• Our NAV per share amounts may change materially if the appraised values of our properties materially change from prior appraisals or the actual operating results for a particular month differ from what we originally budgeted for that month. • The return on an investment in our stock may be reduced if we are required to register as an investment company under the Investment Company Act of 1940 (the “Investment Company Act”). General Risks Related to Investments in Real Estate • Our operating results may be affected by economic and regulatory changes that impact the real estate market in general. • Our portfolio may be concentrated in a limited number of asset types, geographies or investments. • Our board of directors may change our investment and operational policies or our investment guidelines without stockholder consent. • We may have difficulty selling our properties, which may limit our flexibility and ability to pay distributions. • Joint venture investments could be adversely affected by our lack of sole decision-making authority, our reliance on the financial condition of our joint venture partners and disputes between us and our joint venture partners. • The inability of property managers to effectively operate our properties and leasing agents to profitably lease vacancies in our properties would hurt our financial performance. • Our properties face significant competition. General Risks Related to Investments in Real Estate Debt • Our debt investments face prepayment risk and interest rate fluctuations that may adversely affect our results of operations and financial condition. • Real estate debt investments face a number of general market-related risks that can affect the creditworthiness of issuers, and modifications to certain loan structures and market terms make it more difficult to monitor and evaluate investments. • We may invest in commercial mortgage loans, which are non-recourse in nature and include limited options for financial recovery in the event of default; an event of default may adversely affect our results of operations and financial condition. • We may invest in high-yield securities which are generally subject to more risk than higher rated securities. • We have and may in the future 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. Risks Related to Debt Financing • We have incurred mortgage indebtedness and other borrowings and expect to incur additional debt, which may increase our business risks, hinder our ability to make distributions and decrease the value of our stockholders’ investments. • If we draw on a line of credit to fund repurchases or for any other reason, our financial leverage ratio could increase beyond our target. • Increases in interest rates could increase the amount of our loan payments and adversely affect our ability to make distributions to our stockholders. • Volatility in the financial markets and challenging economic conditions could adversely affect our ability to secure debt financing on attractive terms and our ability to service any future indebtedness that we may incur. Risks Related to our Relationship with the Advisor and the Dealer Manager; Risks Related to Conflicts of Interest • The Advisor’s management fee and the Special Limited Partner’s 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. • 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. • Certain other investment funds and accounts sponsored by affiliates of the Advisor have similar or overlapping investment objectives and guidelines, and we will not be allocated certain opportunities and may be allocated only opportunities with lower relative returns.
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