CNSREIT-AR-2024 Final - Flipbook - Page 72
The fees we pay in connection with the continuous public and private offerings of our shares and the agreements
entered into with Cohen & Steers and its affiliates were not determined on an arm9s-length basis and therefore may not
be on the same terms we could achieve from a third party.
The compensation paid to the Advisor, Dealer Manager and other Cohen & Steers affiliates for services they provide
us was not determined on an arm9s-length basis. All service agreements, contracts or arrangements between or among
Cohen & Steers and its affiliates, including the Advisor and us, were not negotiated at arm9s-length. Such agreements
include our Advisory Agreement, the Operating Partnership9s partnership agreement, our dealer manager agreement and
any property related corporate services and other agreements we may enter into with affiliates of the Advisor from time to
time.
Risks Related to Conflicts of Interest
Various potential and actual conflicts of interest will arise, and these conflicts may not be identified or resolved in a
manner favorable to us.
Cohen & Steers has conflicts of interest, or conflicting loyalties, as a result of the numerous activities and relationships
of Cohen & Steers, the Dealer Manager, the Advisor and the affiliates, partners, members, shareholders, officers, directors
and employees of the foregoing, some of which are described herein. However, not all potential, apparent and actual
conflicts of interest are included herein, and additional conflicts of interest could arise as a result of new activities,
transactions or relationships commenced in the future. If any matter arises that we and our affiliates (including the Advisor)
determine in our good faith judgment constitutes an actual and material conflict of interest, we and our affiliates (including
the Advisor) will take such actions as we determine appropriate to mitigate the conflict. Transactions between us and
Cohen & Steers or its affiliates will require approval by our Board, including a majority of our independent directors. There
can be no assurance that our Board or Cohen & Steers will identify or resolve all conflicts of interest in a manner that is
favorable to us.
The Advisor faces a conflict of interest because the fees it receives for services performed are based in part on our NAV,
which the Advisor is ultimately responsible for determining.
The Advisor is paid a management fee for its services based on our NAV, which is calculated by an affiliate of The
Bank of New York Mellon, a third-party firm that provides us with certain administrative and accounting services, based
on valuations provided by the Advisor. In addition, the distributions to be received by the Special Limited Partner with
respect to its performance participation interest in the Operating Partnership are based in part upon the Operating
Partnership9s net assets (which is a component of our NAV). The calculation of our NAV includes certain subjective
judgments with respect to estimating, for example, the value of our portfolio and our accrued expenses, net portfolio
income and liabilities, and therefore, our NAV may not correspond to realizable value upon a sale of those assets. The
Advisor may benefit by us retaining ownership of our assets at times when our stockholders may be better served by the
sale or disposition of our assets in order to avoid a reduction in our NAV. If our NAV is calculated in a way that is not
reflective of our actual NAV, then the purchase price of shares of our common stock or the price paid for the repurchase of
your shares of common stock on a given date may not accurately reflect the value of our portfolio, and your shares may be
worth less than the purchase price or more than the repurchase price. The valuation of our investments will affect the
amount and timing of the management fee paid to the Advisor and the Special Limited Partner9s performance participation
interest. As a result, there may be circumstances where the Advisor is incentivized to determine valuations that are higher
than the actual fair value of our investments.
The Advisor9s management fee and the Special Limited Partner9s performance participation interest may not create
proper incentives or may induce the Advisor and its affiliates to make certain investments, including speculative
investments, that increase the risk of our real estate portfolio.
We pay the Advisor a management fee regardless of the performance of our portfolio. The Advisor9s entitlement to a
management fee, which is not based upon performance metrics or goals, might reduce its incentive to devote its time and
effort to seeking investments that provide attractive risk-adjusted returns for our portfolio. We would be required to pay the
Advisor a management fee in a particular period even if we experienced a net loss or a decline in the value of our portfolio
during that period.
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