5 unchanged sentences
For cautions about relying on forward-looking statements see “Forward Looking Statements” at the beginning of this Report.
+Added: Our risk factors are grouped into the following categories:
• Risks Related to Our Properties and Our Business;
+Added: • Risks Related to Our Organization and Structure;
+Added: • Risks Related to Taxes and Our Status as a REIT;
+Added: • General Risks.
+Added: Risks Related to Our Properties and Our Business
+Added: The COVID-19 global pandemic could adversely affect our business, financial position, results of operations, cash flows, our ability to service our debt, our ability to pay dividends to our stockholders, our REIT status, our ability to capitalize on business opportunities as they arise, our ability to raise capital, and/or the market price of our common stock.
+Added: The COVID-19 global pandemic has led to severe disruption to general economic activities as governments and businesses take actions to mitigate the public health crisis.
+Added: The extent to which the COVID-19 global pandemic ultimately impacts our business will depend on future developments, which are highly uncertain and cannot be predicted, including, but not limited to, the duration and spread of the outbreak, its severity, the actions taken to contain the virus, and how quickly and to what extent normal economic and operating conditions resume.
+Added: Even if the COVID-19 global pandemic subsides, we may continue to experience significant impacts to our business as a result of its global economic impact, including any resulting economic recession.
+Added: Although the impacts of the pandemic cannot be predicted at this time, some potential impacts from the pandemic could include:
+Added: • Government actions that reduce or otherwise hinder our ability to collect rent promptly or at all, adversely affect tenant demand, increase our costs or otherwise reduce our collections;
+Added: • Supply chain, governmental or other disruptions that adversely affect construction or our operations and/or those of our tenants;
+Added: • Economic pressure on our tenants, which could lead to lower collections or defaults;
+Added: • Reduced or different tenant demand, leading to lower occupancy and/or rental rates in our buildings;
+Added: • Increases in expenses and/or capital investments or decreases in tenant demand as a result of safety concerns;
+Added: • Increased risks of IT disruptions and/or cyber attacks as a result of our employees or tenants working remotely;
+Added: • Disruption of our operations as a result of the illness or social distancing of our employees or tenants;
+Added: • Changes in the financial markets, the value of our properties and/or our cash flows which adversely affect our stock price and/or our tenants' access to needed debt or equity capital on reasonable or any terms;
+Added: • Increases in the cost or availability, or changes to the terms, of insurance.
All of our properties are located in Los Angeles County, California and Honolulu, Hawaii, and we are therefore exposed to greater risk than if we owned a more geographically diverse portfolio.
10 unchanged sentences
• competition from other real estate investors, including other real estate operating companies, publicly-traded REITs and institutional investment funds;
−Removed: reduced tenant demand for office space and residential units from matters such as (i) changes in space utilization, (ii) changes in the relative popularity of our properties, (iii) the type of space we provide or (iv) purchasing versus leasing;
+Added: • reduced tenant demand for office space and residential units from matters such as (i) trends in space utilization, (ii) changes in the relative popularity of our properties, (iii) the type of space we provide or (iv) purchasing versus leasing;
• reduced demand for parking space due to the impact of technology such as self driving cars, and the increasing popularity of car ride sharing services;
53 unchanged sentences
New regulations in the submarkets in which we operate could require us to make safety improvements to our buildings, for example requiring us to retrofit our buildings to better withstand earthquakes, and we could incur significant costs complying with those regulations.
−Removed: Terrorism and war could harm our business and operating results.
−Removed: The possibility of future terrorist attacks or war could have a negative impact on our operations, even if they are not directed at our properties and even if they never actually occur.
−Removed: Terrorist attacks can also substantially affect the availability and price of insurance coverage for certain types of damages or occurrences, and our insurance policies for terrorism include large deductibles and co-payments.
−Removed: The lack of sufficient insurance for these types of acts could expose us to significant losses.
−Removed: Security breaches through cyber attacks, cyber intrusions or otherwise, as well as other significant disruptions of our IT networks and related systems could harm our business.
−Removed: We face risks associated with security breaches, whether through cyber attacks or cyber intrusions over the Internet, malware, computer viruses, attachments to e-mails, persons inside our organization or persons with access to systems inside our organization and other significant disruptions of our IT networks and related systems.
−Removed: The risk of a security breach or disruption, particularly through cyber attack or cyber intrusion, including by computer hackers, foreign governments and cyber terrorists, has generally increased as the number, intensity and sophistication of attempted attacks and intrusions from around the world have increased.
−Removed: 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.
−Removed: Although we make efforts to maintain the security and integrity of these types of IT networks and related systems, and have implemented various measures to manage the risk of a security breach or disruption, there can be no assurance that our efforts will be effective in preventing attempted security breaches or disruptions.
−Removed: Even the most well protected information, networks, systems and facilities remain potentially vulnerable because the techniques used in such attempted security breaches evolve and generally are not recognized until launched against a target, and in some cases are designed not be detected and, in fact, may not be detected.
−Removed: Accordingly, we may be unable to anticipate these techniques or to implement adequate security barriers or other preventative measures, and thus it is impossible for us to entirely mitigate this risk.
−Removed: A security breach or other significant disruption involving our IT networks and related systems could have an adverse effect on our business, for example:
−Removed: Disruption to our networks and systems and thus our operations and/or those of our tenants or vendors;
−Removed: Misstated financial reports, violations of loan covenants, missed reporting deadlines and missed permitting deadlines;
−Removed: Inability to comply with laws and regulations;
−Removed: Unauthorized access to, destruction, loss, theft, misappropriation or release of proprietary, confidential, sensitive or otherwise valuable information of ours or others, which others could be used to compete against us or for disruptive, destructive or otherwise harmful purposes;
−Removed: Rendering us unable to maintain the building systems relied upon by our tenants;
−Removed: The requirement of significant management attention and resources to remedy any damages that result;
−Removed: Claims for breach of contract, damages, credits, penalties or termination of leases or other agreements;
−Removed: Damage to our reputation among our tenants, investors, or others.
We may be unable to renew leases or lease vacant space.
43 unchanged sentences
All of our multifamily properties in Los Angeles County are affected by these laws and regulations.
−Removed: Under current California law we are able to increase rents to market rates once a tenant vacates a rent-controlled unit, however increases in rental rates for renewing tenants are limited by California, Los Angeles and Santa Monica rent control regulations.
+Added: Under current California law we are able to increase rents to market rates once a tenant vacates a rent-controlled unit;
+Added: however, increases in rental rates for renewing tenants are limited by California, Los Angeles and Santa Monica rent control regulations.
Hawaii does not have state mandated rent control, however portions of the Honolulu multifamily market are subject to low- and moderate-income housing regulations.
7 unchanged sentences
• competition from other potential acquirers may significantly increase the purchase price of a desired property;
−Removed: we may acquire properties that are not accretive to our results upon acquisition or we may not successfully manage and lease them up to meet our expectations;
+Added: • we may acquire properties that are not accretive to our results upon acquisition or we may not successfully manage and
+Added: lease them up to meet our expectations;
• we may be unable to generate sufficient cash from operations, or obtain the necessary debt or equity financing to consummate an acquisition or, if obtained, the financing may not be on favorable terms;
41 unchanged sentences
If our available cash were to decline significantly below our taxable income, we could lose our REIT status unless we could borrow to make such distributions or make any required distributions in common stock.
−Removed: Our property taxes could increase due to property tax rate changes, reassessments or changes in property tax laws, which would adversely impact our cash flows.
−Removed: We are required to pay property taxes for our properties, which could increase as property tax rates increase or as our properties are assessed or reassessed by taxing authorities.
−Removed: In California, under current law, reassessment occurs primarily as a result of a “change in ownership”.
−Removed: A potential reassessment may take a considerable amount of time, during which the property taxing authorities make a determination of the occurrence of a “change of ownership”, as well as the actual reassessed value.
−Removed: In addition, from time to time, there have been proposals to base property taxes on commercial properties on their current market value, without any limit based on purchase price.
−Removed: If any similar proposal were adopted, the property taxes we pay could increase substantially.
−Removed: In California, pursuant to an existing state law commonly referred to as Proposition 13, properties are reassessed to market value only at the time of change in ownership or completion of construction, and thereafter, annual property reassessments are limited to 2% increases over the previously assessed values.
−Removed: As a result, Proposition 13 generally results in significant below-market assessed values over time.
−Removed: From time to time, including recently, lawmakers and political coalitions have initiated efforts to repeal or amend Proposition 13 to eliminate its application to commercial and industrial properties.
−Removed: If successful, a repeal of Proposition 13 could substantially increase the assessed values and property taxes for our properties in California.
−Removed: If a transaction intended to qualify as a Section 1031 Exchange is later determined to be taxable or if we are unable to identify and complete the acquisition of a suitable replacement property to effect a Section 1031 Exchange, 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 .
−Removed: From time to time we may dispose of properties in transactions that are intended to qualify as tax deferred exchanges under Section 1031 of the Code (Section 1031 Exchanges).
−Removed: It is possible that the qualification of a transaction as a Section 1031 Exchange could be successfully challenged and determined to be currently taxable.
−Removed: In such cases, our taxable income would increase as would the amount of distributions we are required to make to satisfy our REIT distribution requirements.
−Removed: This could increase the dividend income to our stockholders by reducing any return of capital they receive.
−Removed: In some circumstances, we may be required to pay additional dividends or, in lieu of that, corporate income tax, possibly including interest and penalties.
−Removed: As a result, we may be required to borrow in order to pay additional dividends or taxes, and the payment of such taxes could cause us to have less cash available to distribute to our stockholders.
−Removed: 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, including any reports we distributed to our stockholders.
−Removed: It is possible that legislation could be enacted that could modify or repeal the laws with respect to Section 1031 Exchanges, which could make it more difficult or not possible for us to dispose of properties on a tax deferred basis.
We face risks associated with contractual counterparties being designated “Prohibited Persons” by the Office of Foreign Assets Control.
3 unchanged sentences
If a party with whom we contract is placed on the OFAC list we may be required by the OFAC regulations to terminate the agreement, which could result in a losses or a damage claim by the other party that the termination was wrongful.
+Added: Terrorism and war could harm our business and operating results.
+Added: The possibility of future terrorist attacks or war could have a negative impact on our operations, even if they are not directed at our properties and even if they never actually occur.
+Added: Terrorist attacks can also substantially affect the availability and price of insurance coverage for certain types of damages or occurrences, and our insurance policies for terrorism include large deductibles and co-payments.
+Added: The lack of sufficient insurance for these types of acts could expose us to significant losses.
Risks Related to Our Organization and Structure
6 unchanged sentences
As a result, our executive officers, to the extent that they vote their shares in a similar manner, will have significant influence over our affairs and could exercise such influence in a manner that is not in the best interests of our other stockholders, including by attempting to delay, defer or prevent a change of control transaction that might otherwise be in the best interests of our stockholders.
+Added: Under their employment agreements, certain of our executive officers will receive severance if they are terminated without cause or resign for good reason.
+Added: We have employment agreements with Jordan L.
+Added: Kaplan, Kenneth M.
+Added: Panzer and Kevin A.
+Added: Crummy, which provide each executive with severance if they are terminated without cause or resign for good reason (including following a change of control), based on two or three times (depending on the officer) his annual total of salary, bonus and incentive compensation such as LTIP Units, options or outperformance grants.
+Added: In addition, these executive officers would not be restricted from competing with us after their departure.
+Added: The loss of any of our executive officers or key senior personnel could significantly harm our business.
+Added: Our ability to maintain our competitive position is largely dependent upon the skill and effort of our executive officers and key personnel, who have significant real estate industry experience, strong industry reputations and networks, and assist us in identifying acquisition, disposition, development and borrowing opportunities, negotiating with tenants and sellers of properties, and managing our development projects and the operations of our properties.
+Added: If we lose the services of any of our executive officers or key senior personnel our business could be adversely affected.
+Added: Compensation awards to our management may not be tied to or correspond with improved financial results or the market price of our common stock.
+Added: The compensation committee of our board of directors is responsible for overseeing our compensation and incentive compensation plans.
+Added: Our compensation committee has significant discretion in structuring compensation packages and may make compensation decisions based on any number of factors.
+Added: Compensation awards may not be tied to or correspond with improved financial results or the market price of our common stock.
+Added: See Note 13 to our consolidated financial statements in Item 15 of this Report for more information regarding our stock-based compensation.
+Added: Our board of directors may change significant corporate policies without stockholder approval.
+Added: Our investment, financing, borrowing, dividend, operating and other policies are determined by our board of directors.
+Added: These policies may be amended or revised at any time and from time to time at the discretion of our board of directors without a vote of our stockholders.
+Added: Our board of directors may change our policies with respect to conflicts of interest provided that such changes are consistent with applicable legal requirements.
Our growth depends on external sources of capital which are outside of our control.
In order to qualify as a REIT, we are required under the Code to distribute annually at least 90% of our “REIT taxable income", determined without regard to the dividends paid deduction and by excluding any net capital gain.
−Removed: To the extent that we do not distribute all of our net long-term capital gains or at least 90% of our REIT taxable income, we will be required to pay tax thereon at regular corporate tax rates.
+Added: To the extent that we do not distribute all of our net long-term capital gains or at least 90% of our REIT taxable income, we will be required to pay tax thereon at the regular corporate tax rate.
Because of these distribution requirements, we may not be able to fund future capital needs from our operating cash flows, including acquisitions, development and debt refinancing.
38 unchanged sentences
Our charter, bylaws, our Operating Partnership agreement and Maryland law also contain other provisions that may delay, defer or prevent a transaction or a change of control that might involve a premium price for our common stock or otherwise be in the best interest of our stockholders.
−Removed: Under their employment agreements, certain of our executive officers will receive severance if they are terminated without cause or resign for good reason.
−Removed: We have employment agreements with Jordan L.
−Removed: Kaplan, Kenneth M.
−Removed: Panzer and Kevin A.
−Removed: Crummy, which provide each executive with severance if they are terminated without cause or resign for good reason (including following a change of control), based on two or three times (depending on the officer) his annual total of salary, bonus and incentive compensation such as LTIP Units, options or outperformance grants.
−Removed: In addition, these executive officers would not be restricted from competing with us after their departure.
Our fiduciary duties as the sole stockholder of the general partner of our Operating Partnership could create conflicts of interest.
4 unchanged sentences
For example, we are unable to modify the rights of limited partners to receive distributions as set forth in the Operating Partnership agreement in a manner that adversely affects their rights without their consent, even though such modification might be in the best interest of our stockholders.
−Removed: The loss of any of our executive officers or key senior personnel could significantly harm our business.
−Removed: Our ability to maintain our competitive position is largely dependent on the skill and effort of our executive officers and key senior personnel, who have strong industry reputations, assist us in identifying acquisition and borrowing opportunities, having such opportunities brought to us, and negotiating with tenants and sellers of properties.
−Removed: If we lose the services of any of our executive officers or key senior personnel our business could be adversely affected.
−Removed: Our board of directors may change significant corporate policies without stockholder approval.
−Removed: Our investment, financing, borrowing, dividend, operating and other policies are determined by our board of directors.
−Removed: These policies may be amended or revised at any time and from time to time at the discretion of our board of directors without a vote of our stockholders.
−Removed: Our board of directors may change our policies with respect to conflicts of interest provided that such changes are consistent with applicable legal requirements.
−Removed: Compensation awards to our management may not be tied to or correspond with improved financial results or the market price of our common stock.
−Removed: The compensation committee of our board of directors is responsible for overseeing our compensation and incentive compensation plans.
−Removed: Our compensation committee has significant discretion in structuring compensation packages and may make compensation decisions based on any number of factors.
−Removed: Compensation awards may not be tied to or correspond with improved financial results or the market price of our common stock.
−Removed: See Note 13 to our consolidated financial statements in Item 15 of this Report for more information regarding our stock-based compensation.
−Removed: 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.
−Removed: 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.
−Removed: There can be no guarantee that our internal controls over financial reporting will be effective in accomplishing all control objectives all of the time.
−Removed: Deficiencies, including material weaknesses, in our internal control over financial reporting that may occur in the future could result in material misstatements in our financial reporting, which could result in restatements of our financial statements.
−Removed: Failure to maintain effective internal controls could cause us to not meet our reporting obligations, which could affect our ability to remain listed with the NYSE or result in SEC enforcement actions, and could cause investors to lose confidence in our reported financial information.
−Removed: Litigation could have an adverse effect on our business.
−Removed: From time to time, we are party to various lawsuits, claims and other legal proceedings that arise in the ordinary course of our business.
−Removed: An unfavorable resolution of litigation could adversely affect us.
−Removed: Even when there is a favorable outcome, litigation may result in substantial expenses and significantly divert the attention of our management with a similar adverse effect on us.
−Removed: New accounting pronouncements could adversely affect our operating results or the reported financial performance of our tenants.
−Removed: Accounting policies and methods are fundamental to how we record and report our financial condition and results of operations.
−Removed: Uncertainties posed by various initiatives of accounting standard-setting by the FASB and the SEC, which create and interpret applicable accounting standards for U.S.
−Removed: companies, may change the financial accounting and reporting standards or their interpretation and application of these standards that govern the preparation of our financial statements.
−Removed: Similarly, these changes could have a material impact on our tenants’ reported financial condition or results of operations, credit ratings and preferences regarding leasing real estate.
−Removed: See "New Accounting Pronouncements" in Note 2 to our consolidated financial statements in Item 15 of this Report.
Risks Related to Taxes and Our Status as a REIT
−Removed: Prospective investors should consult with their tax advisors regarding the effects of recently enacted tax legislation and other legislative, regulatory and administrative developments.
−Removed: On December 22, 2017, the Tax Cuts and Jobs Act (the “ TCJA ”) was signed into law.
−Removed: The TCJA makes major changes to the Code, including a number of provisions of the Code that affect the taxation of REITs and their stockholders.
−Removed: Among the changes made by the TCJA are:
−Removed: permanently reducing the generally applicable corporate tax rate,
−Removed: generally reducing the tax rate applicable to individuals and other non-corporate taxpayers for tax years beginning after December 31, 2017 and before January 1, 2026,
−Removed: (iii) eliminating or modifying certain previously allowed deductions (including substantially limiting interest deductibility, compensation deductions in excess of $1.0 million per year for certain executives of publicly held corporations and, for individuals, the deduction for non-business state and local taxes),
−Removed: (iv) for taxable years beginning after December 31, 2017 and before January 1, 2026, providing for preferential rates of taxation through a deduction of up to 20% (subject to certain limitations) on most ordinary REIT dividends and certain trade or business income of non-corporate taxpayers, and
−Removed: imposes new limitations on the deduction of net operating losses, which may result in us having to make additional taxable distributions to our stockholders in order to comply with REIT distribution requirements or avoid taxes on retained income and gains.
−Removed: The effect of the significant changes made by the TCJA are uncertain, and the IRS has issued only limited guidance to date, additional administrative guidance will be required in order to fully evaluate the effect of many provisions.
−Removed: The effect of any technical corrections with respect to the TCJA could have an adverse effect on us or our stockholders.
−Removed: Investors should consult their tax advisors regarding the implications of the TCJA on their investment in our common stock.
+Added: Our property taxes could increase due to property tax rate changes, reassessments or changes in property tax laws, which would adversely impact our cash flows.
+Added: We are required to pay property taxes for our properties, which could increase as property tax rates increase or as our properties are assessed or reassessed by taxing authorities.
+Added: In California, under current law, reassessment occurs primarily as a result of a “change in ownership”.
+Added: A potential reassessment may take a considerable amount of time, during which the property taxing authorities make a determination of the occurrence of a “change of ownership”, as well as the actual reassessed value.
+Added: In addition, from time to time, there have been proposals to base property taxes on commercial properties on their current market value, without any limit based on purchase price.
+Added: If any similar proposal were adopted, the property taxes we pay could increase substantially.
+Added: In California, pursuant to an existing state law commonly referred to as Proposition 13, properties are reassessed to market value only at the time of change in ownership or completion of construction, and thereafter, annual property reassessments are limited to 2% increases over the previously assessed values.
+Added: As a result, Proposition 13 generally results in significant below-market assessed values over time.
+Added: From time to time, including recently, lawmakers and political coalitions have initiated efforts to repeal or amend Proposition 13 to eliminate its application to commercial and industrial properties.
+Added: If successful, a repeal of Proposition 13 could substantially increase the assessed values and property taxes for our properties in California.
Failure to qualify as a REIT would result in higher taxes and reduced cash available for distributions.
21 unchanged sentences
In addition, any net taxable income earned directly by our TRS, or through entities that are disregarded for federal income tax purposes as entities separate from our TRS, will be subject to federal and possibly state corporate income tax.
−Removed: We have elected to treat several subsidiaries as TRSs, and we may elect to treat other subsidiaries as TRSs in the future.
+Added: We have elected to treat one of our subsidiaries as a TRS, and we may elect to treat other subsidiaries as TRSs in the future.
In this regard, several provisions of the laws applicable to REITs and their subsidiaries ensure that a TRS will be subject to an appropriate level of federal income taxation.
−Removed: For example, for taxable years prior to 2018, a TRS is limited in its ability to deduct interest payments made to an affiliated REIT.
+Added: For example, for taxable years prior to 2018, a TRS is limited in its ability to deduct interest payments made to an affiliated REIT and, for taxable years after 2017, a TRS is subject to more general limitations on its ability to deduct interest payments to any lender.
In addition, the REIT has to pay a 100% tax on some payments that it receives or on some deductions taken by its TRS if the economic arrangements between the REIT, the REIT’s tenants, and the TRS are not comparable to similar arrangements between unrelated parties.
6 unchanged sentences
To qualify as a REIT, we generally must distribute annually at least 90% of our REIT taxable income, excluding any net capital gains.
−Removed: To the extent that we do not distribute all of our net long-term capital gains or at least 90% of our REIT taxable income, we will be required to pay tax thereon at regular corporate tax rates.
+Added: To the extent that we do not distribute all of our net long-term capital gains or at least 90% of our REIT taxable income, we will be required to pay tax thereon at the regular corporate tax rate.
We intend to make distributions to our stockholders to comply with the Code requirements for REITs and to minimize or eliminate our corporate income tax obligation.
−Removed: Certain types of assets generate substantial mismatches between taxable income and available cash.
+Added: Certain types of assets and activities generate substantial mismatches between taxable income and available cash, either because of differences in timing between the recognition of income and the actual receipt of cash or because of differences between the deduction of expenses and the actual payment of those expenses.
Such assets include rental real estate that has been financed through financing structures which require some or all of available cash flows to be used to service borrowings.
−Removed: As a result, the requirement to distribute a substantial portion of our taxable income could cause us to sell assets in adverse market conditions, borrow on unfavorable terms, distribute amounts that could otherwise be used to fund our operations, capital expenditures, acquisitions or repayment of debt, or cause us to forego otherwise attractive opportunities.
−Removed: Dividends payable by REITs do not qualify for the reduced tax rates available for some dividends.
−Removed: The maximum federal tax rate (not including the Medicare Contribution Tax on unearned income) applicable to income from “qualified dividends” payable to U.S.
−Removed: stockholders that are individuals, trusts and estates is 20%.
−Removed: Dividends payable by REITs, however, generally are not eligible for the 20% rate.
−Removed: However, under the TCJA, for taxable years beginning after December 31, 2017 and before January 1, 2026, individuals, trusts, and estates generally may deduct up to 20% of ordinary REIT dividends.
−Removed: Although these rules do not adversely affect the taxation of REITs or dividends payable by REITs, investors who are individuals, trusts and estates may perceive investments in REITs to be relatively less attractive than investments in the stocks of non-REIT corporations that pay dividends.
+Added: As a result, the requirement to distribute a substantial portion of our taxable income could cause us to sell assets in adverse market conditions, borrow on unfavorable terms, make a taxable distribution of our stock as part of a distribution in which stockholders may elect to receive our stock or (subject to a limit measured as a percentage of the total distribution) cash, distribute amounts that could otherwise be used to fund our operations, capital expenditures, acquisitions or repayment of debt, or cause us to forego otherwise attractive opportunities.
REIT stockholders can receive taxable income without cash distributions .
1 unchanged sentence
If we were to avail ourselves of that option, our stockholders could be required to pay taxes on such stock distributions without the benefit of cash distributions to pay the resulting taxes.
+Added: If a transaction intended to qualify as a Section 1031 Exchange is later determined to be taxable or if we are unable to identify and complete the acquisition of a suitable replacement property to effect a Section 1031 Exchange, 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 .
+Added: From time to time we may dispose of real properties in transactions that are intended to qualify as tax deferred exchanges under Section 1031 of the Code (Section 1031 Exchanges).
+Added: It is possible that the qualification of a transaction as a Section 1031 Exchange could be successfully challenged and determined to be currently taxable.
+Added: In such cases, our taxable income would increase as would the amount of distributions we are required to make to satisfy our REIT distribution requirements.
+Added: This could increase the dividend income to our stockholders by reducing any return of capital they receive.
+Added: In some circumstances, we may be required to pay additional dividends or, in lieu of that, corporate income tax, possibly including interest and penalties.
+Added: As a result, we may be required to borrow in order to pay additional dividends or taxes, and the payment of such taxes could cause us to have less cash available to distribute to our stockholders.
+Added: 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, including any reports we distributed to our stockholders.
+Added: It is possible that legislation could be enacted that could modify or repeal the laws with respect to Section 1031 Exchanges, which could make it more difficult or not possible for us to dispose of properties on a tax deferred basis.
Legislative or other actions affecting REITs could have a negative effect on our investors or us, including our ability to maintain our qualification as a REIT or the federal income tax consequences of such qualification.
19 unchanged sentences
stockholder has not owned more than 10% of our common stock at any time during the year preceding the distribution and our common stock is treated as being “regularly traded”.
+Added: General Risks
+Added: Security breaches through cyber attacks, cyber intrusions or otherwise, as well as other significant disruptions of our IT networks and related systems could harm our business.
+Added: We face risks associated with security breaches, whether through cyber attacks or cyber intrusions over the Internet, malware, computer viruses, attachments to e-mails, persons inside our organization or persons with access to systems inside our organization and other significant disruptions of our IT networks and related systems.
+Added: The risk of a security breach or disruption, particularly through cyber attack or cyber intrusion, including by computer hackers, foreign governments and cyber terrorists, has generally increased as the number, intensity and sophistication of attempted attacks and intrusions from around the world have increased.
+Added: 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.
+Added: Although we make efforts to maintain the security and integrity of these types of IT networks and related systems, and have implemented various measures to manage the risk of a security breach or disruption, there can be no assurance that our efforts will be effective in preventing attempted security breaches or disruptions.
+Added: Even the most well protected information, networks, systems and facilities remain potentially vulnerable because the techniques used in such attempted security breaches evolve and generally are not recognized until launched against a target, and in some cases are designed not be detected and, in fact, may not be detected.
+Added: Accordingly, we may be unable to anticipate these techniques or to implement adequate security barriers or other preventative measures, and thus it is impossible for us to entirely mitigate this risk.
+Added: A security breach or other significant disruption involving our IT networks and related systems could have an adverse effect on our business, for example:
+Added: • Disruption to our networks and systems and thus our operations and/or those of our tenants or vendors;
+Added: • Misstated financial reports, violations of loan covenants, missed reporting deadlines and missed permitting deadlines;
+Added: • Inability to comply with laws and regulations;
+Added: • Unauthorized access to, destruction, loss, theft, misappropriation or release of proprietary, confidential, sensitive or otherwise valuable information of ours or others, which others could be used to compete against us or for disruptive, destructive or otherwise harmful purposes;
+Added: • Rendering us unable to maintain the building systems relied upon by our tenants;
+Added: • The requirement of significant management attention and resources to remedy any damages that result;
+Added: • Claims for breach of contract, damages, credits, penalties or termination of leases or other agreements;
+Added: • Damage to our reputation among our tenants, investors, or others.
+Added: Litigation could have an adverse effect on our business.
+Added: From time to time, we are party to various lawsuits, claims and other legal proceedings that arise in the ordinary course of our business.
+Added: An unfavorable resolution of litigation could adversely affect us.
+Added: Even when there is a favorable outcome, litigation may result in substantial expenses and significantly divert the attention of our management with a similar adverse effect on us.
+Added: 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.
+Added: 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.
+Added: There can be no guarantee that our internal controls over financial reporting will be effective in accomplishing all control objectives all of the time.
+Added: Deficiencies, including material weaknesses, in our internal control over financial reporting that may occur in the future could result in material misstatements in our financial reporting, which could result in restatements of our financial statements.
+Added: Failure to maintain effective internal controls could cause us to not meet our reporting obligations, which could affect our ability to remain listed with the NYSE or result in SEC enforcement actions, and could cause investors to lose confidence in our reported financial information.
+Added: New accounting pronouncements could adversely affect our operating results or the reported financial performance of our tenants.
+Added: Accounting policies and methods are fundamental to how we record and report our financial condition and results of operations.
+Added: Uncertainties posed by various initiatives of accounting standard-setting by the FASB and the SEC, which create and interpret applicable accounting standards for U.S.
+Added: companies, may change the financial accounting and reporting standards or their interpretation and application of these standards that govern the preparation of our financial statements.
+Added: Similarly, these changes could have a material impact on our tenants’ reported financial condition or results of operations, credit ratings and preferences regarding leasing real estate.
+Added: See "New Accounting Pronouncements" in Note 2 to our consolidated financial statements in Item 15 of this Report.
Unresolved Staff Comments
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.