CNSREIT-AR-2024 Final - Flipbook - Page 59
We may invest in structured products or similar products that may include structural and legal risks.
We may invest from time to time in structured products, including pools of mortgages, loans and other real estaterelated interests. These investments may include debt securities issued by a private investment fund that invests, on a
leveraged basis, in bank loans, high-yield debt or other asset groups, or certificates issued by a structured investment
vehicle that holds pools of commercial mortgage loans. We may also invest in credit risk transfer notes that, while not
structured products, face similar risks as structured products because they are debt securities issued by governmental
agencies but their value depends in part on a pool of mortgage loans. Our investments in structured products are subject to
a number of risks, including risks related to the fact that the structured products will be leveraged, and other structural and
legal risks related thereto. Utilization of leverage is a speculative investment technique and will generally magnify the
opportunities for gain and risk of loss borne by an investor investing in the subordinated debt securities. Many structured
products contain covenants designed to protect the providers of debt financing to such structured products. A failure to
satisfy those covenants could result in the untimely liquidation of the structured product and a complete loss of our
investment therein. In addition, if the particular structured product is invested in a security in which we are also invested,
this would tend to increase our overall exposure to the credit of the issuer of such securities, at least on an absolute, if not
on a relative basis. The value of an investment in a structured product will depend on the investment performance of the
assets in which the structured product invests and will, therefore, be subject to all of the risks associated with an investment
in those assets. These risks include the possibility of a default by, or bankruptcy of, the issuers of such assets or a claim that
the pledging of collateral to secure any such asset constituted a fraudulent conveyance or preferential transfer that can be
subordinated to the rights of other creditors of the issuer of such asset or nullified under applicable law.
We may acquire and sell residential credit investments, which may subject us to legal, regulatory and other risks that
could adversely impact our business and financial results.
We may invest directly and indirectly in residential credit investments, which may include performing loans,
nonperforming loans, residential mortgage loans and residential mortgage-backed securities (
