CNSREIT-AR-2024 Final - Flipbook - Page 66
The ability to successfully use derivative investments depends on the ability of the Advisor. The skills needed to
employ derivatives strategies are different from those needed to select portfolio investments and, in connection with such
strategies, the Advisor must make predictions with respect to market conditions, liquidity, market values, interest rates or
other applicable factors, which may be inaccurate. The use of derivative investments may require us to sell or purchase
portfolio investments at inopportune times or for prices below or above the current market values, may limit the amount of
appreciation we can realize on an investment or may cause us to hold a security that we might otherwise want to sell. We
will also be subject to credit risk with respect to the counterparties to our derivatives contracts (whether a clearing
corporation in the case of exchange-traded instruments or another third party in the case of over-the-counter instruments).
In addition, the use of derivatives will be subject to additional unique risks associated with such instruments including a
lack of sufficient asset correlation, heightened volatility in reference to interest rates or prices of reference instruments and
duration/term mismatch, each of which may create additional risk of loss.
Failure to obtain and maintain an exemption from being regulated as a commodity pool operator could subject us to
additional regulation and compliance requirements that could materially adversely affect our business, results of
operations and financial condition.
Registration with the U.S. Commodity Futures Trading Commission (the
