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Risks Related to Our Properties and Our Business
−Removed: • The COVID-19 global pandemic has and could continue to 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.
−Removed: • Persistent higher inflation could adversely impact our operating results, cash flows, financial position, our ability to pay dividends and distributions, and the market price of our common stock.
+Added: • S ustained or further increases in inflation could adversely impact our operating results, cash flows, financial position, our ability to pay dividends and distributions, and the market price of our common stock.
+Added: • Economic and political changes could adversely affect our business, operating results, cash flows, financial position, our ability to pay dividends and distributions, and the market price of our common stock.
• 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.
Our properties in Los Angeles County are concentrated in certain submarkets, exposing us to risks associated with those specific areas.
−Removed: • Our operating performance is subject to risks associated with the real estate industry.
+Added: • Our operating performance and the market value of our securities are subject to risks associated with our investments in real estate assets and with trends in the real estate industry.
• We have a substantial amount of debt, which exposes us to interest rate fluctuation risk and the risk of not being able to refinance our debt, which in turn could expose us to the risk of default under our debt obligations.
• The rents we receive from new leases may be less than our asking rents, and we may experience rent roll-down from time to time.
+Added: • Although we have a diverse tenant base, a large portion of our tenants operate in a concentrated group of industries and downturns in these industries could adversely affect our financial condition, results of operations and cash flows.
• In order to successfully compete against other properties, we need to maintain, repair, and renovate our properties, which reduces our cash flows.
• We face intense competition, which could adversely impact the occupancy and rental rates of our properties.
+Added: • Epidemics, pandemics or other outbreaks, and restrictions intended to prevent their spread, may 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.
• Potential losses, including from adverse weather conditions, natural disasters and title claims, may not be covered by insurance.
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• 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: • Failure to qualify as a REIT would result in higher taxes and reduced cash available for distributions.
−Removed: • If the Operating Partnership, or any of its subsidiaries, were treated as a regular corporation for federal income tax purposes, we could cease to qualify as a REIT.
+Added: • Failure to qualify as a REIT would subject us to corporate taxation and potentially reduce cash available for distributions.
+Added: • If the Operating Partnership, or any of its subsidiaries (other than any TRS), were treated as a regular corporation for federal income tax purposes, we could cease to qualify as a REIT.
• Even if we qualify as a REIT, we will be required to pay some taxes which would reduce cash available for distributions.
10 unchanged sentences
Risks Related to Our Properties and Our Business
−Removed: The COVID-19 global pandemic has and could continue to 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.
−Removed: 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.
−Removed: The extent to which the 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 each variant, its severity, the actions taken to contain the virus, the emergence and impact of future virus variants, and how quickly and to what extent normal economic and operating conditions resume.
−Removed: Even as the 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.
−Removed: Not all of the impacts of the pandemic are known at this time, however, some of the potential impacts from the pandemic could include:
−Removed: • Government actions, including but not limited to lease enforcement moratoriums, 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;
−Removed: • Supply chain, governmental or other disruptions that adversely affect construction or our operations and/or those of our tenants;
−Removed: • Economic pressure on our tenants, which could lead to lower collections or defaults;
−Removed: • Reduced or different tenant demand, leading to lower occupancy and/or rental rates in our buildings;
−Removed: • Reduced attendance in our buildings, resulting in lower parking revenues;
−Removed: • Increases in expenses and/or capital investments or decreases in tenant demand as a result of safety concerns;
−Removed: • Increased risks of IT disruptions and/or cyber attacks as a result of our employees or tenants working remotely;
−Removed: • Disruption of our operations as a result of the illness or social distancing of our employees or tenants;
−Removed: • Impact on the labor market, which could lead to higher employee turnover and increased labor costs;
−Removed: • 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;
−Removed: • Increases in the cost or availability, or changes to the terms, of insurance.
−Removed: Persistent higher inflation could adversely impact our operating results, cash flows, financial position, our ability to pay dividends and distributions, and the market price of our common stock.
−Removed: Some of the potential adverse impacts of higher inflation on our business could include:
+Added: Sustained or further increases in inflation could adversely impact our operating results, cash flows, financial position, our ability to pay dividends and distributions, and the market price of our common stock.
+Added: Since the COVID-19 pandemic, the consumer price index has increased substantially.
+Added: Federal policies and recent global events may exacerbate increases in the consumer price index.
+Added: A sustained or further increase in inflation could have adverse impacts on our business, including:
• an increase in our rental operating costs and our general and administrative costs;
−Removed: • we may be unable to increase rental rates at the same rate as inflation;
−Removed: • if we are able to increase rental rates at the same rate as inflation, it could reduce tenant demand for our properties;
−Removed: • we may be unable to recover higher rental operating costs from our office tenants;
−Removed: • higher operating costs billed to our office tenants could reduce tenant demand for our office properties;
−Removed: • higher inflation is usually accompanied by higher interest rates, which could:
+Added: • our inability to increase rental rates at the same rate as inflation;
+Added: • reduction in tenant demand for our properties if we are able to increase rental rates at the same rate as inflation;
+Added: • our inability to recover higher rental operating costs from our office tenants;
+Added: • higher operating costs billed to our office tenants, which could reduce tenant demand for our office properties;
+Added: • higher interest rates, which could:
(i) increase our borrowing costs, (ii) adversely impact our property valuations, and (iii) cause an economic recession which would adversely affect our business;
• an increase in recurring capital expenditures to maintain our properties;
−Removed: • an increase in construction costs, which would increase the cost of development and respositioning projects;
−Removed: • reduced cash flows would adversely impact our ability to pay dividends and distributions.
+Added: • an increase in construction costs, which would increase the cost of development and respositioning projects and adversely impact our investments in real estate assets and expected yields on our development and repositioning projects, which could make investment opportunities less profitable to us;
+Added: • reduced cash flows, which would adversely impact our ability to pay dividends and distributions.
+Added: 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.
+Added: Consequently, prolonged periods of higher interest rates may negatively impact the valuation of our real estate portfolio and result in a decline of the market price of our common stock and market capitalization, as well as lower sales proceeds from future property dispositions.
+Added: Economic and political changes could adversely affect our business, operating results, cash flows, financial position, our ability to pay dividends and distributions, and the market price of our common stock.
+Added: Our business may be adversely affected by global market, economic and geopolitical conditions, including general global economic and political uncertainty and dislocations in the credit markets.
+Added: If these conditions become more volatile or worsen, our business, results of operations, liquidity and financial condition and those of our tenants may be adversely affected as a result of the following consequences, among others:
+Added: • tenant defaults under leases or tenants not renewing their leases, or renewing under less favorable terms, if the financial condition of our tenants is adversely impacted;
+Added: • reduced leasing to new tenants or at less favorable terms;
+Added: • decreased demand for our office space if businesses, including our tenants, lay off employees;
+Added: • decreased commercial real estate occupancy and rental rates resulting in decreased property values;
+Added: • limitations in our ability to obtain financing on terms and conditions that we find acceptable, or at all, which could reduce our ability to refinance existing debt and obtain new debt to pursue acquisition and development opportunities;
+Added: • reduced values of our properties, which may limit our ability to obtain new debt financing secured by our properties or limit our ability to refinance our existing debt secured by our properties.
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.
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California is also regarded as being more litigious, regulated and taxed than many other states.
−Removed: Our operating performance is subject to risks associated with the real estate industry.
−Removed: Real estate investments are subject to various risks, fluctuations and cycles in value and demand, many of which are beyond our control.
+Added: Any adverse developments in the economy or real estate market in Los Angeles County or Honolulu or the surrounding regions, or any decrease in demand for office space resulting from the Los Angeles County or Honolulu regulatory or business environment could impact our ability to generate revenues sufficient to meet our operating expenses or other obligations, which would adversely impact our operating results, cash flows, financial position, our ability to pay dividends and distributions, and the market price of our common stock.
+Added: Our operating performance and the market value of our common stock are subject to risks associated with our investments in real estate and with trends in the real estate industry.
+Added: Our economic performance and the value of our real estate and, consequently the market price of our common stock, are subject to the risk that our properties may not generate revenues sufficient to meet our operating expenses or other obligations.
+Added: Real estate investments are subject to various risks, fluctuations and cycles in value and demand, many of which are beyond our control and could adversely affect our operating results, cash flows, and financial position.
These events include, but are not limited to:
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• reduced tenant demand for office space and residential units from matters such as:
−Removed: (i) trends in space utilization, (ii) changes in the relative popularity of our properties, (iii) the type of space we lease, (iv) purchasing versus leasing, (v) increasing crime or homelessness in our submarkets or (vi) economic recessions;
+Added: (i) trends in space utilization, including remote working arrangements, (ii) changes in the relative popularity of our properties, (iii) the type of space we lease, (iv) purchasing versus leasing, (v) increasing crime or homelessness in our submarkets, (vi) changing submarket demographics or (vii) economic recessions;
• reduced demand for parking space due to matters such as:
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• difficulty in operating properties effectively;
+Added: • declines in real estate valuations, which may limit our ability to dispose of assets at attractive prices or obtain or maintain debt financing;
+Added: • property damage resulting from seismic activity or other natural disasters;
• acquiring undesirable properties;
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We have a substantial amount of debt and we may incur significant additional debt for various purposes, including, without limitation, to fund future property acquisitions and development activities, reposition properties and to fund our operations.
+Added: As of December 31, 2023, we had approximately $5.6 billion of debt outstanding, of which $1.7 billion is floating rate debt, which exposes us to interest rate fluctuation risk.
See Note 8 to our consolidated financial statements in Item 15 of this Report for more detail regarding our consolidated debt.
See "Off-Balance Sheet Arrangements" in Item 7 of this Report for more detail regarding our unconsolidated debt.
+Added: Our ability to service and refinance our debt and to fund our operations, working capital, and capital expenditures, depends on our ability to generate cash flow in the future.
+Added: Our cash flow is subject to general economic, industry, financial, competitive, operating, legislative, regulatory, environmental and other factors, many of which are beyond our control.
Our substantial indebtedness, and the limitations and other constraints imposed on us by our debt agreements, especially during economic downturns when credit is harder to obtain, could adversely affect us, including the following:
• periods of rising and high interest rates would adversely affect:
−Removed: (i) our results of operations, (ii) our ability to pay dividends and distributions, (iii) the market price of our common stock, and (iv) our ability to borrow or to borrow on favorable terms;
+Added: (i) our results of operations, (ii) our ability to pay dividends and distributions, (iii) the market price of our common stock, (iv) our ability to borrow or to borrow on favorable terms and (v) our ability to refinance existing debt on commercially reasonable terms or at all;
• our cash flows may be insufficient to meet our required principal and interest payments;
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• any foreclosure on our properties could also create taxable income without accompanying cash proceeds, which could adversely affect our ability to meet the REIT distribution requirements imposed by the Code.
−Removed: • most of our floating rate debt and related hedges are indexed to USD-LIBOR, any regulatory changes which impact the USD-LIBOR benchmark, such as the transition to SOFR (see Item 7A - "Quantitative and Qualitative Disclosures about Market Risk" in this Report) or other indexes, could impact our borrowing costs or the effectiveness of our hedges.
The rents we receive from new leases may be less than our asking rents, and we may experience rent roll-down from time to time.
−Removed: As a result of various factors, such as competitive pricing pressure in our submarkets, adverse conditions in the Los Angeles County or Honolulu real estate market, general economic downturns, or the desirability of our properties compared to other properties in our submarkets, the rents we receive on new leases could be less than our in-place rents.
+Added: As a result of various factors, such as competitive pricing pressure in our submarkets, adverse conditions in the Los Angeles County or Honolulu real estate market, general economic downturns, or the desirability of our properties compared to other properties in our submarkets, the rents we receive on new leases could be less than our in-place rents, which could adversely affect our operating results, cash flows, and financial position.
+Added: Although we have a diverse tenant base, a large portion of our tenants operate in a concentrated group of industries and downturns in these industries could adversely affect our financial condition, results of operations and cash flows.
+Added: As of December 31, 2023, as a percentage of our annualized base rental revenue for the stabilized portfolio, 18.2% of our tenants operated in the legal industry, 15.5% in the financial services industry, 14.1% in the entertainment industry and 12.7% in the real estate industry.
+Added: As we continue our development and potential acquisition activities, our tenant mix could become more concentrated, further exposing us to risks associated with those industries.
+Added: For the composition of our tenants by industry, see “Item 2.
+Added: Properties—Office Industry Diversification as of December 31, 2023.” An economic downturn in any of these industries, or in any industry in which a significant number of our tenants currently or may in the future operate, could negatively impact the financial condition of such tenants and cause them to fail to make timely rental payments or default on lease obligations, fail to renew their leases or renew their leases on terms less favorable to us, become bankrupt or insolvent, or otherwise become unable to satisfy their obligations to us.
+Added: As a result, a downturn in an industry in which a significant number of our tenants operate could adversely affect our financial conditions, result of operations and cash flows.
In order to successfully compete against other properties, we need to maintain, repair, and renovate our properties, which reduces our cash flows.
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If our competitors offer space at rental rates below current market rates, or below the rental rates that we currently charge our tenants, or if they offer tenants significant rent or other concessions, we may lose existing or potential tenants and may not be able to replace them, and we may be pressured to reduce our rental rates below those we currently charge or offer more substantial rent abatements, tenant improvements, early termination rights or below-market renewal options in order to retain tenants when our tenants’ leases expire.
+Added: Epidemics, pandemics or other outbreaks, and restrictions intended to prevent their spread, may 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: Epidemics, pandemics or other outbreaks of an illness, disease or virus, such as COVID-19, can severely disrupt general economic activities in a variety of ways that are difficult to predict.
+Added: For example, governments and businesses may take actions to mitigate the public health crisis, including quarantines, stay-at-home orders, density limitations, social distancing measures, and/or restrictions on types of business that may continue to operate.
+Added: The extent to which an outbreak could impact our business will depend on factors such as the duration and spread, its severity, the actions taken to contain the virus, the emergence and impact of future virus variants, and how quickly and to what extent normal economic and operating conditions resume.
+Added: We may experience significant impacts to our business as a result of any economic impact of an outbreak, including any resulting economic recession.
+Added: Some of the potential impacts from an outbreak could include:
+Added: • Government actions, including but not limited to lease enforcement moratoriums, 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: • Reduced attendance in our buildings, resulting in lower parking revenues;
+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: • Impact on the labor market, which could lead to higher employee turnover and increased labor costs;
+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.
Potential losses, including from adverse weather conditions, natural disasters and title claims, may not be covered by insurance.
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The costs of our on-going efforts to comply with these laws and regulations are substantial.
+Added: Similarly, our properties are subject to land use rules and regulations that govern our development, repositioning and use of our properties, such as Title 24 of the California Code of Regulations, which prescribes building energy efficiency standards for residential and nonresidential buildings in the State of California.
Moreover, as we have not conducted a comprehensive audit or investigation of all of our properties to determine our compliance with applicable laws and regulations, we may be liable for investigation and remediation costs, penalties, and/or damages, which could be substantial and could adversely affect our ability to sell or rent our property or to borrow using such property as collateral.
+Added: In addition, changes in the existing land use rules and regulations and approval process that restrict or delay our ability to develop, redevelop or use our properties (such as potential restrictions on the use and/or density of new developments, water use and other uses and activities) or that prescribe additional standards could have a material adverse effect on our financial position, results of operations, cash flows, the market price of our common stock, and our ability to satisfy our debt service obligations and to pay dividends and distributions to our security holders.
Because we own real property, we are subject to extensive environmental regulations, which create uncertainty regarding future environmental expenditures and liabilities.
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Some of our properties may be subject to a ground lease.
−Removed: If we default under the terms of such a lease, we may be liable for damages and could lose our ownership interest in the property.
+Added: A default under the terms of such a lease, or the inability to renegotiate a new lease upon expiration of a lease, could have a material adverse effect on our operating results, cash flows and financial condition.
We may not have sufficient cash available for distribution to stockholders at expected levels in the future.
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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.
+Added: We have employment agreements with our CEO, Jordan L.
+Added: Kaplan, and our COO, Kenneth M.
+Added: Panzer, which provide each executive with severance if they are terminated without cause or resign for good reason (including following a change of control).
+Added: The severance is based upon three times the average of the respective executives annual compensation (base salary and annual bonus) during the last three full calendar years ending prior to the termination date.
In addition, these executive officers would not be restricted from competing with us after their departure.
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If Proposition 13 no longer limited the assessed value of our California properties, the assessed values and property taxes for those properties could increase substantially, which could have a material impact on our results of operations, cash flows and financial condition.
−Removed: Failure to qualify as a REIT would result in higher taxes and reduced cash available for distributions.
+Added: Failure to qualify as a REIT would subject us to corporate taxation and potentially reduce cash available for distributions.
We have elected to be taxed as a REIT under the Code, commencing with our initial taxable year ended December 31, 2006.
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Our ability to satisfy these tests depends upon our analysis of and compliance with numerous factors, many of which are not subject to a precise determination and have only limited judicial and administrative interpretations, and which are not entirely within our control.
−Removed: Holding most of our assets through our Operating Partnership further complicates the application of the REIT requirements and a technical or inadvertent mistake could jeopardize our REIT status.
+Added: Holding substantially all of our assets through our Operating Partnership further complicates the application of the REIT requirements and a technical or inadvertent mistake could jeopardize our REIT status.
New legislation, Treasury regulations, administrative interpretations or court decisions could significantly change the tax laws with respect to the requirements for qualification as a REIT or the federal income tax consequences of qualification as a REIT.
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The failure of any such entities to qualify as a REIT could have similar consequences to the REIT subsidiary and could also cause us to fail to qualify as a REIT.
−Removed: If the Operating Partnership, or any of its subsidiaries, were treated as a regular corporation for federal income tax purposes, we could cease to qualify as a REIT.
−Removed: Although we believe that the Operating Partnership and other subsidiary partnerships, limited liability companies, REIT subsidiaries, QRS and other subsidiaries (other than the TRS) in which we own a direct or indirect interest will be treated for tax purposes as a partnership, disregarded entity (e.g., in the case of a 100% owned limited liability company), REIT or QRS, as applicable, no assurance can be given that the IRS will not successfully challenge the tax classification of any such entity, or that a court would not sustain such a challenge.
−Removed: If the IRS were successful in treating the Operating Partnership or other subsidiaries as entities taxable as a corporation (including a “publicly traded partnership” taxed as a corporation) for federal income tax purposes, we would likely fail to qualify as a REIT and it would significantly reduce the amount of cash available for distribution by such subsidiaries to us.
+Added: If the Operating Partnership, or any of its subsidiaries (other than any TRS), were treated as a regular corporation for federal income tax purposes, we could cease to qualify as a REIT.
+Added: Although we believe that the Operating Partnership and other subsidiary partnerships, limited liability companies, REIT subsidiaries, QRS and other subsidiaries (other than a TRS) in which we own a direct or indirect interest will be treated for tax purposes as a partnership, disregarded entity (e.g., in the case of a 100% owned limited liability company), REIT or QRS, as applicable, no assurance can be given that the IRS will not challenge the tax classification of any such entity, or that a court would not sustain such a challenge.
+Added: If the IRS were successful in treating the Operating Partnership or other subsidiaries (other than a TRS) as entities taxable as a corporation (including a “publicly traded partnership” taxed as a corporation) for federal income tax purposes, we would likely fail to qualify as a REIT and it would significantly reduce the amount of cash available for distribution by such subsidiaries to us.
Even if we qualify as a REIT, we will be required to pay some taxes which would reduce cash available for distributions.
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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 the regular corporate tax rate.
+Added: To the extent that we do not distribute all of our net long-term capital gains or all 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.
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REIT stockholders can receive taxable income without cash distributions .
−Removed: Under certain circumstances, REITs are permitted to pay required dividends in shares of their stock rather than in cash.
+Added: Under certain circumstances, REITs are permitted to pay a portion of the required dividends in shares of their stock rather than in cash.
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.
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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.
+Added: We face risks associated with security breaches, whether through cyber attacks or cyber intrusions over the Internet, malware (including ransomware), computer viruses, social engineering and phishing e-mails, exploitation of vulnerabilities in software used in our business, malfeasance by insiders or persons with access to systems inside our organization, human or technological error, 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, is expected to increase as the number, intensity and sophistication of attacks and intrusions from around the world is escalating.
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.
+Added: We own and manage some of these systems but must rely on third parties for a range of systems, networks and other products and services, including but not limited to software and cloud computing services, that are critical to our business.
+Added: In addition, we and others collect, maintain and process data about employees, business partners and others, including personally identifiable information, as well as proprietary data belonging to our business such as trade secrets.
+Added: There can be no assurance that our security measures, or those of third parties on whom we rely, will effectively protect the confidentiality, integrity and availability of our networks, systems and data from security breaches or disruptions.
+Added: While to date we have experienced no cyberattacks or incidents that have had a material impact on our operations or financial results, we cannot guarantee that material incidents will not occur in the future.
+Added: Our information, networks, systems and facilities remain vulnerable because the techniques used by attackers are constantly evolving (including their use of tools like artificial intelligence) 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.
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.
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• 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;
+Added: • The requirement of significant management attention and resources to restore our business and remedy any damages that result;
• Claims for breach of contract, damages, credits, penalties or termination of leases or other agreements;
+Added: • Regulatory inquiries, investigations and fines or penalties;
• Damage to our reputation among our tenants, investors, or others.
+Added: We cannot guarantee that any costs and liabilities incurred in relation to an attack or incident will be covered by our existing insurance policies or that applicable insurance will be available to us in the future on economically reasonable terms or at all.
Litigation could have an adverse effect on our business.
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See "New Accounting Pronouncements" in Note 2 to our consolidated financial statements in Item 15 of this Report.
−Removed: 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.