CNSREIT-AR-2024 Final - Flipbook - Page 43
Conduct occurring at the portfolio property, even activities that occurred prior to our investment therein, could have an
adverse impact on us. In the event of fraud by the seller of any portfolio property, we may suffer a partial or total loss of
capital invested in that property. An additional concern is the possibility of material misrepresentation or omission on the
part of the seller. Such inaccuracy or incompleteness may adversely affect the value of our investments in such portfolio
property. We will rely upon the accuracy and completeness of representations made by sellers of portfolio properties in the
due diligence process to the extent reasonable when we make our investments, but cannot guarantee such accuracy or
completeness.
In addition, we rely on information, including financial information and non-GAAP metrics provided by sellers of our
investments and our operating partners, for disclosure to our investors about potential acquisitions or current assets owned
by us. Accordingly, although we believe such information to be accurate, such information cannot be independently
verified by the Advisor, and in some cases such information has not been independently reviewed or audited while under
our ownership or control or at all. We cannot assure you that that the financial statements or metrics of properties we have
acquired or will acquire would not be materially different if such statements or metrics had been independently audited or
reviewed.
Consultants, legal advisors, appraisers, accountants, investment banks and other third parties may be involved in the
due diligence process and the ongoing operation of our portfolio properties to varying degrees depending on the type of
investment. For example, certain asset management and finance functions, such as data entry relating to a portfolio
property, may be outsourced to a third-party service provider whose fees and expenses will be borne by such portfolio
property or us. Such involvement of third-party advisors or consultants may present a number of risks primarily relating to
our reduced control of the functions that are outsourced.
We rely on operating partners to operate our properties and leasing agents to lease vacancies in our properties.
The Advisor intends to rely on operating partners to oversee the management of our properties and to act as or hire
leasing agents to lease vacancies in our properties. Our ability to direct and control how our properties are managed on a
day-to-day basis may be limited because we will engage other parties to perform this function. Thus, the success of our
business may depend in large part on the ability of our operating partners to manage the day-to-day operations and the
ability of our operating partners or leasing agents to lease vacancies in our properties. Any adversity experienced by, or
problems in our relationship with, our operating partners or leasing agents could adversely impact the operation and
profitability of our properties.
We depend on tenants for our revenue, and therefore our revenue will depend on the success and economic viability of
our tenants. Our reliance on single or significant tenants in certain buildings may decrease our ability to lease vacated
space.
We expect that rental income from real property will, directly or indirectly, constitute a significant portion of our
income. Delays in collecting accounts receivable from tenants could adversely affect our cash flows and financial
condition. In addition, the inability of a single major tenant or a number of smaller tenants to meet their rental obligations
would adversely affect our income. Therefore, our financial success will indirectly depend on the success of the businesses
operated by the tenants in our properties or in the properties securing loans we may own. Tenants may be negatively
affected by continued disruptions in global supply chains, global economic events and government responses thereto,
terrorist attacks, natural or environmental disasters, public health or pandemic crises, labor shortages, country instability,
market instability or broad inflationary pressures, any of which may have a negative impact on a tenant9s ability to perform
under the terms of their obligations. If tenants do not generate sufficient income to pay for ongoing operating expenses,
such tenants may default on their obligations to us. The weakening of the financial condition of or the bankruptcy or
insolvency of a significant tenant or a number of smaller tenants and vacancies caused by defaults of tenants or the
expiration of leases may adversely affect our operations and our ability to pay distributions.
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