CNSREIT-AR-2024 Final - Flipbook - Page 39
We may change our investment and operational policies without stockholder consent.
Except for changes to the investment restrictions contained in our charter, which require stockholder consent to amend,
we may change our investment and operational policies, including our policies with respect to investments, operations,
indebtedness, capitalization and distributions, at any time without the consent of our stockholders, which could result in our
making investments that are different from, and possibly riskier or more highly leveraged than, the types of investments
described in this Annual Report on Form 10-K or our other SEC filings. Our Board also approved very broad investment
guidelines with which we must comply, but these guidelines provide the Advisor with broad discretion and can be changed
by our Board. A change in our investment strategy may, among other things, increase our exposure to real estate market
fluctuations, default risk and interest rate risk, all of which could materially affect our results of operations and financial
condition.
We may have difficulty selling our properties, which may limit our flexibility and ability to pay distributions.
Because real estate investments are relatively illiquid, it could be difficult for us to promptly sell one or more of our
properties on favorable terms. Additionally, we have in the past and may in the future agree to lock-out or other provisions
when we acquire a property that materially restrict us from selling such property or our interest in such property for a
period of time. This may limit our ability to change our portfolio quickly in response to adverse changes in the performance
of any such property or economic or market trends. In addition, U.S. federal tax laws that impose a 100% excise tax on
gains from sales of dealer property by a REIT (generally, property held for sale, rather than investment) could limit our
ability to sell properties without adversely affecting returns to our stockholders. These restrictions could adversely affect
our results of operations and financial condition.
We face risks associated with property acquisitions.
We intend to acquire properties and portfolios of properties, including large portfolios that could result in changes to
our capital structure. Our acquisition activities and their success are subject to the following risks:
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we may be unable to complete an acquisition after making a non-refundable deposit or guarantee and
incurring certain other acquisition-related costs;
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we may be unable to obtain financing for acquisitions on commercially reasonable terms or at all;
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acquired properties may fail to perform as expected;
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acquired properties may be located in new markets in which we may face risks associated with a lack of
market knowledge or understanding of the local economy, lack of business relationships in the area and
unfamiliarity with local governmental and permitting procedures; and
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we may be unable to quickly and efficiently integrate new acquisitions, particularly acquisitions of portfolios
of properties, into our existing operations.
In addition, while we invest primarily in high-quality, stabilized real estate assets, we may also acquire assets that
require some amount of capital investment in order to be renovated or repositioned. These investments are generally
subject to higher risk of loss than investments in high-quality, stabilized real estate assets and there is no guarantee that any
renovation or repositioning will be successful, or that the actual costs will not be greater than our estimates.
The acquisition, ownership and disposition of real properties carry certain litigation risks at the property level that may
reduce our profitability and the return on your investment.
The acquisition, ownership and disposition of real properties carry certain specific litigation risks. Litigation may be
commenced with respect to a property acquired by us in relation to activities that took place prior to our acquisition of such
property. In addition, at the time of disposition of an individual property, a potential buyer may claim that it should have
been afforded the opportunity to purchase the asset or alternatively that such potential buyer should be awarded due
diligence expenses incurred or statutory damages for misrepresentation relating to disclosure made, if such buyer is passed
over in favor of another as part of our efforts to maximize sale proceeds. Similarly, successful buyers may later sue us
under various damage theories, including those sounding in tort, for losses associated with latent defects or other problems
not uncovered in due diligence.
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