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Item 1A. Risk Factors

2025-02-27 compared with 2024-02-22 · 41 added, 34 removed, 397 unchanged (16% of the section changed)

You should carefully consider these risk factors, together with all of the other information included in this Annual Report on Form 10-K, including our consolidated financial statements and the related notes thereto, before you decide whether to make an investment in our securities.

The Risk Factor Summary that follows should be read in conjunction with the detailed description of risk factors below.

The risks set out below are not the only risks we face.

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These charges and provisions may be required as a result of factors beyond our control, including, among other things, changes in our expected holding periods, changes in the economic environment and market conditions affecting the value of real property assets or natural or man-made disasters.

During the year ended December 31, 2023, we recognized aggregate impairment charges of $168.8 million, with $131.6 million related to our Real Estate Investments and $37.2 million related to our Investment in Unconsolidated Real Estate Ventures.

During the year ended December 31, 2024, we recognized aggregate impairment charges of $53.1 million, $44.7 million of which related to our Real Estate Investments and $8.4 million of which related to our Investment in Unconsolidated Real Estate Ventures.

During the year ended December 31, 2023, we recognized aggregate impairment charges of $168.8 million, $131.6 million of which related to our Real Estate Investments and $37.2 million of which related to our Investment in Unconsolidated Real Estate Ventures.

If we are required to take additional impairment charges, our results of operations could be adversely impacted.

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We may suffer adverse consequences due to the financial difficulties, bankruptcy or insolvency of our tenants.

Periodically, our tenants experience financial difficulties, including bankruptcy, insolvency or a general downturn in their business, and these difficulties may have an adverse effect on our cash flow, results of operations, financial condition and

ability to make distributions to our shareholders.

We cannot assure you that any tenant that files for bankruptcy protection will continue to pay us rent.

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We may hire and supervise third party contractors to provide construction, engineering and various other services for wholly owned development projects, development projects undertaken by real estate ventures in which we hold an equity interest and manage or properties we are managing on behalf of unaffiliated third parties.

Certain of these contracts may be structured

such that we are the principal rather than the agent.

Certain of these contracts may be structured such that we are the principal rather than the agent.

As a result, we may assume liabilities in the course of the project and be subjected to, or become liable for, claims for construction defects, negligent performance of work or other similar actions by third parties we have engaged.

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Our Board of Trustees also has the power to establish the preferences and rights of each class or series of units in the Operating Partnership, and may afford the holders in any series or class of preferred units preferences, distributions, powers and rights, voting or otherwise, senior to the rights of holders of common units.

An increase in interest rates would increase our interest costs on variable rate debt and could adversely impact our ability to refinance existing debt or sell assets on favorable terms or at all.

Rising interest rates could limit our ability to refinance existing debt when it matures or significantly increase our future interest expense.

Interest rates have increased and could continue to increase our interest costs on variable rate debt and could adversely impact our ability to refinance existing debt or sell assets on favorable terms or at all.

Rising interest rates could continue to increase our interest expense and could limit our ability to refinance existing debt when it matures.

From time to time, we enter into interest rate swap agreements and other interest rate hedging contracts.

While these agreements are intended to lessen the impact of rising interest rates on us, they also expose us to the risk that the other parties to the agreements will not perform, we could incur significant costs associated with the settlement or termination of the agreements, the agreements will be unenforceable and the underlying transactions will fail to qualify as highly-effective cash flow hedges under the applicable accounting guidance.

In addition, an increase in interest rates could decrease

the amounts third parties are willing or able to pay for our assets, thereby limiting our ability to recycle capital and change our portfolio promptly in response to changes in economic or other conditions.

In addition, an increase in interest rates could decrease the

amounts third parties are willing or able to pay for our assets, thereby limiting our ability to recycle capital and change our portfolio promptly in response to changes in economic or other conditions.

For more information about our interest costs on variable rate debt see Part II, Item 7.

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The terms and covenants relating to our indebtedness could adversely impact our economic performance.

Our credit facilities, term loans and the indenture governing our unsecured public debt securities contain (and any new or amended facility and term loans may contain) restrictions, requirements and other limitations on our ability to incur indebtedness, including total debt to asset ratios, secured debt to total asset ratios, debt service coverage ratios and minimum ratios of unencumbered assets to unsecured debt which we must maintain.

Our credit facilities, term loans and the indentures governing our unsecured public debt securities contain (and any new or amended facility and term loans may contain) restrictions, requirements and other limitations on our ability to incur indebtedness, including total debt to asset ratios, secured debt to total asset ratios, debt service coverage ratios and minimum ratios of unencumbered assets to unsecured debt which we must maintain.

Our ability to borrow under our credit facilities is subject to compliance with such financial and other covenants.

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In the event that our unsecured debt is downgraded by Moody’s Investor Services or Standard & Poor’s from the current ratings, we would likely incur higher borrowing costs and the market prices of our common shares and debt securities might decline.

Data security breaches may cause damage to our business and reputation.

In the ordinary course of our business, we maintain sensitive data, including our proprietary business information and the information of our tenants and business partners, in our data centers and on our networks.

The risk of a security breach or disruption, mainly through cyber-attack or cyber intrusion, including by computer hackers, foreign governments and cyber terrorists, has generally increased in number, intensity and sophistication.

Notwithstanding the security measures undertaken, our information technology may be vulnerable to attacks or breaches resulting in proprietary information being publicly disclosed, lost or stolen.

There can be no assurance that our security efforts and measures will be effective or that attempted security breaches or disruptions would not be successful or damaging.

Protected information, networks, systems and facilities

remain vulnerable because the techniques used in such attempted security breaches evolve and may not be recognized or detected until launched against a target.

Accordingly, we may be unable to anticipate these techniques or to implement adequate security barriers or other preventative measures.

Data and security breaches could:

• disrupt the proper functioning of our networks and systems and therefore our operations and/or those of our client tenants;

• result in misstated financial reports, violations of loan covenants, missed reporting deadlines, and/or missed permitting deadlines;

• result in our inability to properly monitor our compliance with the rules and regulations regarding our qualification as a REIT;

• result in the unauthorized access to, and destruction, loss, theft, misappropriation, or release of proprietary, confidential, sensitive, or otherwise valuable information of ours or others, which others could use to compete against us or for disruptive, destructive, or otherwise harmful purposes and outcomes;

• result in our inability to maintain the building systems relied upon by our client tenants for the efficient use of their leased space;

• require significant management attention and resources to remedy any damages that result;

• subject us to claims and lawsuits for breach of contract, damages, credits, penalties, or termination of leases or other agreements;

• damage our reputation among our client tenants and investors generally.

While we maintain insurance coverage that may, subject to policy terms and conditions including deductibles, cover specific aspects of cyber risks, such insurance coverage may be insufficient to cover all losses.

Third parties to whom we outsource certain of our functions are also subject to the risks outlined above.

We review and assess the cybersecurity controls of our third party service providers and vendors, as appropriate, and make changes to our business processes to manage these risks.

Data breaches and/or the insolvency of such third parties and vendors may result in us incurring costs and may have other negative consequences.

Terrorist attacks and other acts of violence or war may adversely impact our performance and may affect the markets on which our securities are traded.

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In addition, our insurance policies may not recover all of our property replacement costs and lost revenue resulting from an attack.

We might not be able to pass through the increased costs associated with such increased security measures and insurance to our tenants, which could reduce our profitability and cash flow.

We might not be able to pass through the increased costs associated with such increased security measures and insurance to our tenants,

which could reduce our profitability and cash flow.

Furthermore, any terrorist attacks or armed conflicts could result in increased volatility in or damage to the United States and worldwide financial markets and economy.

Such adverse economic conditions could affect the ability of our tenants to pay rent and our cost of capital, which could have a negative impact on our results.

Social, political and economic changes or instability, or other circumstances beyond our control could affect our business operations.

Our business may be adversely affected by social, political and economic instability, unrest or disruption, including legal, regulatory and policy changes by a new presidential administration in the U.S., protests, demonstrations, strikes, riots, civil disturbance, disobedience, insurrection, or social and other political unrest.

Such events may result in restrictions, curfews or other actions and give rise to significant changes in regional and global economic conditions and cycles, which may adversely affect our financial condition and operations.

Changes in federal policy, including tax policies, and at regulatory agencies occur over time through policy and personnel changes following elections, which can lead to changes involving the level of oversight and focus on certain industries and corporate entities.

The nature, timing, and economic and political effects of potential changes to the current legal and regulatory frameworks affecting the real estate industry remain highly uncertain.

Additionally, changes in federal policy that affect the geopolitical landscape, such as the imposition of tariffs and changes to U.S.

trade policy, have, and could in the future, lead to adverse effects on the U.S.

domestic economy and our business operations.

Some potential losses are not covered by insurance.

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Such events could adversely affect our cash flow and ability to make distributions to shareholders.

If one or more of our

insurance providers were to fail to pay a claim as a result of insolvency, bankruptcy or otherwise, the nonpayment of such claims could have an adverse effect on our financial condition and results of operations.

If one or more of our insurance providers were to fail to pay a claim as a result of insolvency, bankruptcy or otherwise, the nonpayment of such claims could have an adverse effect on our financial condition and results of operations.

In addition, if one or more of our insurance providers were to become subject to insolvency, bankruptcy or other proceedings and our insurance policies with the provider were terminated or cancelled as a result of those proceedings, we cannot guarantee that we would be able to find alternative coverage in adequate amounts or at reasonable prices.

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While we carry general liability and umbrella policies to mitigate such losses on our general liability risks, our results could be materially impacted by claims and other expenses related to such insurance plans if future occurrences and claims differ from these assumptions and historical trends or if employee health-care claims which we self-insure up to a set limit per employee (and which are insured above such self-insured retention amount) exceed our expectations or historical trends.

We have experienced, and may again experience, data security breach that may cause damage to our business and reputation.

In the ordinary course of our business, we maintain sensitive data, including our proprietary financial information, business information and the information of our tenants and business partners, in our data centers and on our networks.

breaches or disruptions, mainly through cyber-attack or cyber intrusion, including by computer hackers, foreign governments and cyber terrorists, have generally increased in number, intensity and sophistication.

Notwithstanding the security measures undertaken, our information technology has been, and may in the future be, vulnerable to attacks or breaches.

One such event occurred on May 1, 2024 when we detected unauthorized occurrences by a third party on portions of our information technology systems that consisted of the third party’s unauthorized access to, and deployment of encryption to, a portion of our internal corporate information technology systems and the exfiltration of certain files, including files containing personal information.

There can be no assurance that our security efforts and measures will be effective or that attempted security breaches or disruptions would not be successful or damaging.

Protected information, networks, systems and facilities remain vulnerable because the techniques used in such attempted security breaches evolve and may not be recognized or detected until launched against a target.

Accordingly, we may be unable to anticipate these techniques or implement adequate security barriers or other preventative measures.

Data security breaches, including the one noted above, have in the past, and may in the future, result in one or more of the following harms:

• disrupt the proper functioning of our networks and systems and therefore our operations and/or those of our tenants;

• result in misstated financial reports, violations of loan covenants, missed reporting deadlines, and/or missed permitting deadlines;

• result in our inability to properly monitor our compliance with the rules and regulations regarding our qualification as a REIT;

• require significant management attention and resources to remedy any damages that result;

• subject us to claims and lawsuits for breach of contract, damages, credits, penalties, or other agreements;

• damage our reputation among our tenants and investors generally.

Third parties to whom we outsource certain of our functions are also subject to the risks outlined above.

We review and assess the cybersecurity controls of our third-party service providers and vendors, as appropriate, and make changes to our business processes to manage these risks.

Data breaches and/or the insolvency of such third parties and vendors may result in us incurring costs and may have other negative consequences.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1A. Risk Factors