CIM GROUP, INC. 10-Q

Item 1A. Risk Factors Risk Factor Summary Below is a summary of the principal factors that make an investment in our common stock speculative or risky. This summary does not address all of the risks that we face, and stockholders should carefully consider the following summary, together with the full risk factors contained below in this “Risk Factors” section and all the other information included in this Quarterly Report on Form 10-Q, in evaluating the Company and our business. If any of the following risks actually occur, our business, financial condition and results of operations could be materially and adversely affected, and stockholders may lose all or part of their investment. Additional risks and uncertainties not presently known to us or that we currently deem immaterial also may impair our business operations. Risks Related to Our Company • Market and political conditions, interest rates and inflation may reduce asset values, limit capital raising or deployment, and make hedging strategies ineffective or reduce returns. • Operational, cybersecurity, vendor and third-party service risks, and artificial intelligence use may disrupt our businesses, cause losses or limit growth. • Loss of key personnel, unmanaged growth, acquisitions or joint ventures, weak internal controls, or accounting changes could impair operations and financial reporting. • Legal and regulatory changes, insurance limits, climate change and pandemics could disrupt operations, increase costs and harm financial performance. Risks Related to Regulation • Extensive regulation and employee misconduct or noncompliance may increase costs and expose us to liability, penalties, regulatory scrutiny and reputational harm. • Publicly traded and open-ended vehicles face regulatory complexities that may limit their activities and increase scrutiny. Risks Related to Our Funds and our Fund Business • Historical Fund returns may not continue; asset values, deployment pace, leverage, illiquidity, fundraising challenges and conflicts could reduce results, revenues and cash flow. • Regulatory limits on Fund assets, contingent liabilities, client-asset rules, unfunded capital calls and noncontrolled holdings could restrict assets, harm performance and reduce AOO. • Real estate, power, infrastructure, energy and credit Funds face market, operational, environmental and industry-specific risks. • Revenue variability, reliance on custodians, counterparties and other agents, new businesses and litigation could harm results, operations and our professional reputation. Risks Associated with Credit Assets • Mortgage, bridge, mezzanine, construction, CMBS and other credit assets face delinquency, foreclosure, default and loss; limited control and restrictive agreements may magnify losses. • Credit-rating downgrades or withdrawals could reduce asset values and cause losses. 63 Risks Associated with Real Estate Assets • Economic, regulatory and geographic conditions, tenant bankruptcies, vacancies, concentration, uninsured losses, impairments and property limitations could reduce cash flow, profitability and values. • Debt, liabilities, expenses, taxes, restrictions, development delays, competition, co-ownership, retail exposure, climate change and legal requirements could increase costs, defaults and liabilities and reduce distributions. Risks Associated with Debt Financing • Leverage, mortgage debt and other borrowings increase loss and default risk; high or rising interest rates may hinder financing, increase payments and reduce dividends. • Insufficient cash flow to service debt and lender covenants could limit dividends. Risks Related to our Corporate Structure and our Common Stock • No public trading market, limited redemptions, uncertain per-share values, and holding-company, Maryland-law or contractual restrictions could limit stockholder liquidity and dividends. • CMGH voting power, potential earnout and conflicts could dilute common stockholders; charter provisions, limited claims and future issuances could further restrict influence or dilute interests. U.S. Federal Income and Other Tax Risks • Benefit Plans and IRAs may trigger penalties or distribution limits; non-U.S. persons may owe U.S. tax on gains if we are a U.S. real property holding corporation. • Tax-law changes, deduction limits, deferred tax assets, our REIT-to-corporate transition and prior REIT qualification issues could increase tax liability and reduce earnings, cash flow and dividends. • Tax Receivable Agreement payments could accelerate or exceed actual benefits; unit exchanges, performance allocations and tax-law changes could create conflicts or liabilities. Risks Related to Our Company Difficult market and political conditions may adversely affect our businesses in many ways, including by reducing the value or hampering the performance of our assets or those in our funds, managed accounts, and co-investment vehicles (individually, a “Fund” and collectively, the “Funds”) or reducing the ability of our Funds or us to raise or deploy capital, each of which could materially reduce our revenue, earnings and cash flow and adversely affect our financial prospects and condition. Our businesses are materially affected by conditions in the global financial markets and economic and political conditions throughout the world that are outside our control. These conditions may affect the value and liquidity of assets, and we may not be able to or may choose not to manage our exposure to these conditions. This could in turn materially reduce our revenue, earnings and cash flow and adversely affect our financial prospects and condition. Global financial markets have experienced heightened volatility in recent periods, including as a result of economic and political events in or affecting the world’s major economies, such as the ongoing war between Russia and Ukraine and conflicts in the Middle East. Sanctions imposed by the U.S. and other countries, including on Iran and in connection with hostilities between Russia and Ukraine and the tensions between China and Taiwan, have caused additional financial market volatility and affected the global economy. Concerns over future increases in inflation, economic recession, as well as interest rate volatility and fluctuations in oil and gas prices resulting from global production and demand levels, as well as geopolitical tension, have exacerbated market volatility. Market volatility has been further exacerbated by social unrest, changes regarding immigration and work permit policies and other political and security concerns both in the U.S. and across various international regions. Because of interrelationships within the global financial markets, if these issues do not abate, worsen or spread, our businesses may be adversely affected. Changes in trade policies, including the imposition of new tariffs or increases in existing tariffs between the U.S., Mexico, Canada, China or other countries, or reactionary measures in response thereto, including retaliatory tariffs, legal challenges, or currency manipulation, could adversely affect the market conditions in which we operate. These factors may affect the value of our or our Funds’ assets and the level and volatility of credit and securities prices, and we, our Funds and our Funds’ portfolio assets may not be able to successfully manage our exposure to these conditions. 64 In addition, numerous structural dynamics and persistent market trends have exacerbated volatility and market uncertainty. Concerns over significant volatility in the commodities markets, sluggish economic expansion in foreign economies, including continued concerns over growth prospects in China and emerging markets, growing debt loads for certain countries, uncertainty about the consequences of the U.S. and other governments withdrawing monetary stimulus measures, government agency closures, prolonged government shutdowns and speculation about a possible recession all highlight the fact that economic conditions remain unpredictable and volatile. U.S. debt ceiling and budget deficit concerns have increased the possibility of additional credit-rating downgrades and economic slowdowns or a recession in the U.S. In recent periods, geopolitical tensions, including between the U.S. and China and including in the Middle East, have escalated. Further escalation of such tensions and the related imposition of sanctions or other trade barriers may negatively impact the rate of global growth. Moreover, there is a risk of both sector-specific and broad-based volatility, corrections and/or downturns in the commodities, equity, credit and other markets. Any of the foregoing could have a significant impact on the markets in which we operate and a material adverse impact on our business prospects and financial condition. Further, while weak economic environments have often provided attractive opportunities and strong relative asset performance, we tend to realize value from our assets in times of economic expansion, when opportunities to sell may be greater. Thus, we depend on the cyclicality of the market to sustain our businesses and generate attractive risk-adjusted returns over extended periods. Conditions in the global financial markets and the global economy may result in adverse consequences for us and our businesses, any of which could adversely affect our assets or the businesses of our Funds, restrict our or such Funds’ activities, impede our or such Funds’ ability to effectively achieve their objectives and result in lower returns than we anticipated at the time certain of our assets were acquired. More specifically, these economic conditions could adversely affect our operating results by causing: • decreases in the market value of assets held by us or some of our Funds; • increases in vacancies, tenant defaults and bankruptcies and other adverse developments at real estate properties; • increased illiquidity in the markets for our assets or those of our Funds, which could adversely affect transaction volumes and the pace of realization on assets or otherwise restrict the ability to realize value from assets, thereby adversely affecting the ability to generate performance or other income; • our AOO to decrease, thereby lowering a portion of our management fees payable by our Funds to the extent they are based on market values; • adverse changes in the value or operating performance of certain assets, including investments in other owner-operators of real assets, which are exposed to real-asset market conditions in the jurisdictions in which such other owner-operators operate; and • increases in costs or reduced availability of financial instruments that finance us and our Funds. We are exposed to risks associated with changes in interest rates. General interest rate fluctuations may have a substantial negative impact on our and our Funds’ assets and opportunities and, accordingly, may have a material adverse effect on our objectives and our results of operations. Because we, our Funds or our Funds’ assets borrow money and may issue debt securities or preferred stock to acquire assets, results of operations are dependent upon the difference between the rate at which funds are borrowed or the related instruments pay interest or dividends and the rate at which such funds are deployed. If market rates decrease, we may earn less interest income from loans made during such lower rate environment. We have in the past and from time to time may in the future enter into certain hedging transactions, such as interest rate swap agreements to mitigate our exposure to adverse fluctuations in interest rates. There can be no assurance that a significant change in market interest rates will not have a material adverse effect on our results of operations. Inflation has impacted and may in the future adversely affect our business, results of operations and financial condition of our businesses, our Funds and our Funds’ assets. Certain of our businesses, our Funds and our Funds’ assets are in industries that have been impacted by inflation. Although U.S. inflation rates have fluctuated in recent periods, they remain well above the historic levels over the past several decades. Ongoing inflationary pressures have increased the costs of labor, energy and raw materials and have adversely affected consumer spending, economic growth and the results of our and our Funds’ assets. If increases in the costs of operations cannot be passed along to customers or other end-users, it could adversely affect our operating results. In addition, any projected future decreases in the operating results of our or our Funds’ assets could adversely impact the fair value of those assets. Any decreases in the fair value of our or our Fund’s assets could result in future realized or unrealized losses. For further information 65 on the potential impact of inflation on our businesses, see “ —Risks Related to Our Company—Inflation and rising interest rates may adversely affect our financial condition and results of operations” and “—Risks Associated with Debt Financing—Increases in interest rates could increase the amount of our debt payments and adversely affect our ability to pay dividends to our stockholders.” Inflation and rising interest rates may adversely affect our financial condition and results of operations. Since we or our Funds have incurred leverage to acquire assets, our income depends, in part, upon the difference between the rate at which funds are borrowed and the rate at which those funds are deployed. Inflation remained high in 2025 and through the first six months of 2026. Beginning in 2022, in an effort to combat inflation and restore price stability, the Federal Reserve significantly raised the federal funds rate, which led to increases in interest rates in the credit market. Although the Federal Reserve began lowering the federal funds rate in the second half of 2024 and in the latter part of 2025, the federal funds rate remains well above pre-2022 levels, and any increase in or continued elevated inflation may cause the Federal Reserve to maintain the federal funds rate at existing levels or again raise the rate. Should the Federal Reserve raise rates in the future, this will likely result in further increases in market interest rates. In a rising interest rate environment, any leverage that we or a Fund incur may bear a higher interest rate than may currently be available. There may not, however, be a corresponding increase in revenues. Any reduction in the rate of return on assets could adversely impact our income, reducing the ability to service the interest obligations on, and to repay the principal of, indebtedness. An increase in inflation could have an adverse impact on our floating rate mortgages, credit facilities and general and administrative expenses, as these costs could increase at a rate higher than our rental and other revenue. Inflation could also have an adverse effect on consumer spending, which could impact our tenants’ revenues and, in turn, their demand for space and future extensions of their leases and by extension, have an adverse impact on our borrowers. For further information on the potential impact of inflation on our businesses, see “— Risks Related to Our Company—Inflation has impacted and may in the future adversely affect our business, results of operations and financial condition of our businesses, our Funds and our Funds’ assets” and “—Risks Associated with Debt Financing—Increases in interest rates could increase the amount of our debt payments and adversely affect our ability to pay dividends to our stockholders.” Operational risks may disrupt our businesses, result in losses or limit our growth. We operate in a business that is highly dependent on information systems and technology. Our information systems and technology may not continue to be able to accommodate our growth, and the cost of maintaining our information systems and technology may increase from its current level, including due to existing and anticipated regulations. Such a failure to accommodate growth, or an increase in costs related to our information systems and technology, could have a material adverse effect on our business and results of operations. Furthermore, while we have offices and personnel located worldwide, a substantial portion of our personnel are located in Los Angeles. An earthquake, wildfire or other disaster or a disruption in the infrastructure that supports our businesses, including a disruption involving electronic communications, our internal human resources systems or other services used by us or third parties with whom we conduct business, or directly affecting our headquarters or other office locations, could materially disrupt our operations and adversely affect our business and financial results. Although we have disaster recovery programs in place, these may not be sufficient to mitigate the harm that may result from such a disaster or disruption. In addition, insurance and other safeguards might only partially reimburse us for our losses, if at all We also rely on a concentrated set of vendors and third-party service providers for certain aspects of our businesses, including for certain information systems, technology and administration of our Funds and compliance matters, such as accounting, client services, operations, banking, software development and maintenance and legal and regulatory compliance. Our ability to conduct our business may be adversely affected if one or more key vendors or third-party service providers fails to meet our expectations or if we otherwise become unable to procure their services on commercially reasonable terms. In addition, certain vendors and third-party service providers are vulnerable to disruption from severe weather events, natural disasters, public health crises, cybersecurity incidents or similar services and other disruptions, and may be subject to financial distress, regulatory sanctions, labor shortages, system failures or other operational issues. Operational risks could increase as third-party service providers increasingly offer mobile and cloud-based software services rather than software services that can be operated within our own data centers, as certain aspects of the security of such technologies may be complex, unpredictable or beyond our control, and any failure by mobile technology or cloud service providers to adequately safeguard their systems and prevent cyber-attacks could disrupt our operations and result in misappropriation, corruption or loss of confidential, proprietary or personal information. In addition, our counterparties’ information systems, technology or accounts may be the target of cyber-attacks. See “—Risks Related to Our Company—Cybersecurity risks and cyber incidents may adversely affect our business in the event we or our transfer agent or any other party that provides us with essential services experiences cyber incidents.” Any interruption or deterioration in the performance of these third parties or the service providers of our 66 counterparties or failures or vulnerabilities of their respective information systems or technology could impair the quality of our businesses’ operations, require us to transition to alternative providers, which could involve significant time, costs and operational risks, and could impact our reputation, adversely affect our businesses and limit our ability to grow. Finally, there continues to be significant evolution and developments in the use of artificial intelligence and machine learning technologies, including generative artificial intelligence and large language models. We cannot fully determine the impact of such evolving technology to our business at this time. Hedging strategies may adversely affect the returns on our cash flow and financial condition and Funds’ assets. When managing our exposure to market risks, we may (on our own behalf or on behalf of our Funds) from time to time use forward contracts, options, swaps, caps, collars, floors, foreign currency forward contracts, currency swap agreements, currency option contracts, among other strategies. Currency fluctuations in particular can have a substantial effect on our cash flow and financial condition. The success of any hedging or other derivative transactions generally will depend on our ability to correctly predict market or foreign exchange changes, the degree of correlation between price movements of a derivative instrument and the position being hedged, the creditworthiness of the counterparty and other factors. As a result, while we may enter into a transaction to reduce our exposure to market or foreign exchange risks, the transaction may result in poorer overall performance than if it had not been executed. Such transactions may also limit the opportunity for gain if the value of a hedged position increases. While such hedging arrangements may reduce certain risks, such arrangements themselves may entail certain other risks. These arrangements may require the posting of cash collateral at a time when we or a Fund has insufficient cash or illiquid assets such that the posting of the cash is either impossible or requires the sale of assets at prices that do not reflect their underlying value. Moreover, these hedging arrangements may generate significant transaction costs, including potential tax costs, that reduce the returns generated. Our strategies to manage risk may be ineffective. Our strategies to manage risk may be ineffective. Such risks include market risk, liquidity risk, operational risk and reputational risk. Management of these risks can be very complex. These strategies may fail under some circumstances, particularly if we are confronted with risks that we have underestimated or not identified, including those related to difficult market or geopolitical conditions. Our future success depends to a significant degree upon certain of our executive officers, senior professionals and key personnel. If we lose or are unable to attract and retain key personnel, our ability to achieve our financial and strategic objectives could be delayed or hindered. Our success depends to a significant degree upon the contributions of certain of our executive officers, senior professionals and other key personnel. We cannot guarantee that all of these key personnel, or any particular person, will remain affiliated with us. If any of our key personnel were to cease their affiliation with us, our operating results could suffer. These individuals possess substantial experience and expertise in investing, are responsible for locating and executing our and our Funds’ assets, have significant relationships with the institutions that are the source of many of our and our Funds’ opportunities and, in certain cases, have strong relationships with our clients. Therefore, if any of our senior professionals or other key personnel depart and join competitors or form competing companies, it could result in the loss of significant opportunities, limit our ability to raise capital from certain existing clients or result in the loss of certain existing clients. There is no guarantee that the non-competition and non-solicitation agreements to which certain of our senior professionals and other key personnel are subject, together with our other arrangements with them, will prevent them from leaving, joining our competitors, soliciting our clients and employees, or otherwise competing with us. Such agreements may also expire after a certain period of time. In addition, there is no assurance that such agreements will be enforceable in all cases, particularly as U.S. states and/or federal agencies enact legislation or adopt rules aimed at effectively prohibiting non-competition agreements. Further, the departure of some or all of those individuals could also trigger certain “key person” provisions in the documentation governing certain of our Funds, which would permit the clients in those Funds to suspend or terminate such Funds’ commitment periods or, in the case of certain Funds, permit clients to withdraw their capital prior to expiration of the applicable lock-up date. We do not carry any “key person” insurance that would provide us with proceeds in the event of the death or disability of any of our senior professionals, and we do not have a policy that prohibits our senior professionals from traveling together. See “ —Risks Related to Regulation—Employee misconduct and failure to comply with applicable laws, obligations and standards could harm us by impairing our ability to attract and retain clients and subjecting us to significant legal liability, regulatory scrutiny and reputational harm.” 67 We believe that our future success depends, in large part, upon our ability to hire and retain highly skilled managerial, operational and marketing personnel. Competition for such personnel is intense, and we cannot assure our stockholders that we will be successful in attracting and retaining such skilled personnel. If we lose or are unable to obtain the services of key personnel, our ability to implement our strategies could be delayed or hindered, and the value of our and our client’s holdings may decline. Our efforts to retain and attract certain personnel may also result in significant additional expenses, which could adversely affect our profitability or result in an increase in the portion of our performance allocations (sometimes referred to in the industry as “carried interest”) and incentive fees that we grant to these personnel. Growth of our businesses may place significant demands on our administrative, operational and financial resources. We are pursuing further growth in our business and AOO in the near future, both organic and through acquisitions. If realized, such growth will place significant demands on our legal, accounting, compliance and operational infrastructure and will increase expenses. In addition, we are required to continuously develop our systems and infrastructure in response to the increasing sophistication of the real assets management market and legal, accounting, regulatory and tax developments. Our future growth will depend in part on our ability to maintain an operating platform and management system sufficient to address our growth and will require us to incur significant additional expenses and to commit additional senior management and operational resources. As a result, we may face significant challenges in: • maintaining adequate financial, regulatory (legal, tax and compliance) and business controls; • providing current and future clients with accurate and consistent reporting; • implementing new or updated information and financial systems and procedures; • monitoring and enhancing our cybersecurity and data privacy risk management; and • training, managing and appropriately sizing our work force and other components of our businesses on a timely and cost-effective basis. We may not be able to manage our expanding operations effectively or be able to continue to grow, and any failure to do so could adversely affect our ability to generate revenue and control our expenses. If we are unable to consummate or successfully integrate new businesses and strategies, acquisitions or joint ventures, we may not be able to implement our growth strategy successfully. Our growth strategy is based, in part, on the selective development or acquisition of management businesses or other businesses complementary to our business where we think we can add substantial value or generate substantial returns. The success of this strategy will depend on, among other things, (i) the availability of suitable opportunities, (ii) the level of competition from other companies that may have greater financial resources, (iii) our ability to value potential development or acquisition opportunities accurately and negotiate acceptable terms for those opportunities, (iv) our ability to obtain requisite approvals and licenses from the relevant governmental authorities and to comply with applicable laws and regulations without incurring undue costs and delays, (v) our ability to identify and enter into mutually beneficial relationships with venture partners, and (vi) our ability to properly manage conflicts of interest. In addition, our ability to integrate personnel at acquired businesses into our operations and culture may be impacted by the structure of acquisitions we make, such as contingent consideration and continuing governance rights retained by the sellers. Cybersecurity risks and cyber incidents may adversely affect our business in the event we or our transfer agent or any other party that provides us with essential services experiences cyber incidents. We, our transfer agent and other parties that provide us with services essential to our operations are vulnerable to service interruptions or damages from any number of sources, including computer viruses, malware, unauthorized access, energy blackouts, natural disasters, terrorism, war and telecommunication failures. Any system failure or accident that causes interruptions in our operations could result in a material disruption to our business. A cyber incident is considered to be any adverse event that threatens the confidentiality, integrity or availability of our information resources. These incidents may be an intentional attack or an unintentional event and could involve gaining unauthorized access to our information systems for purposes of misappropriating assets, stealing confidential information, corrupting data or causing operational disruption. The risk of a security breach or disruption, particularly through cyberattacks or cyber intrusions, including by computer hackers, nation-state affiliated actors, and cyber terrorists, has generally increased as the number, intensity and sophistication of attempted attacks and intrusions from around the world have increased, and will likely continue to increase in the future. Such threats are prevalent and continue to rise, are increasingly difficult to detect, and come from a variety of sources, including traditional computer “hackers”, threat actors, “hacktivists”, organized criminal threat actors, personnel (such as through theft or 68 misuse), sophisticated nation states, and nation-state-supported actors. Some actors now engage and are expected to continue to engage in cyberattacks, including, without limitation, nation-state actors for geopolitical reasons and in conjunction with military conflicts and defense activities. During times of war and other major conflicts, we and the third-party service providers upon which we rely may be vulnerable to heightened risk of these attacks, including retaliatory cyberattacks. The result of these incidents may include disrupted operations, misstated or unreliable financial data, liability for stolen assets or information, increased cybersecurity protection and insurance costs, litigation and damage to our tenant and stockholder relationships. As we and the parties that provide essential services to us increase our and their reliance on technology, the risks posed to the information systems of such persons have also increased. We have implemented processes, procedures and internal controls to help mitigate cyber incidents, but these measures do not guarantee that a cyber incident will not occur or that attempted security breaches or disruptions would not be successful or damaging. A cyber incident could materially adversely impact our business, financial condition, results of operations, cash flows, or our ability to satisfy our debt service obligations or to maintain our level of distributions on common stock. There also may be liability for any stolen assets or misappropriated Company funds or confidential information. Any material adverse effect experienced by us, our transfer agent and other parties that provide us with services essential to our operations could, in turn, have an adverse impact on us. Remote work has become more common among our employees and personnel as well as those of other third-party service providers and has increased risks to the information technology systems and confidential, proprietary and sensitive data of us and third-party service providers as more of those employees utilize network connections, computers and devices outside of the employer’s premises or network, including working at home, while in transit, and in public locations. Those employees working remotely could expose us and our third-party service providers to additional cybersecurity risks and vulnerabilities as their systems could be negatively affected by vulnerabilities present in external systems and technologies outside of their control. Our approach to artificial intelligence (“AI”) may not be successful and could adversely affect our business. We have incorporated and may continue to incorporate the use of AI within our business, and these solutions and features may become more important to our operations over time. Our research and development of AI remains ongoing. There can be no assurance that we will realize the desired or anticipated benefits or cost-efficiency objectives of, and we may fail to properly implement, such technology. AI presents risks, challenges and unintended consequences that could affect our adoption and use of this technology. Our competitors or other third parties may incorporate AI in their business operations more quickly or more successfully than we do, which could impair our ability to compete effectively and adversely affect our results of operations. Additionally, the complex and rapidly evolving landscape around AI may expose us to claims, demands and proceedings by private parties and regulatory authorities and subject us to legal liability as well as reputational harm. Future regulations could impose restrictions on the use of these technologies or require us to implement costly compliance measures. Finally, public perception of new technologies (including AI), such as concerns about data privacy and algorithmic bias, could affect customer acceptance of technology-driven services, which could harm our reputation and business. If we fail to maintain an effective system of internal control over financial reporting, we may not be able to accurately report our financial results. An effective system of internal control over financial reporting is necessary for us to provide reliable financial reports, prevent fraud and operate successfully as a public company. As part of our ongoing monitoring of internal controls, we may discover material weaknesses or significant deficiencies in our internal controls that we believe require remediation. If we discover such weaknesses, we will make efforts to improve our internal controls in a timely manner. Any system of internal controls, however well designed and operated, is based in part on certain assumptions and can only provide reasonable, not absolute, assurance that the objectives of the system are met. Any failure to maintain effective internal controls, or implement any necessary improvements in a timely manner, could have a material adverse effect on our business, financial condition, results of operations, cash flows or our ability to satisfy our debt service obligations or to maintain our level of dividends on our common stock, or cause us to not meet our reporting obligations. Ineffective internal controls could also cause holders of our securities to lose confidence in our reported financial information, which would likely have a negative effect on our business. Changes in accounting standards may adversely impact our financial condition and/or results of operations. We are subject to the rules and regulations of the Financial Accounting Standards Board related to GAAP. Various changes to GAAP are constantly being considered, some of which could materially impact our reported financial condition and/or results of operations. Also, to the extent that public companies in the United States would be required in the future to prepare financial statements in accordance with International Financial Reporting Standards instead of the current GAAP, this change in accounting standards could materially affect our financial condition or results of operations. 69 The overturning of the Chevron doctrine could have an unfavorable impact on us. In June 2024, the U.S. Supreme Court issued a decision in the Loper Bright Enterprises v. Raimondo case that overturned the long-standing federal Chevron doctrine. The Chevron doctrine set forth a test that outlined when courts should defer to an agency’s interpretation of federal law. Under the doctrine, if Congress had not spoken directly to the precise issue in question, the courts were to defer to the agency’s interpretation so long as the interpretation was reasonable. Under the Loper Bright decision, courts are now required to exercise their independent judgment in deciding whether an agency has acted within its statutory authority and may not defer to an agency interpretation of the law simply because a statute is ambiguous. The overturning of the Chevron doctrine is likely to result in challenges to numerous agency interpretations in various areas of law including energy, environment, taxation, and labor, among others. If these challenges are upheld, they could have both favorable and unfavorable impacts on us, depending on whether the interpretations that are overturned were more favorable toward our business and operations than subsequent revised agency interpretations. The likely increase of challenges to agency actions may also increase legal costs and create less certainty around agency actions, at least in the near term. We may not be able to maintain sufficient insurance to cover us for potential litigation or other risks. We may not be able to obtain or maintain sufficient insurance on commercially reasonable terms or with adequate coverage levels against potential liabilities we may face in connection with potential claims, which could have a material adverse effect on our business. We may face a risk of loss from a variety of claims, including related to securities, antitrust, contracts, cybersecurity, fraud and various other potential claims, whether or not such claims are valid. Insurance and other safeguards might only partially reimburse us for our losses, if at all, and if a claim is successful and exceeds or is not covered by our insurance policies, we may be required to pay a substantial amount in respect of such claim. Certain losses of a catastrophic nature, such as losses arising as a result of wars, systemic risk associated with cyber-kinetic warfare, earthquakes, typhoons, terrorist attacks or other similar events, may be uninsurable or may only be insurable at rates that are so high that maintaining coverage would cause an adverse impact on our business, our Funds and their assets. In general, losses related to terrorism and catastrophic nation-state hacks are becoming harder and more expensive to insure against. Some insurers are excluding terrorism coverage from their all-risk policies. In some cases, insurers are offering significantly limited coverage against terrorist acts for additional premiums, which can greatly increase the total cost of casualty insurance for a property. As a result, we, our Funds and their assets may not be insured against terrorism or certain other catastrophic losses. For additional information as it pertains to our real estate asset portfolios, see “—Risks Associated with Real Estate Assets—Uninsured losses or losses in excess of our insurance coverage could materially adversely affect our financial condition and cash flows, and there can be no assurance as to future costs and the scope of coverage that may be available under insurance policies. ” Climate change and related transition and physical risks could adversely affect our operations and those of our portfolio companies and increase costs (including insurance costs). Our business operations and those of our Funds may face risks associated with climate change, including “transition risks” such as risks related to the impact of climate-related legislation and regulation (both domestically and internationally), risks related to climate-related business trends (such as the process of transitioning to a lower-carbon economy) and risks stemming from the potential physical impacts of climate change, such as the increasing frequency or severity of extreme weather events (including wildfires, droughts, hurricanes and floods) and rising sea levels and temperatures. These events and the disruptions they may cause, alone or in combination, could also lead to increased costs of insurance (particularly for real estate in certain regions). See “ —Risks Associated with Real Estate Assets—Our real estate business is subject to risks from climate change.” The long-term macroeconomic effects of the COVID-19 pandemic and any future pandemic or epidemic could have a material adverse impact on our financial performance and results of operations. While many of the direct impacts of the COVID-19 pandemic have eased, the longer-term macroeconomic effects on global supply chains, inflation, labor shortages and wage increases continue to impact many industries, including those of certain of our tenants. While we believe that our business is well-positioned for the post-COVID environment, long-term macroeconomic effects, including from supply and labor shortages, of the COVID-19 pandemic may in the future have an adverse impact on our results of operations and cash flows, and may have an adverse impact on our ability to source new opportunities, obtain financing, fund dividends to stockholders and satisfy redemption requests, among other factors. 70 Risks Related to Regulation Extensive regulation affects our activities, increases the cost of doing business and creates the potential for significant liabilities and penalties that could adversely affect our businesses and results of operations. Overview of our regulatory environment and exemptions from certain laws . Our businesses are subject to extensive regulation, including periodic examinations and potential investigations, by governmental agencies and self-regulatory organizations in the jurisdictions in which we operate. The SEC oversees the activities of our subsidiaries that are registered investment advisers under the Investment Advisers Act. FINRA and the SEC are the primary regulators of our registered broker-dealer, which also maintains registration with 53 U.S. states and territories. We are also increasingly subject to various data privacy and protection laws. If we are unable or fail to comply with such laws, we could be subject to fines, penalties, litigation or reputational harm. Regulators are also increasing scrutiny and considering regulation of the use of artificial intelligence technologies, including with respect to uses of artificial intelligence by real assets managers and investment advisers. While comprehensive U.S. regulation has not been enacted to date, various U.S. governmental agencies and departments, including the SEC and Department of the Treasury, have released reports or otherwise indicated interest in assessing risks relating to the uses of artificial intelligence by businesses such as ours. In addition, certain laws governing artificial intelligence have been adopted in the EU (including the EU Artificial Intelligence Act) and in certain U.S. states. While we cannot predict the nature or effects of future regulations, regulatory developments relating to artificial intelligence could potentially have a material adverse effect on our business and results of operations. SEC enforcement activity has increased in recent years. While we have a robust compliance program in place, it is possible this enforcement activity will target practices that we believe are compliant, and which were not historically targeted by the SEC. Any such developments could materially impact our business and operations, including increasing compliance burdens and regulatory costs, and heightening the risk of regulatory enforcement action such as public sanctions, restrictions on activities, fines and reputational damage. Federal regulation. Pursuant to the Dodd-Frank Act, regulation of the U.S. derivatives market is bifurcated between the CFTC and the SEC. Under the Dodd-Frank Act, the CFTC has jurisdiction over swaps and the SEC has jurisdiction over security-based swaps. Under CFTC rules, all swaps (other than security-based swaps) are included in the definition of commodity interests. As a result, Funds that utilize swaps (whether or not related to a physical commodity) may fall within the statutory definition of a commodity pool. If a Fund qualifies as a commodity pool, then, absent an available exemption, the operator of such Fund is required to register with the CFTC as a commodity pool operator (“CPO”). Registration with the CFTC renders such CPO subject to regulation, including with respect to disclosure, reporting, recordkeeping and business conduct, which could significantly increase operating costs by requiring additional resources. Certain classes of interest rate swaps and certain classes of credit default swaps are subject to mandatory clearing, unless an exemption applies. Many of these swaps are also subject to mandatory trading on designated contract markets or swap execution facilities. Mandatory clearing and trade execution requirements may change the cost and availability of the swaps that we use, and expose our Funds to the credit risk of the clearing house through which any cleared swap is cleared. In addition, federal bank regulatory authorities and the CFTC have adopted initial and variation margin requirements for swap dealers, security-based swap dealers and swap entities, including permissible forms of margin, custodial arrangements and documentation requirements for uncleared swaps and security-based swaps. As a result of these variation margin requirements, some of our Funds are required to post collateral to satisfy the variation margin requirements which has made transacting in uncleared swaps more expensive. Position limits imposed by various regulators, self-regulatory organizations or trading facilities on derivatives may also limit our ability to effect desired trades. The Dodd-Frank Act also authorizes the SEC to establish position limits on security-based swaps, which rules could have a similar impact on our business. These rules and any additional proposals could affect our ability and the ability for our Funds to enter into derivatives transactions. The SEC has adopted Regulation Best Interest which requires broker-dealers, or natural persons who are associated persons of broker-dealers, to act in the best interest of a retail customer when making a recommendation of any securities transaction or investment strategy involving securities. Regulation Best Interest requires such broker-dealers to evaluate available alternatives, including those that may have lower expenses and/or lower risk than our Funds. Regulation Best Interest may negatively impact whether certain broker-dealers and their associated persons are willing to recommend products, including certain of our Funds, to retail customers, which may adversely impact our ability to distribute our products to certain clients. Furthermore, the U.S. Department of Labor as well as several states have proposed regulations or taken other actions pertaining to conduct standards for investment advisers and broker-dealers that may result in additional requirements related to our business. 71 It is difficult to determine the full extent of the impact on us of new laws, regulations or initiatives that may be proposed or whether any of the proposals will become law. In addition, as a result of proposed legislation, shifting areas of focus of regulatory enforcement bodies or otherwise, regulatory compliance practices may shift such that formerly accepted industry practices become disfavored or less common. Any changes or other developments in the regulatory framework applicable to our businesses, including the changes described above and changes to formerly accepted industry practices, may impose additional costs on us, require the attention of our senior management or result in limitations on the manner in which we conduct our businesses. Moreover, as calls for additional regulation have increased, there may be a related increase in regulatory investigations of the trading and other activities of managed funds, including our Funds. In addition, we may be adversely affected by changes in the interpretation or enforcement of existing laws and rules by these governmental authorities and self-regulatory organizations. Compliance with any new laws or regulations could make compliance more difficult and expensive, affect the manner in which we conduct our businesses and adversely affect our profitability. Regulatory environment of our Funds and our Funds’ assets. Each of the regulatory bodies with jurisdiction over us has regulatory powers dealing with many aspects of financial services, including the authority to grant, and in specific circumstances to cancel, permissions to carry on particular activities. A failure to comply with the obligations imposed by the Investment Advisers Act, including recordkeeping, marketing and operating requirements, disclosure obligations and prohibitions on fraudulent activities, could result in investigations, sanctions, restrictions on the activities of us or our personnel and reputational damage. We are involved regularly in trading activities that implicate a broad number of U.S. and foreign securities and tax law regimes, including laws governing trading on inside information, market manipulation and a broad number of technical trading requirements that implicate fundamental market regulation policies. Violation of these laws could result in severe restrictions on our activities and damage to our reputation. Compliance with existing and new or changing laws and regulations subjects us to significant costs. Moreover, our failure to comply with applicable laws or regulations, including labor and employment laws, could result in fines, censure, suspensions of personnel or other sanctions, including revocation of the registration of our relevant subsidiaries as investment advisers or registered broker-dealers. Most of the regulations to which our businesses are subject are designed primarily to protect partners, co-investors and/or other clients in our businesses, Funds and their assets and to ensure the integrity of the financial markets. They are not designed to protect our stockholders. Even if a sanction is imposed against us, one of our subsidiaries or our personnel by a regulator for a small monetary amount, the costs incurred in responding to such matters could be material, the adverse publicity related to the sanction could harm our reputation, which in turn could have a material adverse effect on our businesses in a number of ways, making it harder for us to raise new Funds and discouraging others from doing business with us. In the past several years, the financial services industry, and private equity and real assets managers in particular, has been the subject of heightened scrutiny by regulators around the globe. In particular, the SEC and its staff have focused more narrowly on issues relevant to real assets management firms, including by forming specialized units devoted to examining such firms and, in certain cases, bringing enforcement actions against the firms, their principals and employees. In recent periods there have been a number of enforcement actions within the industry, and it is expected that the SEC will continue to pursue enforcement actions against private fund managers. This enforcement activity may cause us to reevaluate certain practices and adjust our compliance control function as necessary and appropriate. A number of our activities may also be subject to regulation by various U.S. and foreign regulators, and may become subject to new laws, regulations or initiatives. It is impossible to determine the full extent of the impact on us of existing regulation or any other new laws, regulations or initiatives that may be proposed or whether any of the proposals will become law. Any changes in the regulatory framework applicable to our businesses, including the changes described above, may impose additional costs on us, require the attention of our senior management or result in limitations on the manner in which we conduct our business. Complying with any new laws or regulations could be more difficult and expensive, affect the manner in which we conduct our businesses and adversely affect profitability. The SEC’s recent list of examination priorities for investment advisers includes numerous items related to the oversight of managers of private funds, and many firms have received inquiries during examinations or directly from the SEC’s Division of Enforcement regarding private funds, including the calculation of fees and expenses, the allocation of broken-deal expenses, the disclosure of operating partner or operating executive compensation, outside business activities of firm principals and employees, group purchasing arrangements and general conflicts of interest disclosures. Further, the SEC has highlighted valuation practices as one of its areas of focus in examinations and has instituted enforcement actions against advisers for misleading clients about valuation. If the SEC were to investigate and find errors in our methodologies or procedures, we and/or members of our management could be subject to penalties and fines, which could harm our reputation and our business, financial condition and results of operations could be materially and adversely affected. 72 Changes in relevant data protection laws could necessitate changes to the steps companies take for the purposes of complying with such laws and the way in which companies transfer personal data. Following Brexit, the provisions of the GDPR were incorporated directly into U.K. law as the U.K. GDPR. In June 2025, the U.K. government enacted the Data (Use and Access) Act 2025, which includes reforms that may increase divergence between the U.K. and EU data protection regimes over time. In addition, the EU continues to pursue a broad digital regulatory agenda, including proposals to amend certain existing digital frameworks. These developments may require companies to update policies, procedures, technical and organizational measures, vendor arrangements, cross-border data transfer practices and our uses of data and technology, and could increase the risk of investigations, enforcement actions, litigation or penalties if companies fail to comply. In December 2025, the European Commission renewed its adequacy decisions for the U.K., which permit the transfer of personal data from the EEA to the U.K., until December 27, 2031, subject to periodic review and potential renewal. While companies currently rely on the adequacy decisions and other transfer mechanisms, the adequacy decisions could be modified, suspended or withdrawn in the future, which could require companies to implement additional data transfer mechanisms and could result in increased costs and complexity. Employee misconduct and failure to comply with applicable laws, obligations and standards could harm us by impairing our ability to attract and retain clients and subjecting us to significant legal liability, regulatory scrutiny and reputational harm. We are subject to a number of laws, obligations and standards arising from our real assets management business and our authority over the assets managed by our real assets management business. Further, our employees are subject to various internal policies including, but not limited to a Code of Business Conduct and Ethics, an Insider Trading Policy, a Cybersecurity Policy, and policies related to the regulation of our businesses. The violation of these laws, obligations, standards or policies by any of our employees could adversely affect us, our Funds or our Funds’ assets. Our businesses often require that we deal with confidential matters of great significance. If our current or former employees were to use or disclose confidential information improperly, we could suffer serious harm to our reputation, financial position and current and future business relationships. Additionally, we allow certain of our employees to work on a hybrid schedule or remotely, which has required us to develop and implement additional precautions in order to detect and prevent employee misconduct. Employee misconduct could also include, binding us to transactions that exceed authorized limits or present unacceptable risks and other unauthorized activities or concealing unsuccessful assets (which, in either case, may result in unknown and unmanaged risks or losses), concealing or failing to disclose conflicts of interest with our businesses, our Funds or our Funds’ assets or otherwise charging (or seeking to charge) inappropriate expenses or inappropriate or unlawful behavior or actions directed towards other employees, or misappropriation of confidential or proprietary information. Such misconduct could subject us to whistleblower claims, regulatory action and monetary or other penalties. Any claims of retaliation against whistleblowers would exacerbate the consequences of any wrongdoing. Growth of our employee base and/or an increase in our operational footprint in new jurisdictions may heighten the risk of any of the foregoing, particularly in the context of employees who may not have a close familiarity with industries that are regulated in the same way as ours. It is not always possible to detect or deter employee misconduct, and the extensive precautions we take to detect and prevent this activity may not be effective in all cases. If one or more of our current or former employees were to engage in misconduct or were to be accused of such misconduct, our businesses and our reputation could be adversely affected and a loss of client confidence could result, which would adversely impact our ability to raise future funds. Our current and former employees and those of our or our Funds’ portfolio companies may also become subject to allegations of sexual harassment, racial and gender discrimination or other similar misconduct, which, regardless of the ultimate outcome, may result in adverse publicity that could harm our and such portfolio company’s brand and reputation. The pervasiveness of social media, coupled with increased public focus on the externalities of activities unrelated to the business, could further magnify the reputational risks associated with negative publicity. The publicly-traded and open-ended vehicles that we manage are subject to regulatory complexities that limit the way in which they do business and may subject them to a higher level of regulatory scrutiny. The publicly-traded and open-ended investment vehicles that we manage operate under a complex regulatory environment. Such companies require the application of complex tax and securities regulations and may entail a higher level of regulatory scrutiny. In addition, regulations affecting our publicly-traded and open-ended investment vehicles generally affect their ability to take certain actions. Certain of our vehicles have elected, or certain of our vehicles may in the future elect, to be treated as a Regulated Investment Company (“RIC”) or a Real Estate Investment Trust (“REIT”) for U.S. federal income tax purposes. To maintain their status as a RIC or a REIT, such vehicles must meet, among other things, certain source of income, asset diversification and annual distribution requirements. Funds that have elected to be treated as RICs are required to generally distribute to their respective stockholders at least 90% of their respective investment company taxable income to maintain their 73 RIC status. Funds that have qualified as REITs must distribute at least 90% of their taxable income to their stockholders and meet, on a continuing basis, certain other complex requirements under the Code. Certain of our open-ended investment vehicles, or those we may form, are or will be subject to complex rules under the Investment Company Act, including rules that restrict certain of our Funds from engaging in transactions with these open-ended vehicles. The extent to which the publicly-traded and open-ended vehicles that we manage are negatively affected by these regulations may affect our overall profitability. Failure to comply with “pay to play” regulations implemented by the SEC and certain states, and changes to the “pay to play” regulatory regimes, could adversely affect our businesses. In recent years, the SEC and several states have initiated investigations alleging that certain private equity firms and hedge funds or agents acting on their behalf have paid money to current or former government officials or their associates in exchange for improperly soliciting contracts with state pension funds. Under SEC rules addressing “pay to play” practices, investment advisers are prohibited from providing services for compensation to a government entity for two years, subject to very limited exceptions, after the investment adviser, its senior executives or its personnel involved in soliciting assets from government entities make contributions to certain candidates and officials in a position to influence the hiring of an investment adviser by such government entity. Advisers are required to implement compliance policies designed, among other matters, to track contributions by certain of the adviser’s employees and engagements of third parties that solicit government entities and to keep certain records to enable the SEC to determine compliance with the rule. In addition, there have been similar rules on a state level regarding “pay to play” practices. FINRA also has its own set of “pay to play” regulations that are similar to the SEC’s regulations. As we have a significant number of public pension plans that are partners and/or co-investors in or with our Funds and/or portfolio companies, these rules could impose significant economic sanctions on our businesses if we or one of the other persons covered by the rules make any such contribution or payment, whether or not material or with an intent to secure a commitment from a public pension plan. We may also acquire other managers or hire additional personnel who are not subject to the same restrictions as us, but whose activity, and the activity of their principals, prior to our ownership or employment of such person could affect our fundraising. In addition, such investigations may require the attention of senior management and may result in fines if any of our Funds are deemed to have violated any regulations, thereby imposing additional expenses on us. Any failure on our part to comply with these rules could cause us to lose compensation for our services or expose us to significant penalties and reputational damage. Increased regulatory scrutiny and uncertainty with respect to expense allocation may expose us to additional risk. While we historically have and will continue to allocate the expenses of our Funds in good faith and in accordance with the terms of the relevant Fund agreements and our expense allocation policy in effect from time to time, due to increased regulatory scrutiny of expense allocation policies in the private funds realm, our policies and practices may be challenged by our supervising regulatory bodies. If we or our supervising regulators were to determine that we have improperly allocated such expenses, we could be required to refund amounts to the Funds and could be subject to regulatory action, litigation from our clients and/or reputational harm, each of which could have a material adverse effect on our business and financial condition. Increasing scrutiny from stakeholders and regulators with respect to sustainability matters could impact our businesses’ or our Funds’ portfolio companies’ reputation, the cost of our or their operations, or result in clients ceasing to allocate their capital to us, all of which could adversely affect our business and results of operations. We, our businesses, our Funds and their portfolio companies face increasing public scrutiny related to sustainability activities. A variety of organizations measure the performance of companies on sustainability topics, and the results of these assessments are widely publicized. Certain institutional clients may consider such ratings and measures in making their investment decisions. If our ratings or practices in this regard do not meet the standards set by such clients or our stockholders, or if we fail, or are perceived to fail, to demonstrate progress toward stated objectives and initiatives, they may choose not to commit to our Funds. Relatedly, we, our businesses, our Funds and their portfolio companies risk damage to our brands and reputations, if we or they do not or are perceived to not act responsibly in a number of areas, including, but not limited to human rights, climate change and environmental stewardship, support for local communities, corporate governance and transparency, or consideration of similar factors in our asset-selection processes. Adverse incidents with respect to these activities could impact the value of our brand, the brand of our Funds or their portfolio companies, or the cost of our or their operations and relationships with clients, all of which could adversely affect our business and results of operations. Moreover, in recent years “anti-ESG” sentiment has gained momentum across the U.S., with several states, the executive branch and federal agencies, and Congress having proposed, enacted, or indicated an intent to pursue “anti-ESG” policies, legislation, or initiatives, issued related legal opinions and pursued related investigations and litigation. If clients subject to anti-ESG legislation viewed our Funds or responsible investing or ESG practices, including our climate-related goals and commitments, as being in contradiction of such “anti-ESG” policies, legislation or legal opinions, such clients may not commit 74 to our Funds, our ability to maintain the size of our Funds could be impaired, and it could negatively affect results of our operations, cash flow or the price of our common stock. Additionally, real assets managers have been subject to recent scrutiny related to ESG-focused industry working groups, initiatives and associations, including organizations advancing action to address sustainability and responsible investing practices, climate change or climate-related risk. Our sustainability initiatives, objectives, intentions and expectations are subject to change, and no assurance or guarantee can be given that such objectives, intentions or expectations (some of which are aspirational in nature) will be met. Statistics and metrics that we report relating to these matters are estimates and may be based on assumptions or developing standards (including our internal standards and policies). There can be no assurance that our sustainability policies and procedures, including policies and procedures related to responsible investing or the application of sustainability-related criteria or reviews to the asset-selection process, including certain metrics or frameworks, will continue. Such policies and procedures may change, even materially, or may not be applied to certain assets. In addition, the act of selecting and evaluating material sustainability factors is subjective by nature, and there is no guarantee that the criteria utilized, or judgment exercised by us, will reflect the beliefs or values, internal policies or preferred practices of clients or other managers, or align with market trends. Further, we may determine at any point that it is not feasible or practical to implement or complete certain of our sustainability initiatives, policies and procedures based on cost, timing or other considerations. Further, some groups and federal and state officials have asserted that the Supreme Court’s decision striking down race-based affirmative action in higher education in June 2023 should be analogized to private employment matters and private contract matters. Several media campaigns and cases alleging discrimination based on such arguments have been initiated since the decision, and in January 2025, the Presidential Administration signed a number of Executive Orders focused on diversity, equity and inclusion (“DEI”), which caution the private sector to end “illegal DEI discrimination and preferences” and preview upcoming compliance investigations of private entities, including publicly traded companies, and changes to federal contracting regulations. Agencies across the federal government, including the Department of Justice, the Federal Communications Commission, and the Equal Employment Opportunity Commission, have been focusing on DEI-related investigations and enforcement. It is uncertain how the interpretation, application and enforcement of laws (including U.S. state and federal nondiscrimination laws), policies and public sentiment related to DEI will evolve, and it may become increasingly challenging to establish global DEI-related policies and programs that meet the varied laws, policies and norms of different jurisdictions. If clients view our Funds, policies or procedures as being in contradiction of such executive orders, policies, legislation or legal opinions, such clients may not commit to our Funds. Further developments may also make it more difficult for our Funds or vehicles to operate across jurisdictions. Failure to comply with regulations related to financial crimes, fraud and other deceptive practices or other misconduct at our Funds’ portfolio companies, properties or projects could subject us to liability and reputational damage and also harm our businesses. In recent years, the U.S. Department of Justice and the SEC have devoted greater resources to enforcement of the FCPA. In the U.K., the Bribery Act of 2010 (the “U.K. Bribery Act”) prohibits companies that conduct business in the U.K. and their employees and representatives from giving, offering or promising bribes to any person, including non-U.K. government officials, as well as requesting, agreeing to receive or accepting bribes from any person. Under the U.K. Bribery Act, companies may be held liable for failing to prevent their employees and associated persons from violating the Act. On September 1, 2025, the U.K. also introduced, under the ECCTA, a new failure to prevent fraud offence which will hold certain large companies criminally liable for fraud committed by the employees or associated persons. While we have developed and implemented policies and procedures designed to ensure strict compliance by us and our personnel with the FCPA, the U.K. Bribery Act and ECCTA, these policies and procedures may not be effective in all instances to prevent violations. Any determination that we have violated the FCPA, the U.K. Bribery Act and ECCTA or other applicable anti-corruption and fraud laws could subject us to, among other things, civil and criminal penalties, material fines, profit disgorgement, injunctions on future conduct, securities litigation and a general loss of client confidence, any one of which could adversely affect our business prospects or financial position. In addition, we could be adversely affected as a result of actual or alleged misconduct by personnel of portfolio companies, properties or projects that our Funds acquire or loan to if there are failures to comply with regulations or other legal and regulatory requirements that could expose us to litigation or regulatory action and otherwise adversely affect our businesses and reputation. Such misconduct could negatively affect the valuation of a Fund’s assets and consequently affect our Funds’ performance and negatively impact our businesses. In addition, we may face an increased risk of such misconduct to the extent our activities in foreign markets, particularly emerging markets, increase. Such markets may not have established laws and regulations that are as stringent as in more developed nations, or existing laws and regulations may not be consistently enforced. Due diligence on jurisdictions is frequently more complicated because consistent and uniform commercial practices in such locations may not have developed. Misconduct may be especially difficult to detect in such locations, and compliance with applicable laws may be difficult to maintain and monitor. 75 Risks Related to Our Funds and our Funds Business The historical returns attributable to our Funds are not indicative of the future results of our Funds or of our future results or of any returns expected on an investment in our common stock. The historical performance of our Funds is relevant to us primarily insofar as it is indicative of performance allocations and incentive fees we have earned in the past and may earn in the future and our reputation and ability to raise new Funds and therefore earn management fees on such new Funds. The historical and potential returns of the Funds we manage are not, however, directly linked to returns on shares of our common stock. Therefore, holders of shares of our common stock should not conclude that positive performance of the Funds we manage will necessarily result in positive returns on an investment in such shares. An investment in shares of our common stock is not an investment in any of our Funds. Also, there is no assurance that projections in respect of our Funds or unrealized valuations will be realized. Moreover, the historical returns of our Funds should not be considered indicative of the future returns of these or from any future Funds we may raise. Performance metrics going forward for any current or future Fund may vary considerably from the historical performance generated by any particular Fund, or for our Funds as a whole. Future returns will also be affected by the risks described elsewhere in these risk factors, including risks of the industries and businesses in which a particular Fund operates. Valuation methodologies for certain assets can be subject to significant subjectivity, and our value of an asset may differ materially from the value ultimately realized. Many of our Funds’ assets are illiquid and thus have no readily ascertainable market prices. We value these assets based on our estimate, or an independent third-party’s estimate, of their fair value as of the date of determination, which often involves significant subjectivity. There is no single standard for determining fair value in good faith and in many cases fair value is best expressed as a range of fair values from which a single estimate may be derived. The actual results related to any particular asset often vary materially as a result of the inaccuracy of these estimates and assumptions. We include the fair value of illiquid assets in the calculations of net asset values, returns of our Funds and our assets owned and operated. Furthermore, we recognize performance allocations and incentive fees from Funds based in part on these estimated fair values. Because these valuations are inherently uncertain, they may fluctuate greatly from period to period. Also, they may vary greatly from the prices that would be obtained if the assets were to be liquidated on the date of the valuation and often do vary greatly from the prices we eventually realize; as a result, there can be no assurance that such unrealized valuations will be fully or timely realized. In addition, the values of our publicly-traded Funds are subject to significant volatility, including due to a number of factors beyond our control. These include actual or anticipated fluctuations in the quarterly and annual results of these companies or other companies in their industries, market perceptions concerning the availability of additional securities for sale, general economic, social or political developments, changes in industry conditions or government regulations, changes in management or capital structure and significant acquisitions and dispositions. Because the market prices of these securities can be volatile, the valuations of these assets change from period to period, and the valuation for any particular period may not be realized at the time of disposition. In addition, market values may be based on indicative rather than actual trading prices, and may therefore lack precision. To the extent our Funds hold large positions in their portfolio companies, the disposition of these securities often is delayed for, or takes place over, long periods of time, which can further expose us to volatility risk. Even if we hold a quantity of public securities that may be difficult to sell in a single transaction, we do not discount the market price of the security for purposes of our valuations. If we realize value on an asset that is significantly lower than the value at which it was reflected in a Fund’s net asset values, we would suffer losses in the applicable Fund. This could in turn lead to a decline in management fees and a loss equal to the portion of the performance allocations and incentive fees from Funds reported in prior periods that was not realized upon disposition. These effects could become applicable to a large number of our assets if our estimates and assumptions used in estimating their fair values differ from future valuations due to market developments. If asset values turn out to be materially different than values reflected in Fund net asset values, partners and co-investors in our Funds and portfolio companies could lose confidence which could, in turn, result in difficulties in raising additional assets. The valuation process for the portfolio holdings of our registered Funds that we manage may create a conflict of interest. Rule 2a-5 under the Investment Company Act establishes requirements for good faith determinations of fair value, and addresses both the board’s and the “valuation designee’s” roles and responsibilities relating to determinations of the fair value of securities without readily available market quotations. The board of the investment company registered under the Investment 76 Company Act (collectively, the “registered funds”) that we manage has designated its investment advisers to serve as valuation designee. These investment advisers are subsidiaries of the Company. A substantial majority of our registered funds’ portfolio holdings are comprised of assets that are not publicly-traded and do not otherwise have readily available market quotations. As a result, as required by the Investment Company Act and pursuant to Rule 2a-5 under the Investment Company Act, our registered funds’ valuation designees will determine the fair value of these securities in good faith, subject to the oversight of the fund’s board. The participation of employees of the Company’s subsidiaries in our registered funds valuation processes could result in a conflict of interest since certain of our Funds pay base management fees that may fluctuate with changes in the value of our registered funds’ portfolio holdings. Market values of debt instruments and publicly-traded securities that our Funds hold as assets may be volatile. The market prices of debt instruments and publicly-traded securities held by certain of our Funds may be volatile and are likely to fluctuate due to a number of factors beyond our control, including actual or anticipated changes in the profitability of the issuers of such securities, general economic, social or political developments, changes in industry conditions, changes in government regulation, shortfalls in operating results from levels forecast by securities analysts, inflation and rapid fluctuations in inflation rates and the general state of the securities markets as described above under “ —Risks Related to Our Company—Difficult market and political conditions may adversely affect our businesses in many ways, including by reducing the value or hampering the performance of our assets or those in our Funds or reducing the ability of our Funds or us to raise or deploy capital, each of which could materially reduce our revenue, earnings and cash flow and adversely affect our financial prospects and condition, ” and other material events, such as significant management changes, financings, re-financings, securities issuances, acquisitions and dispositions. The value of publicly-traded securities that our Funds hold may be particularly volatile as a result of these factors. In addition, debt instruments that are held by our Funds to maturity or for long terms must be “marked-to-market” periodically, and their values are therefore vulnerable to interest rate fluctuations and the changes in the general state of the credit environment, notwithstanding their underlying performance. Changes in the values of these assets may adversely affect our asset performance and our results of operations. Our Funds may be unable to deploy capital at a steady and consistent pace, which could have an adverse effect on our results of operations and future fundraising. The pace and consistency of our Funds’ capital deployment has been, and may in the future continue to be, affected by a range of factors, including market conditions, regulatory developments and increased competition, which are beyond our control. In particular, certain real assets markets have from time to time experienced challenges with downward pressure on valuations and muted opportunities for acquisitions and realizations. These market dynamics may impact the pace and consistency of our Funds’ capital deployment. Any such reduction or delay would impair our ability to offset our investment in additional resources that we often make to manage new capital, including hiring additional professionals. Moreover, we could be delayed in raising successor Funds. The impact of any such reduction or delay would be particularly adverse with respect to Funds where management fees are paid on invested capital. Any of the foregoing could have a material adverse effect on our results of operations and growth. Dependence on significant leverage by our Funds subjects us to volatility and contractions in the debt financing markets could adversely affect our ability to achieve attractive rates of return on those assets. Certain of our Funds and their assets rely on the use of leverage, and our ability to achieve attractive rates of return on assets will depend on our ability to access sufficient sources of indebtedness at attractive rates. If our Funds or their assets or portfolio companies, raise capital in the structured credit, leveraged loan, high yield bond or investment grade bond markets, the results of their operations may suffer if such markets experience dislocations, contractions or volatility. Any such events could adversely impact the availability of credit to businesses generally and could lead to an overall weakening of the U.S. and global economies. Significant ongoing volatility or a protracted economic downturn could adversely affect the financial resources of our Funds and their assets (in particular those assets that depend on credit from third parties or that otherwise participate in the credit markets) and their ability to make principal and interest payments on outstanding debt, or refinance outstanding debt when due. Moreover, these events could affect the terms of available debt financing with, for example, higher rates, higher equity requirements and/or more restrictive covenants, particularly in the area of acquisition financings for leveraged buyout and real estate assets transactions. The absence of available sources of sufficient debt financing for extended periods of time or an increase in either the general levels of interest rates or in the risk spread demanded by sources of indebtedness would make it more expensive to finance those assets. Future increases in interest rates could also make it more difficult to locate and acquire assets because other potential buyers, including operating companies acting as strategic buyers, may be able to bid for an asset at a higher price 77 due to a lower overall cost of capital or their ability to benefit from a higher amount of cost savings following the acquisition of the asset. In addition, a portion of the indebtedness used to finance assets often includes high yield debt securities issued in the capital markets. Availability of capital from the high yield debt markets is subject to significant volatility, and there may be times when our Funds are unable to access those markets at attractive rates, or at all, when completing an acquisition. Certain assets may also be financed through borrowings on fund-level debt facilities, which may or may not be available for a refinancing at the end of their respective terms. In the event that our Funds are unable to obtain committed debt financing for potential acquisitions or can only obtain debt at an increased interest rate or on unfavorable terms, our Funds may have difficulty completing otherwise profitable acquisitions or may generate profits that are lower than would otherwise be the case, either of which could reduce the performance and income earned by us. Similarly, our Funds’ portfolio companies regularly utilize the corporate debt markets to obtain financing for their operations. If the credit markets render such financing difficult to obtain or more expensive, this may negatively impact the operating performance of those portfolio companies and, therefore, the returns of our Funds. In addition, if the markets make it difficult or impossible to refinance debt that is maturing in the near term, certain of our Funds’ portfolio companies may be unable to repay such debt at maturity and may be forced to sell assets, undergo a recapitalization or seek bankruptcy protection. Any of the foregoing circumstances could have a material adverse effect on our financial condition, results of operations and cash flow. When our Funds’ existing portfolio assets reach the point when debt incurred to finance those assets matures in significant amounts and must be either repaid or refinanced, those assets may materially suffer if they have not generated sufficient cash flow to repay maturing debt and there is insufficient capacity and availability in the financing markets to permit them to refinance maturing debt on satisfactory terms, or at all. A persistence of the limited availability of financing for such purposes for an extended period of time when significant amounts of the debt incurred to finance our Funds’ existing portfolio assets becomes due could have a material adverse effect on these Funds. Our Funds may choose to use leverage as part of their respective asset programs and certain Funds regularly borrow a substantial amount of their capital. The use of leverage poses a significant degree of risk and enhances the possibility of a significant loss in the value of the asset portfolio. A Fund may borrow money from time to time to purchase or carry assets or may enter into derivative transactions with counterparties that have embedded leverage. The interest expense and other costs incurred in connection with such borrowing may not be recovered by appreciation in the assets purchased or carried and will be lost, and the timing and magnitude of such losses may be accelerated or exacerbated, in the event of a decline in the market value of such assets. Gains realized with borrowed funds may cause the Fund’s net asset value to increase at a faster rate than would be the case without borrowings. However, if asset results fail to cover the cost of borrowings, the Fund’s net asset value could also decrease faster than if there had been no borrowings. Any of the foregoing circumstances could have a material adverse effect on our financial condition, results of operations and cash flow. We and certain of our Funds acquire assets that are high risk, illiquid or subject to restrictions on transfer and we may fail to realize any profits from these activities ever or for a considerable period of time or lose certain or all of the equity capital used to acquire the asset. Many of our Funds acquire assets that are not publicly-traded. In many cases, our Funds may be prohibited by contract or by applicable securities laws from selling such securities for a period of time. Our Funds generally cannot sell these securities publicly unless either their sale is registered under applicable securities laws or an exemption from such registration is available, and then only at such times when we do not possess material nonpublic information. Accordingly, our Funds may be forced, under certain conditions, to sell securities at a loss. The ability of many of our Funds to dispose of these assets is heavily dependent on the capital markets and in particular the public equity markets. For example, the ability to realize any value from an asset may depend upon the ability of the portfolio company in which such asset is held to complete an initial public offering. Even if the securities are publicly-traded, large holdings of securities can often be disposed of only over a substantial period of time. Each of these exposes asset returns to risks of downward movement in market prices during the intended disposition period. As a result, we may fail to realize any profits from our Funds that hold these assets for a considerable period of time or at all, and we may lose some or all of the principal amount of our assets. In addition, market conditions can also delay our Funds’ ability to exit and realize value from their assets. For example, fluctuations in interest rates and challenging credit markets may make it difficult for potential buyers to raise sufficient capital to purchase our Funds’ assets. Although the equity markets are not the only means by which we exit assets from our Funds, the strength and liquidity of the U.S. and relevant global equity markets generally, and the initial public offering market specifically, affect the valuation of, and our ability to successfully exit, our equity positions in the portfolio companies of our Funds in a timely manner. We may also realize assets through strategic sales. When financing is not available or becomes too costly, it may be more difficult to find a buyer that can successfully raise sufficient capital to purchase our assets. In addition, volatile debt and equity markets may also make the sale of our assets more difficult to execute. 78 Certain assets may trade on an “over-the-counter” market, which may be any location where the buyer and seller can settle a price. A significant portion of our Funds’ assets are not expected to trade in any market. Due to the lack of centralized information and trading, the valuation of such instruments may carry more risk than publicly-traded common stock. Uncertainties in the conditions of the financial market, unreliable reference data, lack of transparency and inconsistency of valuation models and processes may lead to inaccurate asset pricing (or valuation). In addition, other market participants may value a Fund’s assets differently than us. As many of our Funds have a finite term, we could dispose of assets sooner than otherwise desirable. Accordingly, under certain conditions, our Funds may be forced to either sell their assets at lower prices than they had expected to realize or defer sales that they had planned to make, potentially for a considerable period of time. We have made and expect to continue to make significant capital investments in our current and future Funds and other strategies. Contributing capital to these Funds and new strategies is risky, and we may lose some or all of the principal amount of our assets. Government policies regarding certain regulations, such as antitrust law, or restrictions on foreign ownership of certain of our Funds’ portfolio companies or assets can also make it more difficult for us to deploy capital in certain jurisdictions and limit our Funds’ exit opportunities. The U.S. and many non-U.S. jurisdictions have laws designed to protect national security or to restrict foreign direct investment. For example, under the U.S. Foreign Investment Risk Review Modernization Act (“FIRRMA”), which expanded the jurisdiction and process of the Committee on Foreign Investment in the United States (“CFIUS”), CFIUS has the authority to review, block or impose conditions on, via mandatory filings or declarations, certain investments by non-U.S. persons in U.S. businesses, companies or real assets deemed critical or sensitive to the U.S., including certain noncontrolling investments and certain transactions involving real estate. Many non-U.S. jurisdictions restrict foreign ownership of assets important to national security by taking steps including, but not limited to, placing limitations, restrictions or conditions on foreign ownership, implementing screening or approval mechanisms and restricting the employment of foreigners as key personnel. These U.S. and foreign laws could limit our Funds’ ability to acquire certain assets, businesses or entities or impose burdensome notification requirements, operational restrictions or delays in pursuing and consummating transactions. Certain of our acquisition opportunities may be subject to review and approval by CFIUS or any non-U.S. equivalents thereof, which may have outsized impacts on transaction certainty, timing, feasibility and cost, and may prevent us from maintaining or pursuing opportunities that we otherwise would have maintained or pursued. CFIUS or any non-U.S. equivalents thereof may seek to impose limitations, conditions or restrictions on or prohibit our acquisition of one or more of our assets, which may adversely affect the ability of our Funds to execute on their strategy with respect to such transaction as well as limit our flexibility in structuring or financing certain transactions. In addition, CFIUS is actively pursuing transactions that were not notified to it and may ask questions regarding, or impose restrictions, conditions or limitations on, transactions post-closing. Our Funds may also acquire or loan to companies that are, or may become, subject to CFIUS requirements based on pre-existing foreign ownership and control; in such cases, CFIUS requirements may adversely impact a portfolio company’s ability to obtain or retain business or otherwise make it more difficult for us to realize a profit from an asset. The foregoing laws could limit our ability to find suitable assets and could also negatively impact our fundraising and syndication activities by causing us to exclude or limit certain partners and/or co-investors in or with our Funds and/or portfolio companies for our transactions. Moreover, these laws may make it difficult for us to identify suitable buyers for our assets that we want to exit and could constrain the universe of exit opportunities generally. Complying with these laws imposes potentially significant costs and complex additional burdens, and any failure by us or our portfolio companies to comply with them could expose us to significant penalties, sanctions, loss of future opportunities, additional regulatory scrutiny and reputational harm. See “ —Risks Related to Regulation—Extensive regulation affects our activities, increases the cost of doing business and creates the potential for significant liabilities and penalties that could adversely affect our businesses and results of operations. ” In addition to undertaking active ongoing investigative agendas, the U.S. Department of Justice Antitrust Division and the Federal Trade Commission, the two agencies responsible for enforcing federal antitrust and competition laws, have in recent years issued new guidance (including the 2023 Merger Guidelines). Antitrust and competition law enforcers and regulators in foreign jurisdictions have been similarly active. These developments, together with heightened scrutiny of private equity and real assets managers (including with respect to serial acquisitions, “roll-up” strategies and potential interlocking directorates), are expected to increase scrutiny of mergers and acquisitions and could result in more stringent standards for approving transactions and potential review of previously consummated transactions. As a result, the process of obtaining clearance from U.S. antitrust agencies and other antitrust authorities for mergers and acquisitions undertaken by the Funds we manage is expected to become more challenging, more time consuming and more expensive. We may be required to modify, delay or abandon transactions, accept divestitures or other remedies, or incur significant costs. If certain proposed acquisitions or dispositions of portfolio companies by our Funds are delayed, conditioned or rejected by antitrust enforcers, or if previously closed transactions are investigated, it could have an adverse impact on our ability to generate future performance revenues and 79 to fully deploy the available capital in our Funds, as well as reduce opportunities to exit and realize value from our Funds’ assets. In August 2023, an Executive Order established an outbound investment screening regime that is intended to regulate or prohibit certain investments by U.S. persons in advanced technology sectors in China and other jurisdictions that may be designated as a “country of concern.” The U.S. Department of the Treasury issued final regulations implementing this Executive Order in October 2024, which became effective on January 2, 2025. The final rule prohibits or imposes notification requirements on certain outbound capital involving semiconductors and microelectronics, quantum information technologies and artificial intelligence by U.S. persons into certain entities with a nexus to China. These restrictions on U.S. outbound capital could limit the universe of prospective assets available to us, make it more difficult to deploy capital or identify buyers for assets, and/or adversely affect the governance and operations of our assets and thus our overall performance. The scope of this regime may evolve over time, including through additional guidance or changes in covered sectors, activities or countries. State regulatory agencies may also impose restrictions on private funds’ ownership of certain types of assets, which could affect our Funds’ ability to find attractive and diversified assets and to complete such assets in a timely manner. For example, more than two dozen U.S. states have enacted or are considering legislation that would prohibit, restrict, or regulate foreign ownership of real property in such states. We cannot exclude that some or all of these states may prohibit, restrict or regulate (including requiring disclosure of) our Funds’ transactions, including based on the composition of our client base. Collectively, these laws also elevate the likelihood that we will be required or requested to disclose to U.S. federal and/or state regulators information about us, our Funds, our clients, our structure, and our beneficial ownership and control and may impact the ability of non-U.S. limited partners to participate in certain of our asset strategies. Certain of our Funds’ power, infrastructure and energy assets or portfolio companies are subject to regulation by the Federal Energy Regulatory Commission (“FERC”), which oversees acquisition and disposition of electric generation, transmission and other electric facilities in most of the U.S., along with transmission of electricity in interstate commerce in the U.S., and wholesale purchases and sales of electric energy in interstate commerce in the U.S., among other things. In certain U.S. states, public utility commissions can also (or alternatively) regulate assets in, or transfers of, certain electric sector holdings and infrastructure. Under existing regulations, FERC and public utility commissions may, in certain circumstances, slow, or impose restrictions on, assets in or transfers of regulated assets. Changes to regulations, or changes to interpretations thereof, by FERC or public utility commissions may similarly make regulated assets, acquisitions or dispositions more challenging or time-consuming, and may subject previously-exempt classes of transactions to new authorization requirements. While our assets are exposed to FERC and public utility commission regulation in a manner that is consistent with other participants in the power, infrastructure and energy sector, such regulations could nonetheless result in delays in acquiring assets, delays in exiting assets or limitations or conditions that may adversely affect the ability of our Funds to execute on their strategies with respect to such transactions as well as limit our flexibility in structuring or financing certain transactions. If we were to manage a Fund subject to the fiduciary responsibility and prohibited transaction provisions of ERISA and Section 4975 of the Code, our businesses could be adversely affected if certain of our other Funds fail to satisfy an exception under the U.S. Department of Labor’s “plan assets” regulation. If we were to manage a Fund subject to the fiduciary responsibility and prohibited transaction provisions of ERISA and Section 4975 of the Code, our businesses could be adversely affected if certain of our other Funds fail to satisfy an exception under the U.S. Department of Labor’s “plan assets” regulation. With respect to these Funds, this may result in the application of the fiduciary responsibility standards of ERISA to such Funds, including the requirement of prudence and diversification, and the possibility that certain transactions that we may enter into on behalf of these Funds, in the normal course of business, might constitute or result in, non-exempt prohibited transactions under Section 406 of ERISA or Section 4975 of the Code. A non-exempt prohibited transaction, in addition to imposing potential liability upon fiduciaries of an ERISA plan, may also result in the imposition of an excise tax under the Code upon a “party in interest” (as defined in ERISA) or “disqualified person” (as defined in the Code) with whom we engaged in the transaction. Certain of our other Funds may be intended to qualify as “venture capital operating companies” or rely on another exception under the “plan assets” regulation under ERISA and therefore not be subject to the fiduciary or prohibited transaction provisions of ERISA or Section 4975 of the Code with respect to their assets. However, if these Funds fail to satisfy an exception to holding “plan assets” under relevant regulations by the U.S. Department of Labor for any reason, including as a result of an amendment of the relevant regulations by the U.S. Department of Labor, such failure could materially interfere with our activities in relation to these Funds or expose us to risks related to our failure to comply with the applicable requirements. Contingent liabilities could harm Fund performance. We may cause our Funds to acquire an asset that is subject to contingent liabilities. Such contingent liabilities could be unknown to us at the time of acquisition or, if they are known to us, we may not accurately assess or protect against the risks 80 that they present. Acquired contingent liabilities could therefore result in unforeseen losses for our Funds. In addition, in connection with the disposition of an interest in a portfolio company, a Fund may be required to make representations about the business and financial affairs of such portfolio company typical of those made in connection with the sale of a business. A Fund may also be required to indemnify the purchasers of such asset to the extent that any such representations are inaccurate. These arrangements may result in the incurrence of contingent liabilities by a Fund, even after the disposition of an asset. Accordingly, the inaccuracy of representations and warranties made by a Fund could harm such Fund’s performance. Our failure to comply with asset guidelines set by our clients and/or clients could result in damage awards against us or a reduction in AOO, either of which would cause our earnings to decline and adversely affect our business. When clients retain us to manage assets on their behalf, they specify certain guidelines regarding asset allocation and strategy that we are required to observe in the management of their portfolios. Similarly, clients in our Funds often require certain asset restrictions or limitations be included in their side letters that we are contractually obligated to observe in the management of such clients’ interests in the applicable Fund. Similarly, clients in our Funds often require certain asset restrictions or limitations be included in their side letters that we are contractually obligated to observe in the management of such clients’ interests in the applicable Fund. Our failure to comply with these guidelines, restrictions and other limitations could result in clients terminating their management agreement with us or clients seeking to withdraw from our Funds. Clients or clients could also sue us for breach of contract and seek to recover damages from us. In addition, such guidelines may restrict our ability to pursue certain assets and strategies on behalf of our clients or limit their exposure to such assets and strategies that we believe are economically desirable, which could similarly result in losses to a client account or termination or potential withdrawal of the account a corresponding reduction in AOO. Even if we comply with all applicable asset guidelines, restrictions and limitations, a client may be dissatisfied with its asset performance or our services or fees, and may terminate their accounts, seek to withdraw from our Funds or be unwilling to commit new capital to our Funds. Any of these events could cause our earnings to decline and materially and adversely affect our business, financial condition and results of operations. Clients in certain of our Funds with commitment-based structures may not satisfy their contractual obligation to fund capital calls when requested by us, which could adversely affect a Fund’s operations and performance. Clients in certain of our Funds make capital commitments to those Funds that we are entitled to call from those clients at any time during prescribed periods. We depend on clients fulfilling and honoring their commitments when we call capital from them for those Funds to consummate assets and otherwise pay their obligations when due. Any client that did not fund a capital call would be subject to several possible penalties, including possibly having a meaningful amount of its existing contributed capital forfeited in that Fund. However, the impact of the penalty is directly correlated to the amount of capital previously contributed by the client in the Fund and if a client has contributed little or no capital, for instance early in the life of the Fund, then the forfeiture penalty may not be as meaningful. Clients may also negotiate for lesser or reduced penalties at the outset of the Fund, thereby limiting our ability to enforce the funding of a capital call. In cases where valuations of existing assets fall and the pace of dividends slows, clients may be unable to make new commitments to third-party managed funds such as those managed by us using dividends they received from prior Funds’ assets. A failure of clients to honor a significant amount of capital calls for any particular Fund or Funds could have a material adverse effect on the operation and performance of those Funds. Certain of our Funds may utilize subscription lines of credit to fund assets prior to the receipt of capital contributions from the Fund’s clients. As capital calls made to a Fund’s clients are delayed when using a subscription line of credit, the commitment period of such client capital is shortened, which may increase the leveraged net internal rate of return of a Fund. However, since interest expense and other costs of borrowings under subscription lines of credit are an expense of the Fund, the Fund’s net multiple of invested capital will be reduced, as will the amount of performance allocations generated by the Fund. Any material reduction in the amount of performance allocation generated by a Fund will adversely affect our revenues. Certain of our Funds may hold assets and interests that we do not control, and some of these assets and interests may rank junior to preferred equity and debt in a company’s capital structure. Assets of certain of our Funds will include debt instruments and equity securities of companies that we do not control. Those assets will be subject to the risk that the company in which the asset is held may make business, financial or management decisions with which we do not agree or that the majority stakeholders or the management of the company may take risks or otherwise act in a manner that does not serve our interests. In addition, in most cases, our Funds’ portfolio companies have, or are permitted to have, outstanding indebtedness or equity securities that rank senior to our Fund’s asset. By their terms, such instruments may provide that their holders are entitled to receive payments of dividends, interest or principal on or before the dates on which payments are to be made in respect of our asset. In the event of insolvency, liquidation, dissolution, reorganization or bankruptcy of a portfolio company, holders of securities ranking senior to ours would typically be entitled to receive payment in full before dividends could be made in respect of our interest. After repaying senior security holders, the 81 company may not have any remaining assets to use for repaying amounts owed to us. To the extent that any assets remain, holders of claims that rank equally with our interest would be entitled to share on an equal and ratable basis in dividends that are made out of those assets. If any of the foregoing were to occur, the values of the assets held by our Funds could decrease and our financial condition, results of operations and cash flow could suffer as a result. We may need to pay “clawback” or “contingent repayment” obligations if and when they are triggered under the governing agreements with our Funds. Generally, if at the termination of a Fund and in certain cases at interim points in the life of a Fund, the Fund has not achieved returns that exceed the preferred return threshold or the general partner receives net profits over the life of the Fund in excess of its allocable share under the applicable partnership agreement, we will be obligated to repay an amount equal to the excess of amounts previously distributed to us over the amounts to which we are ultimately entitled. This obligation is known as a “clawback” or contingent repayment obligation. There can be no assurance that we will not incur a contingent repayment obligation in the future. Although a contingent repayment obligation is several to each person who received a distribution, and not a joint obligation, if a recipient does not fund his or her respective share of a contingent repayment obligation, we may have to fund such additional amounts beyond the amount of performance allocation we retained, although we generally will retain the right to pursue remedies against those performance allocation recipients who fail to fund their obligations. We may need to use or reserve cash to repay such contingent repayment obligations instead of using the cash for other purposes. We derive a substantial portion of our revenues from Funds pursuant to agreements that may be terminated. If we were to experience a change of control that triggers an “assignment” (as defined under the Investment Advisers Act or as otherwise set forth in the agreements of our Funds), continuation of the management agreements of our Funds would be subject to client consent. There can be no assurance that required consents will be obtained if a change of control occurs. We currently manage a portion of client assets through separately managed accounts, whereby we earn management fees and performance allocation or incentive fees, and we intend to continue to seek additional separately managed account mandates. The management agreements we enter into in connection with managing separately managed accounts on behalf of certain clients may in certain cases be terminated by such clients on little or no prior notice. In addition, the boards of directors of the companies we manage could terminate our engagement of those companies on little or no prior notice. Although in certain cases there can be economic payments made by the manager for termination of such sub-contracts, in the case of any such terminations, the management fees and performance allocation or incentive fees we earn in connection with managing such account or company would immediately cease, which could result in a significant adverse impact on our revenues. We have in the past and may in the future manage Funds, or serve as the sub-advisor for the existing manager of certain funds, where the management agreement is terminable. If revenue from those management streams ceases, it may have a significant adverse effect on our revenue. Clients in certain of our Funds, including our open-ended Funds, may redeem their interests in these Funds. Clients in many of our Funds have the right to remove the general partner of the Fund and to terminate the commitment period under certain circumstances. These events would lead to a decrease in our revenues, which could be substantial. Clients in certain of our Funds may generally redeem their interests on a periodic basis subject to the expiration of a specified period of time during which capital may not be withdrawn. As we seek to expand the distribution of our products through the retail and private wealth channels (including through semi-liquid structures), the number and composition of clients in such vehicles may change and we may experience more frequent or larger redemption requests, particularly during periods of market volatility or declining performance. Such redemptions would result in a reduction of our AOO and decrease in our management fees, and could also cause us to provide fee waivers, incentives or other concessions in order to support fundraising or retain clients. The governing agreements of many of our Funds provide that, subject to certain conditions, third-party clients in those Funds have the right to remove the general partner of the Fund or terminate the Fund, including in certain cases without cause by a simple majority vote. Any such removal or dissolution could result in a cessation in management fees we would earn from such Funds and/or a significant reduction in the expected amounts of performance allocation and incentive fees from those Funds. Performance allocation could be significantly reduced as a result of our inability to maximize the value of assets by a Fund during the liquidation process or in the event of the triggering of a “contingent repayment” obligation. Finally, the applicable Funds would cease to exist after completion of liquidation and winding-up. In addition, the governing agreements of many of our Funds provide that, subject to certain conditions, third-party clients in those Funds have the right to terminate the commitment period of the Fund, including in certain cases without cause. Such an event could have a significant negative impact on our revenue, earnings and cash flow of such Fund. The governing agreements of our Funds may also provide that upon the occurrence of events, including certain “key persons” events (including due to death, disability or departure), clients in those Funds have the right to vote to suspend or terminate the commitment period, 82 including in certain cases by a simple majority vote in accordance with specified procedures. In addition to having a significant negative impact on our revenue, earnings and cash flow, the occurrence of such an event with respect to any of our Funds would likely result in significant reputational damage to us and could negatively impact our future fundraising efforts. Our Funds may be forced to dispose of assets at a disadvantageous time. Furthermore, we may have to waive management fees for certain of our Funds in certain circumstances. Our Funds may hold assets that they do not advantageously dispose of prior to the date the applicable Fund is dissolved, either by expiration of such Fund’s term or otherwise. Although we generally expect that assets will be disposed of prior to dissolution or be suitable for in-kind distribution at dissolution, and the general partners of the Funds have only a limited ability to extend the term of the Fund with the consent of limited partners or the advisory board of the Fund, as applicable, our Funds may have to sell, distribute or otherwise dispose of assets at a disadvantageous time as a result of dissolution. This would result in a lower than expected return on the assets and, perhaps, on the Fund itself. In addition, our limited partners may require that we waive management fees during periods after the contractual term of a Fund, which would reduce the amount of management fees we earn and therefore could negatively impact our revenues and results of operations. Our real estate Funds are subject to the risks inherent in the ownership and operation of real assets and the construction and development of real assets. Our real estate Funds’ assets are subject to the risks inherent in the ownership and operation of real estate and real estate-related businesses and assets. These assets are subject to the potential for deterioration of real estate fundamentals and the risk of adverse changes in local market and economic conditions, which may include changes in supply of and demand for competing properties in an area, fluctuating occupancy rates and changes in demand for commercial office properties (including as a result of an increased prevalence of remote work). As an owner and operator of real estate assets, our Funds are subject to many of the same risks that we are directly. For additional information, see “ Risks Associated with Credit Assets ” and “ Risks Associated with Real Estate Assets. ” Our Funds focused on assets in the power, infrastructure and energy sector are subject to significant market volatility and potential increased environmental risks and liabilities inherent in the ownership of real assets. As such, the performance of assets in the energy sector is subject to a high degree of business and market risk. Our Funds’ power, infrastructure and energy portfolio companies have been and may be negatively impacted by material declines in power and energy related commodity prices and are subject to other risks, including among others, supply and demand risk, operational risk, regulatory risk, depletion risk, reserve risk, reputational risk, severe weather, climate change and catastrophic event risk (including of cyber-attacks). Commodity prices fluctuate for several reasons, including changes in market and economic conditions, the impact of weather on demand, climate initiatives of government entities, levels of domestic production and international production, policies implemented by the Organization of Petroleum Exporting Countries, power and energy conservation, domestic and foreign governmental regulation and taxation and the availability of local, intrastate and interstate transportation systems. The performance of our assets with underlying exposure to the commodities markets is subject to a high degree of business and market risk, as it is dependent upon prevailing prices of commodities such as oil, natural gas and coal, which are subject to wide fluctuation for a variety of factors that are beyond our control, such as geopolitical developments like the conflict in the Middle East region and between Russia and Ukraine. The infrastructure assets of our Funds may expose them to increased risks and liabilities. Infrastructure assets may expose our Funds to increased risks and liabilities that are inherent in the ownership of real assets. For example: • Ownership of infrastructure assets may also present additional risk of liability for personal and property injury or impose significant operating challenges and costs with respect to, for example, compliance with zoning, environmental or other applicable laws. • Infrastructure assets may face construction risks including, without limitation: (i) labor disputes, shortages of material and skilled labor, or work stoppages; (ii) slower than projected construction progress and the unavailability or late delivery of necessary equipment; (iii) less than optimal coordination with public utilities in the relocation of their facilities; (iv) adverse weather conditions and unexpected construction conditions; (v) accidents or the breakdown or failure of construction equipment or processes; and (vi) catastrophic events such as explosions, fires, terrorist activities and other similar events. These risks could result in substantial unanticipated delays or expenses (which may exceed expected or forecasted budgets) and, under certain circumstances, could prevent completion of construction activities 83 once undertaken. Certain infrastructure assets may remain in construction phases for a prolonged period and, accordingly, may not be cash generative for a prolonged period. Recourse against the contractor may be subject to liability caps or may be subject to default or insolvency on the part of the contractor. • The operation of infrastructure assets is exposed to potential unplanned interruptions caused by significant catastrophic or force majeure events, including cyber-attacks. These risks could, among other effects, adversely impact the cash flows available from infrastructure assets, cause personal injury or loss of life, damage property, or instigate disruptions of service. In addition, the cost of repairing or replacing damaged assets could be considerable. Repeated or prolonged service interruptions may result in permanent loss of customers, litigation, or penalties for regulatory or contractual noncompliance. Force majeure events that are incapable of, or too costly to, cure may also have a permanent adverse effect on an asset. • The management of the business or operations of an infrastructure asset may be contracted to a third-party management company unaffiliated with us. Although it would be possible to replace any such operator, the failure of such an operator to adequately perform its duties or to act in ways that are in our best interest, or the breach by an operator of applicable agreements or laws, rules and regulations, could have an adverse effect on the asset’s financial condition or results of operations. Infrastructure assets may involve the subcontracting of design and construction activities in respect of projects, and as a result our assets are subject to the risks that contractual provisions passing liabilities to a subcontractor could be ineffective, the subcontractor fails to perform services which it has agreed to perform and the subcontractor becomes insolvent. Infrastructure assets often involve an ongoing commitment to a municipal, state, federal or foreign government or regulatory agencies. The nature of these obligations exposes us to a higher level of regulatory control than typically imposed on other businesses and may require us to rely on complex government licenses, concessions, leases or contracts, which may be difficult to obtain or maintain. Infrastructure assets may require operators to manage such assets and such operators’ failure to comply with laws, including prohibitions against bribing of government officials, may adversely affect the value of such assets and cause us serious reputational and legal harm. Revenues for such assets may rely on contractual agreements for the provision of services with a limited number of counterparties, and are consequently subject to counterparty default risk. The operations and cash flow of infrastructure assets are also more sensitive to inflation and, in certain cases, commodity price risk. Furthermore, services provided by infrastructure assets may be subject to rate regulations by government entities that determine or limit prices that may be charged. Similarly, users of applicable services or government entities in response to such users may react negatively to any adjustments in rates and thus reduce the profitability of such infrastructure assets. Many of our Funds’ assets are in critical infrastructure sectors, such as transportation systems, energy and digital infrastructure, which are generally subject to heightened regulatory scrutiny at the time of acquisition and ongoing compliance requirements. Such requirements are likely to expand our compliance burdens, costs and enforcement risks. In addition, advancements in computing and artificial intelligence tools and technologies without related increases in the adoption and development of such technologies could negatively impact demand for, and the valuation of, digital infrastructure assets. Due to the rapid evolution of artificial intelligence technologies, we may not be able to take full advantage of growth opportunities within digital infrastructure. Our credit Funds are subject to the risks inherent in the private credit industry. Assets in our credit Funds are subject to the risks inherent in the private credit industry. These assets are subject to the potential for deterioration of market fundamentals and the risk of adverse changes in local market and economic conditions, which may include changes in supply of and demand for liquid credit, alternative credit and direct lending. More generally, assets in non-investment grade credit are subject to risks including the following: • macroeconomic conditions resulting in downturns or volatility in the global credit markets, such as changes in interest rates, inflation and geopolitical events; • declines in market prices and liquidity in the corporate debt markets; • exposure to losses due to above average amounts of risk and volatility or loss of principal from non-investment grade assets; • inherent uncertainty in determining the fair value of assets that are illiquid and have no readily ascertainable market prices; • changes in laws and regulations related to financial services and products and/or financial consumer protection; and • negative publicity surrounding the private credit industry. 84 In recent periods, there has been increased activity by certain activist and other organized groups in opposition to certain acquisitions made by and activities of private funds. Such groups may contact or otherwise seek to engage with government and regulatory bodies and fund clients, including public pension funds, to criticize or challenge certain asset types, which could lead to negative publicity that could harm our reputation. In addition, partially as a result of certain high profile defaults and bankruptcies, there has also been increased negative publicity with respect to the private credit industry. Although we have not been involved in those particular defaults and bankruptcies, the negative publicity, press speculation about us and concerns surrounding the private credit industry generally, whether or not valid, could in the future harm our reputation, heighten scrutiny on our and our credit Funds’ businesses, encourage litigation and regulatory inquiries and adversely affect our client relationships and fundraising efforts of our credit Funds. Further, our credit Funds may engage in various forms of finance arrangements that are collateralized by various asset classes. These forms of credit generally expose a lender to a greater degree of business and credit risks than traditional lending, as repayment of the loans often depends upon the performance of credit or credit-related assets, the successful operation of the businesses, greater exposure of less established companies to market volatility and potential for fraud and the income stream of the borrower. Additionally, assets in such markets expose our business to additional regulations promulgated by state and federal regulators related to financial consumer protection. Any of these factors may cause the value of the assets in our credit Funds to decline, which may have a material impact on our results of operations. For information on risks inherent in the real estate market that may impact the performance of our Funds, see “ —Risks Associated with Real Estate Assets—Challenging economic conditions could adversely affect vacancy rates, which could have an adverse impact on us or the applicable Fund and could adversely affect our financial condition, results of operations or cash flows. ” Our Funds depend in large part on our ability to raise capital from clients. If we were unable to raise such capital, we would be unable to collect management fees or deploy such capital into assets, which would materially reduce our revenues and cash flow and adversely affect our financial condition. Our ability to raise capital from depends on a number of factors, including many that are outside our control. Clients may downsize their allocations to real assets managers to rebalance a disproportionate weighting of their overall investment portfolio among asset classes. If the value of a client’s portfolio decreases as a whole, the amount available to allocate to alternative assets could decline. Further, clients often evaluate the amount of distributions they have received from existing Funds when considering commitments to new Funds. Poor performance of our Funds, or regulatory or tax constraints, could also make it more difficult for us to raise new capital. Our clients and potential clients continually assess our Funds’ performance independently and relative to market benchmarks and our competitors, which affects our ability to raise capital for existing and future Funds. If economic and market conditions deteriorate or continue to be volatile, clients may delay making new commitments to Funds and/or we may be unable to raise sufficient amounts of capital to support the activities of future Funds. We may not be able to find suitable assets for the Funds to effectively deploy capital, which could reduce our revenues and cash flow and adversely affect our financial condition as well as our ability to raise new Funds and our prospects for future growth. In addition, certain clients have implemented or may implement restrictions against owning certain types of asset classes, such as fossil fuels, which would affect our ability to raise new Funds focused on those asset classes. If we were unable to successfully raise capital, our revenue and cash flow would be reduced, and our financial condition would be adversely affected. Our failure to appropriately address conflicts of interest could damage our reputation and adversely affect our businesses As we expand the number and scope of our businesses, we increasingly confront potential conflicts of interest relating to our, our businesses’ and our Funds’ activities. These conflicts of interest include: • we, certain of our affiliates and our Funds may have overlapping investment objectives, including Funds that have different fee structures, and potential conflicts may arise with respect to our decisions regarding how to allocate opportunities. • we may allocate an opportunity that is appropriate for us, certain of our affiliates, multiple Funds in a manner that excludes one or more of the foregoing or results in a disproportionate allocation based on factors or criteria that we determine, such as differences with respect to available capital, the size of a Fund, minimum commitment amounts and remaining life of a Fund, differences in objectives or current strategies, such as objectives or strategies, differences in risk profile at the time an opportunity becomes available, the potential transaction and other costs of allocating an opportunity among various Funds, potential conflicts of interest, including whether multiple Funds have an existing interest in the asset in question, the nature of the asset or the transaction including the size of opportunity, minimum commitment amounts and the source of the opportunity, current and anticipated market and general economic conditions, existing positions in an issuer/security, prior positions in an issuer/security and other considerations deemed relevant to us; 85 • our Funds may acquire positions in a single asset, for example, where the Fund engaged in development no longer has capital available; • our Funds may acquire interests in different parts of the capital structure of a company in which we, one of our affiliates or one or more of our other Funds also acquires interests and visa-versa. For example, one or more Funds may acquire a controlling or other equity interest issued by a company in which a different Fund holds debt securities. Additionally, in connection with an acquisition we may create multiple tranches of a capital structure and our Funds may be allocated positions in these tranches on terms established by us. The interests of us, our affiliates and our Funds may not always be aligned, which may give rise to actual or potential conflicts of interest, or the appearance of conflicts of interest; • we or our affiliates may transfer to or from, or otherwise provide financial support in connection with transactions involving, our Funds and/or their portfolio companies, which could give rise to claims of conflicts of interest, including with respect to the nature of those assets and the method by which they were valued, among other things; • we, our affiliates or portfolio companies of our Funds may be service providers or counterparties to our Funds or portfolio companies and receive fees or other compensation for services that are not shared with our Fund clients. In such instances, we may be incentivized to cause our Funds or portfolio companies to purchase such services from our affiliates or portfolio companies rather than an unaffiliated service provider despite the fact that a third-party service provider could potentially provide higher quality services or offer them at a lower cost; • Funds in one group could be restricted from selling their positions in such companies for extended periods because investment professionals in another group sit on the boards of such companies or because another part of the firm has received private information; • certain Funds in different groups may acquire interests alongside each other in the same asset; • conflicts of interest may exist in the valuation of our assets (which can affect fees and performance allocations) and regarding decisions about the allocation of specific opportunities among us and our Funds and the allocation of fees and costs among us, our Funds and their portfolio companies; and • Fund clients may perceive conflicts of interest regarding decisions for Funds in which our investment professionals, who have made and may continue to make significant personal investments, are personally invested. Though we believe we have appropriate means and oversight to resolve these conflicts, our judgment on any particular allocation could be challenged. While we have developed general guidelines regarding when two or more of us, our affiliates and our Funds can acquire interests in different parts of the same company’s capital structure and created a process that we employ to handle such conflicts if they arise, our decision to permit the assets to occur in the first instance or our judgment on how to minimize the conflict could be challenged. Further, our employees, including our senior professionals, may acquire interests or have outside business activities which may conflict with interests held by our Funds or prevent our Funds from taking advantage of an opportunity. If we fail to appropriately address any such conflicts, it could negatively impact our reputation and ability to raise additional Funds and the willingness of counterparties to do business with us or result in potential litigation or regulatory action against us, which may adversely impact our business. Conflicts of interest may arise in our allocation of opportunities. As a general matter, there can be no assurance that opportunities of any particular type or amount will be allocated to any of us, our affiliates or our Funds. There can be no assurance that such opportunities will become available and we will take into account a variety of factors and considerations we deem relevant in our sole discretion in allocating such opportunities. We, our affiliates or certain of our Funds may own interests alongside each other in the same asset. Conflicts of interest may exist in the valuation of our assets and regarding decisions about the allocation of specific opportunities among us and our Funds and the allocation of fees and costs among us, our Funds and their portfolio companies. We, from time to time, incur fees, costs, and expenses on behalf of more than one party, including one or more Funds. In those circumstances, each party, including any of our applicable Funds, will typically bear an allocable portion of any such fees, costs, and expenses in proportion to the size of its interest in the activity or entity to which such expense relates or in such other manner as we consider fair and equitable under the circumstances such as the relative Fund size or capital available to be deployed by such Funds. Potential conflicts will arise with respect to our decisions regarding how to allocate potential opportunities among us, our affiliates and our Funds and the terms of any such investments or co-investments. Our Fund documents typically do not mandate specific allocations with respect to co-investments. We may have an incentive to provide co-investment opportunities 86 to certain clients in lieu of others. Co-investment arrangements may be structured through one or more of our vehicles, and in such circumstances, such vehicles will generally bear the costs and expenses thereof (which may lead to conflicts of interest regarding the allocation of costs and expenses between such co-investors and clients in our other Funds). The terms of any such existing and future co-investment vehicles may differ materially, and in some instances may be more favorable to us, than the terms of certain of our Funds or prior co-investment vehicles, and such different terms may create an incentive for us to allocate a greater or lesser percentage of an opportunity to such Funds or such co-investment vehicles, as the case may be. Such incentives will from time to time give rise to conflicts of interest. There can be no assurance that any conflicts of interest will be resolved in favor of any particular Fund or client and such Fund or client (or the SEC) may challenge our treatment of such conflict, which could impose costs on our business and expose us to potential liability. We may also decide to provide a co-investment opportunity to certain clients in lieu of allocating more of that opportunity to our Funds, which may adversely impact our fundraising activity. The real assets management business is intensely competitive. The real assets management business is intensely competitive, with competition based on a variety of factors, including performance, business relationships, quality of service provided to clients, client liquidity and willingness to commit capital, Fund terms (including fees), brand recognition and business reputation. We compete with a number of private equity funds, specialized funds, hedge funds, corporate buyers, traditional real assets managers, real estate development companies, commercial banks, investment banks, other real assets managers and other financial institutions, as well as domestic and international pension funds and sovereign wealth funds, and we expect that competition will continue to increase. Numerous factors increase our competitive risks, including, but not limited to: • a number of our competitors in some of our businesses have greater financial, technical, marketing and other resources and more personnel than we do; • some of our Funds may not perform as well as competitors’ funds or other available investment products; • several of our competitors have raised significant amounts of capital, and many of them have similar objectives to ours, which may create additional competition for acquisition opportunities; • some of our competitors may have a lower cost of capital and access to funding sources that are not available to us, which may create competitive disadvantages for us with respect to our Funds, particularly our Funds that directly use leverage or rely on debt financing of their portfolio assets to generate superior returns; • some of our competitors may have higher risk tolerances, different risk assessments or lower return thresholds than us, which could allow them to consider a wider variety of assets and to bid more aggressively than us for assets that we want to make; • some of our competitors may be subject to less regulation and, accordingly, may have more flexibility to undertake and execute certain businesses or assets than we do and/or bear less compliance expense than we do; • some of our competitors may not have the same types of conflicts of interest as we do; • in order to broaden distribution of certain of their private wealth products, some of our competitors may be willing to pay higher placement, servicing or other forms of distributor fees based on their scale or otherwise, and our unwillingness to pay such fees may adversely impact the amount of capital we or our Funds are able to raise in the private wealth channel; • some of our competitors may have more flexibility than us in raising certain types of funds under the management contracts they have negotiated with their clients; • some of our competitors may have better expertise or be regarded by clients as having better expertise or reputation in a specific asset class or geographic region than we do; • our competitors that are corporate buyers may be able to achieve synergistic cost savings in respect of an acquisition opportunity, which may provide them with a competitive advantage in bidding for an opportunity; • our competitors have instituted or may institute low cost high speed financial applications and services based on artificial intelligence and new competitors may enter the real assets management space using new platforms based on artificial intelligence; and 87 • other industry participants may, from time to time, seek to recruit our investment professionals and other employees away from us. Developments in financial technology, such as artificial intelligence or distributed ledger technology (or blockchain), have the potential to disrupt the financial industry and change the way financial institutions, including real assets managers, do business, and could exacerbate these competitive pressures. We may lose acquisition opportunities in the future if we do not match pricing, structures and terms offered by our competitors. Alternatively, we may experience decreased profitability, rates of return and increased risks of loss if we match pricing, structures and terms offered by our competitors. Further, as part of a shift in the distribution arrangements in the financial industry, certain third-party intermediaries have sought to revise existing or implement new fee arrangements that align their fees with the initial amount or ongoing net asset value (“NAV”) of capital deployed through the intermediary in the applicable vehicle. While the extent of this shift going forward is uncertain, the costs associated with the distribution of certain of our open-ended investment vehicles have increased and there may be further increases in distribution costs for these and future products. The incurrence of higher costs in connection with product distribution, without corresponding decreases in our cost structure, would adversely affect the profitability of impacted products. Certain of the third-party intermediaries on whom we rely to place our client products also sell their own competing proprietary products, which could limit the distribution of our client products. In addition, the attractiveness of our Funds relative to other products could decrease depending on economic conditions. This competitive pressure could adversely affect our ability to make successful acquisitions and limit our ability to raise future Funds, either of which would adversely impact our businesses, revenues, results of operations and cash flow. Lastly, institutional and individual clients are allocating increasing amounts of capital to alternative strategies. Several large institutional clients have announced a desire to consolidate their assets in a more limited number of managers. We expect that this will cause competition in our industry to intensify and could lead to a reduction in the size and duration of pricing inefficiencies that many of our Funds seek to exploit. Increased competition may adversely impact our ability to deploy capital, which could reduce our revenues and cash flow and adversely affect our financial condition. Poor performance of our Funds, or a failure or slowdown in deployment, would cause a decline in our revenue and results of operations and could adversely affect our ability to raise capital for future Funds. Our real assets management business derives revenues primarily from: • management fees, which are based generally on the amount of capital committed to or deployed by our Funds; • performance allocations and incentive fees, which are based on the performance of our Funds; and • returns on investments of our own capital in the Funds and other vehicles that we sponsor and manage. When any of our Funds perform poorly, either by incurring losses or underperforming benchmarks, as compared to our competitors or otherwise, our performance record suffers. As a result, our performance allocations and incentive fees may be adversely affected and, all else being equal, the value of our assets owned and operated could decrease, which may, in turn, reduce our management fees. Moreover, we may experience losses on our own capital as a result of poor performance. If a Fund performs poorly, we will receive little or no performance allocations and incentive fees with regard to the Fund and little income or possibly losses from our own principal ownership of such Fund. Furthermore, if, as a result of poor performance or otherwise, a Fund does not achieve total returns that exceed a specified return threshold over the life of the Fund or other measurement period, we may be obligated to repay the amount by which performance allocations that were previously distributed or paid to us exceeds amounts to which we were entitled. Poor performance of our Funds and other vehicles could also make it more difficult for us to raise new capital. Clients in our closed-end Funds may decline to commit to future closed-end Funds we raise as a result of poor performance. Clients in our open-ended Funds may redeem their interests as a result of poor performance. Poor performance of our publicly-traded Funds may result in stockholders selling their stock in such vehicles, thereby causing a decline in the stock price and limiting our ability to access capital. For further information on the impact of poor fund performance, see “ —We may not be able to maintain our current fee structure as a result of industry pressure from Fund clients to reduce fees, which could have an adverse effect on our profit margins and results of operations. ” The pace and consistency of our Funds’ capital deployment has been, and may in the future continue to be, affected by a range of factors which are beyond our control. Our inability to deploy capital on the timeframe we expect, or at all, and on terms that we believe are attractive, would reduce or delay the management fees, performance allocations and incentive fees that we would otherwise expect to earn on this capital. Moreover, we could be delayed in raising successor Funds. The impact 88 of any such reduction or delay would be particularly adverse with respect to Funds where management fees are paid on invested capital. In addition, if any of our subsidiaries become the sponsor of any special purpose acquisition companies (“SPACs”) that are unable to successfully complete a business combination within the time limitation provided for such SPAC, we may lose the entirety of our investment. We may not be able to maintain our current fee structure as a result of industry pressure from Fund clients to reduce fees, which could have an adverse effect on our profit margins and results of operations. We may not be able to maintain our current fee structure as a result of industry pressure from Fund clients to reduce fees. Although our management fees vary among and within asset classes, historically we have competed primarily on the basis of our performance and not on the level of our management fees relative to those of our competitors. In recent years, however, there has been a general trend toward lower fees in the real assets management industry. Although we have no obligation to modify any of our fees with respect to our existing Funds, we may experience pressure to do so. Institutional clients have continued increasing pressure to reduce management fees charged by external managers, whether through direct reductions, deferrals, rebates or other means. In addition, we may be asked by clients to waive or defer fees for various reasons, including during economic downturns or as a result of poor performance of our Funds. We may not be successful in achieving returns and providing service that will allow us to maintain our current fee structure. Fee reductions on existing or future new businesses could have an adverse effect on our profit margins and results of operations. In addition, we may not be able to maintain our current fee structure if we fail to grow the assets of our Funds. This would limit our ability to earn additional management fees, performance allocations and incentive fees, and ultimately affect our operating results. Our Fund clients and potential Fund clients continually assess our Funds’ performance independently and relative to market benchmarks and our competitors, and our ability to raise capital for existing and future Funds and avoid excessive redemption levels depends on our Funds’ performance. Accordingly, poor Fund performance may deter future commitments to our Funds and thereby decrease the capital committed to our Funds and, ultimately, our management fee income. In the face of poor Fund performance, clients could demand lower fees or fee concessions for existing or future Funds which would likewise decrease our revenue. A portion of our revenue, earnings and cash flow is variable, which may make it difficult for us to achieve steady earnings growth on a quarterly basis and may cause the price of shares of our common stock to decline. A portion of our revenue, earnings and cash flow is variable, primarily due to the fact that performance allocations and incentive fees that we receive from certain of our Funds can vary from quarter to quarter and year to year. In addition, the investment returns of most of our Funds are volatile. We may also experience fluctuations in our results from quarter to quarter and year to year due to a number of other factors, including changes in the values of our Funds’ assets, changes in the amount of distributions, dividends or interest paid in respect of assets, changes in our operating expenses, the degree to which we encounter competition and general economic and market conditions. The timing and amount of performance allocations and incentive fees generated by our Funds is uncertain and contributes to the volatility of our results. It takes a substantial period of time to identify attractive opportunities, to diligence and finance an acquisition and then to realize the cash value or other proceeds of an asset through a sale, public offering, recapitalization or other exit. Even if an asset proves to be profitable, it may be several years before any profits can be realized in cash or other proceeds. We cannot predict when, or if, any realization of assets will occur. If we were to have a realization event in a particular quarter or year, it may have a significant impact on our results for that particular quarter or year that may not be replicated in subsequent periods. We recognize revenue on assets in our Funds based on our allocable share of realized and unrealized gains (or losses) reported by such Funds, and a decline in realized or unrealized gains, or an increase in realized or unrealized losses, would adversely affect our revenue, which could increase the volatility of our results. With respect to our Funds that generate performance allocations, the timing and receipt of such performance allocations varies with the life cycle of our Funds. During periods in which a relatively large portion of our assets owned and operated is attributable to Funds and assets in their “harvesting” period, our Funds would make larger distributions than in the fund-raising or commitment periods that precede harvesting. During periods in which a significant portion of our assets owned and operated is attributable to Funds that are not in their harvesting periods, we may receive substantially lower performance allocations distributions. Moreover in some cases, we receive performance allocations payments only upon realization of assets by the relevant Fund, which contributes to the volatility of our cash flow and in other Funds we are only entitled to performance allocations payments after a return of all contributions and a preferred return to clients. With respect to our Funds that pay an incentive fee, the incentive fee is generally paid annually. In many cases, we earn this incentive fee only if the net asset value of a Fund has increased or, in the case of certain Funds, increased beyond a 89 particular threshold. Some of our Funds also have “high water marks.” If the high water mark for a particular Fund is not surpassed, we would not earn an incentive fee with respect to that Fund during a particular period even if the Fund had positive returns in such period as a result of losses in prior periods. If the Fund were to experience losses, we would not be able to earn an incentive fee from such Fund until it surpassed the previous high water mark. The incentive fees we earn are, therefore, dependent on the net asset value of our Funds’ assets, which could lead to significant volatility in our results. Finally, the timing and amount of incentive fees generated by our closed-end Funds are uncertain and will contribute to the volatility of our earnings. Incentive fees depend on our closed-end Funds’ performance and opportunities for realizing gains, which may be limited. Because a portion of our revenue, earnings and cash flow can be variable from quarter to quarter and year to year, we do not plan to provide any guidance regarding our expected quarterly and annual operating results. We are subject to risks in using custodians, counterparties, administrators and other agents. Certain of our Funds depend on the services of custodians, counterparties, administrators and other agents to carry out certain securities and derivatives transactions and other administrative services. We are subject to risks of errors made by these third parties, which may be attributed to us and subject us or our Fund clients to reputational damage, penalties or losses. We may be unsuccessful in seeking reimbursement or indemnification from these third-party service providers. Although the Dodd-Frank Act provides for general regulation of the derivatives market, the terms of the contracts with these third-party service providers are often customized and complex, and many of these arrangements occur in markets or relate to products that are not subject to regulatory oversight. The counterparty to one or more of these contracts may default, either voluntarily or involuntarily, on its performance under the contract. Any such default may occur suddenly and without notice to us or the applicable Fund. Moreover, if a counterparty defaults, we may be unable to take action to cover our exposure, either because we lack contractual recourse or because market conditions make it difficult to take effective action. This inability could occur in times of market stress, which is when defaults are most likely to occur. In addition, our risk-management processes may not accurately anticipate the impact of market stress or counterparty financial condition, and as a result, we may not have taken sufficient action to reduce our risks effectively. Default risk may arise from events or circumstances that are difficult to detect, foresee or evaluate. In addition, concerns about, or a default by, one large participant could lead to significant liquidity problems for other participants, which may in turn expose us to significant losses. Although we have risk-management processes to ensure that we are not exposed to a single counterparty for significant periods of time, given the large number and size of our Funds, we often have large positions with a single counterparty. For example, most of our Funds have credit lines. If the lender under one or more of those credit lines were to become insolvent, we may have difficulty replacing the credit line and one or more of our Funds may face liquidity problems. In the event of a counterparty default, particularly a default by a major investment bank or a default by a counterparty to a significant number of our contracts, one or more of our Funds may have outstanding trades that they cannot settle or are delayed in settling. As a result, these Funds could incur material losses and the resulting market impact of a major counterparty default could harm our businesses, results of operation and financial condition. In the event of the insolvency of a custodian, counterparty or any other party that is holding assets of our Funds as collateral, our Funds might not be able to recover equivalent assets in full as they will rank among the custodian’s or counterparty’s unsecured creditors in relation to the assets held as collateral. In addition, our Funds’ cash held with a custodian or counterparty generally will not be segregated from the custodian’s or counterparty’s own cash, and our Funds may therefore rank as unsecured creditors in relation thereto. The counterparty risks that we face have increased in complexity and magnitude as a result of disruption in the financial markets in recent years. In addition, counterparties have generally reacted to recent market volatility by tightening their underwriting standards and increasing their margin requirements for all categories of financing, which has the result of decreasing the overall amount of leverage available and increasing the costs of borrowing. We may enter into new lines of business and expand into new management strategies, geographic markets, strategic partnerships and businesses, each of which may result in additional risks, expenses and uncertainties in our businesses. We intend, if market conditions warrant, to grow our businesses by increasing assets owned and operated in existing businesses and expanding into new management strategies, geographic markets, strategic partnerships and businesses. We may pursue growth through acquisitions of other management companies, acquisitions of critical business partners, acquisition of 90 companies, or other strategic initiatives (including through our other businesses), which may include entering into new lines of business. In addition, we expect opportunities will arise to acquire other managers, including managers located outside of the U.S. Each of these geographies may subject us to heightened risks due to jurisdictional limitations or political or economic uncertainty in these regions. See “ —Risks Related to Our Company—Difficult market and political conditions may adversely affect our businesses in many ways, including by reducing the value or hampering the performance of our assets or those in our Funds or reducing the ability of our Funds or us to raise or deploy capital, each of which could materially reduce our revenue, earnings and cash flow and adversely affect our financial prospects and condition. ” Introducing new types of ownership structures and products could increase the complexities involved in managing such assets, including ensuring compliance with applicable regulatory requirements and terms of the Fund. Attempts to expand our businesses involve a number of special risks, including some or all of the following: • the required deployment of capital and other resources; • the diversion of management’s attention from our core businesses; • the assumption of liabilities in any acquired business; • the disruption of our ongoing businesses; • entry into markets or lines of business in which we may have limited or no experience; • increasing demands on our operational and management systems and controls; • enhancing internal control processes of acquired assets; • regulatory or compliance exposure related to acquired assets until appropriate processes and controls are implemented; • our assumption of the imposition on us of known or unknown claims or liabilities in an acquisition, including claims by government agencies or authorities, current or former employees or customers, former stockholders or other third parties; • compliance with or applicability to our businesses’ or our Funds’ portfolio companies of regulations and laws, including, in particular, local regulations and laws and customs in the numerous jurisdictions in which we operate and the impact that noncompliance or even perceived noncompliance could have on us and our Funds’ portfolio companies; • our inability to realize the anticipated operation and financial benefits from an acquisition for a number of reasons, including if we are unable to effectively integrate acquired businesses and the potential departure of key investment professionals and employees or loss of relationships of the acquired businesses; • any divergence from our broader strategic goals or short-term decision-making that may result from any earnout structure in connection with an acquisition; • potential increase in client concentration; and • the broadening of our geographic footprint, increasing the risks associated with conducting operations in certain foreign jurisdictions where we currently have little or no presence. Entry into certain lines of business may subject us to new laws and regulations with which we are not familiar, or from which we are currently exempt, and may lead to increased litigation and regulatory risk. If a new business does not generate sufficient revenues or if we are unable to efficiently manage our expanded operations, our results of operations will be adversely affected. Our strategic initiatives may include joint ventures and business combinations through subsidiary sponsored vehicles, in which case we will be subject to additional risks and uncertainties in that we may be dependent upon, and subject to liability, losses or reputational damage relating to systems, controls and personnel that are not under our control or disputes with our joint venture partners. Because we have not yet identified these potential new strategies, geographic markets or lines of business, we cannot identify all of the specific risks we may face and the potential adverse consequences on us that may result from any attempted expansion. 91 If we are unable to consummate or successfully integrate new businesses and strategies, acquisitions or joint ventures, we may not be able to implement our growth strategy successfully. Our growth strategy is based, in part, on the selective development or acquisition of management businesses or other businesses complementary to our business where we think we can add substantial value or generate substantial returns. The success of this strategy will depend on, among other things, (i) the availability of suitable opportunities, (ii) the level of competition from other companies that may have greater financial resources, (iii) our ability to value potential development or acquisition opportunities accurately and negotiate acceptable terms for those opportunities, (iv) our ability to obtain requisite approvals and licenses from the relevant governmental authorities and to comply with applicable laws and regulations without incurring undue costs and delays, (v) our ability to identify and enter into mutually beneficial relationships with venture partners, and (vi) our ability to properly manage conflicts of interest. In addition, our ability to integrate personnel at acquired businesses into our operations and culture may be impacted by the structure of acquisitions we make, such as contingent consideration and continuing governance rights retained by the sellers. Our financial support in respect of certain assets, or our inability to provide support, may cause our AOO, revenue and earnings to decline. At our option and from time to time, we have provided and may in the future provide guarantees or other financial support in respect of certain Funds or assets. Our support of such Funds or assets may utilize capital and liquidity that would otherwise be available for other purposes. These arrangements subject us to a risk of loss equal to the value of the financial support in the event that these Funds or assets do not perform as anticipated. Conversely, our ability to seed, warehouse or otherwise support certain assets may be restricted by regulation or by our inability to make available sufficient capital or liquidity. Moreover, inherent constraints arising from the business models of certain real assets managers, including our business model, may during periods of market volatility result in us having fewer options for accessing liquidity than real assets managers with alternate business models, which may adversely impact our ability to support certain investment vehicles. Our decision to support particular Fund or assets, or our inability or unwillingness to provide such support, may result in losses or affect our capital or liquidity, which may cause AOO, revenue and earnings to decline. We may be subject to litigation risks and may face liabilities and damage to our professional reputation. In recent years, the volume of claims and amount of damages claimed in litigation and regulatory proceedings against real assets managers have been increasing. We make acquisition decisions on behalf of clients in our Funds that could result in substantial losses. This may subject us to the risk of legal liabilities or actions alleging misconduct, breach of fiduciary duty or breach of contract. Further, we may be subject to third-party litigation arising from allegations that we improperly exercised control or influence over portfolio assets. In addition, we and our affiliates that are the managers and general partners of our Funds, our Funds themselves and those of our employees who are our, our subsidiaries’ or the Funds’ officers and directors are each exposed to the risks of litigation specific to the Funds’ activities and portfolio companies and, in the case where our Funds own controlling interests in public companies, to the risk of shareholder litigation by the public companies’ other shareholders. Moreover, we are exposed to risks of litigation or investigation by clients or regulators relating to our having engaged, or our Funds having engaged, in transactions that presented conflicts of interest that were not properly addressed. We and our Funds are more generally subject to extensive regulation, which, from time to time, results in requests for information from us or our Funds or regulatory proceedings or investigations against us or our Funds, respectively. We may incur significant costs and expenses in connection with any such information requests, proceedings or investigations. Such investigations have previously and may in the future result in penalties and other sanctions. Regulatory actions and initiatives, including by the SEC, can have an adverse effect on our financial results, including as a result of the imposition of a sanction, a limitation on our or our personnel’s activities, or changing our historic practices. Even if an investigation or proceeding did not result in a sanction, or the sanction imposed against us or our personnel by a regulator were small in monetary amount, the adverse publicity relating to the investigation, proceeding or imposition of these sanctions could harm our reputation. Legal liability could have a material adverse effect on our businesses, financial condition or results of operations or cause reputational harm to us, which could harm our businesses. We depend, to a large extent, on our business relationships and our reputation for integrity and high caliber professional service offerings to attract and retain clients and to pursue acquisition opportunities for our Funds. As a result, allegations by private actors, regulators or employees of improper conduct by us, even if unfounded, as well as negative publicity and press speculation about us, our activities or the industry in general, whether valid or not, may harm our reputation, which may be damaging to our businesses. In addition, the laws and regulations governing the limited liability of such issuers and portfolio companies vary from jurisdiction to jurisdiction, and in certain contexts, the laws of certain jurisdictions may provide not only for carve-outs from limited liability protection for the issuer or portfolio company that has incurred the liabilities, but also for recourse to assets of other entities under common control with, or that are part of the same economic group as such issuer. 92 Events which harm our reputation or brand may impact our ability to attract and retain clients and raise new capital. As fiduciaries and stewards of our client’s capital, we value and depend on the trust they place in us. Reputation is a significant factor that increases our competitive risk. See “ —Risks Related to Our Funds and our Fund Business—The real assets management business is intensely competitive. ” Increased regulatory scrutiny, actions or fines, litigation, employee misconduct, failures or perceived failures to appropriately mitigate and manage ESG incidents, conflicts of interest, cyber-attacks and management of tax disputes, could among other events, harm our reputation and thus our ability to attract and retain clients and raise new capital for our Funds, adversely affecting our business. While we have a robust compliance program in place and have successfully instituted a culture of compliance through our policies and procedures aimed to mitigate potential risks and enhanced regulatory action, we may be subject to new and heightened enforcement activity resulting in public sanctions or fines which could adversely impact our reputation. See “ —Risks Related to Regulation. ” Similarly, to the extent we experience material litigation, employee turnover or employee misconduct, our businesses and our reputation could be adversely affected, and a loss of client confidence could result, which could adversely impact our ability to raise future Funds. Our ability to appropriately mitigate, manage and address conflicts of interests among our stakeholders could also result in increased reputational risk. Further, the impact of events which may harm our reputation and brand are heightened given media and public focus on the externalities of activities unrelated to our business, the pervasiveness of social media and public interest in the financial services and real assets management industry generally. The increasing prevalence of artificial intelligence may lead to faster and wider dissemination of any adverse publicity or inaccurate information about us, making effective remediation more difficult and further magnifying the reputational risks associated with negative publicity. Risks Associated with Credit Assets We and certain of our Funds are subject to risks related to our mortgage, bridge and mezzanine loans which could adversely affect our return on our loan assets. We and certain of our Funds make or acquire interests in mortgage, bridge and mezzanine loans and participations in such loans. Such assets carry the risk of defaults caused by many conditions beyond our control, including local and other economic conditions affecting real estate values and interest rate levels. If there are defaults under these loans, we may not be able to repossess and sell quickly any properties securing such loans. An action to foreclose on a property securing a loan is regulated by state statutes and regulations and is subject to many of the delays and expenses of any lawsuit brought in connection with the foreclosure if the defendant raises defenses or counterclaims. In the event of default by a mortgagor, these restrictions, among other things, may impede our ability to foreclose on or sell the mortgaged property or to obtain proceeds sufficient to repay all amounts due to us on the loan, which could reduce the value of our ownership of the defaulted loan. We and certain of our Funds are subject to risks relating to real estate-related securities, including CMBS. Real estate-related securities are often unsecured and also may be subordinated to other obligations of the issuer. As a result, acquisition of real estate-related securities may be subject to risks of (1) limited liquidity in the secondary trading market in the case of unlisted or thinly traded securities, (2) substantial market price volatility resulting from changes in prevailing interest rates in the case of traded securities, (3) subordination to the prior claims of banks and other senior lenders to the issuer, (4) the operation of mandatory sinking fund or call/redemption provisions during periods of declining interest rates that could cause the issuer to reinvest redemption proceeds in lower yielding assets, (5) the possibility that earnings of the issuer or that income from collateral may be insufficient to meet debt service and distribution obligations and (6) the declining creditworthiness and potential for insolvency of the issuer during periods of rising interest rates and economic slowdown or downturn. These risks may adversely affect the value of outstanding real estate-related securities and the ability of the obliged parties to repay principal and interest or make distribution payments. Commercial mortgage backed securities (“CMBS”) are securities that evidence interests in, or are secured by, a single commercial mortgage loan or a pool of commercial mortgage loans. Accordingly, these securities are subject to the risks above and all of the risks of the underlying mortgage loans. CMBS are issued by investment banks and non-regulated financial institutions and are not insured or guaranteed by the U.S. government. The value of CMBS may change due to shifts in the market’s perception of issuers and regulatory or tax changes adversely affecting the mortgage securities market as a whole and may be negatively impacted by any dislocation in the mortgage-backed securities market in general. CMBS are also subject to several risks created through the securitization process. Subordinate CMBS are paid interest only to the extent that there are funds available to make payments. To the extent the collateral pool includes delinquent loans, there is a risk that interest payments on subordinate CMBS will not be fully paid. Subordinate CMBS are also subject to greater credit risk than those CMBS that are more highly rated. In certain instances, third-party guarantees or other forms of credit support can reduce the credit risk. 93 Mezzanine loans, preferred equity and other assets that are subordinated or otherwise junior in an issuer’s capital structure involve greater risks of loss than first mortgage loans. We and certain of our Funds hold interests in mezzanine loans that sometimes take the form of subordinated loans secured by second mortgages on the underlying property or the form of loans secured by a pledge of the ownership interests of either the entity owning the property or a pledge of the ownership interests of the entity that owns the interest in the entity owning the property. These types of assets involve a higher degree of risk than long‑term senior mortgage lending secured by income‑producing real property because the loan may become unsecured as a result of foreclosure by the senior lender. In the event of a bankruptcy of the entity providing the pledge of its ownership interests as security, we may not have full recourse to the assets of such entity, or the assets of the entity may not be sufficient to satisfy our mezzanine loan. If a borrower defaults on our mezzanine loan or debt senior to our loan, or in the event of a borrower bankruptcy, our mezzanine loan will be satisfied only after the senior debt. As a result, we may not recover some or all of our capital. In addition, mezzanine loans may have higher loan‑to‑value ratios than first mortgage loans, resulting in less equity in the property and increasing the risk of loss of principal. Significant losses related to our mezzanine loans would result in operating losses for us or our Funds and may adversely impact our financial condition, results of operations or cash flows. We and certain of our Funds have also acquired preferred equity interests, which involve a higher degree of risk than conventional debt financing due to a variety of factors, including their non-collateralized nature and subordinated ranking to other loans and liabilities of the entity in which such preferred equity is held. Accordingly, if the issuer defaults, the holder of preferred equity interests would only be able to proceed against such entity in accordance with the terms of the preferred security and not against any property owned by such entity. Furthermore, in the event of bankruptcy or foreclosure, the holder of preferred equity would only be able to recover its capital after all lenders to, and other creditors of, such entity are paid in full. As a result, we or the applicable Fund may lose all or a significant part of our capital, which could result in significant losses. Bridge loans involve a greater risk of loss than traditional mortgage loans on stabilized properties. We may originate or acquire bridge loans secured by first lien mortgages on a property to borrowers who are typically seeking short-term capital to be used in an acquisition, construction or rehabilitation of a property, or other short-term liquidity needs. The typical borrower under a bridge loan has usually identified an undervalued asset that has been under-managed and/or is located in a recovering market. If the market in which the asset is located fails to recover according to the borrower’s projections, or if the borrower fails to improve the quality of the asset’s management and/or the value of the asset, the borrower may not receive a sufficient return on the asset to satisfy the bridge loan, and we bear the risk that we may not recover some or all of our initial expenditure. In addition, borrowers usually use the proceeds of a conventional mortgage to repay a bridge loan. A bridge loan therefore is subject to the risk of a borrower’s inability to obtain permanent financing to repay the bridge loan. Bridge loans are also subject to risks of borrower defaults, bankruptcies, fraud, losses and special hazard losses that are not covered by standard hazard insurance. In the event of any default under bridge loans held by us, we bear the risk of loss of principal and non-payment of interest and fees to the extent of any deficiency between the value of the mortgage collateral and the principal amount and unpaid interest of the bridge loan. To the extent we suffer such losses with respect to our bridge loans, the value of our company and the price of our shares of common stock may be adversely affected. Loans expose us or certain of our Funds to risks associated with debt-oriented real estate interests generally. We and certain of our Funds have acquired debt instruments relating to real estate-related assets. Such assets are subject to the risk of defaults by borrowers in paying debt service on outstanding indebtedness and to other impairments of our loans and interests. Any deterioration of real estate fundamentals could negatively impact financial performance by making it more difficult for borrowers of such mortgage loans, or borrower entities, to satisfy their debt payment obligations, increasing the default risk applicable to borrower entities, and/or making it more difficult for us to generate attractive risk-adjusted returns. Changes in general economic conditions will affect the creditworthiness of borrower entities and/or the value of the underlying real estate collateral and may include economic and/or market fluctuations, changes in environmental, zoning and other laws, casualty or condemnation losses, regulatory limitations on rents, decreases in property values, changes in the appeal of properties to tenants, changes in supply and demand, fluctuations in real estate fundamentals, the financial resources of borrower entities, energy supply shortages, various uninsured or uninsurable risks, natural disasters, political events, terrorism and acts of war, changes in government regulations, changes in real property tax rates and/or tax credits, changes in operating expenses, changes in interest rates, changes in inflation rates, changes in the availability of debt financing and/or mortgage funds which may render the sale or refinancing of properties difficult or impracticable, increased mortgage defaults, increases in borrowing rates, negative developments in the economy and/or adverse changes in real estate values generally and other factors that are beyond our control. 94 We cannot predict the degree to which economic conditions generally, and the conditions for real estate debt interests in particular, will improve or decline. Any declines in the performance of the U.S. and global economies or in the real estate debt markets could have a material adverse effect on our business, financial condition, and results of operations and cash flows. Commercial real estate-related assets that are secured, directly or indirectly, by real property are subject to delinquency, foreclosure and loss, which could result in losses to us. We may find it necessary or desirable to foreclose on such loans or CMBS, and the foreclosure process may be lengthy and expensive. We may find it necessary or desirable to foreclose on certain of the loans or CMBS in our portfolio or in those of our Funds, and the foreclosure process may be lengthy and expensive. The ability of a borrower to repay a loan secured by an income-producing property typically is dependent primarily upon the successful operation of the property rather than upon the existence of independent income or assets of the borrower. If the net operating income of the property is reduced, the borrower’s ability to repay the loan may be impaired. Net operating income of an income-producing property can be affected by, among other things: • tenant mix and tenant bankruptcies; • success of tenant businesses; • property management decisions, including with respect to capital improvements, particularly in older building structures; • property location and condition; • competition from other properties offering the same or similar services; • changes in laws that increase operating expenses or limit rents that may be charged; • any liabilities relating to environmental matters at the property; • changes in global, national, regional, or local economic conditions and/or specific industry segments; • global trade disruption, significant introductions of trade barriers and bilateral trade frictions; • declines in global, national, regional or local real estate values; • declines in global, national, regional or local rental or occupancy rates; • changes in interest rates, foreign exchange rates, and in the state of the credit and securitization markets and the debt and equity capital markets, including diminished availability or lack of debt financing for commercial real estate; • changes in real estate tax rates, tax credits and other operating expenses; • changes in governmental rules, regulations and fiscal policies, including income tax regulations and environmental legislation; • acts of God, terrorism, social unrest and civil disturbances, which may decrease the availability of or increase the cost of insurance or result in uninsured losses; and adverse changes in zoning laws. The protection of the terms of the applicable loan, including the validity or enforceability of the loan and the maintenance of the anticipated priority and perfection of the applicable security interests may not be adequate. Furthermore, claims may be asserted by lenders or borrowers that might interfere with enforcement of our rights. Borrowers may resist foreclosure actions by asserting numerous claims, counterclaims and defenses against us, including, without limitation, lender liability claims and defenses, even when the assertions may have no basis in fact, in an effort to prolong the foreclosure action and seek to force the lender into a modification of the loan or a favorable buy-out of the borrower’s position in the loan. In some states, foreclosure actions can take several years or more to litigate. At any time prior to or during the foreclosure proceedings, the borrower may file for bankruptcy or its equivalent, which would have the effect of staying the foreclosure actions and further delaying the foreclosure process and potentially result in a reduction or discharge of a borrower’s debt. Foreclosure may create a negative public perception of the related property, resulting in a diminution of its value, and in the event of any such foreclosure or other similar real estate owned-proceeding, we would also become subject to the various risks associated with direct ownership of real estate, including environmental liabilities. Even if we are successful in foreclosing on a loan, the liquidation proceeds upon sale of the underlying real estate may not be sufficient to recover the cost basis in the loan, resulting in a loss. Furthermore, any 95 costs or delays involved in the foreclosure of the loan or a liquidation of the underlying property will further reduce the net proceeds and, thus, increase the loss. Our control over certain loans and assets may be limited. Our ability to manage the portfolio of loans and assets held by us or our Funds may be limited by the form in which they are made. In certain situations, these assets: • are subject to rights of senior and/or subordinate classes, special servicers or collateral managers under intercreditor, servicing agreements or securitization documents; • pledged by us or the Fund as collateral for financing arrangements; • represent only a minority and/or a noncontrolling participation in an underlying asset; • represent co-investments with others through partnerships, joint ventures or other entities, thereby acquiring noncontrolling interests; or • are dependent on independent third-party management or servicing with respect to the management of an asset. Therefore, we may not be able to exercise control over all aspects of such loans or assets. Such financial assets may involve risks not present in assets where senior creditors, junior creditors, servicers, third-party or controlling investors are not involved. Our rights to control the process following a borrower default may be subject to the rights of senior or junior creditors or servicers whose interests may not be aligned with ours. A partner or co-venturer may have financial difficulties, resulting in a negative impact on such asset, may have economic or business interests or goals that are inconsistent with ours, or may be in a position to take action contrary to our objectives. In addition, we will generally pay all or a portion of the expenses relating to our joint ventures and we may, in certain circumstances, be liable for the actions of our partners or co-venturers. Secured debt agreements impose, and additional lending facilities may impose, restrictive covenants, which may restrict our flexibility for ourself or on behalf of our Funds to determine our operating policies and strategy. We or certain of our Funds are party to various secured debt agreements with various counterparties. The documents that govern these secured debt agreements contain, and additional lending facilities may contain, customary affirmative and negative covenants, including financial covenants applicable to us that may restrict our flexibility to determine our operating policies and strategy. In particular, these agreements require, and future similar agreements may require, the maintenance of specified minimum levels of borrowing capacity under the credit facilities and cash. As a result, we may not be able to leverage these assets as fully as we would otherwise choose, which could reduce the return on these assets. If we or the applicable Fund are unable to meet these collateral obligations, our financial condition and prospects could deteriorate significantly. A failure to meet or satisfy any of these covenants would result in a default under these agreements, and the lenders could elect to declare outstanding amounts due and payable, terminate their commitments, require the posting of additional collateral and enforce their interests against existing collateral. We or the applicable Fund may also be subject to cross-default and acceleration rights in other debt arrangements. We or certain of our Funds are subject to additional risks associated with assets in the form of loan participation interests. We or certain of our Funds own loan participation interests in which another lender or lenders share the rights, obligations and benefits of a commercial mortgage loan made by an originating lender to a borrower. Accordingly, with respect to these participation interests, there is no privity of contract with a borrower because the other lender or participant is the record holder of the loan and, therefore, we or the applicable Fund do not have any direct rights to any underlying collateral for the loan. These loan participations may be senior, pari passu or junior to the interests of the other lender or lenders in respect of distributions from the commercial mortgage loan. Furthermore, we or the applicable Fund may not be able to control the pursuit of any rights or remedies under the commercial mortgage loan, including enforcement proceedings in the event of default thereunder. In certain cases, the original lender or another participant may be able to take actions in respect of the commercial mortgage loan that are not in our best interests. In addition, in the event that (1) the owner of the loan participation interest does not have the benefit of a perfected security interest in the lender’s rights to payments from the borrower under the commercial mortgage loan or (2) there are substantial differences between the terms of the commercial mortgage loan and those of the applicable loan participation interest, such loan participation interest could be recharacterized as an unsecured loan to a lender that is the record holder of the loan in such lender’s bankruptcy, and the assets of such lender may not be sufficient to satisfy the terms of such loan participation interest. Accordingly, loan participation interests present greater risks than first mortgage loans made directly to the owners of real estate collateral. 96 If our the loans do not comply with applicable laws, we may be subject to penalties, which could materially and adversely affect us. Loans may be directly or indirectly subject to foreign or U.S. federal, state or local governmental laws. Real estate lenders and borrowers may be responsible for compliance with a wide range of laws intended to protect the public interest, including, without limitation, the Truth in Lending, Equal Credit Opportunity, Fair Housing and Americans with Disabilities Acts and local zoning laws (including, but not limited to, zoning laws that allow permitted non-conforming uses). If we or any other person failed to comply with such laws in relation to any such loan, legal penalties may be imposed, which could materially and adversely affect us. Additionally, jurisdictions with “one action,” “security first” and/or “antideficiency rules” may limit the ability to foreclose on a real property or to realize on obligations secured by a real property. Assets in non-conforming and non-investment grade rated loans or securities involve increased risk of loss. Many of the assets held by us or our Funds do not conform to conventional loan standards applied by traditional lenders and either are not rated or rated as non-investment grade by the rating agencies. The non-investment grade credit ratings for these assets typically result from the overall leverage of the loans, the lack of a strong operating history for the properties underlying the loans, the borrowers’ credit history, the properties’ underlying cash flow or other factors. As a result, these assets have a higher risk of default and loss than investment grade rated assets. Any loss incurred may be significant for us or the applicable Fund and may may adversely impact our financial condition, results of operations or cash flows. Any credit ratings assigned to our credit assets are subject to ongoing evaluations and revisions and we cannot assure you that those ratings will not be downgraded. Some credit assets held by us or our Funds are rated by Moody’s Investors Service, Inc., Fitch Ratings, Inc., S&P Global Ratings, DBRS, Inc. or Kroll Bond Rating Agency, Inc. Any credit ratings on these assets are subject to ongoing evaluation by credit rating agencies, and we cannot assure you that any such ratings will not be changed or withdrawn by a rating agency in the future if, in its judgment, circumstances warrant. If rating agencies assign a lower-than-expected rating or reduce or withdraw, or indicate that they may reduce or withdraw, their ratings of our assets in the future, the value of these assets could significantly decline, which would adversely affect the value of such assets and could result in losses upon disposition or the failure of borrowers to satisfy their debt service obligations. Commercial construction loans may involve increased lending risks. Construction loans generally expose a lender to greater risk of non‑payment and loss than permanent commercial mortgage loans because repayment of the loans often depends on the borrower’s ability to secure permanent take‑out financing, which requires the successful completion of construction and stabilization of the project, or operation of the property with an income stream sufficient to meet operating expenses, including debt service on such replacement financing. For construction loans, increased risks include the accuracy of the estimate of the property’s value at completion of construction and the estimated cost of construction, all of which may be affected by unanticipated construction delays and cost over‑runs. Such loans typically involve an expectation that the borrower’s sponsors will contribute sufficient equity funds in order to keep the loan in balance, and the sponsors’ failure or inability to meet this obligation could result in delays in construction or an inability to complete construction. Commercial construction loans also expose the lender to additional risks of contractor non‑performance, or borrower disputes with contractors resulting in mechanic’s or materialmen’s liens on the property and possible further delay in construction. In addition, since such loans generally entail greater risk than mortgage loans on income producing property, such risks may result in declines in the fair value of construction loans or realized losses. Further, the lender under a construction loan may be obligated to fund all or a significant portion of the loan at one or more future dates. We or the applicable Fund may not have the funds available at such future date(s) to meet such funding obligations. In that event, we or the applicable Fund would likely be in breach of the loan unless funds can be raised from alternative sources, which may not be achievable on favorable terms or at all. In addition, many of the construction loans owned by us or the applicable Fund have multiple lenders, and the failure of another lender to fund would require us or the Fund to either fund for that defaulting lender or suffer a delay or protracted interruption in the progress of construction. Risks Associated with Real Estate Assets Adverse economic, regulatory and geographic conditions that have an impact on the real estate market in general may prevent us, our businesses’ or our Funds from being profitable or from realizing growth in the value of real estate properties, and could have a significant negative impact on us. As owners of real estate, we and certain of our businesses and Funds are subject to risks generally incident to such ownership, including: 97 • changes in international, national or local economic or geographic conditions (including in connection with a widespread pandemic or outbreak of a highly infectious or contagious disease, such as COVID-19); • changes in supply of or demand for similar or competing properties in an area (including as a result of an increased prevalence of remote work); • changes in interest rates and availability of permanent mortgage funds that may render the sale of a property difficult or unattractive; • the illiquidity of real estate assets generally; • changes in tax, real estate, environmental and zoning laws; and periods of high interest rates and tight money supply. During periods of economic slowdown, rising interest rates or declining demand for real estate, or the public perception that any of these events may occur, could result in a general decline in rents or an increased incidence of defaults under existing leases. If we cannot operate real estate properties so as to meet our financial expectations, because of these or other risks, we may be prevented from being profitable or growing the values of these real estate properties, and our business, financial condition, results of operations, cash flow or our ability to satisfy our debt service obligations or to maintain our level of dividends to our stockholders may be significantly negatively impacted. Additionally, global trade disruption, significant introduction of trade barriers and bilateral trade frictions, including due to tariffs and other changes to trade policy in the U.S. and other jurisdictions, together with any future downturns in the global economy resulting therefrom, could adversely affect our performance. The real estate asset portfolios of us and certain of our Funds are dependent on single-tenant leases for a substantial portion of the revenue derived from this portfolio and, accordingly, if we are unable to renew leases, lease vacant space, including vacant space resulting from tenant defaults, or re-lease space as leases expire on favorable terms or at all, our financial condition could be adversely affected. We and certain of our Funds own primarily freestanding, single-tenant commercial properties that are net leased to a single tenant. Therefore, the financial failure of, or other default by, a significant tenant or multiple tenants could cause a material reduction in revenues and operating cash flows. In addition, to the extent of any master lease with a particular tenant, the termination of such master lease could affect each property subject to the master lease, resulting in the loss of revenue from all such properties. We cannot assure our stockholders that any of these leases will be renewed or that we will be able to lease or re-lease the properties on favorable terms, or at all, or that lease terminations will not cause us to sell the properties at a loss. Any of such properties that become vacant could be difficult to re-lease or sell. We have experienced and may continue to experience vacancies either by the default of a tenant under its lease or the expiration of one of our leases. We or the applicable Fund typically must incur all of the costs of ownership for a property that is vacant. Upon or pending the expiration of these leases, we may be required to make rent or other concessions to tenants, or accommodate requests for renovations, remodeling and other improvements, in order to retain and attract tenants. Certain of these properties may be specifically suited to the particular needs of a tenant (e.g., a restaurant) and major renovations and expenditures may be required in order to re-lease the space for other uses. If the vacancies continue for a long period of time, we may suffer reduced revenues and increased costs, resulting in less cash available for dividends to our stockholders and unitholders of our operating partnership. If we are unable to renew leases, lease vacant space, including vacant space resulting from tenant defaults, or re-lease space as leases expire on favorable terms or at all, our financial condition could be adversely affected. We may become subject to geographic and industry concentrations that make us more susceptible to adverse events with respect to certain geographic areas or industries. Any adverse change in the financial condition of a tenant with whom we or a Fund may have a significant credit concentration now or in the future, or any downturn of the economy in any state or industry in which such significant credit concentration exists now or in the future, could result in a material reduction of our cash flows or material losses to us or the applicable Fund. If a major tenant declares bankruptcy, we may be unable to collect balances due under relevant leases, which could have a material adverse effect on our financial condition and ability to pay dividends to our stockholders. The bankruptcy or insolvency of our tenants may adversely affect the income produced by our properties. Under bankruptcy law, a tenant cannot be evicted solely because of its bankruptcy and has the option to assume or reject any unexpired lease. If the tenant rejects the lease, any resulting claim for breach of the lease (excluding collateral securing the 98 claim) will be treated as a general unsecured claim. Claims against the bankrupt tenant for unpaid and future rent will be subject to a statutory cap that might be substantially less than the remaining rent actually owed under the lease, and it is unlikely that a bankrupt tenant that rejects its lease would pay in full amounts it owes under the lease. Even if a lease is assumed and brought current, we still run the risk that a tenant could condition lease assumption on a restructuring of certain terms, including rent, that would have an adverse impact on us. Any shortfall resulting from the bankruptcy of one or more tenants could adversely affect us or the applicable Fund, including having a material impact on our financial condition, results of operations or cash flows. In addition, the financial failure of, or other default by, one or more tenants could have an adverse effect on the results of our operations. While we evaluate the creditworthiness of tenants by reviewing available financial and other pertinent information, there can be no assurance that any tenant will be able to make timely rental payments or avoid defaulting under its lease. If any of the tenants’ businesses experience significant adverse changes, they may fail to make rental payments when due, close a number of stores, exercise early termination rights (to the extent such rights are available to the tenant) or declare bankruptcy. A default by a significant tenant or multiple tenants could cause a material reduction in our revenues and cash flows. In addition, if a tenant defaults, we or the applicable Fund may incur substantial costs in protecting our assets. If a sale-leaseback transaction is re-characterized in a tenant’s bankruptcy proceeding, our financial condition could be adversely affected. We may enter into sale-leaseback transactions, whereby we would purchase a property and then lease the same property back to the person from whom we purchased it. In the event of the bankruptcy of a tenant, a transaction structured as a sale-leaseback might be re-characterized as either a financing or a joint venture, either of which outcomes could adversely affect our financial condition, cash flows and the amount available for distributions to our stockholders. If the sale-leaseback were re-characterized as a financing, we would not be considered the owner of the property, and as a result would have the status of a creditor in relation to the tenant. In that event, we would no longer have the right to sell or encumber our ownership interest in the property. Instead, we would have a claim against the tenant for the amounts owed under the lease, with the claim arguably secured by the property. The tenant/debtor might have the ability to propose a plan restructuring the term, interest rate and amortization schedule of its outstanding balance. If confirmed by the bankruptcy court, we could be bound by the new terms, and prevented from foreclosing our lien on the property. If the sale-leaseback were re-characterized as a joint venture, we and our tenant could be treated as co-venturers with regard to the property. As a result, we could be held liable, under some circumstances, for debts incurred by the tenant relating to the property. Interest-only indebtedness may increase our risk of default and ultimately may reduce our Funds available for dividends to our stockholders. Certain property acquisitions of ours or our Funds have been financed using interest-only mortgage indebtedness and we may continue to employ such financing. During the interest-only period, the amount of each scheduled payment will be less than that of a traditional amortizing mortgage loan. The principal balance of the mortgage loan will not be reduced (except in the case of prepayments) because there are no scheduled monthly payments of principal during this period. After the interest-only period, the loan requires either scheduled payments of amortized principal and interest or a lump-sum or “balloon” payment at maturity. These required principal or balloon payments will increase the amount of scheduled payments and may increase the risk of default under the related mortgage loan. If the mortgage loan has an adjustable interest rate, the amount of scheduled payments also may increase at a time of rising interest rates. Increased payments and substantial principal or balloon maturity payments will reduce the funds available for distribution to our stockholders because cash otherwise available for dividends will be required to pay principal and interest associated with these mortgage loans. The ability of us or our Funds to make balloon payments at maturity is uncertain and may depend upon the ability to obtain additional financing or to sell the property. At the time the balloon payment is due, we may or may not be able to refinance the loan on terms as favorable as the original loan or sell the property at a price sufficient to make the balloon payment. The effect of a refinancing or sale could affect the rate of return to stockholders and the projected time of disposition of our assets. Any of these results would have a significant negative impact on us or our Funds, including on our financial condition, results of operations or cash flows. We or certain of our Funds have assumed, and in the future may assume, liabilities in connection with property acquisitions, including unknown liabilities. Property acquisitions may entail the assumption of existing liabilities, some of which may have been unknown or unquantifiable at the time of the transaction. Unknown liabilities might include liabilities for cleanup or remediation of undisclosed environmental conditions, claims of tenants or other persons dealing with the sellers prior to our acquisition of the properties, tax liabilities, and accrued but unpaid liabilities whether incurred in the ordinary course of business or otherwise. If 99 the magnitude of such unknown liabilities is high, either singly or in the aggregate, it could adversely affect us or the applicable Fund and could adversely impact our financial condition, results of operations or cash flows. Challenging economic conditions could adversely affect vacancy rates, which could have an adverse impact on us or the applicable Fund and could adversely affect our financial condition, results of operations or cash flows. Challenging economic conditions, the availability and cost of credit, turmoil in the mortgage market, and declining real estate markets may contribute to increased vacancy rates in the commercial real estate sector. If we experience vacancy rates that are higher than historical vacancy rates, we or the applicable Fund may have to offer lower rental rates and greater tenant improvements or concessions than expected. Increased vacancy rates could have the following negative effects on us or the applicable Fund: • the values of commercial properties could decrease below the amount paid for such assets; • revenues from such properties could decrease due to low or no rental income during vacant periods, lower future rental rates and/or increase tenant improvement expenses or concessions; • ownership costs could increase; • revenues from such properties that secure loans could decrease, making it more difficult for meet payment obligations; and/or • the resale value of such properties could decline. All of these factors could have an adverse impact on us or the applicable Fund and could adversely affect our financial condition, results of operations or cash flows. Uninsured losses or losses in excess of our insurance coverage could materially adversely affect our financial condition and cash flows, and there can be no assurance as to future costs and the scope of coverage that may be available under insurance policies. We and our Funds carry comprehensive liability, fire, extended coverage, and rental loss insurance covering all of the properties in our respective portfolio under one or more blanket insurance policies with policy specifications, limits and deductibles customarily carried for similar properties. In addition, we carry professional liability and directors’ and officers’ insurance, and cyber liability insurance. While we select policy specifications and insured limits that we believe are appropriate and adequate given the relative risk of loss, insurance coverages provided by tenants, the cost of the coverage and industry practice, there can be no assurance of an uninsured loss or a loss that exceeds policy limits. In addition, we may reduce or discontinue terrorism, flood or other insurance on some or all properties in the future if the cost of premiums for any of these policies exceeds, in our judgment, the value of the coverage discounted for the risk of loss. Title insurance policies may not insure for the current aggregate market value of our portfolios, and we do not intend to increase our title insurance coverage as the market value of these portfolios increase. Further, we do not carry insurance for certain losses, including, but not limited to, losses caused by earthquakes, riots or acts of war because such losses may be either uninsurable or not economically insurable. If we or the applicable Fund experiences a loss that is uninsured or which exceeds policy limits, we or the applicable Fund could lose the capital used to acquire the damaged properties as well as the anticipated future cash flows from those properties. In addition, if the damaged properties are subject to recourse indebtedness, we or the applicable Fund would continue to be liable for the indebtedness, even if these properties were irreparably damaged. In addition, we carry several different lines of insurance, placed with several large insurance carriers. If any one of these large insurance carriers were to become insolvent, we would be forced to replace the existing insurance coverage with another suitable carrier, and any outstanding claims would be at risk for collection. In such an event, we cannot be certain that we would be able to replace the coverage at similar or otherwise favorable terms. As a result of any of the situations described above, our financial condition and cash flows or those of the applicable Fund may be materially and adversely affected. For additional information as it pertains to our insurance coverage more generally, see “ —Risks Related to Our Company—We may not be able to maintain sufficient insurance to cover us for potential litigation or other risks. ” We may be unable to secure funds for future leasing commissions, tenant improvements or capital needs, which could adversely impact our ability to pay cash distributions to our stockholders. When tenants do not renew their leases or otherwise vacate their space, we or the applicable Fund are typically required to expend substantial funds for leasing commissions, tenant improvements and tenant refurbishments to the vacated space in order to attract replacement tenants. In addition, although we expect that leases with tenants will require tenants to pay routine 100 property maintenance costs, as landlord we or the applicable Fund could be responsible for any major structural repairs, such as repairs to the foundation, exterior walls and rooftops. The capital to fund these activities may come from cash flows from operations, borrowings, property sales or future equity offerings. However, these sources of funding may not be available on attractive terms or at all, and we may be required to defer necessary improvements to a property, which may cause that property to suffer from a greater risk of obsolescence or a decline in value, or a greater risk of decreased operating cash flows as a result of fewer potential tenants being attracted to the property. If this happens, our assets may generate lower cash flows or decline in value, or both. Properties may be subject to impairment charges. We routinely evaluate real estate assets held by us or our Funds for impairment indicators. The judgment regarding the existence of impairment indicators is based on factors such as market conditions, tenant performance and lease structure. For example, the early termination of, or default under, a lease by a tenant may lead to an impairment charge. Since our real estate assets historically have included properties net leased to a single tenant, the financial failure of, or other default by, a single tenant under its lease may result in a significant impairment loss. If we determine that an impairment has occurred, we would be required to make a downward adjustment to the net carrying value of the property, which could have a material adverse effect on results of operations in the period in which the impairment charge is recorded. Negative developments in the real estate market may cause management to reevaluate the business and macro-economic assumptions used in its impairment analysis. Changes in management’s assumptions based on actual results may have a material impact on our financial statements. We may have obtained only limited warranties when any given property was purchased and, as a result, have limited recourse in the event our due diligence did not identify issues that lower the value of the property. Properties are often sold on an “as is” condition and “where is” basis and “with all faults,” without any warranties of merchantability or fitness for a particular use or purpose. In addition, purchase agreements may contain only limited warranties, representations and indemnifications that will only survive for a limited period after the closing of the sale. The purchase of properties with limited warranties increases the risk that we or the applicable Fund may lose some or all of the capital used to acquire the property. We may be unable to sell a property if or when we decide to do so, including as a result of uncertain market conditions. Real estate assets are, in general, relatively illiquid and may become even more illiquid during periods of economic downturn. As a result, we may not be able to sell properties quickly or on favorable terms in response to changes in the economy or other conditions when it otherwise may be prudent to do so. In addition, certain significant expenditures generally do not change in response to economic or other conditions, including debt service obligations, real estate taxes, and operating and maintenance costs. This combination of variable revenue and relatively fixed expenditures may result, under certain market conditions, in reduced earnings. In addition, historically, during periods of increasing interest rates, real estate valuations have generally decreased as a result of rising capitalization rates, which tend to be positively correlated with interest rates. Consequently, prolonged periods of higher interest rates may negatively impact the valuation of our portfolios as well as lower sales proceeds from future dispositions. Some leases may not contain rental increases over time, or the rental increases may be less than the fair market rate at a future point in time. When that is the case, the value of the leased property to a potential purchaser may not increase over time, which may restrict our ability to sell that property, or if we are able to sell that property, may result in a sale price less than the price paid to purchase the property or the price that could be obtained if the rental was at the then-current market rate. Our ability to dispose of properties on advantageous terms or at all depends on certain factors beyond our control, including competition from other sellers and the availability of attractive financing for potential buyers of the properties. We cannot predict the various market conditions affecting real estate assets which will exist at any particular time in the future. Due to the uncertainty of market conditions which may affect the disposition of these properties, we cannot provide any assurances that we will be able to sell such properties at a profit or at all in the future. Accordingly, the extent to which that we or the applicable Fund realize potential appreciation on our real estate assets will depend upon fluctuating market conditions. Furthermore, we or the applicable Fund may be required to expend funds to correct defects or to make improvements before a property can be sold. We cannot provide any assurances that we will have funds available to correct such defects or to make such improvements. Properties where the underlying tenant has a below investment-grade credit rating, as determined by major credit rating agencies, or has an unrated tenant may have a greater risk of default. Certain of our or our Funds’ tenants may not be rated or do not have an investment-grade credit rating from a major ratings agency or are not affiliates of companies having an investment-grade credit rating. Properties with such tenants may have a greater risk of default and bankruptcy than properties leased exclusively to investment-grade tenants. When a Fund acquires 101 properties where the tenant does not have a publicly available credit rating, we will use certain credit assessment tools as well as rely on our own estimates of the tenant’s credit rating which includes reviewing the tenant’s financial information (e.g., financial ratios, net worth, revenue, cash flows, leverage and liquidity, if applicable). If our ratings estimates are inaccurate, the default or bankruptcy risk for the subject tenant may be greater than anticipated. If our lender or a credit rating agency disagrees with our ratings estimates, we may not be able to obtain our desired level of leverage or our financing costs may exceed those that we projected. This outcome could have an adverse impact on our returns on that asset and hence our operating results. Increased operating expenses could reduce cash flows from operations and funds available to acquire properties or make distributions. Properties held by us and our Funds are subject to operating risks common to real estate in general, any or all of which may negatively affect us. If any property is not fully occupied or if rents are payable (or are being paid) in an amount that is insufficient to cover operating expenses that are the landlord’s responsibility under the lease, we or the applicable Fund could be required to expend funds in excess of such rents with respect to that property for operating expenses. Properties are subject to increases in tax rates, utility costs, insurance costs, repairs and maintenance costs, administrative costs and other operating and ownership expenses. Some property leases may not require the tenants to pay all or a portion of these expenses, in which event we or the applicable Fund may be responsible for these costs. If we are unable to lease properties on terms that require the tenants to pay all or some of the properties’ operating expenses, if tenants fail to pay these expenses as required or if expenses we or the applicable Fund are required to pay exceed our expectations, our cash flows or that of the applicable Fund or cash available for future acquisitions or other opportunities would be negatively affected. Real estate-related taxes may increase, and if these increases are not passed on to tenants, income to us or the applicable Fund will be reduced. Local real property tax assessors may reassess properties held by us or our Funds, which may result in increased taxes. Generally, property taxes increase as property values or assessment rates change, or for other reasons deemed relevant by property tax assessors. An increase in the assessed valuation of a property for real estate tax purposes will result in an increase in the related real estate taxes on that property. Although some tenant leases may permit us to pass through such tax increases to the tenants for payment, renewal leases or future leases may not be negotiated on the same basis. Tax increases not passed through to tenants could have a material adverse effect on us or the applicable Fund, including a material adverse effect on our financial condition, results of operations or cash flows. Covenants, conditions and restrictions may restrict our ability to operate a property. Many of our properties are subject to significant covenants, conditions and restrictions, known as “CC&Rs,” restricting their operation and any improvements on such properties. Compliance with CC&Rs may adversely affect the types of tenants we are able to attract to such properties or operating costs. Our operating results may be negatively affected by potential development and construction delays and the resultant increased costs and risks. If we or a Fund engage in development or construction projects, we of the applicable Fund will be subject to uncertainties associated with re-zoning for development, environmental and land use concerns of governmental entities and/or community groups, and the builder’s ability to build in conformity with plans, specifications, budgeted costs, and timetables. If a builder fails to perform, we may resort to legal action to rescind the breached agreements or to compel performance. A builder’s performance may also be affected or delayed by conditions beyond the builder’s control. Delays in completion of construction could also give tenants the right to terminate preconstruction leases. We may incur additional risks if periodic progress payments or other advances to builders are made before they complete construction. These and other such factors can result in increased costs of a project or loss of the asset. In addition, we or the applicable Fund will be subject to normal lease-up risks relating to newly constructed projects. We also must rely on rental income and expense projections and estimates of the fair market value of property upon completion of construction when agreeing upon a price at the time a property is acquired. If our projections are inaccurate, we or the applicable Fund may pay too much for a property, and the return on the asset could suffer. We may deploy or cause Funds to deploy capital in unimproved real property. Returns from development of unimproved properties are also subject to risks associated with re-zoning the land for development and environmental and land use concerns of governmental entities and/or community groups. 102 Competition with third parties in acquiring, leasing or selling properties and other assets may impact our profitability or that of the applicable Fund and the return on the asset. We compete with many other entities engaged in real estate acquisition activities, including individuals, corporations, bank and insurance company investment accounts, REITs, real estate limited partnerships, and other entities engaged in real estate acquisition activities, many of which have greater resources. Larger competitors may enjoy significant advantages that result from, among other things, a lower cost of capital and enhanced operating efficiencies. In addition, the number of entities and the amount of funds competing for suitable acquisitions may increase. Any such increase would result in increased demand for these assets and therefore increased prices paid for them. If we or our Funds pay higher prices for properties and other assets as a result of competition with third parties without a corresponding increase in tenant lease rates, our profitability or that of our Funds will be reduced and this may negatively impact our results of operations. We are also subject to competition in the leasing of properties. Many of our competitors own similar properties in the same markets in which our properties are located. If a property is nearing the end of the lease term or becomes vacant and a competitor (which could include us one of our other Funds) offers space at rental rates below current market rates or below the rental rates currently charged to tenants, we may lose existing or potential tenants and be pressured to reduce rental rates below those currently charged or to offer substantial rent concessions in order to retain tenants when such tenants’ leases expire or to attract new tenants. In addition, if our competitors sell assets similar to assets we intend to sell in the same markets and/or at valuations below our valuations for comparable assets, we may be unable to dispose of these assets at all or at favorable pricing or on favorable terms. As a result of these actions by our competitors, our business, financial condition, liquidity and results of operations may be adversely affected. Our properties face competition that may affect tenants’ ability to pay rent. Many of our leases provide for increases in rent as a result of increases in the tenant’s sales volume. There likely will be numerous other retail properties within the market area of such properties that will compete with tenants for customer business. In addition, traditional retailers face increasing competition from alternative retail channels, including internet-based retailers and other forms of e-commerce, factory outlet centers, wholesale clubs, mail order catalogs and television shopping networks, which could adversely impact our retail tenants’ sales volume. Such competition could negatively affect such tenants’ ability to pay rent or the amount of rent paid. This could result in decreased cash flows from tenants thus affecting our results of operations or the performance of our Funds. Participation in a co-ownership arrangement entails risks that otherwise may not be present in other real estate assets. We or certain of our Funds may invest alongside other parties through joint ventures, co-investments, direct co-ownership arrangements and other structures, collectively referred to in this risk factor as “co-ownership arrangements.” Co-ownership arrangements involve risks generally not otherwise present with ownership of other real estate assets, such as the following: • the risk that a co-owner may at any time have economic or business interests or goals that are or become inconsistent with our business interests or goals; • the possibility that an individual co-owner might become insolvent or bankrupt, or otherwise default under the applicable mortgage loan financing documents, which may constitute an event of default under all of the applicable mortgage loan financing documents, result in a foreclosure and the loss of all or a substantial portion of the co-owner’s capital, or allow the bankruptcy court to reject the agreements entered into by the co-owners owning interests in the property; • the possibility that a co-owner might not have adequate liquid assets to make cash advances that may be required in order to fund operations, maintenance and other expenses related to the property, which could result in the loss of current or prospective tenants and may otherwise adversely affect the operation and maintenance of the property, and could cause a default under the applicable mortgage loan financing documents and may result in late charges, penalties and interest, and may lead to the exercise of foreclosure and other remedies by the lender; • the risk that a co-owner could breach agreements related to the property, which may cause a default under, and possibly result in personal liability in connection with, any mortgage loan financing documents applicable to the property, violate applicable securities laws, result in a foreclosure or otherwise adversely affect the property and the co-ownership arrangement; 103 • the risk that we could have limited control and rights, with management decisions made entirely by a third party; and the possibility that we will not have the right to sell the property at a time that otherwise could result in the property being sold for its maximum value. In the event that our interests become adverse to those of the other co-owners, we or the applicable Fund may not have the contractual right to purchase the co-ownership interests from the other co-owners. Even if we are given the opportunity to purchase such co-ownership interests in the future, we cannot guarantee that there will be sufficient funds available at the time to purchase co-ownership interests from the co-owners. We might want to sell a co-ownership interest in a given property or other asset at a time when the other co-owners in such property or asset do not desire to sell their interests. Therefore, because we anticipate that it will be much more difficult to find a willing buyer for such co-ownership interests in an asset than it would be to find a buyer for a property owned outright, we may not be able to sell such co-ownership interests in a property at the time we would like to sell. We are subject to risks that affect the retail real estate environment generally. Our real estate assets have historically included retail real estate. As such, we and certain of our Funds are subject to certain risks that can affect the ability of our retail properties to generate sufficient revenue to meet operating and other expenses, including debt service and to make capital expenditures. We face continuing challenges because of changing consumer preferences and because the conditions in the economy affect employment growth and cause fluctuations and variations in retail sales and in business and consumer confidence and consumer spending on retail goods. In general, a number of factors can negatively affect the income generated by a retail property or the value of a property, including: a downturn in the national, regional or local economy; a decrease in employment or consumer confidence or spending; increases in operating costs, such as common area maintenance, real estate taxes, utility rates and insurance premiums; higher energy or fuel costs resulting from adverse weather conditions, natural disasters, geopolitical concerns (including the war between Russia and Ukraine and the ongoing conflicts in the Middle East, which have led to disruption, instability and volatility in global markets and industries), terrorist activities and other factors; changes in interest rate levels and the cost and availability of financing; the imposition of tariffs and other changes to trade policy in the U.S. and other jurisdictions; a weakening of local real estate conditions, such as an oversupply of, or a reduction in demand for, retail space or retail goods, and the availability and creditworthiness of current and prospective tenants; trends in the retail industry; seasonality; changes in perceptions by retailers or shoppers of the safety, convenience and attractiveness of a retail property; perceived changes in the convenience and quality of competing retail properties and other retailing options such as internet shopping or other strategies, such as using smartphones or other technologies to determine where to make and to assist in making purchases; the ability of our tenants to meet shoppers’ demands for quality, variety, and product availability, which may be impacted by supply chain disruptions; and changes in laws and regulations applicable to real property, including tax and zoning laws. Changes in one or more of the aforementioned factors can lead to a decrease in the revenue or income generated by our properties and can have a material adverse effect on our financial condition and results of operations. Many of these factors could also specifically or disproportionately affect one or more of our tenants, which could decrease operating performance, reduce property revenue and affect our results of operations. If the estimated future cash flows related to a particular property are significantly reduced, we may be required to reduce the carrying value of the property. Downturns in the retail industry likely will have a direct adverse impact on our revenues and cash flow. Retail properties held by us or certain of our Funds consist primarily of necessity retail properties. Our retail performance therefore is generally linked to economic conditions in the market for retail space. The market for retail space could be adversely affected by any of the following: • weakness in the national, regional and local economies, and declines in consumer confidence which could adversely impact consumer spending and retail sales and in turn tenant demand for space and could lead to increased store closings; • changes in market rental rates; • changes in demographics (including the number of households and average household income) surrounding our properties; • the imposition of tariffs and other changes to trade policy in the U.S. and other jurisdictions; • adverse financial conditions for retail, service, medical or restaurant tenants; • continued consolidation in the retail and grocery sector; 104 • excess amount of retail space in our markets; • reduction in the demand by tenants to occupy our properties as a result of increases in e-commerce and alternative distribution channels, which may negatively affect our tenant sales or decrease the square footage our tenants require and could lead to margin pressure on our tenants and store closures; • the impact of an increase in energy costs on consumers and its consequential effect on the number of shopping visits to our properties; • a pandemic or other health crisis; and consequences of any armed conflict involving, or terrorist attack against, the United States. To the extent that any of these conditions occur, they are likely to impact market rents for retail space, occupancy in our retail properties, our ability to sell, acquire or develop retail properties, and our cash available for dividends to stockholders. If we sell properties by providing financing to purchasers, defaults by the purchasers would adversely affect cash flows. In some instances, we or one of our Funds may sell properties by providing financing to purchasers. When we or any such Fund provide financing to purchasers, we or such Fund will bear the risk that the purchaser may default on its obligations under the financing, which could negatively impact cash flows. Even in the absence of a purchaser default, the distribution of sale proceeds or their redeployment in other assets will be delayed until the promissory notes or other property we may accept upon the sale are actually paid, sold, refinanced or otherwise disposed of. In some cases, we or the applicable Fund may receive initial down payments in cash and other property in the year of sale in an amount less than the selling price, and subsequent payments will be spread over a number of years. If any purchaser defaults under such a financing arrangement, such default could negatively impact our ability to pay cash dividends to our stockholders. Net leases may require us to pay property-related expenses that are not the obligations of our tenants. Under the terms of the majority of the net leases in our portfolio or those of our Funds, in addition to satisfying their rent obligations, tenants will be responsible for the payment or reimbursement of property expenses such as real estate taxes, insurance and ordinary maintenance and repairs. However, under the provisions of certain existing leases and potentially future leases, we or the applicable Fund may be required to pay some or all of the expenses of the property, such as the costs of environmental liabilities, roof and structural repairs, real estate taxes, insurance, certain non-structural repairs and maintenance. If properties incur significant expenses that must be paid by us or the applicable Fund under the terms of our leases, our business, financial condition and results of operations may be adversely affected and the amount of cash available to meet expenses and to pay dividends to stockholders may be reduced. Our real estate business is subject to risks from climate change. Our real estate portfolios are subject to risks associated with climate change. Climate change could trigger extreme weather and changes in precipitation, temperature, and air quality, all of which may result in physical damage to, or a decrease in demand for, our properties located in the areas affected by these conditions. Further, the assessment of the potential impact of climate change has impacted the activities of government authorities, the pattern of consumer behavior, and other areas that impact the general business environment, including, but not limited to, energy-efficiency measures, water use measures, and land-use practices. The promulgation of policies, laws or regulations relating to climate change by governmental authorities in the U.S. and the markets in which we own real estate may require us or the applicable Fund to provide additional capital to our properties. To the extent that climate change impacts changes in weather patterns, our markets could experience increases in extreme weather. For example, a portion of properties in our portfolios are located in areas that have been impacted by drought and, as such, face the risk of increased water costs and potential fines and/or penalties for high consumption. There can be no assurances that we will successfully mitigate the risk of increased water costs and potential fines and/or penalties for high consumption. Climate change may also have indirect effects on our business by increasing the cost of, or decreasing the availability of, property insurance on terms we find acceptable or at all, or by increasing the cost of energy (or water, as described above). There can be no assurance that climate change will not have a material adverse effect on our financial condition or results of operations. 105 Compliance with the Americans with Disabilities Act of 1990, as amended, and fire, safety and other regulations may require us to make unanticipated expenditures that could significantly reduce the cash available for dividends on our common stock. Our properties are subject to regulation under federal laws, such as the Americans with Disabilities Act of 1990, as amended (the “ADA”), pursuant to which all public accommodations must meet federal requirements related to access and use by disabled persons. Although we believe that our properties substantially comply with present requirements of the ADA, we have not conducted an audit or investigation of all such properties to determine our compliance. If one or more of our properties are not in compliance with the ADA, we might be required to take remedial action, which would require us or the applicable Fund to incur additional costs to bring the property into compliance. Noncompliance with the ADA could also result in imposition of fines or an award of damages to private litigants. Additional federal, state and local laws also may require modifications to our properties or restrict our ability to renovate our properties. We cannot predict the ultimate amount of the cost of compliance with the ADA or other legislation. In addition, our properties are subject to various federal, state and local regulatory requirements, such as state and local earthquake, fire and life safety requirements. If we or the applicable Fund were to fail to comply with these various requirements, we or the applicable Fund might incur governmental fines or private damage awards. If we incur substantial costs to comply with the ADA or any other regulatory requirements, our business, financial condition, results of operations, cash flows or our ability to satisfy our debt service obligations or to maintain our level of dividends on our common stock could be materially adversely affected. Local regulations, including municipal or local ordinances, zoning restrictions and restrictive covenants imposed by community developers may restrict our use of our properties and may require us to obtain approval from local officials or community standards organizations at any time with respect to our properties, including prior to acquiring a property or when undertaking renovations of any of our existing properties. We have incurred mortgage indebtedness and other borrowings, which may increase business risks. We or certain of our Funds have acquired real estate and other real estate-related assets by borrowing new funds. In addition, we or such Funds have incurred mortgage debt and pledged certain real properties as security for that debt to obtain funds to acquire additional real properties and other assets and to pay dividends to our stockholders. There is no limitation on the amount we or a Fund may borrow against any individual property or other asset. This factor could negatively impact the cash flows from or return on any given asset. We do not intend to incur mortgage debt on a particular property unless we believe the property’s projected operating cash flows are sufficient to service the mortgage debt. However, if there is a shortfall between the cash flows from a property and the cash flows needed to service mortgage debt on a property, the cash flows available to us or the applicable Fund may be reduced. In addition, incurring mortgage debt increases the risk of loss since defaults on indebtedness secured by a property may result in lenders initiating foreclosure actions. In that case, we or the applicable Fund could lose the property securing the loan that is in default. For U.S. federal income tax purposes, a foreclosure of a property would be treated as a sale of the property for a purchase price equal to the outstanding balance of the debt secured by the mortgage. If the outstanding balance of the debt secured by the mortgage exceeds the tax basis in the property, taxable income would be recognized on foreclosure, even though we would receive no cash proceeds from the foreclosure. We or the applicable Fund may give full or partial guarantees to lenders of recourse mortgage debt to the entities that own the underlying properties. If we or a Fund provide a guaranty on behalf of an entity that owns one of these properties, we or the Fund will be responsible to the lender for satisfaction of the debt if it is not paid by such entity and with respect to any such property that is vacant, potentially be responsible for any property-related costs such as real estate taxes, insurance and maintenance, which costs will likely increase if the lender does not timely exercise its remedies. If any mortgages contain cross-collateralization or cross-default provisions, a default on a single property could affect multiple properties. If any properties are foreclosed upon due to a default, our ability to pay cash distributions to our clients will be adversely affected, which would result in a decrease in the value of our clients’ holdings. The real assets that we or our Funds own may increase the risk of liability under environmental laws. Ownership of real assets may increase the risk of liability under environmental laws that impose, regardless of fault, joint and several liability for the cost of remediating contamination and compensation for damages. In addition, changes in environmental laws or regulations or the environmental condition of an asset may create liabilities that did not exist at the time of acquisition. Even in cases where we are indemnified by a seller against liabilities arising out of violations of environmental laws and regulations, there can be no assurance as to the financial viability of the seller to satisfy such indemnities or our ability to achieve enforcement of such indemnities. 106 Risks Associated with Debt Financing We and certain of our Funds may acquire interests in companies that are highly leveraged, which may increase the risk of loss associated with those assets. We and certain of our Funds may acquire interests in companies whose capital structures involve significant leverage. Additionally, the debt positions acquired by our Funds may be the most junior in what could be a complex capital structure, and thus subject us to the greatest risk of loss in the event of insolvency, liquidation, dissolution, reorganization or bankruptcy of one of these companies. Furthermore, the incurrence of a significant amount of indebtedness by an entity could, among other things: • subject the entity to a number of restrictive covenants, terms and conditions, any violation of which could be viewed by creditors as an event of default and could materially impact our ability to realize value from the asset; • allow even moderate reductions in operating cash flow to render the entity unable to service its indebtedness, leading to a bankruptcy or other reorganization of the entity and a loss of part or all of our Fund’s equity; and • give rise to an obligation to make mandatory prepayments of debt using excess cash flow, which might limit the entity’s ability to respond to changing industry conditions if additional cash is needed for the response, to make unplanned but necessary capital expenditures or to take advantage of growth opportunities; As a result, the risk of loss associated with a leveraged entity is generally greater than for companies with comparatively less debt. High interest rates may make it difficult for us to finance or refinance assets, which could reduce the amount of cash dividends we can make. We run the risk of being unable to finance or refinance our assets on favorable terms or at all. If interest rates are high when we desire to mortgage our assets or when existing loans come due and the assets need to be refinanced, we may not be able to, or may choose not to, finance the assets and we would be required to use cash to purchase or repay outstanding obligations. Our inability to use debt to finance or refinance our assets could reduce our operating cash flows and the amount of cash dividends we can make to our stockholders. Higher costs of capital also could negatively impact our operating cash flows and returns on our assets. Increases in interest rates could increase the amount of our debt payments and adversely affect our ability to pay dividends to our stockholders. We have incurred indebtedness, and in the future may incur additional indebtedness, that bears interest at a variable rate. Beginning in 2022, in an effort to combat inflation and restore price stability, the Federal Reserve significantly raised the federal funds rate, which led to increases in interest rates in the credit market. The Federal Reserve began lowering the federal funds rate in the second half of 2024 and in the latter part of 2025; however, the federal funds rate remains well above pre-2022 levels, and any increase in inflation may cause the Federal Reserve to again raise the federal funds rate. Should the Federal Reserve raise rates in the future, this will likely result in further increases in market interest rates. To the extent that we incur variable rate debt and do not hedge our exposure thereunder, increases in interest rates would increase the amounts payable under such indebtedness, which could reduce our operating cash flows and our ability to pay dividends to our stockholders. In addition, if our existing indebtedness matures or otherwise becomes payable during a period of rising interest rates, we could be required to liquidate one or more of our assets at times that may prevent realization of the maximum return on such assets. For further information on the potential impact of inflation on our businesses, see “ —Risks Related to Our Company—Inflation has impacted and may in the future adversely affect our business, results of operations and financial condition of our businesses, our Funds and our Funds’ assets” and “—Risks Related to Our Company—Inflation and rising interest rates may adversely affect our financial condition and results of operations. ” We may not be able to generate sufficient cash flows to meet our debt service obligations. Our ability to make payments on and to refinance our indebtedness, and to fund our operations, working capital and capital expenditures, depends on our ability to generate cash. To a certain extent, our cash flows are subject to general economic, industry, financial, competitive, operating, legislative, regulatory and other factors, many of which are beyond our control. We cannot assure our stockholders that our business will generate sufficient cash flows from operations or that future sources of cash will be available to us in an amount sufficient to enable us to pay amounts due on our indebtedness or to fund our other liquidity needs. 107 Additionally, if we incur additional indebtedness in connection with any future deployment of capital or development projects or for any other purpose, our debt service obligations could increase. We may need to refinance all or a portion of our indebtedness before maturity. Our ability to refinance our indebtedness or obtain additional financing will depend on, among other things: • our financial condition and market conditions at the time; • restrictions in the agreements governing our indebtedness; • general economic and capital markets conditions; • the availability of credit from banks or other lenders; and our results of operations. As a result, we may not be able to refinance our indebtedness on commercially reasonable terms, or at all. If we do not generate sufficient cash flows from operations, and additional borrowings or refinancings or proceeds of asset sales or other sources of cash are not available to us, we may not have sufficient cash to enable us to meet all of our obligations. Accordingly, if we cannot service our indebtedness, we may have to take actions such as seeking additional equity, or delaying any strategic acquisitions and alliances or capital expenditures, any of which could have a material adverse effect on our business, financial condition, results of operations, cash flows or our ability to satisfy our debt service obligations or maintain our level of dividends on our common stock. Lenders may require us to enter into restrictive covenants relating to our operations, which could limit our ability to make dividends to our stockholders. In connection with providing us financing, a lender could impose restrictions on us that affect our distribution and operating policies and our ability to incur additional debt. In general, our loan agreements restrict our ability to encumber or otherwise transfer our interest in the respective property without the prior consent of the lender. Loan documents we enter into may contain covenants that limit our ability to further mortgage the property, or discontinue insurance coverage. These or other limitations imposed by a lender may adversely affect our flexibility and our ability to pay dividends on our common stock. Risks Related to our Corporate Structure and our Common Stock There is no public trading market for our common stock, and there may never be one. Our common stock is not currently publicly traded. While we have agreed to use commercially reasonable efforts to pursue a listing on a national exchange, including initiating the listing process within 24 months of the closing of the Transactions, we cannot make assurances that such a listing will occur. In addition, we do not have a fixed method for providing stockholders with liquidity. If our stockholders are able to find a buyer for their shares, our stockholders will likely have to sell them at a substantial discount to the fair market value of our common stock. It also is likely that our common stock will not be accepted as the primary collateral for a loan. Therefore, shares of our common stock should be considered illiquid and a long-term investment, and our stockholders must be prepared to hold their shares of our common stock for an indefinite length of time. Our stockholders are limited in their ability to sell their shares pursuant to our share redemption program and may have to hold their shares for an indefinite period of time. Our share redemption program allows our stockholders to sell shares of our common stock to us in limited circumstances, subject to numerous restrictions. Our ability to provide liquidity through our share redemption program is limited and is primarily funded with net DRIP proceeds. Our redemption program is capped at 5% of the weighted average number of shares outstanding annually (intended to approximate 1.25% of the weighted average number of shares outstanding per quarter). As a result, redemption requests may be pro-rated and unsatisfied requests will not carry over. If we reduce or suspend DRIP sales or if redemption requests exceed the caps or available DRIP proceeds, we may further limit or reject requests for redemption. There is no public market for our shares, and we cannot guarantee a future liquidity event. The Board may amend the terms of, suspend, or terminate our share redemption program without stockholder approval at any time if it believes that such action is in the best interest of our stockholders, and our management may reject any request for redemption. These restrictions severely limit our stockholders’ ability to sell their shares should they require liquidity and limit our stockholders’ ability to recover the amount they invested or the fair market value of their shares. 108 Our published estimated per share value of common stock is an estimate as of a given point in time and likely will not represent the amount of net proceeds that would result if we were liquidated or dissolved or completed a merger or other sale. Historically, we published annually our estimated per share net asset value (“NAV”). The Board intends to continue to approve and establish an estimated per share value of its common stock, based on its then-current operations, and to publish such valuation on at least an annual basis. The methodology used by our Board in reaching any such estimated per share value of our common stock is based upon a number of estimates, assumptions, judgments and opinions that may, or may not, prove to be correct. The use of different estimates, assumptions, judgments or opinions may have resulted in significantly different estimates of the per share value of our common stock. Also, the estimated per share value of our common stock reflects an estimate as of a given point in time and will fluctuate over time. As a result, there can be no assurance that: • stockholders would be able to realize the estimated value per share of common stock even if they were able to sell their shares of our common stock; • or we will be able to achieve, for our stockholders, the estimated value per share of common stock upon a listing of our shares of common stock on a national securities exchange, a merger, or a sale of our portfolio. There are currently no SEC, federal or state rules that establish requirements specifying the methodology that we must employ in determining our estimated value per share, or that require us to publish such a value at all and we may, in the future, determine to cease publishing such value. It may be difficult to accurately reflect material events that may impact the estimated value per share of our common stock between valuations and, accordingly, we may issue shares in our DRIP or redeem shares at too high or too low of a price. Our Board intends to determine our estimated value per share of common stock at least annually. Until the next valuation is approved and established by the Board, the per share value used for purposes of reinvesting in our common stock pursuant to the DRIP and redeeming shares pursuant to our share redemption program will continue to be $5.14, as previously approved and established by the Board as of December 31, 2025 There may be changes in the value per share of our common stock following any given valuation that are not fully reflected in such valuation. As a result, the published estimated value per share of common stock may not fully reflect changes in value that may have occurred since the prior valuation. Furthermore, it may be difficult to reflect changing market conditions or material events that may impact our estimated value per share of common stock between valuations, or to obtain timely or complete information regarding any such events. Therefore, the estimated value per share of our common stock published before the announcement of an extraordinary event may differ significantly from our actual value per share of our common stock until such time as sufficient information is available and analyzed, the financial impact is fully evaluated, and the appropriate adjustment is made to our estimated value per share of common stock, as determined by our Board. Any resulting disparity may be to the detriment of an acquiror of our common stock or a stockholder requesting share redemptions pursuant to our share redemption program. Our ability to pay dividends to the holders of our common stock may be limited by our holding company structure, applicable provisions of Maryland law and contractual restrictions or obligations. As a holding company, our ability to pay dividends will be subject to the ability of CMFH to provide cash to us, and we have no material assets other than our investment in CMFH. In conjunction with the Transactions, CMFH will be required to make distributions to the Company sufficient to allow the Company to declare and pay quarterly dividends to stockholders of at least $0.06 per share of common stock for the first four quarters following the closing of the Transactions, $0.07 per share of common stock for the next four quarters, and $0.095 per share of common stock for the next four quarters. Our Board may waive CMFH’s obligation, in whole or in part, at any time by the affirmative vote or written consent of a majority of the independent members of our Board. Nonetheless, there are many factors that can affect the availability and timing of cash distributions to our stockholders. The declaration, payment and determination of the amount of quarterly dividends, if any, will be at the sole discretion of our Board, and reassessed each year based on the level and growth of our fee related earnings after an allocation of current taxes paid. There can be no assurance that any dividends, whether quarterly or otherwise, can or will be paid. Our ability to make cash dividends to holders of our common stock depends on a number of factors, including among other things, general economic and business conditions, our strategic plans and prospects, our businesses and investment opportunities, our financial condition and operating results, working capital requirements and other anticipated cash needs, contractual restrictions and obligations, including fulfilling our current and future capital commitments, legal, tax and regulatory restrictions, restrictions and other 109 implications on the payment of dividends by us to our common stockholders or by our subsidiaries to us, payments required to be made pursuant to the TRA and such other factors as our Board may deem relevant. Under Maryland law, we may not pay dividends to our stockholders if we would, after giving effect to the dividend, not be able to pay our debts as the debts become due in the usual course of business or our total assets would be less than the sum of our total liabilities plus all prior liquidation preferences (unless our charter provides otherwise) . Furthermore, by making cash dividends to our stockholders rather than redeploying that cash in our businesses, we risk slowing the pace of our growth, or not having a sufficient amount of cash to fund our operations, new acquisitions or unanticipated capital expenditures, should the need arise. Because as a U.S. corporation we are subject to entity-level corporate income taxes and may be obligated to make payments under the Tax Receivable Agreement (“TRA”), the amount of dividends ultimately paid by us to holders of our common stock is generally expected to be less, on a per share basis, than the amounts distributed by CMFH to the holders of Class A LP Units of CMFH. Due to the percentage of voting power concentrated in our Special Voting Preferred Shares, holders of our shares of common stock will generally have no influence over matters on which our stockholders vote and limited ability to influence decisions regarding our business. Unless otherwise provided in our charter and bylaws or required by the Maryland General Corporation Law (“MGCL”), holders of our common stock and holders of our Special Voting Preferred Shares vote together as a single class on all matters on which stockholders generally are entitled to vote. Each share of common stock entitles the holder to one vote per share on all matters submitted to a vote of our stockholders. Each Special Voting Preferred Share entitles the holder to a number of votes equal to the number of Class A limited partnership units of CMFH (“CMFH Class A LP Units”) issued concurrently with such Special Voting Preferred Share on all matters submitted to a vote of our stockholders. Pursuant to the Contribution Agreement between us, CIM Group Holdings, LLC (“CMGH”), and CMFH (the “Contribution Agreement”), CMGH is the sole holder of our Special Voting Preferred Shares. As of the date of this report, CMGH holds all 907,376,073.663 Special Voting Preferred Shares outstanding and all of the 907,376,073.663 CMFH Class A LP Units outstanding, representing in the aggregate approximately 67.5% of the economic and voting ownership of the combined company. The remaining approximately 32.5% of the voting power is held by stockholders through their ownership of the approximately 436.9 million shares of common stock outstanding as of the date of this report. So long as CMGH continues to hold a majority of the outstanding Special Voting Preferred Shares, practically all matters submitted to a vote of our stockholders will be decided by CMGH. Our charter permits our board of directors, with the approval of a majority of the entire board and without any action by our stockholders, to amend our charter from time to time to increase or decrease the aggregate number of authorized shares of common stock or the number of shares of any class or series of stock that we have authority to issue, and to classify or reclassify unissued shares into new classes or series of stock (including additional Special Voting Preferred Shares) with such preferences, voting powers, and other rights as the board designates. As a result, holders of shares of our common stock will have very limited or no ability to influence stockholder decisions, including decisions regarding our business. These limits on the ability of the holders of shares of our common stock to exercise voting rights restrict the ability of the holders of our shares of common stock to influence matters subject to a vote of our stockholders. CMGH is entitled to a potential earnout issuance of additional CMFH Class A LP Units and Special Voting Preferred Shares based on the achievement of certain financial metrics over an earnout period, and the issuance of such securities would dilute the economic ownership and voting power of the holders of shares of common stock. The Contribution Agreement provides that we and CMFH will effect a potential up to 3.75% earnout issuance to CMGH of CMFH Class A LP Units and Special Voting Preferred Shares based on the achievement of certain financial performance metrics from January 1, 2026 through December 31, 2028 (the “earnout period”). The issuance of all or a portion of such securities would dilute the economic ownership and voting power of holders of our common stock, further concentrating voting and economic power in CMGH. If the earnout were achieved in full, CMGH would be entitled to additional CMFH Class A LP Units in an amount that would be sufficient (assuming no change in the relative number of CMFH Class A LP Units and shares of our common stock outstanding at the closing of the Transactions) such that the economic interest in CMFH held by CMGH and us as of the closing of the Transactions would have been 71.25% and 28.75%, respectively (or an additional approximate 175.3 million CMFH Class A LP Units to be held by CMGH). There can be no assurance that the earnout will be earned in full or at all. 110 If CMFH Class A LP Units are issued to CMGH as part of an earnout payment, CMFH will also be required to make a special cash distribution to CMGH in an amount equal to the aggregate dividends CMGH would have been entitled to receive in respect of such CMFH Class A LP Units had CMGH held such CMFH Class A LP Units through the period commencing on the date immediately following the expiration of the earnout period and ending on the actual payment date of the earnout amount. Potential conflicts of interest may arise among CMGH and its controlling persons, on the one hand, and the holders of our common stock, on the other hand. CMGH holds all of the issued and outstanding Special Voting Preferred Shares, together with a corresponding number of CMFH Class A LP Units. CMGH is controlled by principals of CIM Group, LLC, including Richard Ressler, Avraham Shemesh and Shaul Kuba (together with Mitsui & Co. Ltd., the “Permitted Transferees”), certain of whom also serve on our board of directors and/or as our executive officers. As a result, conflicts of interest may arise between CMGH and its Permitted Transferees, on the one hand, and us and the holders of shares of our common stock, on the other hand. CMGH has the ability to influence our business and affairs through its ownership of the Special Voting Preferred Shares. Although the affirmative vote of a majority of our directors is required for any action to be taken by our board of directors, certain specified actions will also require the prior written consent of the holders of the Special Voting Preferred Shares and the holders of the CMFH Class A LP Units, each of which is controlled by CMGH. These actions consist of the following: • the issuance of equity securities by CIM Group, Inc., CIM Finance Holdings, LP or any of their respective subsidiaries, subject to the limited exceptions set forth in the partnership agreement; • the adoption of any shareholder rights plan or similar agreement; • any amendment to the charter, articles of incorporation, bylaws, operating agreement or other applicable corporate organizational, constituent and/or governing documents; • the exchange or disposition of all or substantially all assets of CIM Group, Inc., CIM Finance Holdings, LP, or any of their respective subsidiaries in a single transaction or a series of related transactions; • the entry into a merger, sale or other combination (other than a Permitted Merger effected pursuant to Section 9.4(b) of the partnership agreement); • the transfer, mortgage, pledge, hypothecation or grant of a security interest in all or substantially all of the assets of CIM Group, Inc., CIM Finance Holdings, LP, or any of their respective subsidiaries; • the appointment or removal (without cause) of the Chief Executive Officer (or the person holding an equivalent officer position); • the termination, without cause, of the employment of any officers of CIM Group, Inc., CIM Finance Holdings, LP, or any of their respective Subsidiaries or the termination, without cause, of the association of a partner with CIM Finance Holdings, LP or any of its subsidiaries; • liquidation or dissolution of CIM Group, Inc., CIM Finance Holdings, LP, or any of their respective subsidiaries; • withdrawal, removal or substitution of any person serving as a general partner with respect to CIM Group, Inc., CIM Finance Holdings, LP, or any of their respective subsidiaries; • the transfer of or causation of the transfer of any beneficial ownership, in whole or in part, of any general partner interest with respect to CIM Group, Inc., CIM Finance Holdings, LP, or any of their respective subsidiaries to any person other than CMGH or its Permitted Transferees; and • the entry into any new business outside of CIM Finance Holdings, LP or its subsidiaries, or engaging, directly or indirectly (including through any Affiliate), in any business or activities that are the same as, substantially similar to, or competitive with the business of CIM Finance Holdings, LP or its subsidiaries, or the diversion or rerouting of any business or opportunity from the CIM Finance Holdings, LP or any of its subsidiaries. Our charter includes a provision that may discourage a person, including a stockholder, from launching a tender offer for our shares. Our charter requires that any tender offer, including any “mini-tender” offer, must comply with most of the requirements of Regulation 14D of the Exchange Act. The offering person must provide us notice of the tender offer at least ten business days 111 before initiating the tender offer. If the offering person does not comply with these requirements, we will have the right to redeem the non-compliant offeror’s shares and any shares acquired in the tender offer at the lesser of (i) the price then being paid per Common Share purchased in our latest offering at full purchase price (not discounted for commission reductions or for reductions in sale price permitted pursuant to our distribution reinvestment plan), (ii) the estimated value of the shares as determined in our most recent valuation pursuant to Regulatory Notice 09-09 of the Financial Industry Regulatory Authority, (iii) the fair market value of the shares as determined by an independent valuation obtained by us or (iv) the lowest tender offer price offered in the non-compliant tender offer. In addition, the non-complying person shall be responsible for all of our expenses in connection with that person’s noncompliance. This provision of our charter may discourage a person from initiating a tender offer for our shares and prevent our stockholders from receiving a premium to the purchase price for their shares in such a transaction. Our rights and the rights of our stockholders to recover claims against our officers and directors are limited, which could reduce our stockholders’ and our recovery against them if they cause us to incur losses. The MGCL provides that a director has no liability in such capacity if he or she performs his or her duties in good faith, in a manner he or she reasonably believes to be in the corporation’s best interests and with the care that an ordinarily prudent person in a like position would use under similar circumstances. Our charter, in the case of our directors and officers, requires us, subject to certain exceptions, to indemnify and advance expenses to our directors and our officers. Moreover, we have entered into separate indemnification agreements with each of our directors and executive officers. Our charter permits us to provide such indemnification and advance for expenses to our employees and agents. Additionally, our charter limits, subject to certain exceptions, the liability of our directors and officers to us and our stockholders for monetary damages. Although our charter does not allow us to indemnify our directors for any liability or loss suffered by them or hold harmless our directors for any loss or liability suffered by us to a greater extent than permitted under Maryland law, we and our stockholders may have more limited rights against our directors, officers, employees and agents, than might otherwise exist under common law, which could reduce our stockholders’ and our recovery against them. Our stockholders’ interest in us will be diluted if we issue additional shares. Our stockholders do not have preemptive rights to any shares issued by us in the future. Our charter authorizes 3,100,000,000 shares of stock, of which 2,000,000,000 shares are classified as common stock and 1,100,000,000 shares are classified as preferred stock. Subject to any limitations set forth under Maryland law, our Board may amend our charter from time to time to increase the number of authorized shares of stock, increase or decrease the number of shares of any class or series of stock that we have authority to issue, or classify or reclassify any unissued shares into other classes or series of stock without the necessity of obtaining stockholder approval. All of such shares may be issued in the discretion of our Board. Our stockholders will suffer dilution of their equity investment in us upon future issuances of our capital stock, including in the event that we (1) issue shares pursuant to our DRIP (unless such stockholders elect to fully participate in the DRIP), (2) sell securities that are convertible into shares of our common stock, (3) issue shares of our common stock in a private offering of securities to institutional investors, or (4) issue shares of our common stock to sellers of properties acquired in the future by us in connection with an exchange of limited partnership interests of CMFH. Because the limited partnership interests of CMFH may, in the discretion of our Board and in certain circumstances, be exchanged for shares of our common stock, any merger, exchange or conversion between CMFH and another entity ultimately could result in the issuance of a substantial number of shares of our common stock, thereby diluting the percentage ownership interest of other stockholders. U.S. Federal Income and Other Tax Risks If a stockholder that is an employee benefit plan, individual retirement account (“IRA”), annuity described in Sections 403(a) or (b) of the Code, Archer Medical Savings Account, health savings account, Coverdell education savings account, or other arrangement that is subject to the Employee Retirement Income Securities Act (“ERISA”) or Section 4975 of the Code (referred to generally as “Benefit Plans and IRAs”) fails to meet the fiduciary and other standards under ERISA or the Code as a result of an investment in shares of our common stock, such stockholder could be subject to civil and criminal, if the failure is willful, penalties. There are special considerations that apply to Benefit Plans and IRAs investing in shares of our common stock. Stockholders that are Benefit Plans and IRAs should consider: • whether their investment is consistent with the applicable provisions of ERISA and the Code, or any other applicable governing authority in the case of a plan not subject to ERISA or the Code; • whether their investment is made in accordance with the documents and instruments governing the Benefit Plan or IRA, including any investment policy; 112 • whether their investment satisfies the prudence and diversification requirements of Sections 404(a)(1)(B) and 404(a)(1)(C) of ERISA and other applicable provisions of ERISA and the Code; • whether their investment will impair the liquidity needs, the minimum and other distribution requirements, or the tax withholding requirements that may be applicable to such Benefit Plan or IRA; • whether their investment will constitute a prohibited transaction under Section 406 of ERISA or Section 4975 of the Code or any similar rule under other applicable laws or regulations; • whether their investment will produce or result in unrelated business taxable income, as defined in Sections 511 through 514 of the Code, to the Benefit Plan or IRA; • whether their investment will impair the Benefit Plan’s or IRA’s need to value its assets annually (or more frequently) in accordance with ERISA, the Code and the applicable provisions of the Benefit Plan or IRA; • whether their investment will cause our assets to be treated as “plan assets” of the Benefit Plan or IRA; and whether the investment will not constitute a non-exempt prohibited transaction under Title I of ERISA or Section 4975 of the Code. Failure to satisfy the fiduciary standards of conduct and other applicable requirements of ERISA, the Code, or other applicable statutory or common law may result in the imposition of civil and criminal (if the violation is willful) penalties, and can subject the fiduciary to equitable remedies. In addition, if an investment in our common stock constitutes a prohibited transaction under ERISA or the Code, the “party-in-interest” (within the meaning of ERISA) or “disqualified person” (within the meaning of the Code) who authorized or directed the investment may have to compensate the plan for any losses the plan suffered as a result of the transaction or restore to the plan any profits made by such person as a result of the transaction, or may be subject to excise taxes with respect to the amount involved. In the case of a prohibited transaction involving an IRA, the IRA may be disqualified and all of the assets of the IRA may be deemed distributed and subject to tax. In addition to considering their fiduciary responsibilities under ERISA and the prohibited transaction rules of ERISA and the Code, stockholders that are Benefit Plans and IRAs should consider the effect of the plan assets regulation, U.S. Department of Labor Regulation Section 2510.3-101, as modified by ERISA Section 3(42). To avoid our assets from being considered “plan assets” under the plan assets regulation, we intend to limit “benefit plan investors” from owning 25% or more of the shares of our common stock. However, we cannot assure our stockholders that will be effective in limiting benefit plan investors’ ownership to less than the 25% limit. For example, the limit could be unintentionally exceeded if a benefit plan investor misrepresents its status as a benefit plan investor. If our underlying assets were to be considered “plan assets” of a benefit plan investor subject to ERISA, (i) we would be an ERISA fiduciary and subject to certain fiduciary requirements of ERISA with which it would be difficult for us to comply and (ii) we could be restricted from entering into favorable transactions if the transaction, absent an exemption, would constitute a prohibited transaction under ERISA or the Code. Even if our assets are not considered to be “plan assets,” a prohibited transaction could occur if we or any of our affiliates is a fiduciary (within the meaning of ERISA) of a Benefit Plan or IRA stockholder. Due to the complexity of these rules and the potential penalties that may be imposed, it is important that stockholders that are Benefit Plans and IRAs consult with their own advisors regarding the potential applicability of ERISA, the Code and any similar applicable law. Specific rules apply to foreign, governmental and church plans. As a general rule, certain employee benefit plans, including foreign pension plans, governmental plans established or maintained in the United States (as defined in Section 3(32) of ERISA), and certain church plans (as defined in Section 3(33) of ERISA), are not subject to ERISA’s requirements and are not “benefit plan investors” for purposes of investing in “plan assets” subject to ERISA’s requirements. Any such plan that is qualified and exempt from taxation under Sections 401(a) and 501(a) of the Code may nonetheless be subject to the prohibited transaction rules set forth in Section 503 of the Code and, under certain circumstances in the case of church plans, Section 4975 of the Code. Also, certain foreign plans and governmental plans may be subject to foreign, state, or local laws which are, to a material extent, similar to the provisions of ERISA or Section 4975 of the Code. Each fiduciary of a plan subject to any such similar law should make its own determination as to the need for, and the availability of, any exemption relief. If stockholders invest in our common stock through an IRA or other retirement plan, they may be limited in their ability to withdraw required minimum distributions. If stockholders invest in our common stock with assets of a retirement plan or IRA, federal law may require them to withdraw required minimum distributions from such plan or account in the future. Our common stock will be highly illiquid, 113 and our share redemption program only offers limited liquidity. If stockholders require liquidity, they may generally sell their shares, but such sale may be at a price less than the price at which they initially purchased their common stock. If stockholders fail to withdraw required minimum distributions from their plan or account, they may be subject to certain taxes and tax penalties. Changes in relevant tax laws, regulations or treaties or an adverse interpretation of these items by tax authorities may adversely affect our effective tax rate, tax liability and financial condition and results. Any substantial changes in domestic or international corporate tax policies, regulations or guidance, enforcement activities or legislative initiatives may adversely affect our business, the amount of taxes we are required to pay and our financial condition and results of operations generally. Our effective tax rate and tax liability is based on the application of current income tax laws, regulations and treaties. These laws, regulations and treaties are complex, and the manner in which they apply to us and our Funds is sometimes open to interpretation. Significant management judgment is required in determining our provision for income taxes, our deferred tax assets and liabilities and any valuation allowance recorded against our net deferred tax assets. Although management believes its application of current laws, regulations and treaties to be correct and sustainable upon examination by the tax authorities, the tax authorities could challenge our interpretation resulting in additional tax liability or adjustment to our income tax provision that could increase our effective tax rate. For an overview of certain relevant U.S. tax laws and relevant foreign tax laws, see “ —Applicable U.S. and foreign tax law, regulations, or treaties, and changes in such tax laws, regulations or treaties or an adverse interpretation of these items by tax authorities could adversely affect our effective tax rate, tax liability, financial condition and results, ability to raise funds from certain foreign clients, increase our compliance or withholding tax costs and conflict with our contractual obligations. ” The introduction of additional tax regimes both globally and domestically, the implementation of which are uncertain, require significant judgment and will depend on the facts and circumstances of each year. These regimes may not be compatible with one another and may cause adverse tax consequences. In addition, the One Big Beautiful Bill Act (“OBBBA”), enacted in July 2025, extends several provisions of the Tax Cuts and Jobs Act (“TCJA”) that were set to expire on December 31, 2025 and significantly affects U.S. federal taxes, credits and deductions. Any future legislation, regulatory guidance or changes in interpretation relating to the TCJA, the OBBBA or other tax initiatives could increase our or our client’s tax liability, reduce after-tax returns, adversely affect fundraising, investment activity or the performance of our portfolio companies and increase our compliance and withholding tax costs. Further, certain of our Funds, products and investments currently benefit from tax incentives and other tax advantages, including benefits available under the “Opportunity Zones” program pursuant to Section 1400Z-1 of the Code. The modification, reduction, elimination or expiration of any such tax incentives or benefits could reduce demand for affected products, limit our ability to raise capital, reduce the value or expected returns of affected investments and adversely affect our revenues, results of operations and financial condition. Applicable U.S. and foreign tax law, regulations, or treaties, and changes in such tax laws, regulations or treaties or an adverse interpretation of these items by tax authorities could adversely affect our effective tax rate, tax liability, financial condition and results, ability to raise funds from certain foreign clients, increase our compliance or withholding tax costs and conflict with our contractual obligations. Tax laws are regularly reexamined and revised worldwide. Tax laws, regulations and treaties enacted in the future, or changes in the interpretation or application of existing tax laws, regulations and treaties, could require us to revalue our net deferred tax assets and could materially affect our effective tax rate and tax liabilities. In addition, the application of tax laws, regulations and treaties to us and our Funds involves significant management judgment. Tax authorities routinely examine the tax positions of companies, and tax authorities may challenge our interpretations or tax positions in multiple jurisdictions. Any such challenge could result in additional tax liabilities or adjustments to our income tax provision and increase our effective tax rate. The impact of any change in law or interpretation will depend on the facts and circumstances existing at the relevant time. In addition, the Organization for Economic Cooperation and Development’s (“OECD”) Base Erosion and Profit Shifting framework, including a 15% global minimum tax regime, has resulted, and may continue to result, in changes to the framework under which our tax obligations are determined. As jurisdictions enact and implement legislation reflecting the OECD framework, transitional relief expires and additional provisions become effective, our effective tax rate and cash tax payments could increase in future periods. Our transition from taxation as a REIT to taxation as a corporation will increase our tax liability and may reduce our earnings, cash flow and the amount of cash available for dividends to our stockholders. We elected to be taxed as a REIT for U.S. federal income tax purposes beginning with our taxable year ended December 31, 2012. In connection with the Transactions, we have ceased to qualify to be treated as a REIT effective January 1, 2026 and 114 are now subject to U.S. federal income tax at regular corporate rates. We are also subject to state and local income taxes in various jurisdictions. As a REIT, we generally were not subject to federal income tax on taxable income that we distributed to our stockholders so long as we distributed at least 90% of our annual taxable income (computed without regard to the dividends paid deduction and excluding net capital gains). As a taxable corporation, we are not entitled to a deduction for dividends paid to our stockholders. Accordingly, our transition to taxation as a corporation may materially reduce our net income and cash available for distribution to our stockholders. In addition, we are no longer required to distribute at least 90% of our REIT taxable income each year. The declaration, amount and payment of any future dividends will be determined by our Board, and there can be no assurance that we will continue to pay dividends at historical levels or at all. Dividends paid following our transition also may have different income tax consequences to our stockholders than distributions paid while we qualified as a REIT. We may be unable to realize all or a portion of our deferred tax assets or other anticipated tax benefits, which could increase our tax expense and adversely affect our financial condition and results of operations. In determining the anticipated income tax consequences of our transition to taxation as a corporation and the Transactions, we have considered the availability of net operating losses, capital losses, income tax basis, deductions and other tax attributes and benefits that may reduce our future taxable income and tax liabilities. Our ability to realize these tax benefits depends on numerous factors, including the amount, character, timing and jurisdictional source of our future taxable income, the limitations applicable to the utilization of such tax attributes, and future changes in tax law. Our projections regarding the availability and utilization of these tax benefits are based on significant estimates and judgments. Our actual taxable income may differ materially from our projections, and some tax attributes may expire, be subject to a valuation allowance or be limited under applicable tax laws, including as a result of changes in our ownership. In addition, the IRS or another taxing authority could challenge the amount, availability or treatment of a claimed tax attribute or deduction. Certain Non-U.S. persons may be subject to U.S. federal income tax on gain realized on the taxable disposition of our common stock. We have significant interests in real property located in the U.S., and thus may currently be, or may become in the future, a ‘United States real property holding corporation’ as defined under Section 897(c)(2) of the Code. As a result, certain non-U.S. persons may be subject to U.S. federal income tax on gain realized on a sale or other taxable disposition of our common stock. Because the determination of whether we are a USRPHC for U.S. federal income tax purposes depends on the fair market value of our “U.S. real property interests” as defined under Section 897(c)(1) of the Code relative to the fair market value of our non-U.S. real property interests and our other business assets, there can be no assurance that we do not currently constitute, or will not become, a USRPHC. We may incur additional tax liabilities if we failed to qualify as a REIT for any taxable year before we ceased to qualify as a REIT. Although we believe that we were organized and operated in conformity with the requirements for qualification and taxation as a REIT through our final taxable year for which our REIT election was effective, qualification as a REIT involved the application of highly technical and complex provisions of the Code. Our REIT qualification depended on the characterization of our assets and income, and certain of these matters were based on factual determinations and legal interpretations that are subject to change or challenge. The termination of our REIT election does not prevent the IRS or another taxing authority from challenging our qualification as a REIT for a prior taxable year. If we failed to maintain our qualification as a REIT for any taxable year before the taxable year beginning January 1, 2026 and applicable relief provisions did not apply, we would be subject to tax on our taxable income for such year at regular corporate rates and would not be able to deduct distributions paid to our stockholders for such year. We could also be subject to state and local taxes, interest and penalties, and distributions made to our stockholders during the affected periods may have been treated differently for tax purposes. Any such liabilities could be substantial and could materially adversely affect our financial condition, results of operations and cash flows. 115 We will be required to pay the TRA Recipients for most of the benefits relating to our use of attributes we receive from exchanges of CMFH Class A LP Units and related transactions. In certain circumstances, payments to the TRA Recipients may be accelerated and/or could significantly exceed the actual tax benefits we realize. The holders of CMFH Class A LP Units, subject to any applicable transfer restrictions and other provisions, may, on a quarterly basis, exchange their CMFH Class A LP Units for our common stock on a one-for-one basis or, at our option, for cash. These exchanges are expected to result in increases (for U.S. federal income tax purposes) in the tax basis of the tangible and intangible assets of the relevant entity. These increases in tax basis generally will increase (for U.S. federal income tax purposes) depreciation and amortization deductions and potentially reduce gain on sales of assets and, therefore, reduce the amount of tax that we would otherwise be required to pay in the future, although the IRS may challenge all or part of these deductions and tax basis increases, and a court could sustain such a challenge. We have entered into a TRA with certain direct and indirect holders of CMFH Class A LP Units (the “TRA Recipients”) that generally provides for the payment by us to the TRA Recipients of 85% of the cash tax savings, if any, in U.S. federal income taxes, certain state and local income and franchise taxes that we actually realize (or are deemed to realize in certain circumstances) as a result of increases in tax basis and certain other tax benefits arising from exchanges or redemptions of CMFH Class A LP Units. The payments we may make to the TRA Recipients could be material and we may need to incur debt to finance payments under the TRA if our cash resources are insufficient to meet our obligations under the TRA as a result of timing discrepancies or otherwise. The actual increase in tax basis (and our ability to realize the corresponding tax benefits), as well as the amount and timing of any payments under the TRA, will vary depending upon a number of factors, including the timing of exchanges, the price of a Common Share at the time of the exchange, the extent to which such exchanges are taxable and the amount and timing of our income. In certain circumstances, payments to the TRA Recipients under the TRA could be in excess of the cash tax savings that we actually realize. If the IRS or another taxing authority were to challenge a covered tax benefit, the TRA Recipients generally will not reimburse us for payments previously made to them under the TRA, although the amount of the challenge may reduce or eliminate future payments otherwise payable to the affected TRA Recipient. In addition, the TRA provides that, upon a change of control, if we elect an early termination of the TRA or, at the election of the TRA Party Representative as defined in the TRA, upon certain material breaches of our obligations under the TRA, our obligations under the TRA would be accelerated and calculated based on certain assumptions. These assumptions include that we would have sufficient taxable income to fully utilize the applicable tax benefits and that any CMFH Class A LP Units that have not been exchanged would be deemed exchanged for the market value of our common stock as of the applicable date. In such circumstances, these payments may significantly exceed any actual benefits we realize in respect of the tax attributes subject to the TRA. Tax consequences to the direct and indirect holders of CMFH Class A LP Units or to general partners in our Funds may give rise to conflicts of interests. As a result of the tax gain inherent in our assets, upon a realization event, certain direct and indirect holders of CMFH Class A LP Units may incur different and potentially significantly greater tax liabilities as a result of the disproportionately greater allocations of items of taxable income and gain to such holders. As these direct and indirect holders will not receive a correspondingly greater distribution of cash proceeds, they may, subject to applicable fiduciary or contractual duties, have different objectives regarding the appropriate pricing, timing and other material terms of any sale, refinancing, or disposition, or whether to sell such assets at all. Decisions made with respect to an acceleration or deferral of income or the sale or disposition of assets with unrealized built-in tax gains may also influence the timing and amount of payments that are received by the TRA Recipients (including, among others, the Holdco Members and other executive officers) under the TRA. In general, we anticipate that disposition of assets with unrealized built-in tax gains following an exchange will tend to accelerate such payments and increase the present value of payments under the TRA, and disposition of assets with unrealized built-in tax gains in a tax year before an exchange generally will increase an exchanging holder’s tax liability without giving rise to any rights to any payments under the TRA. Decisions made regarding a change of control or voluntary termination also could have a material influence on the timing and amount of payments received by the TRA Recipients pursuant to the TRA. There may be potential conflicts in the tax treatment of performance allocations. We may receive performance allocations or incentive fees from our Funds if specified returns are achieved by those Funds. In certain circumstances, we may prefer to structure the fees as a special allocation of income, which we refer to as a performance allocations, rather than as an incentive fee. The general partner of our Funds may be entitled to receive performance allocations from our Funds and a significant portion of that performance allocations may consist of long-term capital gains. As a U.S. corporation, we will not receive preferential treatment for long-term capital gains and we may be limited in deducting capital losses. As a result, the general partners of our Funds may have interests that are not entirely aligned with our stockholders and thus, subject to their fiduciary 116 duties to Fund partners and/or co-investors may be incentivized to seek investment opportunities that maximize favorable tax treatment to the general partners. The tax treatment of performance allocations has continued to be an area of focus for policymakers and government officials, which could result in further regulatory action by federal or state governments. Congress and the current Presidential administration may consider legislation to further extend the holding period for performance allocations to qualify for long-term capital gains treatment, have performance allocations taxed as ordinary income rather than as capital gain, impose surcharges on performance allocations or increase the capital gains tax rate. Tax authorities and legislators in other jurisdictions in which our investments or employees could clarify, modify or challenge their treatment of performance allocations. Limitations on the amount of interest expense that we may deduct could materially increase our tax liability and negatively affect an investment in our common stock. Our deduction of net business interest expenses for each taxable year is limited generally to 30% of our “adjusted taxable income” for the relevant taxable year. Any excess business interest not allowed as a deduction in a taxable year as a result of the limitation generally will carry forward to the next year. There is no grandfather provision for outstanding debt prior to the effective date of these rules. Any failure to properly manage or address the foregoing risks may have a material adverse effect on our business, results and financial condition.