CNSREIT-AR-2024 Final - Flipbook - Page 85
To maintain our REIT status, we may have to borrow funds on a short-term basis during unfavorable market
conditions.
To qualify as a REIT, we generally must distribute annually to our stockholders a minimum of 90% of our net taxable
income, determined without regard to the dividends-paid deduction and excluding net capital gains. We will be subject to
regular corporate income taxes on any undistributed REIT taxable income each year. Additionally, we will be subject to a
4% nondeductible excise tax on any amount by which distributions paid by us in any calendar year are less than the sum of
85% of our ordinary income, 95% of our capital gain net income and 100% of our undistributed income from previous
years. Payments we make to our stockholders under our share repurchase plan will not be taken into account for purposes
of these distribution requirements. If we do not have sufficient cash to make distributions necessary to preserve our REIT
status for any year or to avoid taxation, we may be forced to borrow funds or sell assets even if the market conditions at
that time are not favorable for these borrowings or sales. These options could increase our costs or reduce our equity.
Compliance with REIT requirements may cause us to forgo otherwise attractive opportunities, which may hinder or
delay our ability to meet our investment objectives and reduce our stockholders9 overall return.
To qualify as a REIT, we are required at all times to satisfy tests relating to, among other things, the sources of our
income, the nature and diversification of our assets, the ownership of our stock and the amounts we distribute to our
stockholders. Compliance with the REIT requirements may impair our ability to operate solely on the basis of maximizing
profits. For example, we may be required to make distributions to stockholders at disadvantageous times or when we do not
have funds readily available for distribution.
Compliance with REIT requirements may force us to liquidate or restructure otherwise attractive investments.
To qualify as a REIT, at the end of each calendar quarter, at least 75% of the value of our assets must consist of cash,
cash items, government securities and qualified real estate assets. The remainder of our investments in securities (other
than qualified real estate assets and government securities) generally cannot include more than 10% of the voting securities
(other than, but not limited to, securities that qualify for the straight debt safe harbor) of any one issuer or more than 10%
of the value of the outstanding securities of more than any one issuer unless we and such issuer jointly elect for such issuer
to be treated as a
