<SEC-DOCUMENT>0001193125-15-012839.txt : 20150316
<SEC-HEADER>0001193125-15-012839.hdr.sgml : 20150316
<ACCEPTANCE-DATETIME>20150116124237
<PRIVATE-TO-PUBLIC>
ACCESSION NUMBER:		0001193125-15-012839
CONFORMED SUBMISSION TYPE:	CORRESP
PUBLIC DOCUMENT COUNT:		2
FILED AS OF DATE:		20150116

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			NETREIT, INC.
		CENTRAL INDEX KEY:			0001080657
		STANDARD INDUSTRIAL CLASSIFICATION:	REAL ESTATE INVESTMENT TRUSTS [6798]
		IRS NUMBER:				330841255
		STATE OF INCORPORATION:			MD
		FISCAL YEAR END:			1231

	FILING VALUES:
		FORM TYPE:		CORRESP

	BUSINESS ADDRESS:	
		STREET 1:		1282 PACIFIC OAKS PLACE
		CITY:			ESCONDIDO
		STATE:			CA
		ZIP:			92029-2900
		BUSINESS PHONE:		760-471-8536

	MAIL ADDRESS:	
		STREET 1:		1282 PACIFIC OAKS PLACE
		CITY:			ESCONDIDO
		STATE:			CA
		ZIP:			92029-2900

	FORMER COMPANY:	
		FORMER CONFORMED NAME:	NETREIT
		DATE OF NAME CHANGE:	19990225
</SEC-HEADER>
<DOCUMENT>
<TYPE>CORRESP
<SEQUENCE>1
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<TITLE>CORRESP</TITLE>
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<IMG SRC="g853449image77777.jpg" ALT="LOGO">
 </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B></B>The Contrarian Real Estate Investment Trust<B> </B></P>
<P STYLE="line-height:3.0pt;margin-top:0pt;margin-bottom:2pt;border-bottom:1.50pt solid #000000">&nbsp;</P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">January&nbsp;15, 2015 </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">Securities and Exchange Commission </P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">Washington, D.C. 20549 </P>
<P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">Via Edgar </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">Attention: &nbsp;&nbsp;&nbsp;&nbsp;Mr.&nbsp;Eric
McPhee, Staff Accountant </P> <P STYLE="font-size:12pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
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<TD WIDTH="4%" VALIGN="top" ALIGN="left">RE:</TD>
<TD ALIGN="left" VALIGN="top">NetREIT, Inc. (the &#147;Company&#148;), a Maryland corporation and non-traded REIT </TD></TR></TABLE> <P STYLE="margin-top:0pt; margin-bottom:0pt; margin-left:8%; font-size:10pt; font-family:Times New Roman">Form 10-K
for the Fiscal Year Ended December&nbsp;31, 2013 </P> <P STYLE="margin-top:0pt; margin-bottom:0pt; margin-left:8%; font-size:10pt; font-family:Times New Roman">Filed March&nbsp;31, 2014 </P>
<P STYLE="margin-top:0pt; margin-bottom:0pt; margin-left:8%; font-size:10pt; font-family:Times New Roman">File No. 000-53673 </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">Dear Mr.&nbsp;Eric McPhee:
</P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">This response kindly requests the Accounting Staff&#146;s comments and guidance regarding the Company&#146;s responses below to the comments in the
Staff&#146;s letter of December&nbsp;19, 2014 regarding the above-referenced filing on Form 10-K. The Company&#146;s responses below correspond to the same numbers as the Staff&#146;s comments in the December&nbsp;19, 2014 letter. </P>
<P STYLE="margin-top:18pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B><U>General </U></B></P> <P STYLE="font-size:6pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
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<TD WIDTH="4%">&nbsp;</TD>
<TD WIDTH="4%" VALIGN="top" ALIGN="left">1.</TD>
<TD ALIGN="left" VALIGN="top">We have previously not filed Schedule III- Real Estate and Accumulated Depreciation as required by Rule 5-04 of Regulation S-X under the belief that the schedule was not required to be separately presented if all the
required information is included in the Notes to Financial Statements or in the Property section of the Form 10-K. The reconciliation table of the beginning and ending of each period was not included; however, a description of the acquisitions and
real estate sold was included in the Footnotes to the Financial Statements. In future Exchange Act periodic reports, we will present the information in a schedule format pursuant to Rule 5-04 of Regulation S-X. </TD></TR></TABLE>
<P STYLE="margin-top:18pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B><U>Item&nbsp;7. Management&#146;s Discussion and Analysis of Financial Condition and Results of Operations Operating Portfolio, page 35 </U></B></P>
<P STYLE="font-size:6pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
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<TD WIDTH="4%">&nbsp;</TD>
<TD WIDTH="4%" VALIGN="top" ALIGN="left">2.</TD>
<TD ALIGN="left" VALIGN="top">In future Exchange Act periodic reports, we will provide additional tenant information including information on tenant ratings and describe how we monitor tenant credit quality for our net leases. Please note that we
only have one single tenant net lease property. All of other properties are multi-tenant. </TD></TR></TABLE> <P STYLE="font-size:6pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="4%">&nbsp;</TD>
<TD WIDTH="4%" VALIGN="top" ALIGN="left">3.</TD>
<TD ALIGN="left" VALIGN="top">Due to our growth cycle, the significant increase in our rental income has been primarily due to the acquisition of new properties, and the variance resulting from period-to-period changes in the same property has been
insignificant. In future Exchange Act periodic reports, we will provide additional disclosure on same property performance on period-to-period changes. </TD></TR></TABLE>
 <p STYLE="margin-top:0pt;margin-bottom:0pt ; font-size:8pt">&nbsp;</P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:8pt; font-family:Times New Roman" ALIGN="center">1282 Pacific Oaks Place,
Escondido, CA 92029-2900 <FONT STYLE="FONT-FAMILY:WINGDINGS">&#170;</FONT> Phone 866-781-7721 <FONT STYLE="FONT-FAMILY:WINGDINGS">&#170;</FONT> Fax 760-471-0399 <FONT STYLE="FONT-FAMILY:WINGDINGS">&#170;</FONT> info@netreit.com </P>


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<IMG SRC="g853449image77777.jpg" ALT="LOGO">
 </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">The Contrarian Real Estate Investment Trust </P>
<P STYLE="line-height:3.0pt;margin-top:0pt;margin-bottom:2pt;border-bottom:1.50pt solid #000000">&nbsp;</P> <p STYLE="margin-top:0pt;margin-bottom:0pt ; font-size:8pt">&nbsp;</P>
 <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B><U>Recent Events Having Significant Effect on Results of Operations, page 42 </U></B></P>
<P STYLE="font-size:6pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
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<TD WIDTH="4%">&nbsp;</TD>
<TD WIDTH="4%" VALIGN="top" ALIGN="left">4.</TD>
<TD ALIGN="left" VALIGN="top">In future Exchange Act reports, we will provide disclosure regarding the relationship of rent rates on expired, new, or renewed leases, as well as discuss the rents scheduled to expire in the current period.
</TD></TR></TABLE> <P STYLE="margin-top:18pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B><U>Revenues, page 45 </U></B></P> <P STYLE="font-size:6pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
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<TR>
<TD WIDTH="4%">&nbsp;</TD>
<TD WIDTH="4%" VALIGN="top" ALIGN="left">5.</TD>
<TD ALIGN="left" VALIGN="top">In future Exchange Act periodic reports, we will provide a discussion of net operating income for period-to-period material changes. </TD></TR></TABLE>
<P STYLE="margin-top:18pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B><U>Note 1. Organization and Basis of Presentation, page F-7 </U></B></P> <P STYLE="font-size:6pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
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<TD WIDTH="4%">&nbsp;</TD>
<TD WIDTH="4%" VALIGN="top" ALIGN="left">6.</TD>
<TD ALIGN="left" VALIGN="top">In connection with the six (6)&nbsp;limited partnerships that were consolidated into the financial statements in accordance with the guidelines attributable to variable interest entities, these entities were primarily
liquidating entities that the Company was managing on behalf of the general partners of the entities. These entities represent less than five percent (5%)&nbsp;of the Company&#146;s total net assets and total mortgage debt. In regard to ASC
810-10-50-12, as to the methodology for determining whether we are the primary beneficiary of the entities, Company previously disclosed that in March 2010 we acquired Dubose Model Homes USA (DMHU) and entered into management contracts to provide
management services to the nineteen (19)&nbsp;limited partnerships sponsored by DMHU, and for which a DMHU affiliate served as the general partner. The conclusion to consolidate the entities has not changed in the most recent financial statements.
We did not provide financial or other support to these entities during 2013. In regard to ASC 810-10-50-14, the carrying amount and classification of the major assets and liabilities of the model homes and mortgage balances thereon were disclosed in
the Footnote to the Financial Statements. The major creditors of these consolidated entities are mortgage lenders, who have recourse to our general credit due to the guarantee by the Company of the mortgage loans. </TD></TR></TABLE>
<P STYLE="margin-top:6pt; margin-bottom:0pt; margin-left:8%; font-size:10pt; font-family:Times New Roman">All of these limited partnerships were completely liquidated and dissolved in 2014. Due to the liquidating nature and the insignificant amount
of assets and liabilities of these entities at December&nbsp;31, 2013, we respectfully request that the disclosure provided in the 2013 financials be accepted. The Company will streamline and improve the disclosure in the 2014 Form 10K. </P>
 <p STYLE="margin-top:0pt;margin-bottom:0pt ; font-size:8pt">&nbsp;</P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:8pt; font-family:Times New Roman" ALIGN="center">1282 Pacific Oaks Place,
Escondido, CA 92029-2900 <FONT STYLE="FONT-FAMILY:WINGDINGS">&#170;</FONT> Phone 866-781-7721 <FONT STYLE="FONT-FAMILY:WINGDINGS">&#170;</FONT> Fax 760-471-0399 <FONT STYLE="FONT-FAMILY:WINGDINGS">&#170;</FONT> info@netreit.com </P>


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<IMG SRC="g853449image77777.jpg" ALT="LOGO">
 </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">The Contrarian Real Estate Investment Trust </P>
<P STYLE="line-height:3.0pt;margin-top:0pt;margin-bottom:2pt;border-bottom:1.50pt solid #000000">&nbsp;</P> <p STYLE="margin-top:0pt;margin-bottom:0pt ; font-size:8pt">&nbsp;</P>
 <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B><U>Intangible Assets, page F-12 </U></B></P>
<P STYLE="font-size:6pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
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<TD WIDTH="4%">&nbsp;</TD>
<TD WIDTH="4%" VALIGN="top" ALIGN="left">7.</TD>
<TD ALIGN="left" VALIGN="top">Lease Intangibles are quantified in Note 3 to the Financial Statements, page F-23. At December&nbsp;31, 2013 the Balance Sheet included in &#147;Other Assets, net&#148; goodwill amounts arising from two acquisitions
aggregating $2,349,843. </TD></TR></TABLE> <P STYLE="margin-top:6pt; margin-bottom:0pt; margin-left:8%; font-size:10pt; font-family:Times New Roman">This amount included $1,032,000 relating to the Dubose Model Homes, USA (&#147;DMHU&#148;)
acquisition in March 2010 described in Note 1 to the Consolidated Financial Statements page F-8 and $1,317,843 relating to the merger acquisition of NTR Property Management and CHG Properties (&#147;NTR-CHG&#148;) effective January&nbsp;31, 2013
described in Note 1 to The Consolidated Financial Statements page F-9. These amounts were grouped in the Other Assets, net classification on the balance sheet due to their immateriality in relation to total assets of $181,245,382 or 1.3%. If the
Staff disagrees with this classification please advise and we will classify them accordingly in future Exchange Act periodic reports. </P>
<P STYLE="margin-top:18pt; margin-bottom:0pt; margin-left:8%; font-size:10pt; font-family:Times New Roman"><B>Valuation Methodologies</B> </P>
<P STYLE="margin-top:6pt; margin-bottom:0pt; margin-left:8%; font-size:10pt; font-family:Times New Roman">ASC 820 refers to three valuation methodologies that may be used in measuring fair value: </P>
<P STYLE="font-size:6pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
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<TD WIDTH="9%">&nbsp;</TD>
<TD WIDTH="3%" VALIGN="top" ALIGN="left">&#149;</TD>
<TD WIDTH="1%" VALIGN="top">&nbsp;</TD>
<TD ALIGN="left" VALIGN="top">The market approach - uses prices and other relevant information generated by market transactions involving identical or comparable assets or liabilities; </TD></TR></TABLE>
<P STYLE="font-size:6pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="9%">&nbsp;</TD>
<TD WIDTH="3%" VALIGN="top" ALIGN="left">&#149;</TD>
<TD WIDTH="1%" VALIGN="top">&nbsp;</TD>
<TD ALIGN="left" VALIGN="top">The income approach &#150; uses valuation techniques to convert future benefits and costs (usually potential cash flows or earnings) into a single present value amount; and </TD></TR></TABLE>
<P STYLE="font-size:6pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="9%">&nbsp;</TD>
<TD WIDTH="3%" VALIGN="top" ALIGN="left">&#149;</TD>
<TD WIDTH="1%" VALIGN="top">&nbsp;</TD>
<TD ALIGN="left" VALIGN="top">The cost approach &#150; based on the amount that currently would be required to replace the service capacity of an asset. </TD></TR></TABLE>
<P STYLE="margin-top:6pt; margin-bottom:0pt; margin-left:8%; font-size:10pt; font-family:Times New Roman">The income approach is commonly used to measure the fair value of level 3 assets for which no relevant market prices exist. In addition,
goodwill is an asset that must be measured residually and not directly, which typically results in the cost approach to be an inappropriate valuation methodology to use in goodwill impairment testing. </P>
<P STYLE="margin-top:6pt; margin-bottom:0pt; margin-left:8%; font-size:10pt; font-family:Times New Roman">A form of income approach, the discounted cash flow method, was used to measure the fair value of the associated with the DMHU and the NTR-CHG
goodwill. The discounted cash flow (&#147;DCF&#148;) method is a method of valuing an asset based upon the concept of the time value of money. All future&nbsp;cash flows, both inflows (revenues) and outflows (expenses and investments), are estimated
and&nbsp;discounted&nbsp;to provide an estimate of their&nbsp;present values. The sum of all future cash flows, both incoming and outgoing, is the&nbsp;net present value which is taken as the value of the asset under analysis. </P>
 <p STYLE="margin-top:0pt;margin-bottom:0pt ; font-size:8pt">&nbsp;</P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:8pt; font-family:Times New Roman" ALIGN="center">1282 Pacific Oaks Place,
Escondido, CA 92029-2900 <FONT STYLE="FONT-FAMILY:WINGDINGS">&#170;</FONT> Phone 866-781-7721 <FONT STYLE="FONT-FAMILY:WINGDINGS">&#170;</FONT> Fax 760-471-0399 <FONT STYLE="FONT-FAMILY:WINGDINGS">&#170;</FONT> info@netreit.com </P>


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<IMG SRC="g853449image77777.jpg" ALT="LOGO">
 </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">The Contrarian Real Estate Investment Trust </P>
<P STYLE="line-height:3.0pt;margin-top:0pt;margin-bottom:2pt;border-bottom:1.50pt solid #000000">&nbsp;</P> <p STYLE="margin-top:0pt;margin-bottom:0pt ; font-size:8pt">&nbsp;</P>
 <P STYLE="margin-top:0pt; margin-bottom:0pt; margin-left:8%; font-size:10pt; font-family:Times New Roman"><B>Documents and Inputs Considered</B> </P>
<P STYLE="margin-top:6pt; margin-bottom:0pt; margin-left:8%; font-size:10pt; font-family:Times New Roman">Below is a summary of the documents and inputs considered in measuring the fair value of goodwill of both entities for purposes of testing
goodwill impairment: </P> <P STYLE="font-size:6pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
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<TD WIDTH="9%">&nbsp;</TD>
<TD WIDTH="3%" VALIGN="top" ALIGN="left">&#149;</TD>
<TD WIDTH="1%" VALIGN="top">&nbsp;</TD>
<TD ALIGN="left" VALIGN="top">Valuation calculations associated with the acquisition of DHMU and NTR-CHG, which included management projections of the revenues and cost savings related to the acquisitions, discount rate assumptions, and other
relevant data; </TD></TR></TABLE> <P STYLE="font-size:6pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="9%">&nbsp;</TD>
<TD WIDTH="3%" VALIGN="top" ALIGN="left">&#149;</TD>
<TD WIDTH="1%" VALIGN="top">&nbsp;</TD>
<TD ALIGN="left" VALIGN="top">Actual performance post-acquisition as compared to the expectations as of the acquisition date; </TD></TR></TABLE> <P STYLE="font-size:6pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="9%">&nbsp;</TD>
<TD WIDTH="3%" VALIGN="top" ALIGN="left">&#149;</TD>
<TD WIDTH="1%" VALIGN="top">&nbsp;</TD>
<TD ALIGN="left" VALIGN="top">Number of properties associated with the model home business by DMHU entities and number of properties being managed by NTR Property Management, Inc. as of December&nbsp;31, 2013; </TD></TR></TABLE>
<P STYLE="font-size:6pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="9%">&nbsp;</TD>
<TD WIDTH="3%" VALIGN="top" ALIGN="left">&#149;</TD>
<TD WIDTH="1%" VALIGN="top">&nbsp;</TD>
<TD ALIGN="left" VALIGN="top">Balance sheet for the entities as of December&nbsp;31, 2013; and </TD></TR></TABLE> <P STYLE="font-size:6pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="9%">&nbsp;</TD>
<TD WIDTH="3%" VALIGN="top" ALIGN="left">&#149;</TD>
<TD WIDTH="1%" VALIGN="top">&nbsp;</TD>
<TD ALIGN="left" VALIGN="top">Budget data and projections for periods subsequent to December&nbsp;31, 2013. </TD></TR></TABLE> <P STYLE="margin-top:18pt; margin-bottom:0pt; margin-left:8%; font-size:10pt; font-family:Times New Roman"><B>Fair Value
Measurement Conclusions</B> </P> <P STYLE="margin-top:6pt; margin-bottom:0pt; margin-left:8%; font-size:10pt; font-family:Times New Roman">The fair value of DMHU entities and the NTR Property Management, Inc. under the DCF method was estimated to be
$30.7 million and $1.6 million, respectively. Based upon the balance sheet at December&nbsp;31, 2013 of the DHMU entities and NTR Property Management, Inc. as of the December&nbsp;31, 2013, the carrying value of these entities was $22.1 million and
$1.5 million, respectively. </P> <P STYLE="margin-top:6pt; margin-bottom:0pt; margin-left:8%; font-size:10pt; font-family:Times New Roman">Key inputs and sources to the DCF method included the below factors: </P>
<P STYLE="font-size:6pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="9%">&nbsp;</TD>
<TD WIDTH="3%" VALIGN="top" ALIGN="left">&#149;</TD>
<TD WIDTH="1%" VALIGN="top">&nbsp;</TD>
<TD ALIGN="left" VALIGN="top">Revenues and expenses for 2014 based upon budget data approved by management; </TD></TR></TABLE> <P STYLE="font-size:6pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="9%">&nbsp;</TD>
<TD WIDTH="3%" VALIGN="top" ALIGN="left">&#149;</TD>
<TD WIDTH="1%" VALIGN="top">&nbsp;</TD>
<TD ALIGN="left" VALIGN="top">Revenues and expenses after 2014 based upon projections from management; </TD></TR></TABLE> <P STYLE="font-size:6pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<TABLE STYLE="BORDER-COLLAPSE:COLLAPSE; font-family:Times New Roman; font-size:10pt" BORDER="0" CELLPADDING="0" CELLSPACING="0" WIDTH="100%">
<TR>
<TD WIDTH="9%">&nbsp;</TD>
<TD WIDTH="3%" VALIGN="top" ALIGN="left">&#149;</TD>
<TD WIDTH="1%" VALIGN="top">&nbsp;</TD>
<TD ALIGN="left" VALIGN="top">Discount rates assumed reasonable based upon cost of capital estimates for the industries. </TD></TR></TABLE>
<P STYLE="margin-top:18pt; margin-bottom:0pt; margin-left:8%; font-size:10pt; font-family:Times New Roman"><B>Impairment Testing Conclusions</B> </P>
<P STYLE="margin-top:6pt; margin-bottom:0pt; margin-left:8%; font-size:10pt; font-family:Times New Roman">Based upon the measurement of the fair value and carrying value for entities as of December&nbsp;31, 2013, the fair value exceeded the carrying
value. Therefore, there was no goodwill impairment indicator for entities as of December&nbsp;31, 2013. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">The Company intends to incorporate Staff comments
on a prospective basis and, at this time, does not intend to amend previously filed reports as a result of the Staff comments received and the responses thereto. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">The Company acknowledges the following: </P> <P STYLE="margin-top:6pt; margin-bottom:0pt; margin-left:8%; font-size:10pt; font-family:Times New Roman">The
Company is responsible for the adequacy and accuracy of the disclosure in the filing; </P> <P STYLE="margin-top:6pt; margin-bottom:0pt; margin-left:8%; font-size:10pt; font-family:Times New Roman">Staff comments or changes to disclosure in response
to staff comments do not foreclose the Commission from taking any action with respect to the filing; and </P>
 <p STYLE="margin-top:0pt;margin-bottom:0pt ; font-size:8pt">&nbsp;</P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:8pt; font-family:Times New Roman" ALIGN="center">1282 Pacific Oaks Place,
Escondido, CA 92029-2900 <FONT STYLE="FONT-FAMILY:WINGDINGS">&#170;</FONT> Phone 866-781-7721 <FONT STYLE="FONT-FAMILY:WINGDINGS">&#170;</FONT> Fax 760-471-0399 <FONT STYLE="FONT-FAMILY:WINGDINGS">&#170;</FONT> info@netreit.com </P>


<p Style='page-break-before:always'>
<HR  SIZE="3" style="COLOR:#999999" WIDTH="100%" ALIGN="CENTER">


 <P STYLE="margin-top:0pt;margin-bottom:0pt">


<IMG SRC="g853449image77777.jpg" ALT="LOGO">
 </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">The Contrarian Real Estate Investment Trust </P>
<P STYLE="line-height:3.0pt;margin-top:0pt;margin-bottom:2pt;border-bottom:1.50pt solid #000000">&nbsp;</P> <p STYLE="margin-top:0pt;margin-bottom:0pt ; font-size:8pt">&nbsp;</P>
 <P STYLE="margin-top:0pt; margin-bottom:0pt; margin-left:8%; font-size:10pt; font-family:Times New Roman">The Company may not assert staff comments as a defense in any legal proceeding initiated by
the Commission or any person under the federal securities laws of the United States. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">If, after review of the Company&#146;s responses to the Staff&#146;s
comments in the December&nbsp;19, 2014 letter you have additional comments or questions, please do not hesitate to contact the undersigned at your convenience. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">Very truly yours, </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">/s/ Kenneth W. Elsberry </P>
<P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">Kenneth W. Elsberry </P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">Chief Financial Officer </P>
<P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">NetREIT, Inc. </P>
 <p STYLE="margin-top:0pt;margin-bottom:0pt ; font-size:8pt">&nbsp;</P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:8pt; font-family:Times New Roman" ALIGN="center">1282 Pacific Oaks Place,
Escondido, CA 92029-2900 <FONT STYLE="FONT-FAMILY:WINGDINGS">&#170;</FONT> Phone 866-781-7721 <FONT STYLE="FONT-FAMILY:WINGDINGS">&#170;</FONT> Fax 760-471-0399 <FONT STYLE="FONT-FAMILY:WINGDINGS">&#170;</FONT> info@netreit.com </P>

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