CNSREIT-AR-2024 Final - Flipbook - Page 51
The hospitality or leisure market is seasonal, highly competitive and generally subject to greater volatility than our other
market segments.
The hospitality or leisure business is seasonal, highly competitive and influenced by factors such as general and local
economic conditions, location, room rates, quality, service levels, reputation and reservation systems, among many other
factors. The hospitality or leisure industry generally experiences seasonal slowdown in the third quarter and, to a lesser
extent, in the fourth quarter of each year. As a result of such seasonality, there will likely be quarterly fluctuations in results
of operations of any hospitality or leisure properties that we own. There are many competitors in this market, and these
competitors may have substantially greater marketing and financial resources than those available to us. Competition also
comes from non-traditional hospitality sources, such as home-sharing platforms. This competition, along with other factors,
such as overbuilding in the hospitality or leisure industry and certain deterrents to traveling, may increase the number of
rooms available and may decrease the average occupancy and room rates of our hospitality or leisure properties. The
demand for rooms at any hospitality or leisure properties that we may acquire will change much more rapidly than the
demand for space at other properties that we acquire. In addition, any such properties that we may own may be adversely
affected by factors outside our control, such as extreme weather conditions or natural disasters, terrorist attacks or alerts,
outbreaks of contagious diseases, airline strikes, economic factors and other considerations affecting travel. These factors
could have a material adverse effect on our financial condition, results of operations and ability to pay distributions to
stockholders.
Retail properties depend on anchor tenants to attract shoppers and could be adversely affected by the loss of a key
anchor tenant.
Retail properties, like other properties, are subject to the risk that tenants may be unable to make their lease payments
or may decline to extend a lease upon its expiration. A lease termination by an anchor tenant could impact leases of other
tenants. Other tenants may be entitled to modify the terms of their existing leases in the event of a lease termination by an
anchor tenant, or the closure of the business of an anchor tenant that leaves its space vacant even if the anchor tenant
continues to pay rent. Any such modifications or conditions could be unfavorable to us as the property owner and could
decrease rents or expense recoveries. Additionally, major tenant closures may result in decreased customer traffic, which
could lead to decreased sales at other stores. In the event of default by a tenant or anchor store, we may experience delays
and costs in enforcing our rights as landlord to recover amounts due to us under the terms of our agreements with those
parties.
We may be adversely affected by trends in the office real estate industry.
Some businesses are rapidly evolving to make employee telecommuting, flexible work schedules, open workplaces
and teleconferencing increasingly common. These practices enable businesses to reduce their space requirements. A
continuation of the movement towards these practices could over time erode the overall demand for office space and, in
turn, place downward pressure on occupancy, rental rates and property valuations, each of which could have an adverse
effect on our financial position, results of operations, cash flows and ability to make expected distributions to our
stockholders. We may also be negatively impacted by competition from other short-term office or shared space leasing
companies or changes in government spending to reduce federal office space as part of the current administration9s cost
reduction initiatives.
We could be negatively impacted by increased competition, decreased demand and restrictive zoning ordinances in the
manufactured housing markets in which we invest.
The manufactured housing industry is generally subject to many of the same national and regional economic and
demographic factors that affect the housing industry generally. These factors, including shortage of consumer financing,
public perception, consumer confidence, inflation, regional population and employment trends, availability of and cost of
alternative housing, weather conditions and general economic conditions, tend to impact manufactured homes to a greater
degree than traditional residential homes. Our operating results from our manufactured housing investments may be
adversely affected by: (i) competition from other available manufactured housing sites or available land for the placement
of manufactured homes outside of established communities and alternative forms of housing (such as apartment buildings
and site built single-family homes) and (ii) local real estate market conditions such as the oversupply of manufactured
housing sites or a reduction in demand for manufactured housing sites in an area. In addition, the inability to secure zoning
permits from local authorities may pose the most significant barrier to entry for developing new manufactured housing
sites.
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