In order to provide additional cash to pay distributions to our stockholders at a rate of at least 7% per annum on stockholders’ invested capital year during the offering period, Colony NorthStar has agreed to purchase up to an aggregate of $10.0 million in shares of our Class A common stock (which includes the $2.0 million of shares purchased by an affiliate of Colony NorthStar to satisfy the minimum offering amount) at the current offering price of our Class A shares net of selling commissions and dealer manager fees. If the cash distributions we pay for any calendar quarter exceed MFFO for such quarter, Colony NorthStar will purchase Class A shares following the end of each quarter for a purchase price equal to the amount by which the distributions paid to stockholders exceed MFFO for such quarter, up to an amount equal to a 7% cumulative, non-compounded annual return on stockholders’ invested capital prorated for such quarter. Notwithstanding Colony NorthStar’s obligations pursuant to the distribution support agreement, we are not required to pay distributions to our stockholders at a rate of 7% per annum or at all. After our distribution support agreement with Colony NorthStar has terminated, we may not have sufficient cash available to pay distributions at the rate we had paid during preceding periods or at all.
There is no guarantee of distributions. Distributions have been paid and may continue to be paid from sources other than cash flow from operations, such as offering proceeds, borrowings or sales of assets and distributions may exceed earnings. We have paid distributions in excess of our cash flow provided by operations. For the year ending December 31, 2016, we declared distributions of $70,855,000 compared to cash flow provided by operations of $34,591,000. The remaining $36,264,000, or 51.2%, was paid using offering proceeds, including the purchase of additional shares by our sponsor, which reduces the amount we can invest in income-producing assets and your overall return may be reduced. Distributions have also exceeded our net income of $22,365,000 for the same period. Fees paid to the advisor were not determined on an arm’s length basis and reduce the amount the program can invest in income-producing assets and your overall return may be reduced.