CNSREIT-AR-2024 Final - Flipbook - Page 45
We may face competition in pursuing opportunities to acquire community shopping centers, be unable to sell our
existing community shopping centers, experience declines in valuations, and be subject to significant losses, all of which
may reduce our net income.
We will continue to evaluate the market for acquiring community shopping centers, and we may acquire these
properties when we believe strategic opportunities exist. Our ability to execute on this strategy on favorable terms and our
ability to successfully integrate, operate, and sell the properties is subject to several risks. We may be unable to acquire a
desired center because of competition from other real estate investors, including from other REITs and investors who are
willing to pay more for a particular center.
Once we acquire a community shopping center, certain centers may not produce the expected returns for several
reasons, including the failure to achieve the expected occupancy or rent levels within the projected time frame and
exposure to fluctuations in the general economy. Moreover, our ability to sell one or more of our shopping sectors may be
limited based on changing economic conditions, availability and terms of financing, interest rates, supply and demand for
space and other factors that are beyond our control. Finally, if we want to sell a community shopping center, there is no
assurance that we will be able to dispose of it in the desired time period or at all, or that the sale price of a property will be
attractive at the relevant time or even exceed the carrying value of our original equity investment.
We may be unable to renew leases as leases expire and our leases may be terminated early.
We may not be able to lease properties that are vacant or become vacant because a tenant decides not to renew its lease
or by the continued default of a tenant under its lease. Our leases may also be terminated early. For example, the current
administration may terminate the federal government9s leases in commercial buildings, including the U.S. General Services
Administration leases, as part of its cost reduction initiatives.In addition, certain of the properties we acquire may have
some level of vacancy at the time of acquisition. Certain other properties may be specifically suited to the particular needs
of a tenant and may become vacant after we acquire them. Even if a tenant renews its lease or we enter into a lease with a
new tenant, the terms of the new lease may be less favorable than the terms of the old lease. In addition, the resale value of
the property could be diminished because the market value may depend principally upon the value of the property9s leases.
If we are unable to promptly renew or enter into new leases, or if the rental rates are lower than expected, our results of
operations and financial condition will be adversely affected. For example, following the termination or expiration of a
tenant9s lease there may be a period of time before we will begin receiving rental payments under a replacement lease.
During that period, we will continue to bear fixed expenses such as interest, real estate taxes, maintenance, security, repairs
and other operating expenses. In addition, declining economic conditions may impair our ability to attract replacement
tenants and achieve rental rates equal to or greater than the rents paid under previous leases. Increased competition for
tenants may require us to make capital improvements to properties which would not have otherwise been planned. Any
unbudgeted capital improvements that we undertake may divert cash that would otherwise be available for distributions or
for satisfying repurchase requests. Ultimately, to the extent that we are unable to renew leases or re-let space as leases
expire, decreased cash flow from tenants will result, which could adversely impact our operating results.
We may be required to expend funds to correct defects or to make improvements before a tenant can be found for a
property at an attractive lease rate or an investment in a property can be sold. No assurance can be given that we will have
funds available to correct those defects or to make those improvements. In acquiring a property, we may agree to lock-out
provisions that materially restrict us from selling that property for a period of time or impose other restrictions, such as a
limitation on the amount of debt that can be placed on that property. These factors and others that could impede our ability
to respond to adverse changes in the performance of our properties could significantly affect our financial condition and
operating results.
Leases with retail properties9 tenants may restrict us from leasing nearby space.
Many leases with retail tenants contain provisions giving the particular tenant the exclusive right to sell particular
types of merchandise or provide specific types of services within the particular retail center. These provisions may limit the
number and types of prospective tenants interested in leasing space in a particular retail property.
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