CNSREIT-AR-2024 Final - Flipbook - Page 38
Trade negotiations and related government actions may create regulatory uncertainty for us and our tenants and
adversely affect the profitability of investments.
In recent years, the U.S. government has indicated its intent to alter its approach to international trade policy and in
some cases, to renegotiate, or potentially terminate, certain existing bilateral or multi lateral trade agreements and treaties
with foreign countries and has made proposals and taken actions related thereto. For example, the U.S. government has
imposed, and may in the future further increase, tariffs on certain foreign goods, including from China, such as steel and
aluminum. Some foreign governments, including China, have instituted retaliatory tariffs on certain U.S. goods. Most
recently, the current U.S. presidential administration has imposed or sought to impose significant increases to tariffs on
goods imported into the U.S., including from China, Canada and Mexico. Tariffs on imported goods could further increase
costs, decrease margins, reduce the competitiveness of products and services offered by current and future tenants and
adversely affect the revenues and profitability of our tenants whose businesses rely on goods imported from such impacted
jurisdictions.
There is uncertainty as to further actions that may be taken under the current U.S. presidential administration with
respect to U.S. trade policy. Further governmental actions related to the imposition of tariffs or other trade barriers or
changes to international trade agreements or policies, could further increase costs, decrease margins, reduce the
competitiveness of products and services offered by our tenants and adversely affect the revenues and profitability of
companies whose businesses rely on goods imported from outside of the United States.
Financial regulatory changes in the U.S. could adversely affect our business.
The financial services industry continues to be the subject of heightened regulatory scrutiny in the U.S. There has been
active debate over the appropriate extent of regulation and oversight of investment funds and their managers. We may be
adversely affected as a result of new or revised regulations imposed by the SEC or other U.S. governmental regulatory
authorities or self-regulatory organizations that supervise the financial markets. We also may be adversely affected by
changes in the interpretation or enforcement of existing laws and regulations by these governmental authorities and selfregulatory organizations. Further, new regulations or interpretations of existing laws may result in enhanced disclosure
obligations, which could negatively affect us and materially increase our regulatory burden. Increased regulations generally
increase our costs, and we could continue to experience higher costs if new laws or regulations require us to spend more
time or buy new technology to comply effectively.
Any changes in the regulatory framework applicable to our business, including the changes described above, may
impose additional compliance and other costs, increase regulatory investigations of the investment activities of our funds,
require the attention of our senior management, affect the manner in which we conduct our business and adversely affect
our profitability. The full extent of the impact on us of any new laws, regulations or initiatives that may be proposed is
impossible to determine.
Our portfolio may be concentrated in a limited number of industries, geographies or investments.
Our portfolio may be heavily concentrated at any time in only a limited number of industries, geographies or
investments, and, as a consequence, our aggregate return may be substantially affected by the unfavorable performance of
even a single investment. Concentration of our investments in a particular type of asset or geography makes us more
susceptible to fluctuations in value resulting from adverse economic or business conditions affecting that particular sector,
geographic region or asset type. For investments that the Advisor intends to finance, there is a risk that such financing may
not be completed, which could result in us holding a larger percentage of our assets in a single investment and asset type
than desired. Real estate values may also be adversely affected by new businesses and approaches in the real estate market
in sectors in which we invest that cause disruptions in the industry with technological and other innovations, such as
impacts to the value of hospitality properties due to competition from the non-traditional hospitality sector (such as shortterm rental services) and office properties due to competition from shared office spaces (including co-working
environments) or remote work arrangements. Further, our investments in real estate securities and real property may be
exposed to new or increased risks and liabilities that could reduce our revenue and earnings, including risks associated with
global climate change, such as increased frequency and intensity of adverse weather and natural disasters. In addition,
distress in the commercial real estate sector, including office properties, as well as shifting business trends and workforce
reductions in certain geographies and industries, may negatively impact certain markets in which we invest, including for
example, as a result of low occupancy rates, tenant defaults, reduced rental rates, the maturation of a significant amount of
commercial real property loans amid an elevated interest rate environment, tightening credit conditions imposed by
traditional sources of real estate financing and refinancing and commercial mortgage loan defaults. Investors have no
assurance as to the degree of diversification in our investments, either by industry sector, geographic region or asset type.
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