitled to indemnification, payment to Indemnitee shall be made within ten days after such determination. Indemnitee shall cooperate with the person, persons or entity making such determination with respect to Indemnitee's entitlement to indemnification, including providing to such person, persons or entity upon reasonable advance request any documentation or information which is not privileged or otherwise protected from disclosure and which is reasonably available to Indemnitee and reasonably necessary to such determination in the discretion of the Board of Directors or Independent Counsel if retained pursuant to clause (ii)(B) of this Section 9. Any Expenses actually and reasonably incurred by Indemnitee in so cooperating with the person, persons or entity making such determination shall be borne by the Company (irrespective of the

determination as to Indemnitee's entitlement to indemnification) and the Company shall indemnify and hold Indemnitee harmless therefrom.

(c) In making a determination with respect to entitlement to indemnification hereunder, the person or persons or entity making such determination shall presume that Indemnitee is entitled to indemnification under this Agreement if Indemnitee has submitted a request for indemnification in accordance with Section 9(a) of this Agreement, and the Company shall have the burden of proof to overcome that presumption in connection with the making of any determination contrary to that presumption.

(d) The termination of any Proceeding by judgment, order, settlement, conviction, a plea of nolo contendere or its equivalent, or an entry of an order of probation prior to judgment, does not create a presumption that Indemnitee did not meet the requisite standard of conduct described herein for indemnification.

Section 10. Remedies of Indemnitee .

(a) If (i) a determination is made pursuant to Section 9 of this Agreement that Indemnitee is not entitled to indemnification under this Agreement, (ii) advance of Expenses is not timely made pursuant to Section 8 of this Agreement, (iii) no determination of entitlement to indemnification shall have been made pursuant to Section 9(b) of this Agreement within 30 days after receipt by the Company of the request for indemnification, (iv) payment of indemnification is not made pursuant to Section 6 of this Agreement within ten days after receipt by the Company of a written request therefor, or (v) payment of indemnification is not made within ten days after a determination has been made that Indemnitee is entitled to indemnification, Indemnitee shall be entitled to an adjudication in an appropriate court located in the State of Maryland, or in any other court of competent jurisdiction, of his or her entitlement to such indemnification or advance of Expenses. Alternatively, Indemnitee, at his or her option, may seek an award in arbitration to be conducted by a single arbitrator pursuant to the commercial Arbitration Rules of the American Arbitration Association. Indemnitee shall commence such proceeding seeking an adjudication or an award in arbitration within 180 days following the date on which Indemnitee first has the right to commence such proceeding pursuant to this Section 10(a); provided , however , that the foregoing clause shall not apply to a proceeding brought by Indemnitee to enforce his or her rights under Section 6 of this Agreement.

(b) In any judicial proceeding or arbitration commenced pursuant to this Section 10, the Company shall have the burden of proving that Indemnitee is not entitled to indemnification or advance of Expenses, as the case may be.

(c) If a determination shall have been made pursuant to Section 9(b) of this Agreement that Indemnitee is entitled to indemnification, the Company shall be bound by such determination in any judicial proceeding or arbitration commenced pursuant to this Section 10, absent a misstatement by Indemnitee of a material fact, or an omission of a material fact necessary to make Indemnitee's statement not materially misleading, in connection with the request for indemnification.

(d) In the event that Indemnitee, pursuant to this Section 10, seeks a judicial adjudication of or an award in arbitration to enforce his or her rights under, or to recover damages for breach of, this Agreement, Indemnitee shall be entitled to recover from the Company, and shall be indemnified by the Company for, any and all Expenses actually and reasonably incurred by him or her in such judicial adjudication or arbitration. If it shall be determined in such judicial adjudication or arbitration that Indemnitee is entitled to receive part but not all of the indemnification or advance of Expenses sought, the Expenses incurred by Indemnitee in connection with such judicial adjudication or arbitration shall be appropriately prorated.

Section 11. Defense of the Underlying Proceeding .

(a) Indemnitee shall notify the Company promptly upon being served with or receiving any summons, citation, subpoena, complaint, indictment, information, notice, request or other document relating to any Proceeding which may result in the right to indemnification or the advance of Expenses hereunder; provided , however , that the failure to give any such notice shall not disqualify Indemnitee from the right, or otherwise affect in any manner any right of Indemnitee, to indemnification or the advance of Expenses under this Agreement unless the Company's ability to defend in such Proceeding or to obtain proceeds under any insurance policy is materially and adversely prejudiced thereby, and then only to the extent the Company is thereby actually so prejudiced.

(b) Subject to the provisions of the last sentence of this Section 11(b) and of Section 11(c) below, the Company shall have the right to defend Indemnitee in any Proceeding which may give rise to indemnification hereunder; provided , however , that the Company shall notify Indemnitee of any such decision to defend within 15 calendar days following receipt of notice of any such Proceeding under Section 11(a) above. The Company shall not, without the prior written consent of Indemnitee, which shall not be unreasonably withheld or delayed, consent to the entry of any judgment against Indemnitee or enter into any settlement or compromise which (i) includes an admission of fault of Indemnitee or (ii) does not include, as an unconditional term thereof, the full release of Indemnitee from all liability in respect of such Proceeding, which release shall be in form and substance reasonably satisfactory to Indemnitee. This Section 11(b) shall not apply to a Proceeding brought by Indemnitee under Section 10 above or Section 17 below.

(c) Notwithstanding the provisions of Section 11(b) above, if in a Proceeding to which Indemnitee is a party by reason of Indemnitee's Corporate Status, (i) Indemnitee reasonably concludes, based upon an opinion of counsel approved by the Company, which approval shall not be unreasonably withheld, that he or she may have separate defenses or counterclaims to assert with respect to any issue which may not be consistent with other defendants in such Proceeding, (ii) Indemnitee reasonably concludes, based upon an opinion of counsel approved by the Company, which approval shall not be unreasonably withheld, that an actual or apparent conflict of interest or potential conflict of interest exists between Indemnitee and the Company, or (iii) if the Company fails to assume the defense of such Proceeding in a timely manner, Indemnitee shall be entitled to be represented by separate legal counsel of Indemnitee's choice, subject to the prior approval of the Company, which shall not be unreasonably withheld, at the expense of the Company. In addition, if the Company fails to comply with any of its obligations under this Agreement or in the event that

the Company or any other person takes any action to declare this Agreement void or unenforceable, or institutes any Proceeding to deny or to recover from Indemnitee the benefits intended to be provided to Indemnitee hereunder, Indemnitee shall have the right to retain counsel of Indemnitee's choice, subject to the prior approval of the Company, which shall not be unreasonably withheld, at the expense of the Company (subject to Section 10(d)), to represent Indemnitee in connection with any such matter.

Section 12. Non-Exclusivity; Survival of Rights; Subrogation; Insurance.

(a) The rights of indemnification and advance of Expenses as provided by this Agreement shall not be deemed exclusive of any other rights to which Indemnitee may at any time be entitled under applicable law, the charter or Bylaws of the Company, any agreement or a resolution of the stockholders entitled to vote generally in the election of directors or of the Board of Directors, or otherwise. No amendment, alteration or repeal of this Agreement or of any provision hereof shall limit or restrict any right of Indemnitee under this Agreement in respect of any action taken or omitted by such Indemnitee in his or her Corporate Status prior to such amendment, alteration or repeal.

(b) In the event of any payment under this Agreement, the Company shall be subrogated to the extent of such payment to all of the rights of recovery of Indemnitee, who shall execute all papers required and take all action necessary to secure such rights, including execution of such documents as are necessary to enable the Company to bring suit to enforce such rights.

(c) The Company shall not be liable under this Agreement to make any payment of amounts otherwise indemnifiable or payable or reimbursable as Expenses hereunder if and to the extent that Indemnitee has otherwise actually received such payment under any insurance policy, contract, agreement or otherwise.

Section 13. Insurance . The Company will use its reasonable best efforts to acquire and maintain directors and officers liability insurance, on terms and conditions deemed appropriate by the Board of Directors of the Company, with the advice of counsel, covering Indemnitee or any claim made against Indemnitee for service as a director or officer of the Company and covering the Company for any indemnification or advance of Expenses made by the Company to Indemnitee for any claims made against Indemnitee for service as a director or officer of the Company. Without in any way limiting any other obligation under this Agreement, the Company shall indemnify Indemnitee for any payment by Indemnitee arising out of the amount of any deductible or retention and the amount of any excess of the aggregate of all judgments, penalties, fines, settlements and reasonable Expenses actually and reasonably incurred by Indemnitee in connection with a Proceeding over the coverage of any insurance referred to in the previous sentence.

Section 14. Indemnification for Expenses of a Witness . Subject to the limitations in Section 7, to the extent that Indemnitee is or may be, by reason of his or her Corporate Status, a witness in any Proceeding, whether instituted by the Company or any other party, and to which Indemnitee is not a party but in which the Indemnitee receives a subpoena to testify or to produce documents, he or she shall be advanced all reasonable Expenses and indemnified against all Expenses actually and reasonably incurred by him or her or on his or her behalf in connection therewith.

Section 15. Duration of Agreement; Binding Effect.

(a) This Agreement shall continue until and terminate ten years after the date that Indemnitee's Corporate Status shall have ceased; provided , that the rights of Indemnitee hereunder shall continue until the final termination of any Proceeding then pending in respect of which Indemnitee is granted rights of indemnification or advance of Expenses hereunder and of any proceeding commenced by Indemnitee pursuant to Section 10 of this Agreement relating thereto.

(b) The indemnification and advance of Expenses provided by, or granted pursuant to, this Agreement shall be binding upon and be enforceable by the parties hereto and their respective successors and assigns (including any direct or indirect successor by purchase, merger, consolidation or otherwise to all or substantially all of the business or assets of the Company), shall continue as to an Indemnitee who has ceased to be a director, trustee, officer, employee or agent of the Company or of any other corporation, partnership, joint venture, trust, employee benefit plan or other enterprise which such person is or was serving in any capacity at the written request of the Company, and shall inure to the benefit of Indemnitee and his or her spouse, assigns, heirs, devisees, executors and administrators and other legal representatives.

(c) The Company shall require and cause any successor (whether direct or indirect by purchase, merger, consolidation or otherwise) to all, substantially all or a substantial part of the business and/or assets of the Company, by written agreement in form and substance satisfactory to Indemnitee, expressly to assume and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform if no such succession had taken place.

Section 16. Severability . If any provision or provisions of this Agreement shall be held to be invalid, illegal or unenforceable for any reason whatsoever: (a) the validity, legality and enforceability of the remaining provisions of this Agreement (including, without limitation, each portion of any section of this Agreement containing any such provision held to be invalid, illegal or unenforceable that is not itself invalid, illegal or unenforceable) shall not in any way be affected or impaired thereby; and (b) to the fullest extent possible, the provisions of this Agreement (including, without limitation, each portion of any section of this Agreement containing any such provision held to be invalid, illegal or unenforceable, that is not itself invalid, illegal or unenforceable) shall be construed so as to give effect to the intent manifested thereby.

Section 17. Exception to Right of Indemnification or Advance of Expenses . Notwithstanding any other provision of this Agreement, Indemnitee shall not be entitled to indemnification or advance of Expenses under this Agreement with respect to any Proceeding brought by Indemnitee, unless (a) the Proceeding is brought to enforce indemnification under this Agreement, and then only to the extent in accordance with and as authorized by Sections 8 and 10 of this Agreement, or (b) the Company's Bylaws, as amended, the Company's charter, a resolution of the stockholders entitled to vote generally in the election of directors or of the Board of Directors or an agreement approved by the Board of Directors to which the Company is a party expressly provide otherwise.

Section 18. Identical Counterparts . This Agreement may be executed in one or more counterparts, each of which shall for all purposes be deemed to be an original but all of which together shall constitute one and the same Agreement. One such counterpart signed by the party against whom enforceability is sought shall be sufficient to evidence the existence of this Agreement.

Section 19. Headings . The headings of the paragraphs of this Agreement are inserted for convenience only and shall not be deemed to constitute part of this Agreement or to affect the construction thereof.

Section 20. Modification and Waiver . No supplement, modification or amendment of this Agreement shall be binding unless executed in writing by both of the parties hereto. No waiver of any of the provisions of this Agreement shall be deemed or shall constitute a waiver of any other provisions hereof (whether or not similar) nor shall such waiver constitute a continuing waiver.

Section 21. Notices . All notices, requests, demands and other communications hereunder shall be in writing and shall be deemed to have been duly given if (i) delivered by hand and receipted for by the party to whom said notice or other communication shall have been directed, or (ii) mailed by certified or registered mail with postage prepaid, on the third business day after the date on which it is so mailed:

(a) If to Indemnitee, to: The address set forth on the signature page hereto.

(b) If to the Company to:

Carey Watermark Investors 2 Incorporated
c/o W. P. Carey Inc.
50 Rockefeller Plaza
New York, New York 10020
Attn: General Counsel

or to such other address as may have been furnished to Indemnitee by the Company or to the Company by Indemnitee, as the case may be.

Section 22. Governing Law . The parties agree that this Agreement shall be governed by, and construed and enforced in accordance with, the laws of the State of Maryland, without regard to its conflicts of laws rules.

[ SIGNATURE PAGE FOLLOWS ]

IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the day and year first above written.



	CAREY WATERMARK INVESTORS 2 INCORPORATED
ATTEST:	By: Name: Title:
	INDEMNITEE
WITNESS:	Name: Address:

EXHIBIT A

FORM OF AFFIRMATION AND UNDERTAKING TO REPAY EXPENSES ADVANCED

The Board of Directors of Carey Watermark Investors 2 Incorporated

Re: Undertaking to Repay Expenses Advanced

Ladies and Gentlemen:

This undertaking is being provided pursuant to that certain Indemnification Agreement dated the _____ day of _______________, 20__, by and between Carey Watermark Investors 2 Incorporated, a Maryland corporation (the " Company "), and the undersigned Indemnitee (the " Indemnification Agreement "), pursuant to which I am entitled to advance of expenses in connection with [Description of Proceeding] (the " Proceeding ").

Terms used herein and not otherwise defined shall have the meanings specified in the Indemnification Agreement.

I am subject to the Proceeding by reason of my Corporate Status or by reason of alleged actions or omissions by me in such capacity. I hereby affirm that at all times, insofar as I was involved as a director or officer of the Company, in any of the facts or events giving rise to the Proceeding, I (1) acted in good faith and honestly, (2) did not receive any improper personal benefit in money, property or services and (3) in the case of any criminal proceeding, had no reasonable cause to believe that any act or omission by me was unlawful.

In consideration of the advance of Expenses by the Company for reasonable attorneys' fees and related expenses incurred by me in connection with the Proceeding (the " Advanced Expenses "), I hereby agree that if, in connection with the Proceeding, it is established that (1) an act or omission by me was material to the matter giving rise to the Proceeding and (a) was committed in bad faith or (b) was the result of active and deliberate dishonesty or (2) I actually received an improper personal benefit in money, property or services or (3) in the case of any criminal proceeding, I had reasonable cause to believe that the act or omission was unlawful, then I shall promptly reimburse the portion of the Advanced Expenses, together with the applicable legal rate of interest thereon, relating to the claims, issues or matters in the Proceeding as to which the foregoing findings have been established and which have not been successfully resolved as described in Section 6 of the Indemnification Agreement. To the extent that Advanced Expenses do not relate to a specific claim, issue or matter in the Proceeding, I agree that such Expenses shall be allocated on a reasonable and proportionate basis.

IN WITNESS WHEREOF, I have executed this Affirmation and Undertaking on this _____ day of _______________, 20__.



WITNESS:
	(SEAL)

EXHIBIT 10.10

FORM OF SELECTED DEALER AGREEMENT

WITH CAREY FINANCIAL, LLC

To:


RE:	CAREY WATERMARK INVESTORS 2 INCORPORATED

Ladies and Gentlemen:

Carey Financial, LLC (the “Dealer Manager”) entered into a dealer manager agreement, dated as of ____________, 2015 (the “Dealer Manager Agreement”), with Carey Watermark Investors 2 Incorporated, a Maryland corporation (the “Company”), under which the Dealer Manager agreed to use its best efforts to solicit subscriptions in connection with the public offering (the “Offering”) for its shares of common stock, $.001 par value per share, as described in the Dealer Manager Agreement commencing on the initial Effective Date (as defined below). Unless otherwise defined herein, capitalized terms used herein shall have the respective meanings therefor as in the Dealer Manager Agreement.

In connection with the performance of the Dealer Manager’s obligations under Section 3 of the Dealer Manager Agreement, the Dealer Manager is authorized to retain the services of securities dealers (the “Selected Dealers”) who are members of the Financial Industry Regulatory Authority (“FINRA”) to solicit subscriptions for Shares in connection with the Offering. You are hereby invited to become a Selected Dealer and, as such, to use your reasonable best efforts to solicit subscribers for Shares, in accordance with the following terms and conditions of this selected dealer agreement (this “Agreement”):


1.	Registration Statement .

(a)

Registration Statement and Prospectus. A registration statement on Form S-11 (File No. 333-196681), including a preliminary prospectus, has been prepared by the Company and was initially filed with the Securities and Exchange Commission (the “Commission”) on June 11, 2014, in accordance with the applicable requirements of the Securities Act of 1933, as amended (the “Securities Act”), and the applicable rules and regulations of the Commission promulgated thereunder (the “Securities Act Rules and Regulations”) for the registration of the Offering. The Company has prepared and filed such amendments thereto and such amended prospectus as may have been required to the date hereof, and will file such additional amendments and supplements thereto as may hereafter be required. The registration statement on Form S-11 and the prospectus contained therein, as finally amended at the date the registration statement is declared effective by the Commission (the “Effective Date”) are respectively hereinafter referred to as the “Registration Statement” and the “Prospectus”, except that:

(i)

Carey Financial, LLC

Selected Dealer Agreement 1

(ii)

As used herein, the terms “Registration Statement”, “preliminary Prospectus” and “Prospectus” shall include the documents, if any, incorporated by reference therein. As used herein, the term “Effective Date” also shall refer to the effective date of each post-effective amendment to the Registration Statement, unless the context otherwise requires.


1.	Compliance with Applicable Rules and Regulations; License and Association Membership .

Upon the date of this Agreement, the undersigned securities dealer will become one of the “Selected Dealers” referred to in the Dealer Manager Agreement and is referred to herein as “Selected Dealer”. Selected Dealer agrees that solicitation and other activities by it hereunder shall comply with, and shall be undertaken only in accordance with, the terms of the Dealer Manager Agreement, the terms of this Agreement, the Securities Act, the Securities Act Rules and Regulations, the Securities Exchange Act of 1934, as amended (the “Exchange Act”) and the applicable rules and regulations promulgated thereunder (the “Exchange Act Rules and Regulations”), the Blue Sky Survey (as defined below), the FINRA Rules applicable to the Offering from time to time in effect, specifically including, but not in any way limited to, NASD Conduct Rules 2340 (Customer Account Statements) and 2420 (Dealing with Non-Members), and FINRA Rules 2111 (Suitability), 2310 (Direct Participation Programs), 5130 (Restrictions on the Purchase and Sale of Initial Equity Public Offerings), and 5141 (Sale of Securities in a Fixed Price Offering), and the provisions of Article III.C. of the Statement of Policy Regarding Real Estate Investment Trusts of the North American Securities Administrators Association, Inc., as revised and amended on May 7, 2007 and as may be further revised and amended (the “NASAA Guidelines”).

Selected Dealer’s acceptance of this Agreement constitutes a representation to the Company and to the Dealer Manager that Selected Dealer is a properly registered or licensed broker-dealer, duly authorized to sell Shares under federal and state securities laws and regulations in all states where it offers or sells Shares, and that it is a member in good standing of FINRA. Selected Dealer represents and warrants that it is currently licensed as a broker-dealer in the jurisdictions identified on Schedule I to this Agreement and that its independent contractors and registered representatives have the appropriate licenses to offer and sell the Shares in such jurisdictions.

This Agreement shall automatically terminate with no further action by either party if Selected Dealer ceases to be a member in good standing of FINRA or with the securities commission of the state in which Selected Dealer’s principal office is located. Selected Dealer agrees to notify the Dealer Manager immediately if Selected Dealer ceases to be a member in good standing of FINRA or with the securities commission of any state in which Selected Dealer is currently registered or licensed.


2.	Limitation of Offer; Investor Suitability .


(a)	Investor Suitability. Selected Dealer will offer Shares only:

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(i)	to persons that meet the financial qualifications set forth in the Prospectus or in any suitability letter or memorandum sent to it by the Company or the Dealer Manager, and


(ii)	in accordance with Section 8, to persons in the jurisdictions in which it is advised in writing by the Company or the Dealer Manager that the Shares are qualified for sale or that qualification is not required (the “Blue Sky Survey”).

Notwithstanding the qualification of Shares for sale in any respective jurisdiction (or exemption therefrom), Selected Dealer will not offer Shares and will not permit any of its registered representatives to offer Shares in any jurisdiction unless both Selected Dealer and such registered representative are duly licensed to transact securities business in such jurisdiction. In offering Shares, Selected Dealer shall comply with the provisions of the FINRA Rules, as well as other applicable rules and regulations relating to suitability of investors, including, but not limited to, the provisions of Section III.C. of the NASAA Guidelines.

In offering the sale of Shares to any person, Selected Dealer will have reasonable grounds to believe (based on such information obtained from the investor concerning the investor’s age, investment objectives, other investments, financial situation, needs or any other information known by Selected Dealer after due inquiry) that: (A) such person is in a financial position appropriate to enable such person to realize to a significant extent the benefits described in the Prospectus, including the tax benefits where they are a significant aspect of the Company; (B) the investor has a fair market net worth sufficient to sustain the risks inherent in the program, including loss of investment and lack of liquidity; (C) the purchase of the Shares is otherwise suitable for such person; and (D) such person has either: (1) a minimum annual gross income of $70,000 and a minimum net worth (exclusive of home, home furnishings and automobiles) of $70,000; or (2) a minimum net worth (determined with the foregoing exclusions) of $250,000 and meets the higher suitability standards, if applicable, imposed by the state in which the investment by such investor is made. Selected Dealer further will use its best efforts to determine the suitability and appropriateness of an investment in the Shares of each proposed investor solicited by a person associated with Selected Dealer by reviewing documents and records disclosing the basis upon which the determination as to suitability was reached as to each proposed investor, whether such documents and records relate to accounts which have been closed, accounts which are currently maintained or accounts hereinafter established. In making the determinations as to financial qualifications and as to suitability required by the NASAA Guidelines, Selected Dealer may rely on (x) representations from investment advisers who are not affiliated with Selected Dealer, banks acting as trustees or fiduciaries, and (y) information it has obtained from a prospective investor, including such information as the investment objectives, other investments, financial situation and needs of the person or any other information known by Selected Dealer after due inquiry.

Notwithstanding the foregoing, Selected Dealer shall not execute any transaction with the Company in a discretionary account without prior written approval of the transaction by the customer.

(b)

Maintenance of Records. Selected Dealer shall maintain, for at least six years or for a period of time not less than that required in order to comply with all applicable federal, state and other regulatory requirements, whichever is later, a record of the information obtained to determine that an investor meets the suitability standards imposed on the offer and sale of the Shares (both at the time of the initial subscription and at the time of any additional subscriptions) and a representation of the investor that the investor is investing for the investor’s own account or, in lieu of such

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representation, information indicating that the investor for whose account the investment was made met the suitability standards. Selected Dealer may satisfy its obligation by contractually requiring such information to be maintained by the investment advisers or banks discussed above. Selected Dealer further agrees to comply with the record keeping requirements of the Exchange Act, including, but not limited to, Rules 17a-3 and 17a-4 promulgated under the Exchange Act. Selected Dealer agrees to make such documents and records available to the Dealer Manager and the Company upon request, and representatives of the Commission, FINRA and applicable state securities administrators upon Selected Dealer’s receipt of an appropriate document subpoena or other appropriate request for documents from any such agency.


3.	Delivery of Prospectus and Approved Sales Literature.


(a)	Delivery of Prospectus and Approved Sales Literature. Selected Dealer will:


(i)	deliver a Prospectus, as then supplemented or amended, to each person who subscribes for Shares at least five business days prior to the tender of such person’s order form, which is included as Annex B to the Prospectus (the “Order Form”);


(ii)	promptly comply with the written request of any person for a copy of the Prospectus, as then supplemented or amended, during the period between the initial Effective Date and the termination of the Offering;


(iii)	deliver to any person, in accordance with applicable law or as prescribed by any state securities administrator, a copy of any prescribed document included within or incorporated by reference in the Registration Statement and any supplements thereto during the course of the Offering;


(iv)	not use any sales materials in connection with the solicitation of purchasers of the Shares except Approved Sales Literature;


(v)	to the extent the Company provides Approved Sales Literature, not use such materials unless accompanied or preceded by the Prospectus, as then currently in effect, and as may be supplemented in the future; and


(vi)	not give or provide any information or make any representation or warranty other than information or representations contained in the Prospectus or the Approved Sales Literature. Selected Dealer will not publish, circulate or otherwise use any other advertisement or solicitation material in connection with the Offering without the Dealer Manager’s express prior written approval.


(b)	Agency is Not Created. Nothing contained in this Agreement shall be deemed or construed to make Selected Dealer an employee, agent, representative or partner of the Dealer Manager or the Company, and Selected Dealer is not authorized to act for the Dealer Manager or the Company.

(c)

Documents Must Be Accompanied or Preceded by a Prospectus. Selected Dealer will not send or provide amendments or supplements to the Prospectus or any Approved Sales Literature to any investor unless it has previously sent or provided a Prospectus and all amendments and supplements thereto to that investor or has simultaneously sent or provided a Prospectus and all amendments and supplements thereto with such Prospectus amendment or supplement or Approved Sales Literature.

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(d)	Broker-Dealer Use Only Material. Selected Dealer will not show to or provide any investor or reproduce any material or writing which is supplied to it by the Dealer Manager and marked “broker-dealer use only,” institutional communication, or otherwise bearing a legend denoting that it is not to be used in connection with the offer or sale of Shares to members of the public.


(e)	Copies of Prospectuses and Approved Sales Literature. The Dealer Manager will supply Selected Dealer with reasonable quantities of the Prospectus (including any supplements thereto), as well as any Approved Sales Literature, for delivery to investors.


(f)	Prospectus Delivery Requirement. Selected Dealer shall furnish a copy of any revised preliminary Prospectus to each person to whom it has furnished a copy of any previous preliminary Prospectus, and further agrees that it will mail or otherwise deliver all preliminary and final Prospectuses required for compliance with the provisions of Rule 15c2-8 under the Exchange Act.


4.	Submission of Orders; Right to Reject Orders.

(a)

Minimum Investment. Subject to certain individual state requirements and except for shares issued pursuant to the DRIP, Shares may be sold only to investors who initially purchase a minimum of $2,000 in Shares (in any combination of Class A Shares and Class T Shares), subject to certain state requirements as described in the Prospectus. With respect to Selected Dealer’s participation in any resales or transfers of the Shares, Selected Dealer agrees to comply with any applicable requirements set forth in Section 2 and to fulfill the obligations pursuant to FINRA Rule 2310.

(b)

Escrow Agreement. Until the minimum offering of $2,000,000 in Shares has been sold, payments for Shares shall be made by checks payable to “UMB Bank, N.A., as Escrow Agent for Carey Watermark Investors 2 Incorporated.” During such time, Selected Dealer shall forward original checks together with an original Order Form, executed and initialed by the subscriber as provided for in the Order Form, to UMB Bank, N.A. (the “ Escrow Agent ”) at the address provided in the Order Form.

When Selected Dealer’s internal supervisory procedures are conducted at the site at which the Order Form and check were initially received by Selected Dealer from the subscriber, Selected Dealer shall transmit the Order Form and check to the Escrow Agent by the end of the next business day following receipt of the check and Order Form. When, pursuant to Selected Dealer’s internal supervisory procedures, Selected Dealer’s final internal supervisory procedures are conducted at a different location (the “Final Review Office”), Selected Dealer shall transmit the check and Order Form to the Final Review Office by the end of the next business day following Selected Dealer’s receipt of the Order Form and check. The Final Review Office will, by the end of the next business day following its receipt of the Order Form and check, forward both the Order Form and check to the Escrow Agent. If any Order Form solicited by Selected Dealer is rejected by the Dealer Manager or the Company, then the Order Form and check will be returned to the rejected subscriber within 10 business days from the date of rejection.

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by the subscriber as provided for in the Order Form, to Carey Watermark Investors 2 Incorporated, c/o W. P. Carey/DST Systems, at the address provided in the Order Form.

(c)

Acceptance and Confirmation. All orders, whether initial or additional, are subject to acceptance by and shall become effective upon confirmation by the Company or the Dealer Manager, each of which reserve the right to reject any order in their sole discretion for any or no reason. Orders not accompanied by the required instrument of payment for Shares may be rejected. Issuance and delivery of a Share will be made only after a sale of a Share is deemed by the Company to be completed in accordance with Section 3(c) of the Dealer Manager Agreement.

If an order is rejected, cancelled or rescinded for any reason, then Selected Dealer will return to the Dealer Manager any selling commissions or dealer manager fees theretofore paid with respect to such order, and, if Selected Dealer fails to so return any such selling commissions, the Dealer Manager shall have the right to offset amounts owned against future commissions or dealer manager fees due and otherwise payable to Selected Dealer (it being understood and agreed that such right to offset shall not be in limitation of any other rights or remedies that the Dealer Manager may have in connection with such failure).


5.	Selected Dealer Compensation.

(a)

Selling Commissions. Subject to the terms and conditions set forth herein and in the Dealer Manager Agreement and, subject to the volume discounts and other special circumstances and discounts described in the “The Offering/Plan of Distribution” section of the Prospectus, the Dealer Manager shall pay to Selected Dealer a selling commission that differs based on whether a Class A or Class T Share was sold. With respect to the Class A Shares, the Dealer Manager shall pay the Selected Dealer a selling commission of 7% of the gross proceeds from the Class A Shares sold by it and accepted and confirmed by the Company. With respect to the Class T Shares, the Dealer Manager shall pay the Selected Dealer a selling commission of 2% of the gross proceeds from the Class T Shares sold by it and confirmed by the Company. Additionally, in the Dealer Manager’s discretion, it may re-allow to the Selected Dealer an annual distribution and shareholder servicing fee as described and paid in the Dealer Manager Agreement and the Prospectus for the Class T Shares sold by the Selected Dealer if the Selected Dealer has executed an addendum to this Agreement, which is attached hereto as Schedule II.

For purposes of this Section 6(a), Shares are “sold” only if an executed Order Form is accepted by the Company and the Company has thereafter distributed the selling commission to the Dealer Manager in connection with such transaction.


(b)	DRIP Sales. Selected Dealer acknowledges and agrees that no selling commissions will be paid for sales of DRIP Shares.

Carey Financial, LLC

Selected Dealer Agreement 6

(c)

Dealer Manager’s Authority to Issue Confirmation. Notwithstanding the foregoing, it is understood and agreed that no commission shall be payable with respect to particular Shares if the Dealer Manager or the Company rejects a proposed subscriber’s Order Form. Accordingly, Selected Dealer shall have no authority to issue a confirmation (pursuant to Exchange Act Rule 10b-10) to any subscriber; such authority residing solely in the Dealer Manager, as the Dealer Manager and processing broker-dealer.


(d)	Reallowance of Dealer Manager Fee. The Dealer Manager may, in its sole discretion, re-allow a portion of the Dealer Manager Fee received by it to Selected Dealer as a marketing support fee (the "Marketing Fee") for the sale of the Class A Shares and/or Class T Shares if the Selected Dealer has executed an addendum to this Agreement, which is attached hereto as Schedule II.

The Dealer Manager may, in its sole discretion, request the Company to reimburse, to Selected Dealer for reasonable accountable bona fide due diligence expenses, provided such expenses have actually been incurred, are supported by detailed and itemized invoices provided to the Company and the Dealer Manager, and the Company or the Dealer Manager had theretofore given its prior written approval of incurrence of such expenses.

(e)

Marketing Expenses. Certain marketing expenses such as Selected Dealer conferences may be advanced to Selected Dealer and later deducted from the portion of the Dealer Manager Fee re-allowed to that Selected Dealer. If the Offering is not consummated, Selected Dealer will repay any such advance to the extent not expended on marketing expenses. Any such advance shall be deducted from the maximum amount of the Dealer Manager Fee that may otherwise be re-allowable to Selected Dealer.

Notwithstanding anything herein to the contrary, Selected Dealer will not be entitled to receive any Dealer Manager Fee and/or distribution and shareholder servicing fee which would cause the aggregate amount of selling commissions, dealer manager fees, distribution and shareholder servicing fees and other forms of underwriting compensation (as defined in accordance with applicable FINRA rules) received by the Dealer Manager and all Selected Dealers to exceed 10.0% of the gross proceeds raised from the sale of Shares in the Primary Offering.


(f)	Limitations on Dealer Manager’s Liability for Commissions. The Company will not be liable or responsible to any Selected Dealer for the payment of any selling commissions or any reallowance of fees to Selected Dealer, it being the sole and exclusive responsibility of the Dealer Manager for the payment of selling commissions or any reallowance to Selected Dealer.

Selected Dealer hereby waives any and all rights to receive payments of commissions, the Marketing Fee and the distribution and shareholder servicing fee, if applicable, until the Dealer Manager is in receipt of the selling commissions, the Marketing Fee and the distribution and shareholder servicing fee. Selected Dealer acknowledges and agrees that the Dealer Manager’s liability for commissions (including the Marketing Fee and distribution and shareholder servicing fee, if any) payable to Selected Dealer is limited solely to commissions received and the portion of the Dealer Manager fee which represents the Marketing Fee and the distribution and shareholder servicing fee received by the Dealer Manager from the Company in connection with Selected Dealer’s sale of Shares.


(g)	RIA Sales. In the event Selected Dealer has an affiliated registered investment advisor (“RIA”) which is recommending the purchase of Class A Shares to an investor who has agreed to pay compensation for investment advisory or other financial services and the Selected Dealer elects to

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waive the sales commission of 7.0% and the Marketing Fee, neither of which will be paid on the sale, then the Selected Dealer must execute the RIA Addendum which is attached hereto as Schedule III.

Reserved Shares. The number of Shares, if any, to be reserved for sale by each Selected Dealer may be decided by the mutual agreement, from time to time, of the Dealer Manager and the Company. The Dealer Manager reserves the right to notify Selected Dealer by United States mail or by other means of the number of Shares reserved for sale by Selected Dealer, if any. Such Shares will be reserved for sale by Selected Dealer until the time specified in the Dealer Manager’s notification to Selected Dealer. Sales of any reserved Shares after the time specified in the notification to Selected Dealer or any requests for additional Shares will be subject to rejection in whole or in part.


7.	Blue Sky Qualification.

(a)

Notice of Blue Sky Qualification. The Dealer Manager will inform Selected Dealer as to the jurisdictions in which the Dealer Manager has been advised by the Company that the Shares have been qualified for sale or are exempt under the respective securities or “blue sky” laws of such jurisdictions, but the Dealer Manager has not assumed and will not assume any obligation or responsibility as to Selected Dealer’s right to act as a broker and/or dealer with respect to the Shares in any such jurisdiction. Selected Dealer agrees that Selected Dealer will not make any offers or sell any Shares except in states in which the Dealer Manager may advise Selected Dealer that the Offering has been qualified or is exempt and in which Selected Dealer is legally qualified to make offers and further agrees to assure that each person to whom Selected Dealer sells Shares (at both the time of the initial purchase as well as at the time of any subsequent purchases) meets any special suitability standards which apply to sales in a particular jurisdiction, as described in the Blue Sky Survey and the Order Form.

Neither the Dealer Manager nor the Company assume any obligation or responsibility in respect of the qualification of the Shares covered by the Prospectus under the laws of any jurisdiction or Selected Dealer’s qualification to act as a broker and/or dealer with respect to the Shares in any jurisdiction. The Blue Sky Survey which has been or will be furnished to Selected Dealer indicates the jurisdictions in which it is believed that the offer and sale of Shares covered by the Prospectus is exempt from, or requires action under, the applicable blue sky or securities laws thereof, and what action, if any, has been taken with respect thereto.

(b)

Selected Dealer’s Compliance Obligation. It is understood and agreed that under no circumstances will Selected Dealer, as a Selected Dealer, engage in any activities hereunder in any jurisdiction in which Selected Dealer may not lawfully so engage or in any activities in any jurisdiction with respect to the Shares in which Selected Dealer may lawfully so engage unless Selected Dealer have complied with the provisions hereof.

Dealer Manager’s Authority. Subject to the Dealer Manager Agreement, the Dealer Manager shall have full authority to take such action as it may deem advisable with respect to all matters pertaining to the Offering or arising thereunder. The Dealer Manager shall not be under any liability to Selected Dealer (except (i) for its own lack of good faith and (ii) for obligations expressly assumed by the Dealer Manager hereunder) for or in respect of the validity or value of or title to, the Shares; the form of, or the statements contained in, or the validity of, the Registration Statement, the Prospectus or any amendment or supplement thereto, or any other instrument executed by the Company or by others; the form or validity of the Dealer Manager Agreement or this Agreement; the delivery of the Shares; the performance by the Company or by others of any agreement on its or their part; the qualification of the Shares for sale under the laws of any

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jurisdiction; or any matter in connection with any of the foregoing; provided, however, that nothing in this paragraph shall be deemed to relieve the Company or the Dealer Manager from any liability imposed by the Securities Act. No obligations or liability on the part of the Company or the Dealer Manager shall be implied or inferred herefrom.


9.	Indemnification.

(a)

Incorporation of Indemnification Obligations Under the Dealer Manager Agreement. Under the Dealer Manager Agreement, the Company has agreed to indemnify Selected Dealer and the Dealer Manager and each of their respective Indemnified Parties, in certain instances and against certain liabilities, including liabilities under the Securities Act in certain circumstances. Selected Dealer hereby agrees to indemnify the Company and each of its Indemnified Parties as provided in the Dealer Manager Agreement and to indemnify the Dealer Manager to the extent and in the manner that Selected Dealer agrees to indemnify the Company in the Dealer Manager Agreement.

(b)

Selected Dealer’s Hold Harmless Obligation. In furtherance of, and not in limitation of the foregoing, Selected Dealer will indemnify, defend and hold harmless the Dealer Manager and the Company, and their officers, directors, employees, members, partners, affiliates, agents and representatives, and each person, if any, who controls such entity within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act, and each person who has signed the Registration Statement (“Indemnified Parties”), from and against any losses, claims, damages or liabilities to which any of the Indemnified Parties may become subject, under the Securities Act or the Exchange Act, or otherwise, insofar as such losses, claims and expenses (including the reasonable legal and other expenses incurred in investigating and defending any such claims or liabilities), damages or liabilities (or actions in respect thereof) arise out of or are based upon:


(i)	in whole or in part, any material inaccuracy in the representations or warranties contained in this Agreement or any material breach of a covenant contained herein by Selected Dealer;

(ii)

any untrue statement or any alleged untrue statement of a material fact contained in any Registration Statement or any post-effective amendment thereto or in the Prospectus or any amendment or supplement to the Prospectus; or in any Approved Sales Literature; or any Blue Sky Application or other document executed by the Company or on its behalf specifically for the purpose of qualifying any or all of the Shares for sale under the securities laws of any jurisdiction or based upon written information furnished by the Company under the securities laws thereof;

(iii)

the omission or alleged omission to state a material fact required to be stated in the Registration Statement or any post-effective amendment thereof to make the statements therein not misleading or the omission or alleged omission to state a material fact required to be stated in the Prospectus or any amendment or supplement to the Prospectus to make the statements therein, in light of the circumstances under which they were made, not misleading, provided, however , that in each case described in clauses (ii) and (iii) to the extent, but only to the extent, that such untrue statement or omission was made in reliance upon and in conformity with written information furnished to the Company or the Dealer Manager by Selected Dealer specifically for use with reference to Selected Dealer in the preparation of the Registration Statement or any such post-effective amendments thereof or the Prospectus or any such amendment thereof or supplement thereto;

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(iv)	any use of sales literature, including “broker dealer use only” or institutional materials, by Selected Dealer that is not Approved Sales Literature;

(v)

any untrue statement made by Selected Dealer or Selected Dealer’s representatives or agents or omission by Selected Dealer or Selected Dealer’s representatives or agents to state a fact necessary in order to make the statements made, in light of the circumstances under which they were made, not misleading in connection with the offer and sale of the Shares in each case, other than statements or omissions made in conformity with the Registration Statement, Prospectus, Approved Sales Literature or any other materials or information furnished by or on behalf of the Company; or


(vi)	any failure by Selected Dealer to comply with applicable laws governing money laundry abatement and anti-terrorist financing efforts in connection with the Offering, including applicable FINRA Rules, Exchange Act Rules and Regulations and the USA PATRIOT Act of 2001 (the “PATRIOT Act”).

Selected Dealer will reimburse the aforesaid parties for any reasonable legal or other expenses incurred in connection with investigation or defense of such loss, claim, damage, liability or action. This indemnity agreement will be in addition to any liability which Selected Dealer may otherwise have.

(c)

Notice of Claim. Promptly after receipt by any indemnified party under this Section 10 of notice of the commencement of any action, such indemnified party will, if a claim in respect thereof is to be made against any indemnifying party under this Section 10, promptly notify the indemnifying party of the commencement thereof; provided, however , the failure to give such notice shall not relieve the indemnifying party of its obligations hereunder except to the extent it shall have been prejudiced by such failure.

In case any such action is brought against any indemnified party, and it notifies an indemnifying party of the commencement thereof, the indemnifying party will be entitled, to the extent it may wish, jointly with any other indemnifying party similarly notified, to participate in the defense thereof, with separate counsel. Such participation shall not relieve such indemnifying party of the obligation to reimburse the indemnified party for reasonable legal and other expenses incurred by such indemnified party in defending itself, except for such expenses incurred after the indemnifying party has deposited funds sufficient to effect the settlement, with prejudice, of, and unconditional release of all liabilities from, the claim in respect of which indemnity is sought. Any such indemnifying party shall not be liable to any such indemnified party on account of any settlement of any claim or action effected without the consent of such indemnifying party, such consent not to be unreasonably withheld or delayed.

(d)

Reimbursement. An indemnifying party under Section 10 of this Agreement shall be obligated to reimburse an indemnified party for reasonable legal and other expenses as follows: the indemnifying party shall pay all legal fees and expenses reasonably incurred by the indemnified party in the defense of such claims or actions; provided, however, that the indemnifying party shall not be obligated to pay legal expenses and fees to more than one law firm in connection with the defense of similar claims arising out of the same alleged acts or omissions giving rise to such claims notwithstanding that such actions or claims are alleged or brought by one or more parties against more than one indemnified party.

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If such claims or actions are alleged or brought against more than one indemnified party, then the indemnifying party shall only be obliged to reimburse the expenses and fees of the one law firm (in addition to local counsel) that has been participating by a majority of the indemnified parties against which such action is finally brought; and in the event a majority of such indemnified parties is unable to agree on which law firm for which expenses or fees will be reimbursable by the indemnifying party, then payment shall be made to the first law firm of record representing an indemnified party against the action or claim. Such law firm shall be paid only to the extent of services performed by such law firm and no reimbursement shall be payable to such law firm on account of legal services performed by another law firm.


10.	Contribution. If the indemnification provided for in Section 10 hereof is for any reason unavailable to or insufficient to hold harmless an indemnified party in respect of any losses, liabilities, claims, damages or expenses referred to therein, the contributions provisions set forth in Section 8 of the Dealer Manager Agreement shall be applicable.


11.	Company as Party to Agreement. The Company shall be a third party beneficiary of Selected Dealer’s representations, warranties, covenants and agreements contained in Sections 10 and 11. The Company shall have all enforcement rights in law and in equity with respect to those portions of this Agreement as to which it is third party beneficiary.


12.	Privacy Laws; Compliance.


(a)	Selected Dealer agrees to:


(i)	abide by and comply with (A) the privacy standards and requirements of the Gramm-Leach-Bliley Act of 1999 (the “GLB Act”); B) the privacy standards and requirements of any other applicable federal or state law; and (C) Selected Dealer’s own internal privacy policies and procedures, each as may be amended from time to time;


(ii)	refrain from the use or disclosure of nonpublic personal information (as defined under the GLB Act) of all customers, except as necessary to service the customers or as otherwise necessary or required by applicable law; and


(iii)	determine which customers have opted out of the disclosure of nonpublic personal information by periodically reviewing and, if necessary, retrieving an aggregated list of such customers (the “List”) as provided by each to identify customers that have exercised their opt-out rights.

If either party uses or discloses nonpublic personal information of any customer for purposes other than servicing the customer, or as otherwise required by applicable law, that party will consult the List to determine whether the affected customer has exercised his or her opt-out rights. Each party understands that it is prohibited from using or disclosing any nonpublic personal information of any customer that is identified on the List as having opted out of such disclosures.

13.

Anti-Money Laundering Compliance Programs. Selected Dealer represents to the Dealer Manager and to the Company that it has established and implemented an anti-money laundering compliance program (“AML Program”) in accordance with Section 352 of the PATRIOT Act and FINRA Rule 3310, that complies with applicable anti-money laundering laws and regulations, including, but not limited to, the customer identification program requirements of Section 326 of the PATRIOT Act, and the suspicious activity reporting requirements of Section 356 of the PATRIOT Act, and the laws, regulations and

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Executive Orders administered by the Office of Foreign Assets Control (“OFAC”) of the U.S. Department of Treasury (collectively, “AML/OFAC Laws”). The Selected Dealer hereby covenants to remain in compliance with the AML/OFAC Laws and shall, upon request by the Dealer Manager and/or the Company, provide a certification to the Dealer Manager and/or the Company that, as of the date of such certification, its AML Program is compliant with the AML/OFAC Laws.

Upon request by the Dealer Manager and/or the Company at any time, Selected Dealer will (i) furnish a written copy of its AML Program, or a summary of its AML Program, to the Dealer Manager and/or the Company for review, and (ii) furnish any information that the Dealer Manager and/or the Company may request to satisfy applicable AML/OFAC laws.


14.	Miscellaneous.

(a)

Ratification of Dealer Manager Agreement. Selected Dealer hereby authorizes and ratifies the execution and delivery of the Dealer Manager Agreement by the Dealer Manager as Dealer Manager for itself and on behalf of all Selected Dealers (including Selected Dealer party hereto) and authorizes the Dealer Manager to agree to any variation of its terms or provisions and to execute and deliver any amendment, modification or supplement thereto. Selected Dealer hereby agrees to be bound by all provisions of the Dealer Manager Agreement relating to Selected Dealers. Selected Dealer also authorizes the Dealer Manager to exercise, in the Dealer Manager’s discretion, all the authority or discretion now or hereafter vested in the Dealer Manager by the provisions of the Dealer Manager Agreement and to take all such actions as the Dealer Manager may believe desirable in order to carry out the provisions of the Dealer Manager Agreement and of this Agreement.

(b)

Termination. This Agreement, except for the provisions of Sections 9 (Dealer Manager’s Authority), 10 (Indemnification), 11 (Contribution), 12 (Company as Party to Agreement), 13 (Privacy Laws; Compliance) and this Section 15 (Miscellaneous), may be terminated at any time by either party hereto by two days’ prior written notice to the other party and, in all events, this Agreement shall terminate on the termination date of the Dealer Manager Agreement, except for the provisions of Sections 9, 10, 11, 12, 13 and this Section 15.


(c)	Communications. Any communications from Selected Dealer should be in writing addressed to the Dealer Manager at:

Carey Financial, LLC

50 Rockefeller Plaza

New York, New York 10020

Facsimile No.: (212) 492-8922

Attention: Mark Goldberg

with a copy to:

Kunzman & Bollinger, Inc.

5100 N. Brookline Avenue, Suite 600

Oklahoma City, Oklahoma 73112

Facsimile No: (405) 942-3501

Attention: Wallace W. Kunzman, Jr.

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Any notice from the Dealer Manager to Selected Dealer shall be deemed to have been duly given if mailed, communicated by electronic delivery or facsimile or delivered by overnight courier to Selected Dealer at Selected Dealer’s address shown below.


(d)	No Partnership. Nothing herein contained shall constitute the Dealer Manager, Selected Dealer, the other Selected Dealers or any of them as an association, partnership, limited liability company, unincorporated business or other separate entity.

(e)

Notice of Registration Statement Effectiveness. If this Agreement is executed before the initial Effective Date, then the Dealer Manager will notify Selected Dealer in writing when the initial Effective Date has occurred. Selected Dealer agrees that Selected Dealer will not make any offers to sell the Shares or solicit purchasers for the Shares until Selected Dealer has received such written notice of the initial Effective Date from the Dealer Manager or the Company. This Agreement shall be effective for all sales by Selected Dealer on and after the initial Effective Date.

(f)

Transfer Agent. The Company may authorize its transfer agent to provide information to the Dealer Manager and Selected Dealer regarding record holder information about the clients of Selected Dealer who have invested with the Company on an on-going basis for so long as Selected Dealer has a relationship with such client. Selected Dealer shall not disclose any password for a restricted website or portion of a website provided to Selected Dealer in connection with the Offering and shall not disclose to any person, other than an officer, director, employee or agent of Selected Dealer, any material downloaded from such restricted website or portion of a restricted website.

(g)

Assignment. Selected Dealer shall have no right to assign this Agreement or any of its rights hereunder or to delegate any of its obligations. Any purported assignment or delegation by Selected Dealer shall be null and void. The Dealer Manager shall have the right to assign any or all of its rights and obligations under this Agreement by written notice, and Selected Dealer shall be deemed to have consented to such assignment by execution hereof. Dealer Manager shall provide written notice of any such assignment to Selected Dealer.


(h)	Counterparts. This Agreement may be executed (including by facsimile transmission) with counterpart signature pages or in counterpart copies, each of which shall be deemed an original but all of which together shall constitute one and the same instrument comprising this Agreement.


(i)	Invalidity. The invalidity or unenforceability of any provision of this Agreement shall not affect the other provisions hereof, and this Agreement shall be construed in all respects as if such invalid or unenforceable provision were omitted.

(j)

Strict Performance. The failure of any party to insist upon or enforce strict performance by any other party of any provision of this Agreement or to exercise any right under this Agreement shall not be construed as a waiver or relinquishment to any extent of such party’s right to assert or rely upon any such provision or right in that or any other instance; rather, such provision or right shall be and remain in full force and effect.

If the foregoing is in accordance with Selected Dealer’s understanding and agreement, please sign and return the attached duplicate of this Agreement. Selected Dealer’s indicated acceptance thereof shall constitute a binding agreement between Selected Dealer and the Dealer Manager.

DEALER MANAGER:

Carey Financial, LLC

Selected Dealer Agreement 13

CAREY FINANCIAL, LLC

By:
Name:
Title:

The undersigned dealer confirms its agreement to act as a Selected Dealer pursuant to all the terms and conditions of the above Selected Dealer Agreement and the attached Dealer Manager Agreement. The undersigned dealer hereby represents that it will comply with the applicable requirements of the Securities Act and the Exchange Act and the published rules and regulations of the Commission thereunder, and applicable blue sky or other state securities laws. The undersigned dealer represents and warrants that the undersigned dealer is duly registered as a broker-dealer under the provisions of the Exchange Act and the Exchange Act Rules and Regulations or is exempt from such registration. The undersigned dealer confirms that it and each salesperson acting on its behalf are members in good standing of FINRA and duly licensed by each regulatory authority in each jurisdiction in which the undersigned dealer or such salesperson will offer and sell Shares, or are exempt from registration with such authorities. The undersigned dealer hereby represents that it will comply with the Rules of FINRA and all rules and regulations promulgated by FINRA.

Check each applicable box below:


•	Check this box if electing to sell Class A Shares.


•	Check this box if electing to sell Class T Shares.

Dated: ____________, 2015

Name of Selected Dealer

Federal Identification Number

By:

Name:

Authorized Signatory

Kindly have checks representing commissions forwarded as follows (if different than above): (Please type or print)

Name of Firm:

Address:

Street

City

State and Zip Code

(Area Code) Telephone No.

Attention:

Carey Financial, LLC

Selected Dealer Agreement 14

SCHEDULE I

SELECTED DEALER AGREEMENT WITH

CAREY FINANCIAL, LLC

Selected Dealer represents and warrants that it is currently licensed as a broker-dealer in the following jurisdictions:



o Alabama	o Nebraska
o Alaska	o Nevada
o Arizona	o New Hampshire
o Arkansas	o New Jersey
o California	o New Mexico
o Colorado	o New York
o Connecticut	o North Carolina
o Delaware	o North Dakota
o District of Columbia	o Ohio
o Florida	o Oklahoma
o Georgia	o Oregon
o Hawaii	o Pennsylvania
o Idaho	o Puerto Rico
o Illinois	o Rhode Island
o Indiana	o South Carolina
o Iowa	o South Dakota
o Kansas	o Tennessee
o Kentucky	o Texas
o Louisiana	o Utah
o Maine	o Vermont
o Maryland	o Virgin Islands
o Massachusetts	o Virginia
o Michigan	o Washington
o Minnesota	o West Virginia
o Mississippi	o Wisconsin
o Missouri	o Wyoming
o Montana

Carey Financial, LLC

Selected Dealer Agreement 15

SCHEDULE II

ADDENDUM TO SELECTED DEALER AGREEMENT

The following reflects the Marketing Fee and/or Distribution and Shareholder Servicing Fee as agreed upon between Carey Financial, LLC (the “ Dealer Manager ”) and the Selected Dealer, effective [_______], 2015 in connection with sales of Shares of Carey Watermark Investors 2 Incorporated (the “Company”) by the Selected Dealer, excluding Shares issued under the Company’s distribution reinvestment plan.

Check each applicable box below:


•	Check this box if electing to sell Class A Shares.

If the Selected Dealer elects to sell Class A Shares, it may qualify to receive a Marketing Fee, of up to ___% per Class A Share sold.


•	Check this box if electing to sell Class T Shares.

If the Selected Dealer elects to sell Class T Shares, it may qualify to receive a Marketing Fee, of up to ___% per Class T Share sold.

If the Selected Dealer elects to sell Class T Shares, it will qualify to receive the Annual Distribution and Shareholder Servicing Fee for the Class T Shares that it sells, which is calculated annually in an amount equal to 1% of the purchase price per Class T Share or, once reported, the amount of the estimated NAV per share for the Class T Shares. The Annual Distribution and Shareholder Servicing Fee will accrue daily and be paid quarterly in arrears as described in the Prospectus. The Dealer Manager will reallow the Distribution and Shareholder Servicing Fee to the Selected Dealer who sold the Class T Shares to the extent the Selected Dealer Agreement with such Selected Dealer provides for such a reallowance. Notwithstanding, upon the date, if any, the Dealer Manager is notified that the Selected Dealer who sold the Class T Shares giving rise to the Distribution and Shareholder Servicing Fee is no longer the broker-dealer of record with respect to such Class T Shares, then such Selected Dealer’s entitlement to the Distribution and Shareholder Servicing Fee related to such Class T Shares shall cease, and such Selected Dealer shall not receive the Distribution and Shareholder Servicing Fee for any portion of the quarter in which such Selected Dealer is not the broker-dealer of record on the last day of the quarter. Thereafter, such Distribution and Shareholder Servicing Fee may be reallowed by the Dealer Manager to the then-current broker-dealer of record of the Class T Shares, if any, if such broker-dealer of record has been designated and has entered into a Selected Dealer Agreement with the Dealer Manager that provides for such reallowance. All determinations regarding the reallowance of the Distribution and Shareholder Servicing Fee will be made by the Dealer Manager in good faith in its sole discretion. The Selected Dealer agrees to promptly notify the Dealer Manager upon becoming aware that it is no longer the broker-dealer of record to any or all of the Class T Shares held by the Selected Dealer.

Payment of the Annual Distribution and Shareholder Servicing Fee with respect to the Class T Shares sold in the Primary Offering will terminate on the earlier of (i) the date at which, in the aggregate, underwriting compensation from all sources, including the Annual Distribution and Shareholder Servicing Fee, any organization and offering fee paid for underwriting and underwriting compensation paid by the sponsor and its affiliates, equals 10% of the gross proceeds from the Primary Offering (i.e., the gross proceeds from the offering of Class A and Class T Shares excluding proceeds from sales pursuant to the distribution reinvestment plan), calculated as of the same date that the Company calculates the aggregate Distribution and Shareholder Servicing Fee; and (ii) the sixth anniversary of the last day of the fiscal quarter in which the Primary Offering (excluding the DRIP) terminates.

Carey Financial, LLC

Selected Dealer Agreement 16

Eligibility to receive the Marketing Fee is conditioned upon the Selected Dealer’s compliance with one or more of the following conditions. Any determination regarding the Selected Dealer’s compliance with the listed conditions will be made by the Dealer Manager, in its sole discretion.


1.	The Selected Dealer has internal marketing and support personnel (telemarketers, marketing director, etc.) who assist the Dealer Manager’s marketing team;


2.	The Selected Dealer has and uses internal marketing communications vehicle(s) to promote the Company. Vehicles may include, but are not restricted to, newsletters, conference calls, internal mail, etc.;


3.	The Selected Dealer will respond to investors’ inquiries concerning monthly statements, valuations, distribution rates, tax information, annual reports, reinvestment and redemption rights and procedures, the financial status of the Company and the real estate markets in which the Company has invested;


4.	The Selected Dealer will assist investors with reinvestments and redemptions; and/or


5.	The Selected Dealer will provide other services requested by investors from time to time and will maintain the technology necessary to adequately service investors.

IN WITNESS WHEREOF, the parties have executed this Schedule II on the date and year shown above.



SELECTED DEALER:	DEALER MANAGER:
(Name of Selected Dealer)	CAREY FINANCIAL, LLC
By: Name: Title:	By: Name: Title:

Carey Financial, LLC

Selected Dealer Agreement 17

SCHEDULE III

RIA ADDENDUM TO SELECTED DEALER AGREEMENT


1.	Covenants of the Selected Dealer . The Selected Dealer covenants, warrants and represents, during the full term of this Agreement, that:


(a)	The RIA is affiliated with the Selected Dealer.


(b)	Any investment advisor representative of the Selected Dealer’s affiliated RIA who recommends a purchase of Class A Shares to an investor must also be associated with the Selected Dealer as a registered representative and be supervised by the Selected Dealer pursuant to the requirements set forth in the Selected Dealer Agreement.


(c)	The sale of any Class A Shares that are recommended by its affiliated RIA must be made by the Selected Dealer pursuant to the Selected Dealer Agreement and reflected on the books and records of the Selected Dealer, regardless of whether the Class A Shares are held with a custodian.


(d)	The Selected Dealer shall review and approve the investor’s account with its affiliated RIA as well as the transaction involving the sale of the Company’s Class A Shares to the investor, including but not limited to, the activities of its registered representative who also is dually licensed with its affiliated RIA as an investment advisor representative.


(e)	The Selected Dealer shall review and approve any outside custodial arrangement in connection with any purchase of Class A Shares recommended by its affiliated RIA.


(f)	The Selected Dealer’s affiliated RIA is registered as an investment advisor under the Investment Advisers Act.


(g)	The Selected Dealer’s affiliated RIA shall comply with all applicable federal and state securities laws, including, without limitation, the disclosure requirements of the Investment Advisers Act, and the provisions thereof requiring disclosure of the compensation to be paid to the RIA.


(h)	The Selected Dealer’s affiliated RIA shall maintain the records required by Section 204 of the Investment Advisers Act, and Rule 204-2 thereunder in the form and for the periods required thereby.

IN WITNESS WHEREOF, the parties have executed this Schedule III on the date and year shown above.



SELECTED DEALER:	DEALER MANAGER:
(Name of Selected Dealer)	CAREY FINANCIAL, LLC
By: Name: Title:	By: Name: Title:

Carey Financial, LLC

Selected Dealer Agreement 18

Exhibit 31.1

Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

I, Michael G. Medzigian, certify that:


1.	I have reviewed this Quarterly Report on Form 10-Q of Carey Watermark Investors 2 Incorporated;


2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;


3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;


4.	The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:


(a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;


(b)	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;


(c)	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and


(d)	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an Annual Report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and


5.	The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):


(a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and


(b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: May 14, 2015

/s/ Michael G. Medzigian

Michael G. Medzigian

Chief Executive Officer

Exhibit 31.2

Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

I, Hisham A. Kader, certify that:


1.	I have reviewed this Quarterly Report on Form 10-Q of Carey Watermark Investors 2 Incorporated;


2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;


3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;


4.	The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:


(a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;


(b)	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;


(c)	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and


(d)	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an Annual Report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and


5.	The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):


(a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and


(b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: May 14, 2015

/s/ Hisham A. Kader

Hisham A. Kader

Chief Financial Officer

Exhibit 32

Certifications Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

In connection with the Quarterly Report of Carey Watermark Investors 2 Incorporated on Form 10-Q for the period ended March 31, 2015 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), each of the undersigned officers of Carey Watermark Investors 2 Incorporated, does hereby certify, to the best of such officer’s knowledge and belief, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:


1.	The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and


2.	The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of Carey Watermark Investors 2 Incorporated.

Date: May 14, 2015

/s/ Michael G. Medzigian

Michael G. Medzigian

Chief Executive Officer

Date: May 14, 2015

/s/ Hisham A. Kader

Hisham A. Kader

Chief Financial Officer

The certification set forth above is being furnished as an exhibit solely pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and is not being filed as part of the Report as a separate disclosure document of Carey Watermark Investors 2 Incorporated or the certifying officers.

A signed original of this written statement required by Section 906, or other document authenticating, acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of this written statement required by Section 906, has been provided to Carey Watermark Investors 2 Incorporated and will be retained by Carey Watermark Investors 2 Incorporated and furnished to the Securities and Exchange Commission or its staff upon request.