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UNITED STATES SECURITIES AND
    EXCHANGE COMMISSION
 Washington, D.C.
    20549
      Form 10-K
      þ

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) 
    OF THE SECURITIES EXCHANGE ACT OF 1934For the fiscal year ended
    December 31, 2008oro

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
    OF THE SECURITIES EXCHANGE ACT OF 1934From the transition period
    from          to   Commission File Number:
    333-139042
  SHOPOFF PROPERTIES TRUST,
    INC.
 (Exact name of registrant as
    specified in its charter)
  Maryland

20-5882165(State or Other Jurisdiction
    of
    Incorporation of Organization)

(I.R.S. Employer
    Identification No.)8951 Research Drive

92618Irvine, California

(Zip Code)(Address of Principal Executive
    Offices)   (877) 874-7348
 (Registrants telephone
    number, including area code)
  Securities
    registered pursuant to Section 12(b) of the
    Act :
  Title of Each Class:

Name of Each Exchange on Which RegisteredNone

None   Securities
    registered pursuant to Section 12(g) of the Act:
  None
  o þ
  þ o
  þ o
  Regulation S-K Form 10-K Form 10-K. þ
  12b-2
  Large accelerated
    filer o

Accelerated
    filer o

Non-accelerated
    filer o

Smaller reporting
    company þ(Do not check if a smaller reporting company)   Rule 12b-2 o þ




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TABLE OF
    CONTENTS
   
 PagePART IItem 1.


Business


1Item 1A.


Risk Factors


10Item 1B.


Unresolved Staff Comments


31Item 2.


Properties


31Item 3.


Legal Proceedings


33Item 4.


Submission of Matters to a Vote of Security
    Holders


33PART IIItem 5.


Market for Registrants Common Equity
    Related Stockholder Matters and Issuer Purchases of Equity
    Securities


33Item 6.


Selected Financial Data


35Item 7.


Managements Discussion and Analysis of
    Financial Condition and Results of Operations


36Item 7A.


Quantitative and Qualitative Disclosures About
    Market Risk


51Item 8.


Financial Statements and Supplementary Data


52Item 9.


Changes In and Disagreements With Accountants on
    Accounting Financial Disclosure


52Item 9A.


Controls and Procedures


52Item 9B.


Other Information


53PART IIIItem 10.


Directors, Executive Officers and Corporate
    Governance


53Item 11.


Executive Compensation


53Item 12.


Security Ownership of Certain Beneficial Owners
    and Management and Related Stockholder Matters


54Item 13.


Certain Relationships and Related Transactions
    and Director Independence


54Item 14.


Principal Accounting Fees and Services


54PART IVItem 15.


Exhibits, Financial Statement Schedules


55SignaturesEX-21.1EX-23.1EX-31.1EX-31.2EX-32.1EX-32.2   i




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PART I  FORWARD-LOOKING
    STATEMENTS
  Form 10-K
    
    Changes in economic conditions generally and the real estate
    market specifically.
    Legislative/regulatory changes, including changes to laws
    governing the taxation of REITs.
    Availability of capital.
    Interest rates.
    Our ability to service our debt.
    Competition.
    Supply and demand for undeveloped land and other real estate in
    our proposed market areas.
    The prospect of a continuing relationship with Shopoff Advisors.
    Changes in accounting principles generally accepted in the
    United States of America.
    Policies and guidelines applicable to REITs.    ITEM 1.
    BUSINESS  General
       1




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Form S-11
        Our
    Business and Objectives
  Investment
    Objectives
    
    the potential for an annual internal rate of return in excess of
    30% on a compounded basis;
    the potential for a sharp increase in value due to such factors
    as a recent or potential future zoning change or other
    opportunity where a property might lie in the path of progress;
    characteristics of the property enable us to ascertain that we
    could purchase the property at a discount from current market
    value;
    geographic location in California, Nevada, Arizona, Hawaii, or
    Texas;
    potential for capital appreciation;
    potential for economic growth in the community in which the
    property is located;
    prospects for liquidity through sale, financing or refinancing
    of the property;
    moderate competition from existing properties; 2




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
    location in a market in which we have familiarity based upon
    past experience or we have an advantage based upon our
    experience in repositioning properties;
    potential for development of the property into income property.  Investment
    in Undeveloped Real Estate Assets
    2005-2006
    Other
    Property Acquisitions
      lease-up
      Making
    Loans and Investments in Mortgages
   3




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
    except for differences attributable to adjustable rate loans,
    equal periodic payments on a schedule that would be sufficient
    to fully amortize the loan over a 20 to 40 year period;
    payments of interest only for a period not greater than ten
    years with the remaining balance payable in equal periodic
    payments on a schedule that would fully amortize the loan over a
    20 to 30 year period; or
    payment of a portion of the stated interest currently and
    deferral of the remaining interest for a period not greater than
    five years, with the remaining principal and interest payable in
    equal periodic payments on a schedule that would fully amortize
    the loan over a 20 to 35 year period.        Investment
    in Securities
   4




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Joint
    Ventures
      
    we are the managing member of a limited liability company or the
    general partner of a limited partnership and we are receiving a
    larger share of the profits than our capital represents to the
    overall venture;
    we are investing with a local operating partnership over which
    we have management control thereby allowing us to exert control
    over operations and the disposition of the assets within the
    venture;
    we have the right of first refusal if the joint venturer wishes
    to sell its interest in the property to a third party;
    there are no duplicate property management or other
    fees; and
    the investment of each entity is on substantially the same terms
    and conditions or on terms and conditions more favorable to us.    Investment
    Policies
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
    We will not repurchase or otherwise reacquire our shares or
    other securities, except (i) in the case of shares issued
    under our 2007 equity incentive plan which are subject to the
    right of first refusal upon transfer by plan participants, and
    (ii) when and if shares of our common stock are traded on a
    secondary market or on a national securities exchange or
    national market system, if a majority of the directors determine
    such purchase to be in our best interests.
    We will not issue our shares on a deferred payment basis or
    other similar arrangement
    We will not invest in the securities of other issuers for the
    purpose of exercising control.
    We will not engage in underwriting or the agency distribution of
    securities issued by others.
    We do not intend to make
    distributions-in-kind,
    except for: (a) distributions of readily marketable
    securities, (b) distributions of beneficial interests in a
    liquidating trust established for our dissolution and the
    liquidation of our assets in accordance with the terms of the
    Maryland General Corporations Law; or (c) distributions of
    property pursuant to which our board of directors
    (i) advises each stockholder of the risks associated with
    direct ownership of the property; (ii) offers each
    stockholder the election of receiving in-kind property
    distributions; and (iii) distributes in-kind property only
    to those stockholders who accept the directors offer.    Financing
    Objectives
  and/or
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Distribution
    Policy
      and/or
      Tax
    Policy
    Economic
    Dependency
   7




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General
    Competitive Conditions
        Employees
    Compliance
    with Federal, State, and Local Law
    Costs of Government Environmental Regulation and Private
    Litigation.
  Costs of Compliance with the Americans with Disabilities
    Act.
  Use of Hazardous Substances by Tenants.
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Other Federal, State and Local
    Regulations.
  Investment
    Company Act
          
    limitations on capital structure;
    restrictions on specified investments;
    prohibitions on transactions with affiliates; and
    compliance with reporting, record keeping, voting, proxy
    disclosures and other rules and regulations that would
    significantly change our operations.  Available
    Information
  Form 10-K, Form 10-Q, http:/
    /www.sec.gov www.shopoffpropertiestrust.com (877) 874-7348.
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ITEM 1A.  RISK
    FACTORS  Following are some of the risks and uncertainties that could
    cause our actual results to differ materially from those
    presented in our forward-looking statements. The risks and
    uncertainties described below are not the only ones we face but
    do represent those risks and uncertainties that we believe are
    material to us. Additional risks and uncertainties not presently
    known to us or that we currently deem immaterial may also harm
    our business.
  Risks
    Related to the Current Economic Crisis
  The
    U.S. is in the midst of a severe global economic crisis and, as
    a result, the federal government has taken emergency measures in
    the form of executive orders, legislation, rules, regulations,
    and various other initiatives in an attempt to stabilize the
    U.S. and global economies. If the actions of the U.S.
    government, including the U.S. Treasury Department, the Federal
    Reserve and other governmental and regulatory bodies, do not
    have their desired effect, our business may be adversely
    impacted.
    Depressed
    real estate prices in the markets in which we intend to acquire
    the majority of our properties may adversely impact our
    business.
    Difficult
    conditions in the financial markets and the economy generally
    may make it more difficult for us to raise the capital we need
    to successfully implement our business plan.
  12-year
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Risks
    Related to Our Business
  We and
    the Advisor are relatively new companies with limited operating
    histories, and we may not be able to operate
    successfully.
    
    identify and acquire investments that further our investment
    strategies;
    increase awareness of the Shopoff name within the investment
    products market;
    attract, integrate, motivate and retain qualified personnel to
    manage our day-to-day operations;
    respond to competition for our targeted real estate properties
    and other real estate-related investments as well as for
    potential investors in our shares; and
    build and expand our operations structure to support our
    business.    Our
    investments may differ from prior programs sponsored by the
    Sponsor, and therefore the past performance of those programs
    may not be indicative of our future results.
    Payment
    of fees, distributions and expense reimbursements to the Advisor
    and its affiliates will reduce cash available for investment and
    for distribution to our stockholders.
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We may
    suffer from delays in locating suitable investments, which could
    reduce our ability to make distributions to our stockholders and
    reduce the return on your investment.
    We
    will acquire, entitle and hold properties as long-term
    investments. Accordingly, you may not realize a return on your
    investment for years, if at all.
    We may
    not have sufficient funds to pay dividends prior to the sale of
    properties we acquire.
    We are
    uncertain of our sources of debt and/or equity financing to fund
    future capital needs. If we are not able to locate sources of
    funding, our ability to make necessary capital improvements to
    our properties may be impaired or delayed.
    We
    depend on key personnel, the loss of any of whom could be
    detrimental to our business.
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Our
    success is dependent on the performance of the Advisor as well
    as key employees of the Advisor.
  and/or
  Terrorist
    attacks and other acts of violence or war may affect the markets
    in which we operate, our operations and our
    profitability.
  and/or
    Our
    results of operations, our ability to pay distributions to our
    stockholders and our ability to dispose of our investments are
    subject to general economic and regulatory factors we cannot
    control or predict.
    
    Increases in supply of competing properties
    and/or
    decreases in demand for our properties may impact our results;
    Changes in interest rates and availability of debt financing
    could render the sale of properties difficult or unattractive;
    Increased insurance premiums, real estate taxes or energy or
    other expenses may reduce funds available for distribution.  and/or
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Risks
    Related to an Investment in Our Common Stock
  There
    is currently no public market for our shares of common stock.
    Therefore, it will likely be difficult for you to sell your
    shares and, if you are able to sell your shares, you may have to
    sell them at a substantial discount from the price you
    paid.
    Our
    ability to successfully conduct our offering is dependent in
    part on the ability of Shopoff Securities, a newly-formed
    entity, to successfully sell our shares in the
    offering.
    Investors
    in the offering will be unable to evaluate the manner in which
    the net proceeds are invested and the economic merits of
    projects prior to investment.
    Because
    our broker-dealer, Shopoff Securities, is our affiliate, there
    will be little or no independent due diligence
    review of us.
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Because
    this is a best efforts offering, Shopoff Securities
    is only required to use its best efforts to sell our shares. If
    we are unable to raise substantial funds in our offering, we
    will be limited in the number and type of investments we may
    make, which will result in a less diversified
    portfolio.
    Investors
    in our offering who purchase a portion of the
    2,000,000 shares offered at $9.50 per share experience
    immediate dilution as a result of the grant of restricted stock
    to our directors and executive officers when the minimum
    offering amount was sold. Investors in our offering who purchase
    a portion of the remaining 18,100,000 shares at $10.00 per
    share may experience dilution if the value of our net assets is
    less than $10.00 at the time of their respective
    purchases.
    Because
    we will continue to sell shares at a fixed price during the
    course of our offering and, at the same time, will be acquiring
    real estate and real estate-related assets with the proceeds of
    the offering, shares purchased after completion of the minimum
    offering will experience dilution to the extent that future
    shares are issued when and if the value of our underlying net
    assets exceeds the price you paid for your shares in the
    offering.
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Because
    we established the offering price on an arbitrary basis, it may
    not be indicative of the price at which our shares would trade
    if they were actively traded.
    The
    board of directors has significant discretion to modify or
    expand our investment objectives and policies without
    shareholder approval.
          Some
    states securities laws may limit secondary trading of our
    common stock, which may restrict the states in which you can
    sell the shares we are offering.
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Risks
    Related to Investments in Real Estate
  Uncertainties
    in the entitlement process may result in increased costs and
    risks of ownership of the properties.
  and/or and/or 2-year and/or
  Uncertain
    market conditions relating to the future disposition of
    properties could cause us to sell our properties at a loss in
    the future.
    We
    face possible liability for environmental cleanup costs and
    damages for contamination related to properties we acquire,
    which could substantially increase our costs and reduce our
    liquidity and cash distributions to stockholders.
  and/or and/or and/or
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Competition
    with third parties in acquiring properties and other investments
    may reduce our profitability and the return on your
    investment.
  and/or
  Uninsured
    losses relating to real estate may reduce your
    returns.
    Risks
    Associated With Real Estate-Related Investments
  and/or
  Our
    real estate-related investments may be impacted by unfavorable
    real estate market conditions, which could decrease their
    value.
    Our
    returns on mortgage loans may be reduced by interest rate
    fluctuations.
    Delays
    in liquidating defaulted real estate-related investments could
    reduce our investment returns.
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Returns
    on our mortgage loans may be limited by
    regulations.
    Foreclosures
    create additional risks, as we would be subject to all of the
    risks of owning the property on which we
    foreclose.
    If we
    liquidate prior to the maturity of our real estate-related
    investments, we may be forced to sell those investments on
    unfavorable terms or at a loss.
    Risks
    Associated With Debt Financing
  We
    expect to incur mortgage and other indebtedness, which may
    increase our business risks and impair our ability to make
    distributions to our stockholders.
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If
    mortgage debt is unavailable at reasonable rates, we may not be
    able to finance or refinance the properties, which could reduce
    the number of properties we can acquire and the amount of cash
    distributions we can make.
    Lenders
    may require us to enter into restrictive covenants relating to
    our operations, which could limit our ability to make
    distributions to our stockholders.
  and/or
  Fluctuations
    in interest rates could increase our expenses, require us to
    sell investments and/or make it more difficult to make
    attractive investments.
    If we
    enter into financing arrangements involving balloon payment
    obligations, the repayment of the balloon payments may require
    us to enter into unfavorable refinancings and/or to divert funds
    from other sources, which would reduce dividends
    paid.
  and/or
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The
    tightening of the credit markets in California, Nevada, Arizona,
    Hawaii, and Texas, which may continue for an indefinite period
    of time, may make it increasingly difficult for us to secure
    financing at reasonable rates or at all, which may limit our
    ability to finance or refinance our real estate properties,
    reduce the number of properties we can acquire, and adversely
    affect your investment.
    Risks
    Associated with Joint Ventures
  The
    terms of joint venture agreements or other joint ownership
    arrangements into which we may enter could impair our operating
    flexibility and our results of operations.
  co-tenancies and/or
  
    a partner or co-investor might have economic
    and/or other
    business interests or goals which are unlike or incompatible
    with our business interests or goals, including inconsistent
    goals relating to the sale of properties held in a joint venture
    and/or the
    timing of the termination and liquidation of the venture;
    such partners or co-investors may become bankrupt and such
    proceedings could have an adverse impact on the operation of the
    partnership or joint venture;
    we may incur liabilities as the result of actions taken by joint
    venture partners in which we had no direct involvement; and
    such partners or co-investors may be in a position to take
    action contrary to our instructions or requests or contrary to
    our policies and objectives or fail to take actions as we
    instruct, or in accordance with our policies and objectives,
    including our policy with respect to qualifying and maintaining
    our qualification as a REIT.   21




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We may
    structure our joint venture relationships in a manner which
    could limit the amount we participate in the cash flow or
    appreciation of an investment.
  and/or
  Risks
    Associated With Our Organizational Structure
  Your
    interest in us may be diluted if we issue additional shares in
    our offering or otherwise.
      
    sell additional shares in the future;
    sell securities that are convertible into shares of our common
    stock;
    issue shares of our common stock in a private offering to
    institutional investors; or
    issue shares of our common stock to sellers of properties
    acquired by us in connection with an exchange of limited
    partnership interests of the Operating Partnership (we have no
    intention of making such exchanges at this time).  The
    limit on the number of shares a person could own may discourage
    a takeover attempt.
  and/or
  Certain
    provisions of Maryland law and our charter and bylaws could
    hinder, delay or prevent a change in control of our
    company.
    
    Number of Directors, Board Vacancies, Term of
    Office.  Under certain amendments to our charter
    which will become effective at such time as a class of our
    equity securities is registered under the Securities Exchange
    Act of 1934, as amended, or the Exchange Act (which will occur
    upon completion of our initial 22




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public offering), we have elected to be subject to certain
    provisions of Maryland law which vest in the board of directors
    the exclusive right to determine the number of directors and the
    exclusive right, by the affirmative vote of a majority of the
    remaining directors, to fill vacancies on the board even if the
    remaining directors do not constitute a quorum.  
    Classified Board.  Under our charter, we have a
    classified board serving staggered, five-year terms, which may
    lengthen the time required to gain control of our board of
    directors.
    Advance Notice Provisions for Stockholder Nominations and
    Proposals.  Our bylaws require advance written
    notice for stockholders to nominate persons for election as
    directors at, or to bring other business before, any meeting of
    stockholders. This bylaw provision limits the ability of
    stockholders to make nominations of persons for election as
    directors or to introduce other proposals unless we are notified
    in a timely manner prior to the meeting.
    Exclusive Authority of our Board to Amend the
    Bylaws.  Our bylaws provide that our board of
    directors has the exclusive power to adopt, alter or repeal any
    provision of the bylaws or to make new bylaws. Thus, our
    stockholders may not effect any changes to our bylaws.
    Preferred Stock.  Under our charter, our board
    of directors has authority to issue preferred stock from time to
    time in one or more series and to establish the terms,
    preferences and rights of any such series of preferred stock,
    all without approval of our stockholders
    Duties of Directors with Respect to Unsolicited
    Takeovers.Maryland law provides protection for
    Maryland corporations against unsolicited takeovers by limiting,
    among other things, the duties of the directors in unsolicited
    takeover situations. The duties of directors of Maryland
    corporations do not require them to (1) accept, recommend
    or respond to any proposal by a person seeking to acquire
    control of the corporation, (2) authorize the corporation
    to redeem any rights under, or modify or render inapplicable,
    any stockholders rights plan, (3) make a determination
    under the Maryland Business Combination Act or the Maryland
    Control Share Acquisition Act, or (4) act or fail to act
    solely because of the effect of the act or failure to act may
    have on an acquisition or potential acquisition of control of
    the corporation or the amount or type of consideration that may
    be offered or paid to the stockholders in an acquisition.
    Moreover, under Maryland law the act of the directors of a
    Maryland corporation relating to or affecting an acquisition or
    potential acquisition of control is not subject to any higher
    duty or greater scrutiny than is applied to any other act of a
    director. Maryland law also contains a statutory presumption
    that an act of a director of a Maryland corporation satisfies
    the applicable standards of conduct for directors under Maryland
    law.
    Ownership Limit.  In order to preserve our
    status as a REIT under the Code, our charter generally prohibits
    any person, from beneficially or constructively owning more than
    9.8% in value or in number of shares (whichever is more
    restrictive) of the aggregate of our outstanding common stock or
    more than 9.8% of the aggregate of our outstanding shares of
    capital stock unless our board of directors waives or modifies
    this ownership limit.
    Maryland Business Combination Act.The
    Maryland Business Combination Act provides that unless exempted,
    a Maryland corporation may not engage in business combinations,
    including mergers, dispositions of 10% or more of its assets,
    issuance of shares of stock and other specified transactions,
    with an interested stockholder or an affiliate of an
    interested stockholder for five years after the most recent date
    on which the interested stockholder became an interested
    stockholder, and thereafter unless specified criteria are met.
    An interested stockholder is generally a person owning or
    controlling, directly or indirectly, 10% or more of the voting
    power of the outstanding stock of a Maryland corporation. Our
    board of directors has adopted a resolution exempting only
    transactions between us and our affiliates from this statute.
    Therefore, the provisions of the Maryland Business Combination
    Act are applicable to business combinations between our company
    and persons other than our affiliates.
    Maryland Control Share Acquisition
    Act.  Maryland law provides that control
    shares of a corporation acquired in a control share
    acquisition shall have no voting rights except to the
    extent approved by a vote of two-thirds of the votes eligible to
    be cast on the matter under the Maryland Control Share
    Acquisition Act. Control shares means shares of
    stock that, if aggregated with all other shares of stock
    previously acquired 23




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by the acquiror, would entitle the acquiror to exercise voting
    power in electing directors within one of the following ranges
    of the voting power: one-tenth or more but less than one-third,
    one-third or more but less than a majority or a majority or more
    of all voting power. A control share acquisition
    means the acquisition of control shares, subject to certain
    exceptions. If voting rights of control shares acquired in a
    control share acquisition are not approved at a
    stockholders meeting, then subject to certain conditions
    and limitations, the issuer may redeem any or all of the control
    shares for fair value. If voting rights of such control shares
    are approved at a stockholders meeting and the acquiror
    becomes entitled to vote a majority of the shares of stock
    entitled to vote, all other stockholders may exercise appraisal
    rights. Our bylaws contain a provision exempting acquisitions of
    our shares from the Maryland Control Share Acquisition Act.
    However, our board of directors may amend our bylaws in the
    future to repeal or modify this exemption, in which case any
    control shares of our company acquired in a control share
    acquisition will be subject to the Maryland Control Share
    Acquisition Act.  Your
    investment return may be reduced if we are required to register
    as an investment company under the Investment Company
    Act.
    Risks
    Related to Conflicts of Interest
    We
    will compete with affiliates of the Advisor in the acquisition
    of properties.
    If we
    enter into joint ventures with affiliates, we may face conflicts
    of interest or disagreements with our joint venture partners
    that will not be resolved as quickly or on terms as advantageous
    to us as would be the case if the joint venture had been
    negotiated at arms-length with an independent joint
    venture partner. As a result, your returns may be decreased by
    us entering into joint ventures with affiliates of the
    Advisor.
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The
    Advisor and employees of the Advisor and its affiliates will
    face conflicts of interest relating to time management and
    allocation of resources, and our results of operations may
    suffer as a result of these conflicts of interest.
  and/or
  
    the allocation of new investments among us and affiliates of the
    Advisor;
    the allocation of time and resources among us and affiliates of
    the Advisor;
    the timing and terms of the investment in or sale of an asset;
    entitlement or management of our properties by affiliates of the
    Advisor;
    investments with
    and/or sales
    to and acquisitions from affiliates of the Advisor; and
    compensation to the Advisor.  The
    Advisor will face conflicts of interest relating to its
    compensation structure. The distribution payable to the Advisor
    upon termination of the advisory agreement may also influence
    decisions about terminating the Advisor or our acquisition or
    disposition of investments.
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We may
    acquire assets from, or dispose of assets to, entities managed
    by the Advisor or its affiliates, which could result in us
    entering into transactions on less favorable terms than we would
    receive from an unrelated party and/or that negatively affect
    the publics perception of us.
  and/or
  The
    fees we pay the Advisor under the advisory agreement and the
    distributions payable to the Advisor under the partnership
    agreement of the Operating Partnership were not determined on an
    arms-length basis and therefore may not be on the same
    terms as those we could negotiate with a
    third-party.
    Risks
    Associated with Income Taxes
    Failure
    to qualify as a REIT would reduce our net income (if any) and
    cash available for distributions.
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and/or and/or
  Even
    if we qualify as a REIT for federal income tax purposes, we may
    be subject to other tax liabilities that reduce our cash flow
    and our ability to make distributions to you.
    
    In order to qualify as a REIT, we must distribute annually at
    least 90% of our REIT taxable income to our stockholders (which
    is determined without regard to the dividends paid deduction or
    net capital gain). To the extent that we satisfy the
    distribution requirement but distribute less than 100% of our
    REIT taxable income, we will be subject to federal corporate
    income tax on the undistributed income.
    We will be subject to a 4% nondeductible excise tax on the
    amount, if any, by which distributions we pay in any calendar
    year are less than the sum of 85% of our ordinary income, 95% of
    our capital gain net income and 100% of our undistributed income
    from prior years.
    If we have net income from the sale of foreclosure property that
    we hold primarily for sale to customers in the ordinary course
    of business or other nonqualifying income from foreclosure
    property, we must pay a tax on that income at the highest
    corporate income tax rate.
    If we sell a property, other than foreclosure property, that we
    hold primarily for sale to customers in the ordinary course of
    business, our gain would be subject to the 100% prohibited
    transaction tax.
    Our taxable REIT subsidiaries will be subject to tax on their
    taxable income.  Dividends
    payable by REITs do not qualify for the reduced tax
    rates.
   27




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##### Table of Contents



To
    maintain our REIT status, we may be forced to borrow funds
    during unfavorable market conditions to make distributions to
    our stockholders, which could increase our operating costs and
    decrease the value of your investment.
  and/or
  To
    maintain our REIT status, we may be forced to forego attractive
    investment opportunities, which could delay or hinder our
    ability to meet our investment objectives and lower the return
    on your investment.
    The
    extent of our use of taxable REIT subsidiaries may affect the
    value of our common stock relative to the share price of other
    REITs.
    Even
    if we qualify as a REIT, we could be subject to an excise tax on
    non-arms-length transactions with our taxable REIT
    subsidiaries.
    We may
    be required to pay a penalty or may not qualify as a REIT if the
    value of our taxable REIT subsidiaries exceeds 25% of the value
    of our total assets at the close of any calendar
    quarter.
  30-day
 28




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##### Table of Contents



Certain
    of our business activities are potentially subject to the
    prohibited transaction tax, which could reduce the return on
    your investment.
        If the
    Operating Partnership, or any joint ventures in which the
    Operating Partnership invests, fails to maintain its status as a
    partnership for federal income tax purposes, its income may be
    subject to taxation and we may fail to satisfy the REIT asset
    requirements.
    We may
    incur excess inclusion income that would increase the tax
    liability of our stockholders.
     29




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##### Table of Contents



Misplaced
    reliance on legal opinions or statements by issuers of
    mortgage-backed securities and government securities could
    result in a failure to comply with REIT gross income or asset
    tests.
    Risks
    Related to Employee Benefit Plans and IRAs
    There
    are special considerations for pension or profit-sharing or
    401(k) plans, health or welfare plans or individual retirement
    accounts whose assets are being invested in our common
    stock.
    
    whether your investment is consistent with the applicable
    provisions of ERISA and the Internal Revenue Code, or any other
    applicable governing authority in the case of a government plan;
    whether your investment is made in accordance with the documents
    and instruments governing your plan or IRA, including your
    plans investment policy;
    whether your investment satisfies the prudence and
    diversification requirements of Sections 404(a)(1)(B) and
    404(a)(1)(C) of ERISA;
    whether your investment will impair the liquidity of the plan or
    IRA;
    whether your investment will produce unrelated business taxable
    income, referred to as UBTI and as defined in Sections 511
    through 514 of the Internal Revenue Code, to the plan; and
    your need to value the assets of the plan annually.  and/or and/or parties-in-interest and/or and/or
 30




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##### Table of Contents



ITEM 1B.
    UNRESOLVED
    STAFF COMMENTS    ITEM 2.
    PROPERTIES    Winchester
    Ranch
              TSG
    Little Valley and Whiterock Acquisition Co., L.P.
   31




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##### Table of Contents



Mesquite
    Venture I, LLC  $600,000 Secured
    Loan
    Aware
    Development Inc  $2,300,000 Secured
    Loan
        
    Aware agreed that, in the absence of additional defaults other
    than payment defaults, Aware would forbear from exercising its
    rights and remedies under the Vineyard Loans, including without
    limitation foreclosure, from the date January 9, 2009
    through July 9, 2009 (Forbearance Period), in
    order to allow Springbrook 32




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##### Table of Contents



time to attempt to refinance the Vineyard Loans. During the
    Forbearance Period, interest and other required payments under
    the Vineyard Loans will continue to accrue at the stated rate,
    and will be added to principal.  
    At any time during the Forbearance Period, Aware shall accept,
    as payment in full under the Vineyard Loans, with respect to one
    note, the sum of $1,896,000 plus all accrued interest then due
    under the Notes, of which amount Springbrook shall cause to be
    paid $1,886,000 directly to SPT Real Estate Finance, and $10,000
    to Aware and all other amounts directly to Lender and, with
    respect to the second note, the sum of $424,000 plus all accrued
    interest then due under the Notes, of which amount Springbrook
    shall cause to be paid $414,000 directly to SPT Real Estate
    Finance, LLC and $10,000 to Aware and all other amounts directly
    to Lender.  
    The commercial guaranties executed by William A. Shopoff, an
    individual, and William A. Shopoff and Cindy I. Shopoff, as
    Trustees of the Trust, in connection with the Vineyard Loans,
    have been released, and Aware has waived any and all right to
    recover under the same.        ITEM 3.
    LEGAL
    PROCEEDINGS    ITEM 4.
    SUBMISSION
    OF MATTERS TO A VOTE OF SECURITY HOLDERS   PART II  ITEM 5.
    MARKET
    FOR REGISTRANTS COMMON EQUITY, RELATED STOCKHOLDER MATTERS
    AND ISSUER PURCHASES OF EQUITY SECURITIES  Market
    Information
     33




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##### Table of Contents



Holders
    of Record
    Distribution
    Information
  and/or
    Dividends
    Unregistered
    Sales of Equity Securities
    Issuer
    Redemption of Equity Securities
    Use of
    Proceeds from Sales of Registered Securities
  Form S-11 No. 333-139042),
 34




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##### Table of Contents



Estimated/Type of Expense Amount

Amount


ActualSelling commissions and broker-dealer fees

$
Finders fees


Expenses paid to or for underwriters


Other organization and offering costs

$
4,624,000



ActualTotal expenses

$
4,624,000



Actual   ITEM 6.
    SELECTED
    FINANCIAL DATA    As ofDecember 31,2008Balance sheet data:Cash and cash equivalents

$
7,486,696Notes Receivable, net


558,000Real estate deposits


3,300,000Real estate investments


2,614,134Prepaid expenses and other assets


55,807Property, Plant, Equipment, net


45,047Total Assets

$
14,059,684LiabilitiesAccounts Payable and accrued liabilities

$
64,596Due to related parties


132,135Total Liabilities

$
196,731Minority Interest


100Stockholders equityCommon Stock $0.01 par value


18,573Additional Paid In Capital, net of offering costs


15,472,346Accumulated Deficit


(1,628,066
)Total Stockholders equity


13,862,853Total Liabilities and Stockholders Equity

$
14,059,684   35




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##### Table of Contents



For theYear EndedDecember 31,2008Operating data:RevenuesInterest Income  Note Receivable

$
21,000Interest Income  Other


131,356Total Revenues


152,356Operating ExpensesDue Diligence


1,027,888Professional Fee


264,433Insurance


208,589Board Of Director Compensation


59,335General and Administrative


58,211Total Operating Expenses


1,618,456Net Loss

$
(1,466,100
)Other data:Cash flows used in operating activities


(1,484,712
)Cash flows used in investing activities


(6,521,276
)Cash flows provided by financing activities


(15,292,134
)Per share data:Net loss per common share  basic and diluted

$
(2.32
)Weighted-average number of common shares outstanding


631,921   ITEM 7.
    MANAGEMENTS
    DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
    OPERATIONS  You should read the following discussion and analysis
    together with our consolidated financial statements and notes
    thereto included in this Annual Report on
    Form 10-K.
    The following information contains forward-looking statements,
    which are subject to risks and uncertainties. Should one or more
    of these risks or uncertainties materialize, actual results may
    differ materially from those expressed or implied by the
    forward-looking statements. Please see Special Note
    Regarding Forward-Looking Statements above for a
    description of these risks and uncertainties
  Company
    Overview
  Form S-11 No. 333-139042)
  Form S-11
 36




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##### Table of Contents



Form S-11
      2005-2006
       37




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##### Table of Contents



and/or
    Results
    of Operations
  Form S-11 Form S-11
          Comparison
    of Twelve Months Ended December 31, 2008 to Twelve Months
    Ended December 31, 2007
     38




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##### Table of Contents



Recent
    Market Developments
      Organization
    and Offering Costs
     39




---



##### Table of Contents



Liquidity
    and Capital Resources
                   40




---



##### Table of Contents



Distributions
    The
    Advisory Agreement
      Acquisition and Advisory Fees:
  Debt Financing Fee:
  Asset Management Fees:
  Disposition Fees:
 41




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##### Table of Contents



Subordinated Participation in Distributable
    Cash:
  Subordinated Incentive Fee Due Upon
    Listing:
  Subordinated Performance Fee Due Upon
    Termination:
  Investment
    Strategy
    
    the potential for an annual internal rate of return in excess of
    30% on a compounded basis;
    the potential for a sharp increase in value due to such factors
    as a recent or potential future zoning change or other
    opportunity where a property might lie in the path of progress;
    characteristics of the property enable us to ascertain that we
    could purchase the property at a discount from current market
    value;
    geographic location in California, Nevada, Arizona, Hawaii, or
    Texas;
    potential for capital appreciation;
    potential for economic growth in the community in which the
    property is located;
    prospects for liquidity through sale, financing or refinancing
    of the property;
    moderate competition from existing properties;
    location in a market in which we have familiarity based upon
    past experience or we have an advantage based upon our
    experience in repositioning properties;
    potential for development of the property into income property.  2005-2006
 42




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##### Table of Contents



Other Property Acquisitions.
  Making Loans and Investments in Mortgages.
  Investment in Securities.
  Joint Ventures.
    Critical
    Accounting Policies
  and/or
 43




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##### Table of Contents



Use of
    Estimates
  and/or
  Principles
    of Consolidation
      Cash
    and Cash Equivalents
    Revenue
    and Profit Recognition
  Accounting for Sales of Real Estate
       44




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##### Table of Contents



Cost
    of Real Estate Investments
        Property
    Held for Sale
      
    Management, having the authority to approve the action, commits
    to a plan to sell the asset;
    The asset is available for immediate sale in its present
    condition, subject only to terms that are usual and customary
    for sales of such asset;
    An active program to locate a buyer and other actions required
    to complete the plan to sell the asset has been initiated;
    The sale of the asset is probable, and the transfer of the asset
    is expected to qualify for recognition as a completed
    transaction within one year;
    The asset is being actively marketed for sale at a price that is
    reasonable in relation to its current estimated fair
    value; and
    Given the actions required to complete the plan to sell the
    asset, it is unlikely that significant changes to the plan would
    be made or that the plan would be abandoned.    asset-by-asset
 45




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##### Table of Contents



Long-Lived
    Assets
  Accounting for the Impairment of or
    Disposal of Long-Lived Assets. SFAS No. 144
    Note
    Receivable
    Potential
    Investments in Partnerships and Joint Ventures.
  Consolidation of Variable Interest Entities
  
    The total equity investment at risk is not sufficient to permit
    the entity to finance its activities without additional
    subordinated financial support from other parties (i.e., the
    equity investment at risk is not greater than the expected
    losses of the entity).
    As a group the holders of the equity investment at risk lack any
    one of the following three characteristics of a controlling
    financial interest:  
    The direct or indirect ability to make decisions about an
    entitys activities through voting rights or similar rights.
    The obligation to absorb the expected losses of the entity if
    they occur. 46




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##### Table of Contents




    The right to receive the expected residual returns of the entity
    if they occur.    and/or
        Income
    Taxes
     47




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##### Table of Contents



Stock-Based
    Compensation
  SFAS No. 123-R, Share-Based Payment SFAS No. 123-R
  Significant
    Recent Accounting Pronouncements
  Fair
    Value Measurements, FAS 157-2,
  The Fair Value Option for
    Financial Assets and Financial Liabilities  Including
    an Amendment of FASB Statement No. 115. Accounting for
    Certain Investments in Debt and Equity Securities
 48




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##### Table of Contents



Business Combinations.
  
    Acquisition costs will be generally expensed as incurred;
    Noncontrolling interests (formerly known as minority
    interests  see SFAS No. 160
    discussion below) will be valued at fair value at the
    acquisition date;
    Acquired contingent liabilities will be recorded at fair value
    at the acquisition date and subsequently measured at either the
    higher of such amount or the amount determined under existing
    guidance for non-acquired contingencies;
    In-process research and development will be recorded at fair
    value as an indefinite-lived intangible asset at the acquisition
    date;
    Restructuring costs associated with a business combination will
    be generally expensed subsequent to the acquisition
    date; and
    Changes in deferred tax asset valuation allowances and income
    tax uncertainties after the acquisition date generally will
    affect income tax expense.    Noncontrolling Interests in Consolidated
    Financial Statements  An Amendment of ARB
    No. 51.
  Disclosures about Derivative Instruments and Hedging
    Activities
 49




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##### Table of Contents



Subsequent
    Events
  Status
    of Offering
    Real
    Estate- Related Investment
        
    Aware agreed that, in the absence of additional defaults other
    than payment defaults, Aware would forbear from exercising its
    rights and remedies under the Vineyard Loans, including without
    limitation foreclosure, from the date January 9, 2009
    through July 9, 2009 (Forbearance Period), in
    order to allow Springbrook time to attempt to refinance the
    Vineyard Loans. During the Forbearance Period, interest and
    other required payments under the Vineyard Loans will continue
    to accrue at the stated rate, and will be added to principal.  
    At any time during the Forbearance Period, Aware shall accept,
    as payment in full under the Vineyard Loans, with respect to one
    note, the sum of $1,896,000 plus all accrued interest then due
    under the Notes, of which amount Springbrook shall cause to be
    paid $1,886,000 directly to SPT Real Estate Finance, and $10,000
    to Aware and all other amounts directly to Lender and, with
    respect to the second note, the sum of $424,000 plus all accrued
    interest then due under the Notes, of which amount Springbrook
    shall cause to be paid $414,000 directly to SPT Real Estate
    Finance, and $10,000 to Aware and all other amounts directly to
    Lender.  
    The commercial guaranties executed by William A. Shopoff, an
    individual, and William A. Shopoff and Cindy I. Shopoff, as
    Trustees of the Trust, in connection with the Vineyard Loans,
    were released, and Aware waived any and all right to recover
    under the same.     50




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##### Table of Contents



SEC
    Action
  Form S-11
  Departure
    of Directors or Principal Officers, Election of Directors,
    Appointment of Principal Officers
    Sale
    of Real Estate Property
        Financial
    Information
      ITEM 7A.
    QUANTITATIVE
    AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK   51




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##### Table of Contents



ITEM 8.
    FINANCIAL
    STATEMENTS AND SUPPLEMENTARY DATA  page F-1
  ITEM 9.
    CHANGES
    AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING FINANCIAL
    DISCLOSURE    ITEM 9A.
    CONTROLS
    AND PROCEDURES  Disclosure
    Controls and Procedures
  Rules 13a-15(e) 15d-15(e))
  Changes
    in Internal Control over Financial Reporting
    Management
    Report on Internal Control over Financial Reporting
  Rules 13a-15(f) 15d-15(f)
  
    pertain to the maintenance of records that in reasonable detail
    accurately and fairly reflect the transactions and dispositions
    of the assets of the company; 52




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##### Table of Contents




    provide reasonable assurance that transactions are recorded as
    necessary to permit preparation of financial statements in
    accordance with GAAP, and that receipts and expenditures of the
    company are being made only in accordance with authorizations of
    management and directors of the company; and
    provide reasonable assurance regarding prevention or timely
    detection of unauthorized acquisition, use or disposition of the
    companys assets that could have a material effect on its
    financial statements.        ITEM 9B.
    OTHER
    INFORMATION   PART III  ITEM 10.
    DIRECTORS
    EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE  Form 10-K Form 10-K/A
  Code of
    Conduct
    ITEM 11.
    EXECUTIVE
    COMPENSATION  Form 10-K Form 10-K/A
 53




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##### Table of Contents



ITEM 12.
    SECURITY
    OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
    RELATED STOCKHOLDER MATTERS    Equity
    Compensation Plan Information
  Number of SecuritiesRemaining Available forNumber of Securities to


Weighted-average


Future Issuance Underbe Issued Upon Exercise


Exercise Price of


Equity Compensation Plansof Outstanding Options,


Outstanding Options,


(Excluding SecuritiesPlan Category

Warrants and Rights(a)


Warrants and Rights(b)


Reflected in Column (a))(c)Equity compensation plans approved by security holders


1,655,000


$




1,481,250Equity compensation plans not approved by security holders










Total


1,655,000


$




1,481,250   Form 10-K Form 10-K/A
  ITEM 13.
    CERTAIN
    RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR
    INDEPENDENCE  Form 10-K Form 10-K/A
  ITEM 14.
    PRINCIPAL
    ACCOUNTANT FEES AND SERVICES  Form 10-K Form 10-K/A
 54




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##### 



PART IV  ITEM 15.
    EXHIBITS,
    FINANCIAL STATEMENT SCHEDULES    1.  Financial
    Statements
   
 Report of Independent Registered Public Accounting Firm


F-2Consolidated Balance Sheets as of December 31, 2008 and 2007


F-3Consolidated Statements of Operations for the Years Ended
    December 31, 2008 and 2007


F-4Consolidated Statements of Stockholders Equity for the
    Year Ended December 31, 2008 and 2007


F-5Consolidated Statements of Cash Flows for the Year Ended
    December 31, 2008 and 2007


F-6Notes to Consolidated Financial Statements


F-7    2.  Financial
    Statement Schedules
    3.  Exhibits
  ExhibitNumber

Exhibit1
.1

Broker-Dealer Agreement between Shopoff Properties Trust, Inc.
    and Shopoff Securities, Inc. (filed as Exhibit 1.1 on August 16,
    2007 to Shopoff Properties Trusts Registration Statement
    on Form S-11 (Registration No. 333-139042) and incorporated
    herein by reference).3
.1

Charter of the Registrant (filed as Exhibit 3.1 on November 30,
    2006 to Shopoff Properties Trusts Registration Statement
    on Form S-11(Reg. No. 333-139042) and incorporated herein by
    reference).3
.2

Articles of Amendment and Restatement of the Registrant (filed
    as Exhibit 3.1 to Shopoff Properties Trusts Quarterly
    Report on Form 10-Q filed on November 14, 2008 and incorporated
    herein by reference).3
.3

Bylaws of the Registrant (filed as Exhibit 3.2 on November 30,
    2006 to Shopoff Properties Trusts Registration Statement
    on Form S-11(Reg. No. 333-139042) and incorporated herein by
    reference).3
.4

Amended and Restated Bylaws of the Registrant (filed as Exhibit
    3.4 on June 22, 2007 to Shopoff Properties Trusts
    Registration Statement on Form S-11(Reg. No. 333-139042) and
    incorporated herein by reference).3
.5

Agreement of Limited Partnership of Shopoff Partners (filed as
    Exhibit 3.5 on June 6, 2007 to Shopoff Properties Trusts
    Registration Statement on Form S-11 (Reg. No. 333-139042) and
    incorporated herein by reference).4
.1

Form of Registrants Common Stock Certificate (filed as
    Exhibit 4.1 on March 30, 2007 to Shopoff Properties Trusts
    Registration Statement on Form S-11 (Reg. No. 333-139042) and
    incorporated herein by reference).10
.1

2007 Equity Incentive Plan  (filed as Exhibit 10.1 to the
    Registration Statement on Form S-8 (Reg. No. 333-152782) on
    August 5, 2008 and incorporated herein by reference).+10
.2

Advisory Agreement between Shopoff Properties Trust, Inc.,
    Shopoff Partners, L.P. and Shopoff Advisors, L.P. (filed as
    Exhibit 10.2 on August 16, 2007 to Shopoff Properties
    Trusts Registration Statement on Form S-11(Reg. No.
    333-139042) and incorporated herein by reference).10
.3

Amendment to Advisory Agreement, dated January 21, 2009, by and
    among Shopoff Properties Trust, Inc., Shopoff Partners, L.P. and
    Shopoff Advisors, L.P. (filed as Exhibit 10.4 on January 22,
    2009 to Shopoff Properties Trusts Post-Effective Amendment
    No. 2 (Reg. No. 333-139042) and incorporated herein by
    reference). 55




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##### Table of Contents



ExhibitNumber

Exhibit10
.4

Subscription Escrow Agreement by and between Shopoff Properties
    Trust, Inc., and Wells Fargo Bank, N.A. (filed as Exhibit 10.3
    on November 30, 2006 to Shopoff Properties Trusts
    Registration Statement on Form S-11 and incorporated herein by
    reference).10
.5

Purchase and Sale Agreement and Escrow Instructions by and
    between SPT-SWRC, LLC and Pulte Home Corporation, dated December
    23, 2008 and amendments thereto (filed as Exhibit 10.1 to
    Shopoff Properties Trusts Current Report on Form 8-K on
    January 7, 2009 and incorporated herein by reference).10
.6

Assignment and Assumption Agreement by and between SPT-SWRC, LLC
    and Pulte Home Corporation, dated December 30, 2008 (filed as
    Exhibit 10.2 to Shopoff Properties Trusts Current Report
    on Form 8-K on January 7, 2009 and incorporated herein by
    reference).10
.7

Purchase and Sale Agreement and Joint Escrow Instructions by and
    between TSG Little Valley, L.P. and Shopoff Advisors, L.P.,
    dated September 30, 2008 (filed as Exhibit 10.1 to Shopoff
    Properties Trusts Form 10-Q filed on November 14, 2008 and
    incorporated herein by reference).10
.8

Amendment to Purchase and Sale and Joint Escrow Instructions by
    and between TSG Little Valley, L.P. and Shopoff Advisors, L.P.,
    dated December 30, 2008 (filed as Exhibit 10.3 to Shopoff
    Properties Trusts Current Report on Form 8-K on January 7,
    2009 and incorporated herein by reference).10
.9

Collateral Assignment and Pledge of Note, Deed of Trust and Loan
    Documents made as of January 9, 2009, by Aware Development
    Company, Inc. in favor of SPT Real Estate Finance, LLC securing
    Promissory Note in the amount of $414,000 dated January 9, 2009
    (filed as Exhibit 10.1 to Shopoff Properties Trusts
    Current Report on Form 8-K on January 15, 2009 and incorporated
    herein by reference).10
.10

Collateral Assignment and Pledge of Note, Deed of Trust and Loan
    Documents made as of January 9, 2009, by Aware Development
    Company, Inc. in favor of SPT Real Estate Finance, LLC securing
    Promissory Note in the amount of $1,886,000 dated January 9,
    2009 (filed as Exhibit 10.2 to Shopoff Properties Trusts
    Current Report on Form 8-K on January 15, 2009 and incorporated
    herein by reference).10
.11

Promissory Note in the amount of $1,886,000, dated January 9,
    2009 (filed as Exhibit 10.3 to Shopoff Properties Trusts
    Current Report on Form 8-K on January 15, 2009 and incorporated
    herein by reference).10
.12

Promissory Note in the amount of $414,000, dated January 9, 2009
    (filed as Exhibit 10.4 to Shopoff Properties Trusts
    Current Report on Form 8-K on January 15, 2009 and incorporated
    herein by reference).10
.13

Amendment to Purchase and Sale and Joint Escrow Instructions by
    and between TSG Little Valley, L.P. and Shopoff Advisors, L.P.,
    dated January 13, 2009 (filed as Exhibit 10.4 to Post-Effective
    Amendment No. 2 (Registration No. 333-139042) on January 22,
    2009 and incorporated herein by reference).10
.14

Amendment to Purchase and Sale and Joint Escrow Instructions by
    and between TSG Little Valley, L.P. and Shopoff Advisors, L.P.,
    dated January 27, 2009 (filed as Exhibit 10.1 to Form 8-K on
    March 4, 2009 and incorporated herein by reference).10
.15

Purchase and Sale Agreement and Escrow Instructions by and
    between SPT-SWRC, LLC and Khalda Development, Inc., dated
    February 27, 2009 (filed as Exhibit 10.1 to
    Form 8-K
    on March 26, 2009 and incorporated herein by reference).21
.1

List of Subsidiaries.23
.1

Consent of Squar, Milner, Peterson, Miranda & Williamson,
    LLP.31
.1

Certificate of Chief Executive Officer pursuant to Section 302
    of the Sarbanes-Oxley Act of 2002.31
.2

Certificate of Chief Financial Officer pursuant to Section 302
    of the Sarbanes-Oxley Act of 2002.32
.1

Certificate of Chief Executive Officer pursuant to Section 906
    of the Sarbanes-Oxley Act of 2002.32
.2

Certificate of Chief Financial Officer pursuant to Section 906
    of the Sarbanes-Oxley Act of 2002.     +
    
    Indicates a management contract or compensation plan. 56




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##### Table of Contents



INDEX TO
    CONSOLIDATED FINANCIAL STATEMENTS
  Report of Independent Registered Public
    Accounting Firm


F-2Consolidated Balance Sheets as of
    December 31, 2008 and 2007


F-3Consolidated Statements of Operations for the
    Years Ended December 31, 2008 and 2007


F-4Consolidated Statements of Stockholders
    Equity for the Years Ended December 31, 2008 and 2007


F-5Consolidated Statements of Cash Flows for the
    Years Ended December 31, 2008 and 2007


F-6Notes to Consolidated Financial Statements


F-7  F-1




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##### Table of Contents



REPORT OF
    INDEPENDENT REGISTERED
    PUBLIC ACCOUNTING FIRM               F-2




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##### Table of Contents



SHOPOFF
    PROPERTIES TRUST, INC.
  CONSOLIDATED
    BALANCE SHEETS
  December 31,2008


2007ASSETSCurrent AssetsCash and cash equivalents

$
7,486,696


$
200,550Restricted cash






778,765Note receivable, net


558,000



Real estate deposits


3,300,000



Real estate investments


2,614,134



Prepaid expenses and other assets


55,807



20,269Property and equipment, net


45,047



Total assets

$
14,059,684


$
999,584LIABILITIES AND STOCKHOLDERS EQUITYLiabilitiesAccounts payable and accrued liabilities

$
64,596


$
Due to related parties


132,135



183,900Total liabilities


196,731



183,900Commitments and ContingenciesMinority interest


100



100Stockholders equityCommon stock, $0.01 par value; 200,000,000 shares
    authorized; 1,857,300 and 21,100 shares issued and
    outstanding at December 31, 2008 and 2007, respectively


18,573



211Common stock issuable upon breaking escrow, $0.01 par
    value, zero and 81,800 shares at December 31, 2008 and
    2007, respectively






818Additional paid-in capital, net of offering costs


15,472,346



976,521Accumulated deficit


(1,628,066
)


(161,966
)Total stockholders equity


13,862,853



815,584Total liabilities and stockholders equity

$
14,059,684


$
999,584    F-3




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##### Table of Contents



SHOPOFF
    PROPERTIES TRUST, INC.
  CONSOLIDATED
    STATEMENTS OF OPERATIONS
  For the Years EndedDecember 31,2008


2007REVENUEInterest income, note receivable

$
21,000


$
Interest income, other


131,356



1,665Total revenue


152,356



1,665EXPENSESDue diligences costs related to properties not acquired


1,027,888



Professional fees


264,433



25,154Insurance


208,589



133,603Director compensation


59,335



General and administrative


58,211



4,874Total expenses


1,618,456



163,631NET LOSS

$
(1,466,100
)

$
(161,966
)Net loss per common share, basic and diluted

$
(2.32
)

$
(7.68
)Weighted-average number of common shares, issued and outstanding


631,921



21,100    F-4




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##### Table of Contents



SHOPOFF
    PROPERTIES TRUST, INC.
  CONSOLIDATED
    STATEMENTS OF STOCKHOLDERS EQUITY
 For the
    Years Ended December 31, 2008 and 2007
  CommonStock IssuableUpon Breaking


Additional





TotalCommon Stock


Escrow


Paid-in


Accumulated


StockholdersShares


Amount


Shares


Amount


Capital


Deficit


EquityBalance  December 31, 2006


21,100


$
211






$



$
200,239


$



$
200,450Common stock issuable upon breaking escrow










81,800



818



776,282







777,100Net loss






















(161,966
)


(161,966
)Balance  December 31, 2007


21,100



211



81,800



818



976,521



(161,966
)


815,584Common stock issuable upon breaking escrow










(81,800
)


(818
)


(776,282
)






(777,100
)Issuance of common stock


1,836,200



18,362











17,425,538







17,443,900Offering costs paid to sponsor


















(2,153,431
)






(2,153,431
)Net loss






















(1,466,100
)


(1,466,100
)Balance  December 31, 2008


1,857,300


$
18,573






$



$
15,472,346


$
(1,628,066
)

$
13,862,853    F-5




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##### Table of Contents



SHOPOFF
    PROPERTIES TRUST, INC.
  CONSOLIDATED
    STATEMENTS OF CASH FLOWS
  For the Years EndedDecember 31,2008


2007CASH FLOWS FROM OPERATING ACTIVITIESNet loss

$
(1,466,100
)

$
(161,966
)Adjustments to reconcile net loss to net cash (used in) provided
    by operating activities:Depreciation expense


4,095



Changes in net assets and liabilitiesPrepaid expenses and other assets


(35,538
)


(20,269
)Accounts payable and accrued liabilities


64,596



Due to related parties


(51,765
)


183,900Net cash (used in) provided by operating activities


(1,484,712
)


1,665CASH FLOWS FROM INVESTING ACTIVITIESNote receivable, net


(558,000
)


Real estate investments


(2,614,134
)


Purchase of property and equipment


(49,142
)


Real estate deposits


(3,300,000
)


Net cash used in investing activities


(6,521,276
)


CASH FLOWS FROM FINANCING ACTIVITIESIssuance of common stock to subscribers, net of offering costs


14,512,551



Common stock issuable upon breaking escrow


818



777,100Restricted cash


778,765



(778,765
)Net cash provided by (used in) financing activities


15,292,134



(1,665
)Net change in cash


7,286,146



CASH  beginning of year


200,550



200,550CASH  end of year

$
7,486,696


$
200,550    F-6




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##### Table of Contents



SHOPOFF
    PROPERTIES TRUST, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
 December 31,
    2008 and 2007
  1.
    ORGANIZATION
    AND NATURE OF BUSINESS              2.
    SUMMARY
    OF SIGNIFICANT ACCOUNTING POLICIES   F-7




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##### Table of Contents



SHOPOFF
    PROPERTIES TRUST, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Use of
    Estimates
  and/or
  Principles
    of Consolidation
      Consolidation
    of Variable Interest Entities
  Consolidation of Variable
    Interest Entities, an Interpretation of Accounting Research
    Bulletin No. 51
      Cash
    and Cash Equivalents
    Cost
    of Real Estate Investments
   F-8




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##### Table of Contents



SHOPOFF
    PROPERTIES TRUST, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      Property
    Held for Sale
  Accounting for the Impairment or Disposal of Long Lived
    Assets
    
    Management, having the authority to approve the action, commits
    to a plan to sell the asset;
    The asset is available for immediate sale in its present
    condition, subject only to terms that are usual and customary
    for sales of such asset;
    An active program to locate a buyer and other actions required
    to complete the plan to sell the asset has been initiated;
    The sale of the asset is probable, and the transfer of the asset
    is expected to qualify for recognition as a completed
    transaction within one year;
    The asset is being actively marketed for sale at a price that is
    reasonable in relation to its current estimated fair
    value; and
    Given the actions required to complete the plan to sell the
    asset, it is unlikely that significant changes to the plan would
    be made or that the plan would be abandoned.    Long-Lived
    Assets
  Accounting for the Impairment of or
    Disposal of Long-Lived Assets. SFAS No. 144
 F-9




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##### Table of Contents



SHOPOFF
    PROPERTIES TRUST, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Note
    Receivable
    Revenue
    and Profit Recognition
  Accounting for Sales of Real
    Estate
      Organization
    and Offering Costs
   F-10




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##### Table of Contents



SHOPOFF
    PROPERTIES TRUST, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Income
    Taxes
          Concentrations
    of Credit Risk
   F-11




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##### Table of Contents



SHOPOFF
    PROPERTIES TRUST, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
        Stock-Based
    Compensation
  SFAS No. 123-R, Share-Based Payment SFAS No. 123-R
  Fair
    Values of Financial Instruments
  Disclosures About Fair Value of
    Financial Instruments
    Fair
    Value Measurements
  Recently
    Issued Accounting Pronouncements
  Fair Value Measurements FAS 157-2,
 F-12




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##### Table of Contents



SHOPOFF
    PROPERTIES TRUST, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  The Fair Value Option for Financial
    Assets and Financial Liabilities Including an Amendment of FASB
    Statement No. 115 Accounting for Certain Investments in
    Debt and Equity Securities
  Business Combinations.
  
    Acquisition costs will be generally expensed as incurred;
    Noncontrolling interests (formerly known as minority
    interests  see SFAS No. 160
    discussion below) will be valued at fair value at the
    acquisition date;
    Acquired contingent liabilities will be recorded at fair value
    at the acquisition date and subsequently measured at either the
    higher of such amount or the amount determined under existing
    guidance for non-acquired contingencies;
    In-process research and development will be recorded at fair
    value as an indefinite-lived intangible asset at the acquisition
    date;
    Restructuring costs associated with a business combination will
    be generally expensed subsequent to the acquisition
    date; and
    Changes in deferred tax asset valuation allowances and income
    tax uncertainties after the acquisition date generally will
    affect income tax expense.    Noncontrolling Interests in
    Consolidated Financial Statements -An Amendment of ARB
    No. 51
 F-13




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##### Table of Contents



SHOPOFF
    PROPERTIES TRUST, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Disclosures about Derivative Instruments and Hedging
    Activities
    3.
    NOTE RECEIVABLE        4.
    REAL
    ESTATE INVESTMENTS  Winchester
    Ranch (Pulte Home Project) Acquisition
   F-14




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##### Table of Contents



SHOPOFF
    PROPERTIES TRUST, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    No. 30266-2
      5.
    STOCKHOLDERS
    EQUITY  Common
    Stock
        2007
    Equity Incentive Plan
     F-15




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##### Table of Contents



SHOPOFF
    PROPERTIES TRUST, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Form S-8
    6.
    OTHER
    RELATED PARTY TRANSACTIONS           F-16




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##### Table of Contents



SHOPOFF
    PROPERTIES TRUST, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      
    Acquisition and Advisory Fees:  3% of
    (i) with respect to any real estate asset acquired by the
    Company directly or indirectly other than a real estate related
    investment, the contract purchase price of the underlying
    property, and (ii) with respect to any real estate related
    investment acquired by the Company directly or indirectly, the
    contract purchase price of the underlying property.
    As of December 31, 2008, the Company owed $60,000 to the
    Advisor as earned but unpaid acquisition fees relating to the
    Winchester Ranch acquisition completed December 31, 2008
    (see Note 4).
    Debt Financing Fee:  1% of the amount available
    under any loan or line of credit made available to the Company
    upon the receipt of the proceeds from such loan or line of
    credit.
    Asset Management Fee:  a monthly payment equal
    to one-twelfth of 2% of (i) the aggregate asset value for
    operating assets and (ii) the total contract price plus
    capitalized entitlement and project related costs for real
    estate assets held for less than or equal to one year by the
    Company, directly or indirectly, as of the last day of the
    preceding month other than a real estate-related investment and
    (iii) the appraised value as determined from time to time
    for real estate assets held for greater than one year by the
    Company, directly or indirectly, as of the last day of the
    preceding month other than a real estate-related investment and
    (iv) the appraised value of the underlying property, for
    any real estate-related investment held by the Company directly
    or indirectly, as of the last day of the preceding month, in the
    case of subsection (iv) not to exceed one-twelfth of 2% of
    the funds advanced by the Company for the purchase of the real
    estate-related investment.
    Disposition Fees:  equal to (i) in the
    case of the sale of any real estate asset, other than real
    estate-related investments, the lesser of (a) one-half of
    the competitive real estate commission paid up to 3% of the
    contract price or, if none is paid, the amount that customarily
    would be paid, or (b) 3% of the contract price of each real
    estate asset sold, and (ii) in the case of the sale of any
    real estate-related investments, 3% of the sales price. Any
    disposition fee may be paid in addition to real estate
    commissions paid to non-affiliates, provided that the total real
    estate commissions (including such disposition fee) paid to all
    persons by the Company for each real estate asset, upon
    disposition thereof, shall not exceed an amount equal to the
    lesser of (i) 6% of the aggregate contract price of each
    real estate asset or (ii) the competitive real estate
    commission for each real estate asset. The Company will pay the
    disposition fees for a property at the time the property is sold.
    Additional Fees:  The Agreement includes
    certain other fees that will be payable to the Advisor upon the
    occurrence of certain potential events such as listing on a
    national securities exchange or termination of the Agreement.  7.
    PROPOSED
    ACQUISITIONS   F-17




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##### Table of Contents



SHOPOFF
    PROPERTIES TRUST, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
        8.
    COMMITMENTS
    AND CONTINGENCIES  Economic
    Dependency
    Environmental
    Legal
    Matters
    Organizational
    and Offering Costs
   F-18




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##### Table of Contents



SHOPOFF
    PROPERTIES TRUST, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Specific
    Performance
        9.
    SUBSEQUENT
    EVENTS  Real
    Estate- Related Investment
     F-19




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##### Table of Contents



SHOPOFF
    PROPERTIES TRUST, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      
    Aware agreed that, in the absence of additional defaults other
    than payment defaults, Aware would forbear from exercising its
    rights and remedies under the Vineyard Loans, including without
    limitation foreclosure, from the date January 9, 2009
    through July 9, 2009 (Forbearance Period), in
    order to allow Springbrook time to attempt to refinance the
    Vineyard Loans. During the Forbearance Period, interest and
    other required payments required of Springbrook under the
    Vineyard Loans will continue to accrue at the stated rate, and
    will be added to principal.
    At any time during the Forbearance Period, Aware shall accept,
    as payment in full under the Vineyard Loans, with respect to one
    note, the sum of $1,896,000 plus all accrued interest then due
    under the Notes, of which amount Springbrook shall cause to be
    paid $1,886,000 directly to SPT Real Estate Finance, LLC, and
    $10,000 to Aware and all other amounts directly to Lender and,
    with respect to the second note, the sum of $424,000 plus all
    accrued interest then due under the Aware Notes, of which amount
    Springbrook shall cause to be paid $414,000 directly to SPT RE,
    LLC, and $10,000 to Aware and all other amounts directly to
    Lender.
    The commercial guaranties executed by William A. Shopoff, an
    individual, and William A. Shopoff and Cindy I. Shopoff, as
    Trustees of the Trust, in connection with the Vineyard Loans,
    have been released, and Aware has waived any and all right to
    recover under the same.          Registration
    Statement
  Form S-11
  Departure
    of Directors or Principal Officers, Election of Directors,
    Appointment of Principal Officers
   F-20




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##### Table of Contents



SHOPOFF
    PROPERTIES TRUST, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Sale
    of Real Estate Property
    Other
     F-21




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##### Table of Contents



SIGNATURES



Pursuant to the requirements of the Securities Exchange Act of
    1934, as amended, the registrant has duly caused this report to
    be signed on its behalf by the undersigned thereunto duly
    authorized. Signature

Title

Date/s/  WILLIAM
    A. SHOPOFFWilliam
    A. Shopoff

President, Chief Executive Officer and Chairman of the Board of
    Directors
    (Principal Executive Officer)

March 31, 2009/s/  KEVIN
    M. BRIDGESKevin
    M. Bridges

Director, Principal Financial Officer
    (Chief Financial Officer)

March 31, 2009/s/  EDWARD
    FITZPATRICKEdward
    Fitzpatrick

Executive Vice President and Director

March 31, 2009/s/  JEFFREY
    W. SHOPOFFJeffrey
    W. Shopoff

Director

March 31, 2009/s/  GLENN
    PATTERSONGlenn
    Patterson

Director

March 31, 2009/s/  PATRICK
    MEYERPatrick
    Meyer

Director

March 31, 2009/s/  STUART
    MCMANUSStuart
    Mcmanus

Director

March 31, 2009/s/  MELANIE
    BARNESMelanie
    Barnes

Director

March 31, 2009




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##### Table of Contents



EXHIBIT INDEX
  ExhibitNumber

Exhibit1
.1

Broker-Dealer Agreement between Shopoff Properties Trust, Inc.
    and Shopoff Securities, Inc. (filed as Exhibit 1.1 on
    August 16, 2007 to Shopoff Properties Trusts
    Registration Statement on
    Form S-11
    (Registration
    No. 333-139042)
    and incorporated herein by reference).3
.1

Charter of the Registrant (filed as Exhibit 3.1 on
    November 30, 2006 to Shopoff Properties Trusts
    Registration Statement on
    Form S-11(Reg.
    No. 333-139042)
    and incorporated herein by reference).3
.2

Articles of Amendment and Restatement of the Registrant (filed
    as Exhibit 3.1 to Shopoff Properties Trusts Quarterly
    Report on
    Form 10-Q
    filed on November 14, 2008 and incorporated herein by
    reference).3
.3

Bylaws of the Registrant (filed as Exhibit 3.2 on
    November 30, 2006 to Shopoff Properties Trusts
    Registration Statement on
    Form S-11(Reg.
    No. 333-139042)
    and incorporated herein by reference).3
.4

Amended and Restated Bylaws of the Registrant (filed as
    Exhibit 3.4 on June 22, 2007 to Shopoff Properties
    Trusts Registration Statement on
    Form S-11(Reg.
    No. 333-139042)
    and incorporated herein by reference).3
.5

Agreement of Limited Partnership of Shopoff Partners (filed as
    Exhibit 3.5 on June 6, 2007 to Shopoff Properties
    Trusts Registration Statement on
    Form S-11
    (Reg.
    No. 333-139042)
    and incorporated herein by reference).4
.1

Form of Registrants Common Stock Certificate (filed as
    Exhibit 4.1 on March 30, 2007 to Shopoff Properties
    Trusts Registration Statement on
    Form S-11
    (Reg.
    No. 333-139042)
    and incorporated herein by reference).10
.1

2007 Equity Incentive Plan (filed as Exhibit 10.1 to the
    Registration Statement on
    Form S-8
    (Reg.
    No. 333-152782)
    on August 5, 2008 and incorporated herein by reference).+10
.2

Advisory Agreement between Shopoff Properties Trust, Inc.,
    Shopoff Partners, L.P. and Shopoff Advisors, L.P. (filed as
    Exhibit 10.2 on August 16, 2007 to Shopoff Properties
    Trusts Registration Statement on
    Form S-11(Reg.
    No. 333-139042)
    and incorporated herein by reference).10
.3

Amendment to Advisory Agreement, dated January 21, 2009, by
    and among Shopoff Properties Trust, Inc., Shopoff Partners, L.P.
    and Shopoff Advisors, L.P. (filed as Exhibit 10.4 on
    January 22, 2009 to Shopoff Properties Trusts
    Post-Effective Amendment No. 2 (Reg.
    No. 333-139042)
    and incorporated herein by reference).10
.4

Subscription Escrow Agreement by and between Shopoff Properties
    Trust, Inc., and Wells Fargo Bank, N.A. (filed as
    Exhibit 10.3 on November 30, 2006 to Shopoff
    Properties Trusts Registration Statement on
    Form S-11
    and incorporated herein by reference).10
.5

Purchase and Sale Agreement and Escrow Instructions by and
    between SPT-SWRC, LLC and Pulte Home Corporation, dated
    December 23, 2008 and amendments thereto (filed as
    Exhibit 10.1 to Shopoff Properties Trusts Current
    Report on
    Form 8-K
    on January 7, 2009 and incorporated herein by reference).10
.6

Assignment and Assumption Agreement by and between SPT-SWRC, LLC
    and Pulte Home Corporation, dated December 30, 2008 (filed
    as Exhibit 10.2 to Shopoff Properties Trusts Current
    Report on
    Form 8-K
    on January 7, 2009 and incorporated herein by reference).10
.7

Purchase and Sale Agreement and Joint Escrow Instructions by and
    between TSG Little Valley, L.P. and Shopoff Advisors, L.P.,
    dated September 30, 2008 (filed as Exhibit 10.1 to
    Shopoff Properties Trusts
    Form 10-Q
    filed on November 14, 2008 and incorporated herein by
    reference).10
.8

Amendment to Purchase and Sale and Joint Escrow Instructions by
    and between TSG Little Valley, L.P. and Shopoff Advisors, L.P.,
    dated December 30, 2008 (filed as Exhibit 10.3 to
    Shopoff Properties Trusts Current Report on
    Form 8-K
    on January 7, 2009 and incorporated herein by reference).10
.9

Collateral Assignment and Pledge of Note, Deed of Trust and Loan
    Documents made as of January 9, 2009, by Aware Development
    Company, Inc. in favor of SPT Real Estate Finance, LLC securing
    Promissory Note in the amount of $414,000 dated January 9,
    2009 (filed as Exhibit 10.1 to Shopoff Properties
    Trusts Current Report on
    Form 8-K
    on January 15, 2009 and incorporated herein by reference).10
.10

Collateral Assignment and Pledge of Note, Deed of Trust and Loan
    Documents made as of January 9, 2009, by Aware Development
    Company, Inc. in favor of SPT Real Estate Finance, LLC securing
    Promissory Note in the amount of $1,886,000 dated
    January 9, 2009 (filed as Exhibit 10.2 to Shopoff
    Properties Trusts Current Report on
    Form 8-K
    on January 15, 2009 and incorporated herein by reference).




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##### Table of Contents



ExhibitNumber

Exhibit10
.11

Promissory Note in the amount of $1,886,000, dated
    January 9, 2009 (filed as Exhibit 10.3 to Shopoff
    Properties Trusts Current Report on
    Form 8-K
    on January 15, 2009 and incorporated herein by reference).10
.12

Promissory Note in the amount of $414,000, dated January 9,
    2009 (filed as Exhibit 10.4 to Shopoff Properties
    Trusts Current Report on
    Form 8-K
    on January 15, 2009 and incorporated herein by reference).10
.13

Amendment to Purchase and Sale and Joint Escrow Instructions by
    and between TSG Little Valley, L.P. and Shopoff Advisors, L.P.,
    dated January 13, 2009 (filed as Exhibit 10.4 to
    Post-Effective Amendment No. 2 (Registration
    No. 333-139042)
    on January 22, 2009 and incorporated herein by reference).10
.14

Amendment to Purchase and Sale and Joint Escrow Instructions by
    and between TSG Little Valley, L.P. and Shopoff Advisors, L.P.,
    dated January 27, 2009 (filed as Exhibit 10.1 to
    Form 8-K
    on March 4, 2009 and incorporated herein by reference).10
.15

Purchase and Sale Agreement and Escrow Instructions by and
    between SPT-SWRC, LLC and Khalda Development, Inc., dated
    February 27, 2009 (filed as Exhibit 10.1 to
    Form 8-K
    on March 26, 2009 and incorporated herein by reference).21
.1

List of Subsidiaries.23
.1

Consent of Squar, Milner, Peterson, Miranda &
    Williamson, LLP.31
.1

Certificate of Chief Executive Officer pursuant to
    Section 302 of the Sarbanes-Oxley Act of 2002.31
.2

Certificate of Chief Financial Officer pursuant to
    Section 302 of the Sarbanes-Oxley Act of 2002.32
.1

Certificate of Chief Executive Officer pursuant to
    Section 906 of the Sarbanes-Oxley Act of 2002.32
.2

Certificate of Chief Financial Officer pursuant to
    Section 906 of the Sarbanes-Oxley Act of 2002.     +
    
    Indicates a management contract or compensation plan.