Risk Factors AN INVESTMENT IN THE COMPANY IS SPECULATIVE AND ENTAILS A SIGNIFICANT DEGREE OF RISK, INCLUDING THE RISK OF TOTAL LOSS OF AN INVESTOR’S INVESTMENT, AND THEREFORE SHOULD BE UNDERTAKEN ONLY BY INVESTORS CAPABLE OF EVALUATING THE RISKS OF AN INVESTMENT IN THE COMPANY (AND IN TURN, THE COMPANY’S OWNERSHIP OF A MEMBERSHIP INTEREST IN THE PARTNERSHIP) AND BEARING THE RISKS THAT IT REPRESENTS. THE INTERESTS IN THE COMPANY AND THE COMPANY’S INVESTMENT AS A MEMBER OF THE PARTNERSHIP ARE EACH ARE EXPECTED TO BE ILLIQUID AND THE INTERESTS WILL BE SUBJECT TO SIGNIFICANT RESTRICTIONS ON TRANSFERABILITY AND PROSPECTIVE INVESTORS SHOULD BE AWARE THAT, AS MEMBERS, THEY MAY BE REQUIRED TO BEAR THE RISKS ASSOCIATED WITH AN INVESTMENT IN THE COMPANY FOR AN INDEFINITE PERIOD OF TIME. THE FOLLOWING LIST IS NOT A COMPLETE LIST OF ALL RISKS INVOLVED IN CONNECTION WITH AN INVESTMENT IN THE COMPANY. THERE CAN BE NO ASSURANCE THAT THE COMPANY WILL BE ABLE TO ACHIEVE ITS INVESTMENT OBJECTIVE OR THAT MEMBERS WILL RECEIVE A RETURN ON, OR OF, THEIR INVESTMENT. A SIGNIFICANT NUMBER OF THE RISKS ASSOCIATED WITH AN INVESTMENT IN THE COMPANY (WHICH IN TURN WILL OWN A MEMBERSHIP INTEREST IN THE PARTNERSHIP) ARE NOT WITHIN THE COMPANY’S OR THE SPONSOR’S CONTROL. THESE RISKS INCLUDE, AMONG OTHERS, ECONOMIC TRENDS, PARTICULARLY IN THE REAL ESTATE AND CAPITAL MARKETS, FLUCTUATIONS IN THE INTEREST RATE ENVIRONMENT, CHANGES IN INCOME TAX LAWS, GOVERNMENT REGULATIONS, AND THE AVAILABILITY OF ATTRACTIVE INVESTMENT OPPORTUNITIES. PRIOR TO INVESTING IN THE COMPANY, PROSPECTIVE INVESTORS SHOULD PERFORM THEIR OWN ANALYSIS OF THE INVESTMENT OPPORTUNITIES, OBJECTIVES, PRINCIPAL TERMS, RISKS AND CONFLICTS PRESENTED HEREIN AND DISCUSS INVESTING IN THE COMPANY WITH THEIR OWN FINANCIAL, LEGAL, AND TAX ADVISERS. PROSPECTIVE INVESTORS SHOULD CAREFULLY CONSIDER THE FACTORS BELOW IN CONNECTION WITH AN INVESTMENT IN THE COMPANY. Investment / Offering Risks General best reasonable efforts offering. This offering is being conducted on a “best reasonable efforts” basis by the Sponsor. No guarantee can be given that all or any of the securities will be sold, or that sufficient proceeds will be available to acquire the entire interest in the Partnership offered to the Company by the Partnership. Receipt of a relatively small amount of capital commitments may reduce the ability of the Company to fully indirectly invest in the Property. No guaranteed return of investor’s capital contributions. The investments hereby offered are speculative and involve a high degree of risk. There can be no guarantee that an investor will realize a substantial return on the investment, or any return at all, or that the investor will not lose the entire amount of its investment in the Company. For this reason, each prospective investor should read this Memorandum, the Limited Liability Company Agreement for the Company, and the Amended and Restated Limited Partnership Agreement to be effective upon the purchase of the limited partnership interest in the Partnership by the Company, and the Subscription Agreement carefully, and consult with its own attorneys, accountants, business advisers, and/or any other adviser it deems appropriate prior to making any investment decision. No guarantee of profitability. There can be no assurance that cash flows will be sufficient to create net profits for the Compa ny even if the Sponsor believes in each investment’s economic viability. Poor performance by the Property could significantly aff ect the total returns to investors. There is no assurance that the value of the Property will increase over time or that such investment will not experience a complete loss in value, which may result in a complete loss to investors. No guarantee that the offering price of Interests is an accurate reflection of their value. The offering price of Interests has been determined by the Company taking into account its offering expenses, prospects, the number of securities to be offered and the general condition of the securities market, all as assessed by its management. Such prices are not directly correlated to the Company’s assets, earnings, net tangible book value or any other traditional criteria of value. Restrictions on transfer, resale, and liquidation of Interests. The Interests are “restricted securities” and subject to significant restrictions on transfer, resale, and liquidation under federal and state securities laws and under each of the Limited Liability Company Agreement for the Company and the Amended and Restated Limited Partnership Agreement. Moreover, it is not anticipated that any public market for the Interests will develop. Consequently, the Interests are extremely illiquid and a member of the Company may not be able to liquidate its investment in the event of emergency or for any other reason, and Interests may not be readily accepted as collateral for a loan. The purchase of Interest, therefore, should be considered only as a long-term investment. Investors must be able to bear the risks of holding their Interests for an indefinite period of time. Non-U.S. investors may have certain additional obligations under law. Non-U.S. investors may have certain additional notice, filing, reporting, accounting, withholding, or tax obligations required by federal, state, local, or foreign law. Such investors are solely liable for compliance with applicable laws. Members of the Company, will directly and indirectly will bear their allocable share of Company (and Partnership) fees, expenses, and distributions payable to the Sponsor and its Affiliates. Investors will bear their allocable share of fees, expenses, and distributions in connection with the investment and operating expenses of the Company and the Partnership as described in the Limited Liability Company Agreement for the Company and the Amended and Restated Limited Partnership Agreement for the Partnership, including but not limited to, any expenses, broker fees, construction management fees, asset management fees, property management fees, carried interest distributions to be paid to the General Partner and/or its Affiliates. Accordingly, gross returns, if any, will be reduced by the foregoing fees, expenses, and distributions and may be significantly less than if any investor had invested directly in the Property. Members in default may experience material and adverse consequences. A defaulting Member under the Limited Liability Company Agreement may experience material and adverse consequences. In such event, the Sponsor may exercise certain remedies available to it under the Limited Liability Company Agreement, including taking away the defaulting Member’s right to receive distributions and profit allocations and to vote, and to the maximum extent permitted by applicable law, the forced sale of the Member’s interests to other non-defaulting Members. Members may be subject to withholdings or other taxes. Members may be subject to withholdings or other taxes as a result of their participation in the Company and, indirectly, in the Partnership. To the extent the Partnership withholds or pays any such taxes on behalf of its Limited Partner, the Members in turn shall be deemed to have received a proportionate payment from the Partnership as of the time such withholding or tax is paid, which payment shall be deemed to be a distribution with respect to the Interest owned by such Member. Any excess amounts beyond a distribution to which each Member is entitled shall be deemed a loan bearing interest at the maximum rate permitted by applicable law. Dilution of Interests from subsequent closings. The General Partner may allow the Partnership to admit additional Limited Partners to subscribe for Interests in the Partnership at subsequent closings in accordance with the Amended and Restated Limited Partnership Agreement. In such event, the new additional Limited Partners are expected to participate in the Partnership and consequently dilute the Interest of the Company as an existing Limited Partner of the Partnership.
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