What changed in this filing

/stocks — the workspaceLOADING

Item 1A. Risk Factors

2021-02-11 compared with 2020-02-05 · 139 added, 120 removed, 264 unchanged (50% of the section changed)

6 unchanged sentences

• changes in the national, regional, and local economic climate;

local real estate conditions such as an oversupply of rentable space caused by increased development of new properties or a reduction in demand for rentable space caused by a change in the wants and needs of our tenants or economic conditions making our locations undesirable;

• local real estate conditions such as an oversupply of rentable space caused by increased development of new properties, a reduction in demand for rentable space caused by a change in the wants and needs of our tenants, or economic conditions making our locations undesirable;

• the attractiveness of our properties to tenants or buyers;

2 unchanged sentences

• uninsured losses as a result of casualty events;

Table of C ontents

• sociopolitical unrest such as political instability, civil unrest, armed hostilities, or political activism resulting in a disruption of day-to-day building operations;

• the need to periodically repair, renovate, and re-lease properties;

10 unchanged sentences

We regularly review our real estate assets for impairment;

and based on these reviews, we may record impairment losses that have an adverse effect on our results of operations.

Negative or uncertain market and economic conditions, as well as market volatility, increase the likelihood of incurring impairment losses.

and based on these reviews, we may record impairments that have an adverse effect on our results of operations.

Negative or uncertain market and economic conditions, as well as market volatility, increase the likelihood of incurring impairment.

If we decide to sell a real estate asset rather than holding it for long-term investment or if we reduce our estimates of future cash flows on a real estate asset, the risk of impairment increases.

7 unchanged sentences

The granting of these concessions may adversely affect our results of operations and cash flows to the extent that they result in reduced rental rates, additional capital improvements, or allowances paid to, or on behalf of, the tenants.

Tenant and property concentration risk .

Tenant and market concentration risk .

As of December 31, 2020, our top 20 tenants represented 32.7% of our annualized base rental revenues with no single tenant accounting for more tha n 5.1% of our annualized base rental revenues.

The inability of any of our significant tenants to pay rent or a decision by a significant tenant to vacate their premises prior to, or at the conclusion

of, their lease term could have a significant negative impact on our results of operations or financial condition if a suitable replacement tenant is not secured in a timely manner.

The inability of any of our significant tenants to pay rent or a decision by a significant tenant to vacate their premises prior to, or at the conclusion of, their lease term could have a significant negative impact on our results of operations or financial condition if a suitable replacement tenant is not secured in a timely manner.

For the three months ended December 31, 2020, 35.0% of our net operating income for properties owned was derived from the metropolitan Atlanta area, 27.1% was derived from the Austin area, and 11.2% was derived from the Charlotte area.

11 unchanged sentences

Federal, state, and local laws and regulations relating to the protection of the environment may require a current or previous owner or operator of real estate to investigate and clean up hazardous or toxic substances or petroleum product released at a property.

If determined to be liable, the owner or operator may have to pay a governmental entity or third parties for property damage and for investigation and clean-up costs incurred by such parties in connection with the contamination, or perform such investigation and clean-up itself.

Table of C ontents

with the contamination, or perform such investigation and clean-up itself.

Although certain legal protections may be available to prospective purchasers of property, these laws typically impose clean-up responsibility and liability without regard to whether the owner or operator knew of or caused the presence of the regulated substances.

1 unchanged sentence

In addition, third parties may sue the owner or operator of a site for damages and costs resulting from regulated substances emanating from that site.

We manage this risk through Phase I Environmental Site Assessments and, as necessary, Phase II environmental sampling on properties we acquire or develop.

We manage this risk through Phase I Environmental Site Assessments and, as necessary, Phase II Environmental Site Assessments which include environmental sampling on properties we acquire or develop.

We are not currently aware of any environmental liabilities at locations that we believe could have a material adverse effect on our business, assets, financial condition, or results of operations.

13 unchanged sentences

Climate change may also indirectly affect our business by increasing the cost of (or making unavailable) property insurance on terms we find acceptable, increasing the cost of energy and increasing the risk of flood at our properties.

Should the impact of climate change be severe or occur for lengthy periods of time, our financial condition or results of operations could be adversely affected.

Risks associated with the development of mixed-use commercial properties .

We operate, are currently developing, and may in the future develop properties, either alone or through joint ventures, that are known as "mixed-use" developments.

This means that, in addition to the development of office space, the project may also include space for retail, residential, or other commercial purposes.

We do not have as much experience in developing and managing non-office real estate as we do office real estate and, as a result, we may seek to develop the non-office component ourselves, sell the right to that component to a third-party developer, or we may partner with a third party who has more non-office real estate experience.

If we do choose to develop the other component ourselves, we would be exposed not only to those risks typically associated with the development of commercial real estate generally, but also to specific risks associated with the development and ownership of non-office real estate.

In addition, even if we sell the rights to develop the other component or elect to participate in the development through a joint venture, we may be exposed to the risks associated with the failure of the other party to complete the development as expected.

These include the risk that the other party would default on its obligations necessitating that we complete the other component ourselves, including potential financing of the project.

If we decide not to sell or participate in a joint venture and instead hire a third party manager, we would be dependent on them and their key personnel to provide services to us and we may not find a suitable replacement if the management agreement is terminated, or if key personnel leave or otherwise become unavailable to us.

Should the impact of climate change be severe or occur for lengthy periods of time, our financial condition or results of operations could be adversely impacted.

Joint venture structure risks .

We hold ownership interests in a number of joint ventures with varying structures and may in the future invest in real estate through such structures.

We hold ownership interests in a number of joint ventures with varying structures and may in the future invest in additional real estate through such structures.

Our venture partners may have rights to take actions over which we have no control, or the right to withhold approval of actions that we propose, either of which could adversely affect our interests in the related joint ventures, and in some cases, our overall financial condition and results of operations.

1 unchanged sentence

For example, a venture partner may have economic and/or other business interests or goals which are incompatible with our business interests or goals and that venture partner may be in a position to take action contrary to our interests.

In addition, such venture partners may default on their obligations, which could have an adverse impact on the financial condition and operations of the joint venture.

Such defaults may result in our fulfilling their obligations that may, in some cases, require us to contribute additional capital to the ventures.

In addition, such venture partners may default on their obligations, including loans secured by property owned by the joint venture, which could have an adverse impact on the financial condition and operations of the joint venture.

Such defaults may result in our fulfilling the defaulting's partner's obligations that may, in some cases, require us to contribute additional capital to the ventures.

Furthermore, the success of a project may be dependent upon the expertise, business judgment, diligence, and effectiveness of our venture partners in matters that are outside our control.

Thus, the involvement of venture partners could adversely impact the development, operation, ownership, financing, or disposition of the underlying properties.

Risks associated with the development of mixed-use properties .

We operate, are currently developing, and may in the future develop properties, either alone or through joint ventures, that are known as "mixed-use" developments.

This means that, in addition to the development of office space, the project may also include space for retail, residential, or other commercial purposes.

If we do choose to develop other components ourselves, we would be exposed not only to those risks typically associated with the development of commercial real estate generally, but also to specific risks associated with the development and ownership of

Table of C ontents

non-office real estate.

In addition, even if we sell the rights to develop the other components or elect to participate in the development through a joint venture, we may be exposed to the risks associated with the failure of the other party to complete the development as expected.

These include the risk that the other party would default on its obligations necessitating that we complete the other component ourselves, including potential financing of the project.

Title insurance risk .

We did not acquire new title insurance policies in connection with the mergers with Parkway Properties, Inc.

("Parkway") in 2016 and with TIER in 2019, instead relying on existing policies benefiting those entities' subsidiaries.

We did not acquire new title insurance policies in connection with the mergers with Parkway in 2016 and with TIER in 2019, instead relying on existing policies benefiting those entities' subsidiaries.

We generally do acquire title insurance policies for all developed and acquired properties;

4 unchanged sentences

As a result, our ability to sell one or more of our properties, whether in response to any changes in economic or other conditions or in response to a change in strategy, may be limited.

In the event we want to sell a property, we may not be able to do so in the desired time period, the sales price of the property may not meet our expectations or requirements, and/or we may be required to record an impairment loss on the property as a result.

Ground lease risks .

As of December 31, 2019, we had interests in thirteen land parcels in various markets which we lease individually on a long-term basis.

As of December 31, 2019, we had 2.3 million aggregate rentable square feet of rental space located on these leased parcels, from which we recognized 11.2% of total Net Operating Income ("NOI") in the fourth quarter of 2019.

As of December 31, 2020, we had interests in eleven land parcels in various markets which we lease individually on a long-term basis.

As of December 31, 2020, we had 2.3 million a ggregate rentable square feet of rental space located on these leased parcels, from which we recognized 11.1% of total Net Operating Income ("NOI") in the fourth quarter of 2020.

In the future, we may invest in additional properties on some of these parcels or additional parcels subject to ground leases.

Many of these ground leases and other restrictive agreements impose significant limitations on our uses of the subject property, restrict our ability to sell or otherwise transfer our interests in the property, or restrict our use of the property.

Many of these ground leases and other restrictive agreements impose significant limitations on our uses of the subject property and restrict our ability to sell or otherwise transfer our interests in the property.

These restrictions may limit our ability to timely sell or exchange the property, impair the property's value, or negatively impact our ability to find suitable tenants for the property.

5 unchanged sentences

Noncompliance could result in the imposition of fines by the federal government or the award of damages to private litigants.

If, under the Americans with Disabilities Act, we are required to make substantial alterations and capital

expenditures in one or more of our properties, including the removal of access barriers, it could adversely impact our earnings and cash flows, thereby impacting our ability to service debt and make distributions to our stockholders.

If, under the Americans with Disabilities Act, we are required to make substantial alterations and capital expenditures in one or more of our properties, including the removal of access barriers, it could adversely impact our earnings and cash flows, thereby impacting our ability to service debt and make distributions to our stockholders.

Our properties are subject to various federal, state, and local regulatory requirements, such as state and local fire, health, and life safety requirements.

4 unchanged sentences

We generally finance our acquisition and development projects through one or more of the following:

our Credit Facility, unsecured debt, non-recourse mortgages, construction loans, the sale of assets, joint venture equity, the issuance of common stock, the issuance of preferred stock, and the issuance of units of CPLP.

our $1 billion senior unsecured line of credit (the "Credit Facility"), unsecured debt, non-recourse mortgages, construction loans, the sale of assets, joint venture equity, the issuance of common stock, the issuance of preferred stock, and the issuance of units of CPLP.

Each of these sources may be constrained from time to time because of market conditions, and the related cost of raising this capital may be unfavorable at any given point in time.

These sources of capital, and the risks associated with each, include the following:

Table of C ontents

• Credit Facility .

37 unchanged sentences

Issuance of preferred stock could be dilutive to earnings per share and have an adverse effect on the trading price of common stock.

We can provide no assurance that conditions will be favorable for future issuances of preferred stock when we need the capital, which could have an adverse effect on our ability to fund acquisition and development activities.

We can provide no assurance that conditions will be favorable for future issuances of preferred

Table of C ontents

stock when we need the capital, which could have an adverse effect on our ability to fund acquisition and development activities.

• Operating partnership units .

24 unchanged sentences

Our degree of leverage could limit our ability to obtain additional financing or affect the market price of our securities.

Net debt as a percentage of either total asset value or total market capitalization and net debt as a multiple of annualized EBITDA is often used by analysts to gauge the financial health of equity REITs like us.

Net debt as a percentage of either total asset value or total market capitalization and net debt as a multiple of annualized EBITDA re are often used by analysts to gauge the financial health of equity REITs like us.

If our degree of leverage is viewed unfavorably by lenders or potential joint venture partners, it could affect our ability to obtain additional financing.

In general, our degree of leverage could also make us more vulnerable to a downturn in business or the economy.

Table of C ontents

general, our degree of leverage could also make us more vulnerable to a downturn in business or the economy.

In addition, increases in our net debt to market capitalization ratio, which is in part a function of our stock price, or to other measures of asset value used by financial analysts may have an adverse effect on the market price of common stock.

Changes in, or a discontinuation of, LIBOR could have an adverse impact on operations.

Changes in, or a discontinuation of, LIBOR would cause changes in how interest is calculated on our variable rate debt including our Credit Facility and term loan.

All of our variable rate debt has provisions allowing for interest to be calculated based off of rates other than LIBOR.

These alternative rates could be higher than LIBOR causing an increase in interest expense and negative impact on operations.

Changes in, or the planned discontinuation of, LIBOR could have an adverse impact on operations.

LIBOR has been the subject of regulatory guidance and proposals for reform and in July 2017, the United Kingdom's Financial Conduct Authority (the authority that regulates LIBOR) announced it intends to stop compelling banks to submit rates for the calculation of LIBOR after 2021.

Changes in, or the planned discontinuation of, LIBOR would cause changes in how interest is calculated on our variable rate debt including our Credit Facility and term loan.

Recent proposals for LIBOR reforms may result in the establishment of new methods of calculating LIBOR or the establishment of one or more alternative benchmark rates.

Our variable-interest debt instruments, including our Credit Facility and term loan facilities, provide for alternate interest rate calculations if LIBOR is no longer widely available or should the alternative interest rate prove more favorable.

There can be no assurances as to what alternative interest rates may be and whether such interest rates will be more or less favorable than LIBOR and any other unforeseen impacts of the potential discontinuation of LIBOR.

The Company intends to continue monitoring the developments with respect to the planned phasing out of LIBOR after 2021 and work with its lenders to ensure any transition away from LIBOR will have minimal impact on its financial condition.

Real Estate Acquisition and Development Risks

4 unchanged sentences

• the costs and timing of repositioning or redeveloping acquisitions;

• disproportionate concentrations of earnings in one or more markets;

• the acquisitions may fail to meet internal projections or otherwise fail to perform as expected;

17 unchanged sentences

We may incur significant costs for predevelopment activity for projects that are abandoned, which would directly affect our results of operations.

For projects that are abandoned, we must expense certain costs, such as salaries, that would have otherwise been capitalized.

For projects that are abandoned, we must expense certain costs, such as salaries, that would have otherwise been

Table of C ontents

We have procedures and controls in place that are intended to minimize this risk, but it is likely that we will incur predevelopment expense on abandoned projects on an ongoing basis.

25 unchanged sentences

• Competition .

We compete for tenants in our Sunbelt markets by highlighting our locations, rental rates, services, amenities, reputation, and the design and condition of our facilities including operational efficiencies and sustainability improvements.

We compete for tenants in our Sun Belt markets by highlighting our locations, rental rates, services, amenities, reputation, and the design and condition of our facilities including operational efficiencies and sustainability improvements.

As the competition for tenants is intense, we may be required to provide rent abatements, incur charges for tenant improvements and other concessions, or we may not be able to lease vacant space in a timely manner.

We may be unable to integrate the business of TIER successfully and realize the related benefits, or do so within the anticipated time frame.

The ongoing integration of the TIER business into our own will require significant management and resources.

may encounter difficulties in the integration process, or in realizing any of the expected benefits from the Merger, including the following:

lost sales and tenants as a result of certain tenants deciding not to do business with us;

the complexities associated with integrating personnel;

the additional complexities of combining two companies with different histories, cultures, regulatory restrictions, markets, and customer bases;

our failure to retain key employees;

potential unknown liabilities and unforeseen increased expenses, delays, or regulatory conditions associated with the Merger;

performance shortfalls as a result of the diversion of management's attention caused by completing the Merger.

For all these reasons, it is possible that the integration process could result in the distraction of our management, the disruption or our ongoing business, or inconsistencies in our services, standards, controls, procedures and policies, any of which could adversely affect our ability to maintain relationships with tenants, customers, vendors, and employees.

As a result of the Merger, the composition of our Board of Directors has changed.

Concurrent with the closing of the Merger, the Board of Directors has changed and currently consists of ten members, eight of which served on our Board of Directors prior to the Merger and two of which served on TIER's Board of Directors prior to the Merger.

Our success is dependent on our Board of Directors' experience, skills, and ability to work together and with our management team to implement a successful strategy.

If our Board of Directors is not successful, our ability to execute our business strategy could be adversely affected.

Our future results will suffer if we do not effectively manage our operations following the Merger.

Following the Merger, we may continue to expand our operations through additional acquisitions, development opportunities, and other strategic transactions, some of which involve complex challenges.

Our future success will depend, in part, upon our ability to manage our expansion opportunities.

This poses substantial challenges for us to integrate new operations into our existing business in an efficient and timely manner;

and to monitor successfully our operations, costs, regulatory compliance, and service quality;

and to maintain other necessary internal controls.

We cannot assure you that our expansion or acquisition opportunities will be successful, or that they will realize their expected operating efficiencies, cost savings, revenue enhancements, synergies, or other benefits.

General Business Risks

Federal Income Tax Risks

Any failure to continue to qualify as a REIT for federal income tax purposes could have a material adverse impact on us and our stockholders.

We intend to continue to operate in a manner to qualify as a REIT for federal income tax purposes.

Qualification as a REIT involves the application of highly technical and complex provisions of the Internal Revenue Code (the “Code”), for which there are only limited judicial or administrative interpretations.

Certain facts and circumstances not entirely within our

Table of C ontents

control may affect our ability to qualify as a REIT.

In addition, we can provide no assurance that legislation, new regulations, administrative interpretations, or court decisions will not adversely affect our qualification as a REIT or the federal income tax consequences of our REIT status.

If we were to fail to qualify as a REIT, we would not be allowed a deduction for distributions to stockholders in computing our taxable income.

In this case, we would be subject to federal income tax on our taxable income at regular corporate rates.

Unless entitled to relief under certain Code provisions, we also would be disqualified from operating as a REIT for the four taxable years following the year during which qualification was lost.

As a result, we would be subject to federal and state income taxes which could adversely affect our results of operations and distributions to stockholders.

Although we currently intend to operate in a manner designed to qualify as a REIT, it is possible that future economic, market, legal, tax, or other considerations may cause us to revoke the REIT election.

In order to qualify as a REIT, under current law, we generally are required each taxable year to distribute to our stockholders at least 90% of our net taxable income (excluding any net capital gain).

To the extent that we do not distribute all of our net capital gain or distribute at least 90%, but less than 100%, of our other taxable income, we are subject to tax on the undistributed amounts at regular corporate rates.

In addition, we are subject to a 4% nondeductible excise tax to the extent that distributions paid by us during the calendar year are less than the sum of the following:

• 85% of our ordinary income;

• 95% of our net capital gain income for that year;

• 100% of our undistributed taxable income (including any net capital gains) from prior years.

We generally intend to make distributions to our stockholders to comply with the 90% distribution requirement to avoid corporate-level tax on undistributed taxable income and to avoid the nondeductible excise tax.

Distributions could be made in cash, in stock, or in a combination of cash and stock.

Differences in timing between taxable income and cash available for distribution could require us to borrow funds to meet the 90% distribution requirement, to avoid corporate-level tax on undistributed taxable income, and to avoid the nondeductible excise tax.

Certain property transfers may be characterized as prohibited transactions.

From time to time, we may transfer or otherwise dispose of some of our properties.

Under the Code, any gains resulting from transfers or dispositions, from other than a taxable REIT subsidiary, that are deemed to be prohibited transactions would be subject to a 100% tax on any gain associated with the transaction.

Prohibited transactions generally include sales of assets that constitute inventory or other property held for sale to customers in the ordinary course of business.

Since we acquire properties primarily for investment purposes, we do not believe that our occasional transfers or disposals of property are deemed to be prohibited transactions.

However, whether or not a transfer or sale of property qualifies as a prohibited transaction depends on all the facts and circumstances surrounding the particular transaction.

The Internal Revenue Service ("IRS") may contend that certain transfers or disposals of properties by us are prohibited transactions.

While we believe that the IRS would not prevail in any such dispute, if the IRS were to argue successfully that a transfer or disposition of property constituted a prohibited transaction, we would be required to pay a tax equal to 100% of any gain allocable to us from the prohibited transaction.

In addition, income from a prohibited transaction might adversely affect our ability to satisfy the income tests for qualification as a REIT for federal income tax purposes.

Recent changes to the U.S.

tax laws could have an adverse impact on our business operations, financial condition, and earnings.

In recent years, numerous legislative, judicial, and administrative changes have been made in the provisions of federal and state income tax laws applicable to investments similar to an investment in our shares.

In particular, the comprehensive tax reform legislation enacted in December 2017 and commonly known as the Tax Cuts and Jobs Act ("TCJA") made many significant changes to the U.S.

federal income tax laws that will profoundly impact the taxation of individuals and corporations (including both regular C corporations and corporations that have elected to be taxed as REITs).

A number of changes that affect noncorporate taxpayers will expire at the end of 2025 unless Congress acts to extend them.

Among other changes, the Coronavirus Aid, Relief, and Economic Security Act, or CARES Act, signed into law on March 27, 2020, makes certain changes to the TCJA.

These changes will impact us and our stockholders in various ways, some of which are adverse or potentially adverse compared to prior law.

To date, the IRS has issued only limited guidance with respect to certain of the new provisions, and there are numerous interpretive issues that will require further guidance.

It is highly likely that technical corrections of legislation will be needed to clarify certain aspects of the new law and give proper effect to Congressional intent.

There can be no assurance, however, that technical clarifications or changes needed to prevent unintended or unforeseen tax consequences will be enacted by Congress in the near future.

Additional changes to tax laws are likely to continue to occur in the future, and we cannot assure investors that any such changes will not adversely affect the taxation of our stockholders.

Any such changes could have an adverse effect on an investment in shares or on the market value or the

Table of C ontents

resale potential of our properties.

Investors are urged to consult with their own tax advisor with respect to the impact of recent legislation on ownership of shares and the status of legislative, regulatory, or administrative developments and proposals, and their potential effect on ownership of shares.

We may face risks in connection with Section 1031 Exchanges.

When possible, we dispose of and acquire properties in transactions that are intended to qualify as Section 1031 Exchanges.

If a transaction's gain that is intended to qualify as a Section 1031 deferral is later determined to be taxable, we may face adverse consequences, and if the laws applicable to such transactions are amended or repealed, we may not be able to dispose of properties on a tax-deferred basis.

In such case, our taxable income and earnings and profits would increase.

This could increase the dividend income to our stockholders by reducing any return of capital they received.

In some circumstances, we may be required to pay additional dividends or, in lieu of that, corporate income tax, possibly including interest and penalties.

In addition, if a Section 1031 Exchange were later to be determined to be taxable, we may be required to amend our tax returns for the applicable year in question.

Further, as a result of changes made by the TCJA, Section 1031 Exchanges are only permitted with respect to real property.

The changes generally apply to exchanges completed after December 31, 2017, unless the property was disposed of or received in the exchange on or before such date.

If a material amount of personal property is associated with the real property that we have disposed of in a Section 1031 Exchange, these provisions will be less beneficial than under prior law.

Disclosure Controls and Internal Control over Financial Reporting Risks

Our business could be adversely impacted if we have deficiencies in our disclosure controls and procedures or internal control over financial reporting.

The design and effectiveness of our disclosure controls and procedures and internal control over financial reporting may not prevent all errors, misstatements, or misrepresentations.

While management will continue to review the effectiveness of our disclosure controls and procedures and internal control over financial reporting, there can be no guarantee that our internal control over financial reporting will be effective in accomplishing all control objectives at all times.

Deficiencies, including any material weakness, in our internal control over financial reporting which may occur in the future could result in misstatements of our results of operations, restatements of our financial statements, a decline in our stock price, or otherwise materially adversely affect our business, reputation, results of operations, financial condition, or liquidity.

General Risks

A pandemic, epidemic or outbreak of a contagious disease, such as the ongoing global pandemic of COVID-19, could adversely affect us.

Public health crises, pandemics, and epidemics, such as the ongoing COVID-19 pandemic, have had, and could continue to have, a material adverse effect on global, national, and local economies, as well as on our business and our tenants’ businesses.

The potential impact of a pandemic, epidemic, or outbreak of a contagious disease on our tenants and our properties is difficult to predict or assess.

The extent to which the ongoing COVID-19 pandemic, including the outbreaks in Atlanta, Austin, Charlotte, Phoenix, Tampa, and Dallas and actions taken to contain or slow them, continues to impact our operations and those of our tenants, will depend on future developments.

These may include the scope, severity, and duration of the pandemic, and the actions taken to mitigate its impact including the availability and effectiveness of vaccines or other treatments;

all of which are highly uncertain and unpredictable, but could be material.

The long-term impact of COVID-19 on the U.S.

and global economies is uncertain and could result in prolonged world-wide economic downturns and recessions that may lead to corporate bankruptcies among our tenants.

Any of these developments, and other effects of the ongoing global pandemic of COVID-19 or any other pandemic, epidemic, or outbreak of contagious disease, could adversely affect us.

In addition to the general economic impact of a pandemic, epidemic, or outbreak of a contagious disease, if an outbreak of COVID-19 occurs within the workforce of our tenants or otherwise disrupts their management and other personnel, the business and operating results of our tenants could be negatively impacted.

Large-scale “shelter in place”, “stay safe”, or "social distancing" executive orders and health guidance in Atlanta, Austin, Charlotte, Phoenix, Tampa, or Dallas, where we have high concentrations of our lease revenues, have caused many of our tenants, including retailers and restaurants, to stay closed or operate at reduced capacity for an extended period of time.

Although many (but not all) of these restrictions have been gradually lifted, national "social distancing" guidance has remained, and it remains unclear whether an initial surge in the level of business activity is likely to be sustained, especially if the areas in which our properties are located experience a resurgence in COVID-19 cases and/or are subject to the reimposition of previously lifted business restrictions, the imposition of new business restrictions, or the issuance of new or revised local or national health guidance.

The negative impact upon our tenants may include an immediate reduction in cash flow available to pay rent under our leases, and although various

Table of C ontents

governmental financial programs may mitigate this, governmental assistance may not be available to all affected tenants or may be significantly delayed or discontinued.

In turn, our tenants' inability to pay rent under our leases could adversely affect our own liquidity, and there can be no guarantee that additional liquidity will be readily available or available on favorable terms in the future.

Large-scale executive orders and other measures taken to curb the spread of COVID-19 may also negatively impact the ability of our properties to continue to obtain necessary goods and services or provide adequate staffing, which may also adversely affect our operating results and reputation.

Any increased costs or lost revenue as a result of tenant financial difficulty, or their need to comply with executive orders and other guidance from the Centers for Disease Control and Prevention, or other health agencies or departments may not be fully recoverable under our leases or adequately covered by insurance, which could impact our profitability.

In addition to the potential consequences listed above, these same factors may cause prospective tenants to delay their leasing decisions or to lease less space.

Even after the pandemic has ceased to be active, the prevalence of work-from-home policies during the pandemic may alter tenant preferences in the long-term with respect to the demand for leasing office space.

We are dependent upon the services of certain key personnel, including members of the Board of Directors, the loss of any of whom could adversely impact our ability to execute our business.

10 unchanged sentences

Our restated and amended articles of incorporation impose limitations on the ownership of our stock.

In general, except for certain individuals who owned stock at the time of adoption of these limitations, and except for persons or organizations that

are granted waivers by our Board of Directors, no individual or entity may own more than 3.9% of the value of our outstanding stock.

We provide waivers to this limitation on a case by case basis, which could result in increased voting control by a shareholder.

In general, except for certain individuals who owned stock at the time of adoption of these limitations, and except for persons or organizations that are granted waivers by our Board of Directors, no individual or entity may own more than 3.9% of the value of our outstanding stock.

We provide waivers to this limitation on a case by case basis, which could result in increased voting control by a stockholder.

The ownership limitation may have the effect of delaying, inhibiting, or preventing a transaction or a change in control that might involve a premium price for our stock or otherwise be in the best interest of our stockholders.

11 unchanged sentences

• any failure to comply with existing debt covenants;

Table of C ontents

• any foreclosure or deed in lieu of foreclosure of our properties;

4 unchanged sentences

• general market and economic conditions;

in particular, market and economic conditions of Atlanta, Charlotte, Austin, Phoenix, Tampa, and Dallas.

in particular, market and economic conditions of Atlanta, Austin, Charlotte, Phoenix, Tampa, and Dallas.

Many of the factors listed above are beyond our control.

11 unchanged sentences

Our IT networks and related systems are essential to the operation of our business and our ability to perform day-to-day operations (including managing our building systems) and, in some cases, may be critical to the operations of certain of our tenants.

of these types of IT networks and related systems will be effective or that attempted security breaches or disruptions would not be successful or damaging.

While, to date, we have not had a significant cyber breach or attack that had a material impact on our business or results of operations, there can be no assurance that our efforts to maintain the security and integrity of these types of IT networks and related systems will be effective or that attempted security breaches or disruptions would not be successful or damaging.

A security breach or other significant disruption involving our IT networks and related systems could adversely impact our financial condition, results of operations, cash flows, liquidity, and the market price of our common stock.

2 unchanged sentences

As cyber threats continue to evolve, we may be required to expend additional resources to continue to enhance our information security measures and to investigate and remediate any information security vulnerabilities.

Federal Income Tax Risks

Any failure to continue to qualify as a REIT for federal income tax purposes could have a material adverse impact on us and our stockholders.

We intend to continue to operate in a manner to qualify as a REIT for federal income tax purposes.

Certain facts and circumstances not entirely within our control may affect our ability to qualify as a REIT.

If we were to fail to qualify as a REIT, we would not be allowed a deduction for distributions to stockholders in computing our taxable income.

In this case, we would be subject to federal income tax on our taxable income at regular corporate rates.

Unless entitled to relief under certain Code provisions, we also would be disqualified from operating as a REIT for the four taxable years following the year during which qualification was lost.

As a result, we would be subject to federal and state income taxes which could adversely affect our results of operations and distributions to stockholders.

In addition, we are subject to a 4% nondeductible excise tax to the extent that distributions paid by us during the calendar year are less than the sum of the following:

85% of our ordinary income;

95% of our net capital gain income for that year;

100% of our undistributed taxable income (including any net capital gains) from prior years.

Distributions could be made in cash, in stock, or in a combination of cash and stock.

Certain property transfers may be characterized as prohibited transactions.

From time to time, we may transfer or otherwise dispose of some of our properties.

Prohibited transactions generally include sales of assets that constitute inventory or other property held for sale to customers in the ordinary course of business.

Since we acquire properties primarily for investment purposes, we do not believe that our occasional transfers or disposals of property are deemed to be prohibited transactions.

However, whether or not a transfer or sale of property qualifies as a prohibited transaction depends on all the facts and circumstances surrounding the particular transaction.

The Internal Revenue Service may contend that certain transfers or disposals of properties by us are prohibited transactions.

While we believe that the Internal Revenue Service would not prevail in any such dispute, if the Internal Revenue Service were to argue successfully that a transfer or disposition of property constituted a prohibited transaction, we would be required to pay a tax equal to 100% of any gain allocable to us from the prohibited transaction.

In addition, income from a prohibited transaction might adversely affect our ability to satisfy the income tests for qualification as a REIT for federal income tax purposes.

We may face risks in connection with Section 1031 Exchanges.

When possible, we dispose of and acquire properties in transactions that are intended to qualify as Section 1031 Exchanges.

In such case, our taxable income and earnings and profits would increase.

This could increase the dividend income to our stockholders by reducing any return of capital they received.

In some circumstances, we may be required to pay additional dividends or, in lieu of that, corporate income tax, possibly including interest and penalties.

In addition, if a Section 1031 Exchange were later to be determined to be taxable, we may be required to amend our tax returns for the applicable year in question.

Recent changes to the U.S.

tax laws could have an adverse impact on our business operations, financial condition, and earnings.

In particular, the comprehensive tax reform legislation enacted in December 2017 and commonly known as the Tax Cuts and Jobs Act, or TCJA, makes many significant changes to the U.S.

federal income tax laws that will profoundly impact the taxation of individuals and corporations (including both regular C corporations and corporations that have elected to be taxed as REITs).

A number of changes that affect noncorporate taxpayers will expire at the end of 2025 unless Congress acts to extend them.

These changes will impact us and our shareholders in various ways, some of which are adverse or potentially adverse compared to prior law.

Although the IRS has issued guidance with respect to certain of the new provisions, there are numerous interpretive issues that will require further guidance.

It is highly likely that technical corrections legislation will be needed to clarify certain aspects of the new law and give proper effect to Congressional intent.

There can be no assurance, however, that technical clarifications or changes needed to prevent unintended or unforeseen tax consequences will be enacted by Congress in the near future.

Additional changes to tax laws are likely to continue to occur in the future, and we cannot assure investors that any such changes will not adversely affect the taxation of our stockholders.

Any such changes could have an adverse effect on an investment in shares or on the market value or the resale potential of our properties.

Disclosure Controls and Internal Control over Financial Reporting Risks

Our business could be adversely impacted if we have deficiencies in our disclosure controls and procedures or internal control over financial reporting.

The design and effectiveness of our disclosure controls and procedures and internal control over financial reporting may not prevent all errors, misstatements, or misrepresentations.

Unresolved Staff Comments

Not applicable.

Table of C ontents

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

What changed 10-K

Item 1A. Risk Factors