What changed in this filing

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Item 1A. Risk Factors

2021-02-19 compared with 2020-02-21 · 287 added, 198 removed, 520 unchanged (48% of the section changed)

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See "Special Note Regarding Forward-Looking Statements."

Risks Related to Our Business

Risk Factors Summary

The following is a summary of the principal risks and uncertainties described in more detail in this Annual Report:

• The ongoing COVID-19 pandemic is expected to continue to materially and adversely impact and disrupt our business, financial condition, results of operations and cash flows.

• A consumer shift in retail shopping from brick and mortar stores to e-commerce may have an adverse impact on our revenues and cash flow.

• Economic, political and market conditions could negatively impact our business, results of operations and financial condition.

Our business may be affected by economic, political and market challenges experienced by the U.S.

• Potential strategic transactions that we evaluate may not occur, and even if they do occur, they may not be successful in increasing stockholder value or providing liquidity for our stockholders.

• Our ongoing business strategy involves the selling of assets;

however, we may be unable to sell an asset at acceptable terms and conditions, if at all.

• Our ongoing strategy depends, in part, upon completing future acquisitions and dispositions, and we may not be successful in identifying attractive acquisition opportunities and consummating these transactions.

• We depend on tenants for our revenue, and accordingly, lease terminations, tenant defaults and bankruptcies could adversely affect the income produced by our assets.

• Our retail portfolio is subject to geographic concentration, which exposes us to risks of oversupply and competition in the relevant markets.

• We may be unable to renew leases, lease vacant space or re-let space as leases expire, thereby increasing or prolonging vacancies, which would adversely affect our financial condition, cash flows and results of operations.

• We may be required to make significant expenditures to improve our properties in order to retain and attract tenants.

• An increase in real estate taxes may decrease our income from properties.

• Retail conditions may adversely affect our income and our ability to make distributions to our stockholders.

• Continued slow or negative growth in the retail industry could result in defaults by retail tenants, which could have an adverse impact on our business, financial condition or result of operations.

• Our success depends on the success and continued presence of our anchor tenants.

• If our non-anchor tenants terminate their leases, our cash flow and results of operations could be adversely affected.

• We may be restricted from re-leasing space at our retail properties.

• Our retail leases may contain co-tenancy provisions, which would have an adverse effect on our operation of such retail properties if exercised.

• Debt service may reduce the funds available for distribution and increase the risk of loss since defaults may cause us to lose the properties securing the loans.

• If we are unable to borrow at favorable rates, we may not be able to refinance existing loans at maturity.

• Our existing or future debt agreements will contain covenants that restrict certain aspects of our operations, and our failure to comply with those covenants could materially and adversely affect us.

• Our mortgage agreements contain certain provisions that may limit our ability to sell our properties.

• Covenants applicable to current or future debt could restrict our ability to make distributions necessary to qualify as a REIT, which could materially and adversely affect us and the value of our common stock.

• Interest-only indebtedness may increase our risk of default and ultimately may reduce our funds available for distribution to our stockholders.

• To hedge against interest rate fluctuations, we use derivative financial instruments, which may be costly and ineffective.

• We may be contractually obligated to purchase property even if we are unable to secure financing for the acquisition.

• Our special purpose property-owning subsidiaries may default under non-recourse mortgage loans.

• Actions of our joint venture partner could negatively impact our performance.

• The termination of our joint venture may adversely affect our cash flow, operating results, and our ability to make distributions to stockholders.

• We could incur significant indemnification liabilities in connection with the spin-off transactions of our former subsidiaries.

• Since our shares are not currently traded on a national stock exchange, there is no established public market for our shares and our stockholders may not be able to sell their shares.

• The estimated per share value of our common stock is based on a number of assumptions and estimates that may not be accurate or complete and is also subject to a number of limitations.

• There is no assurance that we will be able to continue paying cash distributions or that distributions will continue to increase over time.

• Funding distributions from sources other than cash flow from operating activities may negatively impact our ability to sustain or pay future distributions and result in us having less cash available for other uses, such as property purchases.

• Our Share Repurchase Program may be amended, suspended or terminated by our board of directors at any time without stockholder approval, reducing the potential liquidity of a stockholder's investment.

In July 2020, as a result of the COVID-19 pandemic, the Board suspended our Share Repurchase Program.

• Our rights and the rights of our stockholders to take action against our directors and officers are limited.

• Our charter permits our Board to issue preferred stock on terms that may subordinate the rights of the holders of our current common stock or discourage a third party from acquiring us.

• Certain provisions of Maryland law could inhibit changes in control.

• Our Board or a committee of our Board may change our investment policies without stockholder approval.

• Our assets may be subject to impairment charges that may materially and adversely affect our financial results.

• We are increasingly dependent on information technology, and are therefore subject to greater cyber risks.

• Failure to remain qualified as a REIT would cause us to be taxed as a regular corporation, which could substantially reduce funds available for distributions to our stockholders.

• REIT distribution requirements could adversely affect our liquidity and may force us to borrow funds or sell assets during unfavorable market conditions.

• Failure to make required distributions would subject us to federal corporate income tax.

• The prohibited transactions tax may limit our ability to dispose of our properties, and we could incur a material tax liability if the IRS successfully asserts that the 100% prohibited transaction tax applies to some or all of our dispositions.

• We may fail to qualify as a REIT if the IRS successfully challenges the valuation of our common stock used for purposes of our dividend reinvestment program.

• Stockholders may have tax liability on distributions that they elect to reinvest in our common stock.

• We may fail to qualify as a REIT as a result of our investments in joint ventures and other REITs.

• Dividends payable by REITs do not qualify for the reduced tax rates available for some dividends.

Risks Related to the COVID-19 Pandemic

The ongoing COVID-19 pandemic, and the future outbreak of other highly infectious or contagious diseases, is expected to continue to materially and adversely impact and disrupt our business, financial condition, results of operations and cash flows.

The COVID-19 pandemic has negatively impacted our business and financial performance, and we expect this impact to continue.

The states in which our retail properties are located are in varying stages of restrictions and re-openings in response to the COVID-19 pandemic.

Certain jurisdictions had begun re-opening only to return to restrictions in the face of increases in new COVID-19 cases.

We are unable to predict whether cases of COVID-19 in these markets or other areas in which we operate will decrease, increase, or remain the same, whether the approved COVID-19 vaccines will be efficiently distributed in these markets, and whether local governments will mandate closures of our tenants' businesses or implement other restrictive measures on their and our operations.

Many of our tenants have already been adversely affected by the COVID-19 pandemic and actions taken to contain or prevent its spread.

A substantial number of tenants have temporarily closed their businesses, shortened their operating hours or are offering reduced services.

As a result, the Company has observed a substantial increase in the number of tenants that have made late or partial rent payments, requested a deferral of rent payments, or defaulted on rent payments, and it is likely that more of our tenants will be similarly impacted in the future.

Additionally, certain tenants have declared bankruptcy as a result of the effects of the pandemic and additional tenants may declare bankruptcy in the future.

The global spread and unprecedented impact of COVID-19 has created significant volatility, uncertainty and economic disruption.

The extent to which the COVID-19 pandemic continues to impact our business, operations, and financial results is highly uncertain and will depend on numerous evolving factors that we may not be able to accurately predict.

The COVID-19 pandemic, including any resurgences, or a future pandemic, could also have material and adverse effects on our financial condition, results of operations, cash flows and per share value due to, among other factors:

• continuing or additional closures of, or other operational issues at, our properties resulting from government or tenant action;

• reduced economic activity impacting our tenants' ability to meet their rental and other obligations to us in full or at all;

• the ability of our tenants who have been granted rent deferrals to timely pay deferred rent;

• any inability to renew leases or lease vacant space on favorable terms, or at all;

• a potentially prolonged recession and high unemployment negatively impacting consumer discretionary spending;

• continued changes in consumer behavior in favor of e-commerce;

• tenant bankruptcies;

• liquidity issues resulting from reduced cash flows from operations;

• negative impacts to the credit and/or capital markets making it difficult to access capital on favorable terms or at all;

• impairment in value of our tangible or intangible assets;

• a general decline in business activity and demand for real estate transactions adversely affecting our ability to grow our portfolio of properties and service our indebtedness;

• supply chain disruptions adversely affecting our tenants' operations;

• impacts on the health of our personnel and a disruption in the continuity of our business.

The impact of COVID-19 may also heighten other risks discussed herein, which could adversely affect our business, financial condition, results of operations, cash flows and estimated share value.

Risks Related to Our Business and Strategy

A consumer shift in retail shopping from brick and mortar stores to e-commerce may have an adverse impact on our revenues and cash flow.

The majority of national retailers operating brick and mortar stores have made e-commerce sales an important part of their business model.

The shift to e-commerce sales may adversely impact their sales for brick and mortar stores, causing those retailers to adjust the size or number of retail locations in the future.

This shift could adversely impact our occupancy and rental rates, which would, in turn, adversely impact our revenues and cash flows.

Economic, political and market conditions could negatively impact our business, results of operations and financial condition.

Our business is affected by economic, political and market challenges experienced by the U.S.

or global economies or the real estate industry as a whole (and, in particular, the retail sector);

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or by competitive business market conditions experienced by us and/or our retail tenants and shadow anchor retailers (anchor retailers that anchor our assets but whose properties are not owned or leased by us), such as challenges competing with e-commerce channels.

For example, prolonged lower oil prices may negatively impact the economy in the Houston metropolitan area, where approximately 13.3% of our total annualized base rental income is derived.

These conditions may materially affect our tenants, shadow anchor retailers, the value and performance of our assets and our ability to sell assets, as well as our ability to make principal and interest payments on, or refinance, outstanding debt when due.

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• changing government regulations, including tax policies.

A consumer shift in retail shopping from brick and mortar stores to e-commerce may have an adverse impact on our revenues and cash flow.

The majority of national retailers operating brick and mortar stores have made e-commerce sales an important part of their business model.

Although many tenants at our retail properties either provide services or sell groceries, for those tenants that do not have an online presence, the shift to e-commerce sales may adversely impact their sales, causing those retailers to adjust the size or number of retail locations in the future.

This shift could adversely impact our occupancy and rental rates, which would, in turn, adversely impact our revenues and cash flows.

Our management and our board of directors (the "Board") routinely evaluate opportunities to position the Company for various strategic transactions designed to provide liquidity for our stockholders.

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Even if a strategic transaction does occur, it may not be successful in increasing share value or providing liquidity for our stockholders, and may have the opposite effect, eroding share value and failing to deliver any meaningful liquidity, in which case our stockholders' investment would lose value.

At this time, the COVID-19 pandemic and related uncertainties have delayed our process for exploring and executing upon a potential strategic transaction.

Our ongoing business strategy involves the selling of assets;

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Our ongoing strategy depends, in part, upon completing future acquisitions and dispositions, and we may not be successful in identifying attractive acquisition opportunities and consummating these transactions.

As part of our strategy, we intend to tailor and grow our multi-tenant retail platform.

We cannot assure our stockholders that we will be able to identify opportunities or complete transactions on commercially reasonable terms or at all, or that we will

actually realize any anticipated benefits from such acquisitions or investments.

As part of our strategy, we intend to tailor and grow our retail platform.

We cannot assure our stockholders that we will be able to identify opportunities or complete transactions on commercially reasonable terms or at all, or that we will actually realize any anticipated benefits from such acquisitions or investments.

There may be high barriers to entry in many key markets and scarcity of available acquisition and investment opportunities in desirable locations.

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Additionally, we regularly review our business to identify properties or other assets that we believe are in certain markets or have certain characteristics that may not benefit us as much as properties in other markets or with different characteristics.

One of our strategies is to selectively dispose of retail properties and use sale proceeds to fund our growth in markets and with properties that will enhance our multi-tenant retail platform.

One of our strategies is to selectively dispose of retail properties and use sale proceeds to fund our growth in markets and with properties that will enhance our retail platform.

We cannot assure our stockholders that we will be able to consummate any such sales on commercially reasonable terms or at all, or that we will actually realize any anticipated benefits from such sales.

Additionally, we may be unable to successfully identify attractive and suitable replacement assets even if we are successful in completing such dispositions.

We may face delays in reinvesting net sales proceeds in new assets, which would impact the return we earn on our assets.

We may face delays in reinvesting net sales proceeds in new assets, which would impact the

return we earn on our assets.

Dispositions of real estate assets can be particularly difficult in a challenging economic environment when uncertainties exist about the impact of e-commerce on retailers and when financing alternatives are limited for potential buyers.

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• changes in the level of future development activity may adversely impact our results from operations by reducing the amount of certain internal overhead costs that may be capitalized.

a shift in our development and acquisition thesis, which may include mixed-use properties (with or without joint venture or development partners), with differing tenant profiles or mixes, and/or multi-story buildings, all in select cases.

If we lose or are unable to retain and obtain key personnel, our ability to implement our business strategies could be delayed or hindered.

We believe that our future success depends, in large part, on our ability to retain and hire highly-skilled managerial and operating personnel.

Competition for persons with managerial and operational skills is intense, and we cannot assure our

stockholders that we will be successful in retaining or attracting skilled personnel.

If we lose or are unable to obtain the services of our executive officers and other key personnel, or we are unable to establish or maintain the necessary strategic relationships, our ability to implement our business strategy could be delayed or hindered.

We are increasingly dependent on information technology ("IT"), and potential cyber-attacks, security problems, or other disruptions present risks.

A cyber incident is considered to be any adverse event that threatens the confidentiality, integrity or availability of our information resources.

More specifically, a cyber incident is an intentional attack or an unintentional event that can include an intruder gaining unauthorized access to systems to disrupt operations, corrupt data or steal confidential information.

As our reliance on technology has increased, so have the risks posed to our systems, both internal and those we have outsourced.

Although we make efforts to maintain the security and integrity of our IT networks and related systems, and we have implemented various measures to manage the risk of a security breach or disruption, there can be no assurance that our security efforts and measures will be effective or that attempted security breaches would not be successful or damaging.

While we maintain some of our own critical IT systems, we also depend on third parties to provide important IT services relating to several key business functions.

Furthermore, the security measures employed by third-party service providers may prove to be ineffective at preventing breaches of their systems.

Moreover, cyber incidents perpetrated against our tenants, including unauthorized access to customers' credit card data and other confidential information, could diminish consumer confidence and consumer spending and negatively impact our business and reputation.

Our primary risks that could directly result from the occurrence of a cyber incident include operational interruption, damage to our relationships with our tenants and private data exposure.

Our financial results and reputation may be negatively impacted by such an incident.

A failure of our IT infrastructure could adversely impact our business and operations.

We rely upon the capacity, reliability and security of our IT infrastructure and our ability to expand and continually update this infrastructure in response to changing needs of our business.

We continue to face the challenge of integrating new systems and hardware into our operations.

If there are technological impediments, unforeseen complications, errors or breakdowns in the IT infrastructure, the disruptions could have an adverse effect on our business and financial condition.

We disclose funds from operations ("FFO"), a non-GAAP (U.S.

generally accepted accounting principles, or "GAAP") financial measure, in communications with investors, including documents filed with the SEC;

however, FFO is not equivalent to our net income or loss as determined under GAAP, and GAAP measures should be considered to be more relevant to our operating performance.

We use internally, and disclose to investors, FFO, a non-GAAP financial measure.

FFO is not equivalent to our net income or loss as determined under GAAP, and investors should consider GAAP measures to be more relevant to our operating performance.

Because of the manner in which FFO differs from GAAP net income or loss, it may not be an accurate indicator of our operating performance.

Furthermore, FFO is not necessarily indicative of cash flow available to fund cash needs and should not be considered as an alternative to cash flows from operations as an indication of our liquidity, or indicative of funds available to fund our cash needs, including our ability to make distributions to our stockholders.

Neither the SEC nor any other regulatory body has passed judgment on the acceptability of the adjustments that we use to calculate FFO.

Also, because not all companies calculate FFO the same way, comparisons with other companies may not be meaningful.

We are subject to litigation that could negatively impact our cash flow, financial condition and results of operations.

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A significant unfavorable outcome could negatively impact our cash flow, financial condition and results of operations.

Corporate responsibility related to environmental, social and governance factors, may impose additional costs and expose us to new risks.

We, as well as our investors, are focused on corporate responsibility, specifically related to environmental, social and governance factors.

Third-party providers of corporate responsibility ratings and reports on companies have increased to meet growing investor demand for measurement of corporate responsibility and performance.

There is no assurance as to how we will rate according to the metrics.

Additionally, the measurement parameters may change over time.

We may face reputational damage in the event our corporate responsibility procedures or standards do not meet the standards set by various

constituencies.

In addition, our competitors may receive more favorable ratings.

The occurrence of any of the foregoing could have an adverse impact on our business, financial condition and results of operations, including increased capital expenditures and operating expenses.

Risks Related to our Real Estate Assets

Risk associated with expansion into new markets.

If opportunities arise, we may acquire or develop properties in markets where we currently have no presence.

Each of the risks applicable to acquiring or developing properties in our current markets are applicable to acquiring, developing and integrating properties in new markets.

In addition, we may not possess the same level of familiarity with the dynamics and conditions of the new markets we may enter, which may adversely affect our operating results and investment returns in those markets.

Risks Related to the Real Estate Industry

There are inherent risks with investments in real estate, including the relative illiquidity of such investments.

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In particular, the tax laws applicable to REITs require that we hold our assets for investment, rather than primarily for sale in the ordinary course of business, which may cause us to forgo or defer sales of assets that otherwise would be in our best interests.

Therefore, we may not be able to vary our multi-tenant retail platform promptly in response to changing economic, financial and investment conditions and dispose of assets at opportune times or on favorable terms, which may adversely affect our cash flows and our ability to make distributions to stockholders.

Therefore, we may not be able to vary our retail platform promptly in response to changing economic, financial and investment conditions

and dispose of assets at opportune times or on favorable terms, which may adversely affect our cash flows and our ability to make distributions to stockholders.

Investments in real estate are also subject to adverse changes in general economic conditions.

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• changes in interest rates and availability, cost and terms of financing.

Our assets may be subject to impairment charges that may materially and adversely affect our financial results.

Economic and other conditions may adversely impact the valuation of our assets, resulting in impairment charges that could have a material adverse effect on our results of operations.

On a regular basis, we evaluate our assets for impairments based on various factors, including changes in the holding periods, projected cash flows of such assets and market conditions as described in Part II, Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations-Critical Accounting Policies and Estimates - Impairment of Long Lived Assets." If we determine that an impairment has occurred, we would be required to make an adjustment to the net carrying value of the asset, which could have a material adverse effect on our results of operations in the accounting period in which the adjustment is made.

Furthermore, changes in estimated future cash flows due to a change in our plans, policies, or views of market and economic conditions could result in the recognition of additional impairment losses for already impaired assets, which, under the applicable accounting guidance, could be substantial and could materially adversely affect our results of operations.

We have incurred and we may incur future impairment charges, which could be material.

We depend on tenants for our revenue, and accordingly, lease terminations, tenant defaults and bankruptcies could adversely affect the income produced by our assets.

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Certain economic conditions may adversely affect one or more of our tenants.

For example, business failures, downsizings, changing consumer tastes and e-commerce can contribute to reduced consumer demand for retail products and services, which would impact tenants of our retail properties.

In addition, our retail properties typically are anchored by large, nationally recognized tenants, any of which may experience a downturn in its business that may weaken significantly its financial condition and thus the performance of the

applicable shopping center.

In addition, our properties typically are anchored by large, nationally recognized tenants, any of which may experience a downturn in its business that may weaken significantly its financial condition and thus the performance of the applicable shopping center.

Further, mergers or consolidations among large retail establishments could result in the closure of existing stores or duplicate or geographically overlapping store locations, which could include tenants at our retail properties.

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As a result, it is likely that we would recover substantially less than the full value of the remaining rent during the term.

Our multi-tenant retail portfolio is subject to geographic concentration, which exposes us to risks of oversupply and competition in the relevant markets.

Our retail portfolio is subject to geographic concentration, which exposes us to risks of oversupply and competition in the relevant markets.

Significant increases in the supply of certain property types without corresponding increases in demand in those markets could have a material adverse effect on our financial condition, our results of operations and our ability to pay distributions.

As of December 31, 2019 , approximately 42.0% of our total annualized base rental income was generated by properties located in Texas, with 13.3% , 12.4%, 10.4%, and 5.8% of our total annualized base rental income generated by properties located in the Houston, Austin, Dallas-Fort Worth-Arlington, and San Antonio metropolitan areas, respectively.

An oversupply of retail properties in any of these markets could have a material adverse effect on our financial condition, our results of operations and our ability to pay distributions.

Risk associated with expansion into new markets.

If opportunities arise, we may acquire or develop properties in markets where we currently have no presence.

Each of the risks applicable to acquiring or developing properties in our current markets are applicable to acquiring, developing and integrating properties in new markets.

As of December 31, 2020, approximately 41.4% of the total annualized base rental income in our retail portfolio was generated by properties located in Texas, with 13.0%, 12.9%, 10.8%, and 4.8% of our total annualized base rental income generated by properties located in the Houston, Austin, Dallas-Fort Worth-Arlington, and San Antonio metropolitan areas, respectively.

oversupply of retail properties in any of these markets could have a material adverse effect on our financial condition, our results of operations and our ability to pay distributions.

Real estate is a competitive business.

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We also face competition from other real estate investment programs for buyers.

We perceive there to be a smaller population of potential buyers for certain types of assets that comprise our multi-tenant retail portfolio in comparison to assets in other real estate sectors, which may make it challenging for us to sell certain of our multi-tenant retail properties.

We perceive there to be a smaller population of potential buyers for certain types of assets that comprise our retail portfolio in comparison to assets in other real estate sectors, which may make it challenging for us to sell certain of our retail properties.

We may be unable to renew leases, lease vacant space or re-let space as leases expire, thereby increasing or prolonging vacancies, which would adversely affect our financial condition, cash flows and results of operations.

As of December 31, 2019 , our retail properties are 95.2% occupied.

As of December 31, 2019 , leases representing approximately 5.3% and 10.7% of our total GLA are scheduled to expire in 2020 and 2021, respectively.

We cannot assure our

stockholders that leases will be renewed or that our properties will be re-leased on terms equal to or better than the current terms, or at all.

As of December 31, 2020, our pro rata combined retail portfolio was 93.8% occupied.

As of December 31, 2020, leases representing approximately 6.2% and 13.8% of our pro rata combined retail portfolio GLA was scheduled to expire in 2021 and 2022, respectively.

We cannot assure our stockholders that leases will be renewed or that our properties will be re-leased on terms equal to or better than the current terms, or at all.

We also may not be able to lease space which is currently not occupied on acceptable terms and conditions, if at all.

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We may not be able to fund tenant improvements, pay leasing commissions or fund capital improvements at our existing assets solely from cash provided from our operating activities.

Consequently, we may have to rely upon the availability of debt, net proceeds from the dispositions of our assets or equity capital to fund tenant improvements, pay leasing commissions or fund capital improvements.

Consequently, we may have to rely upon the availability

of debt, net proceeds from the dispositions of our assets or equity capital to fund tenant improvements, pay leasing commissions or fund capital improvements.

The inability to do so could impair our ability to compete effectively and harm our business.

We are subject to risks from natural disasters and severe weather.

We are subject to risks from natural disasters, severe weather, and climate change.

Natural disasters and severe weather such as earthquakes, wildfires, mudslides, tornadoes, hurricanes, blizzards, hailstorms or floods may result in significant damage to our properties, disrupt operations at our properties and adversely affect both the value of our properties and the ability of our tenants and operators to make their scheduled rent payments to us.

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We also are exposed to the risk of an increased need for the maintenance and repair of our buildings due to inclement weather.

In addition, climate change may adversely impact our properties directly and may lead to additional compliance obligations and costs, including insurance premiums, taxes and fees.

We may obtain only limited warranties when we purchase a property and would have only limited recourse if our due diligence did not identify issues that could decrease the value of our property after the purchase.

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The purchase of properties with limited warranties increases the risk that we may lose some or all of our invested capital in the property, as well as the loss of rental income from that property, and may also require additional investment to make the property suitable and competitive.

Actions of our joint venture partner could negatively impact our performance.

With respect to our joint venture, we are not in a position to exercise sole decision-making authority regarding the property or the joint venture.

Consequently, our joint venture may involve risks not present with other methods of investing in real estate.

For example, our joint venture partner may have economic or business interests or goals which are or which become inconsistent with our economic or business interests or goals or may take action contrary to our instructions or requests or contrary to our policies or objectives.

We have experienced these events from time to time with our former joint venture partners, which in some cases have resulted in litigation.

An adverse outcome in any lawsuit could have a material effect on our business, financial condition or results of operations.

In addition, any litigation increases our expenses and prevents our officers and directors from focusing their time and effort on our multi-tenant retail portfolio and business plans.

Our relationship with our joint venture partner is contractual in nature.

These agreements may restrict our ability to sell our interest when we desire or on advantageous terms and may be terminated or dissolved and, in each event, we may not continue to own or operate the interests or assets underlying the relationship or may need to purchase the interests or assets at an above-market price to continue ownership.

Such joint venture investments may involve other risks not otherwise present with a direct investment in real estate, including the following examples:

the possibility that the investment may require additional capital that we or our joint venture partner does not have, which lack of capital could affect the performance of the investment or dilute our interest if our joint venture partner were to contribute our share of the capital;

the possibility that our joint venture partner in an investment might breach a loan agreement or other agreement or otherwise, by action or inaction, act in a way detrimental to us or the investment;

the possibility that we may incur liabilities as the result of the action taken by our joint venture partner;

that such joint venture partner may exercise buy/sell rights that force us to either acquire the entire investment, or dispose of our share, at a time, on terms and/or at a price that may not be consistent with our investment objectives.

The termination of our joint venture may adversely affect our cash flow, operating results, and our ability to make distributions to stockholders.

If our joint venture was terminated for any reason, we could lose the fee income, including but not limited to asset, property management and leasing fees from these partnerships, which would adversely affect our operating results and our cash available for distribution to stockholders.

An increase in real estate taxes may decrease our income from properties.

An increase in real estate taxes may decrease our net operating income from properties.

From time to time, the amount we pay for property taxes may increase as either property values increase or assessment rates are adjusted.

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If we are unable to pass the increase in taxes through to our tenants, our net operating income for the property will decrease.

Uninsured losses or premiums for insurance coverage may adversely affect a stockholder’s returns.

Various types of catastrophic losses, like windstorms, earthquakes and floods, and losses from foreign terrorist activities may not be insurable or may not be economically insurable.

Even when insurable, these policies may have high deductibles and/or high premiums.

Lenders may require such insurance.

Our failure to obtain such insurance could constitute a default under loan agreements, and/or our lenders may force us to obtain such insurance at unfavorable rates, which could materially and adversely affect our profitability.

In the event of a substantial loss, our insurance coverage may not be sufficient to cover the full current market value or replacement cost of our lost investment.

Should an uninsured loss or a loss in excess of insured limits occur, we could lose all or a portion of the capital we have invested in an asset, as well as the anticipated future revenue from the asset.

In that event, we might nevertheless remain obligated for any mortgage debt or other financial obligations related to the asset.

Inflation, changes in building codes and ordinances, environmental considerations and other factors might require us to come out of pocket to replace or renovate an asset after it has been damaged or destroyed.

Under those circumstances, the insurance proceeds we receive might be inadequate to restore our economic position on the damaged or destroyed property, which could materially and adversely affect our profitability.

In addition, insurance risks associated with potential terrorist acts could sharply increase the premiums we pay for coverage against property and casualty claims.

With the enactment of the Terrorism Risk Insurance Program Reauthorization Act of 2007, United States insurers cannot exclude conventional, chemical, biological, nuclear and radiation terrorism losses.

insurers must make terrorism insurance available under their property and casualty insurance policies;

however, this legislation does not regulate the pricing of such insurance.

In many cases, mortgage lenders have begun to insist that commercial property owners purchase coverage against terrorism as a condition of providing mortgage loans.

Such insurance policies may not be available at a reasonable cost, which could inhibit our ability to finance or refinance our assets.

In such instances, we may be required to provide other financial support to cover potential losses.

We may not have adequate coverage for such losses, which could materially and adversely affect our profitability.

We could incur material costs related to government regulation and litigation with respect to environmental matters, which could materially and adversely affect our revenues and profitability.

Our assets are subject to various U.S.

federal, state and local environmental laws that impose liability for contamination.

Under these laws, governmental entities have the authority to require us, as the current or former owner of an asset, to perform or pay for the clean-up of contamination (including hazardous substances, asbestos and asbestos-containing materials, waste or petroleum products) at, on, under or emanating from the asset and to pay for natural resource damages arising from such contamination.

Such laws often impose liability without regard to whether the owner or operator or other responsible party knew of, or caused such contamination, and the liability may be joint and several.

Because these laws also impose liability on persons who owned an asset at the time it became contaminated, it is possible we could incur cleanup costs or other environmental liabilities even after we sell assets.

Contamination at, on, under or emanating from our assets also may expose us to liability to private parties for costs of remediation and/or personal injury or property damage.

In addition, environmental laws may create liens on contaminated sites in favor of the government for damages and costs it incurs to address such contamination.

If contamination is discovered on our assets, environmental laws also may impose restrictions on the manner in which the assets may be used or businesses may be operated, and these restrictions may require substantial expenditures.

Moreover, environmental contamination can affect the value of an asset and, therefore, an owner’s ability to borrow funds using the asset as collateral or to sell the asset on favorable terms or at all.

Furthermore, persons who sent waste to a waste disposal facility, such as a landfill or an incinerator, may be liable for costs associated with cleanup of that facility.

In addition, our assets are subject to various federal, state, and local environmental, health and safety laws and regulations that address a wide variety of issues, including, but not limited to, storage tanks, air emissions from emergency generators, storm water and wastewater discharges, lead-based paint, mold and mildew, and waste management.

We may handle and use hazardous or regulated substances and wastes as part of their operations, which substances and wastes are subject to regulation.

We may incur costs to comply with these environmental, health and safety laws and regulations and could be subject to fines and penalties for non-compliance with applicable requirements.

Environmental laws in the U.S.

also require that owners or operators of buildings containing asbestos properly manage and maintain the asbestos, adequately inform or train those who may come into contact with asbestos and undertake special precautions, including removal or other abatement, if that asbestos is disturbed during building renovation or demolition.

These laws may impose fines and penalties on building owners or operators who fail to comply with these requirements and may allow third parties to seek recovery from owners or operators for personal injury associated with exposure to asbestos.

Some of our assets may contain asbestos-containing building materials.

When excessive moisture accumulates in buildings or on building materials, mold growth may occur, particularly if the moisture problem remains undiscovered or is not addressed over a period of time.

Some molds may produce airborne toxins or irritants.

Indoor air quality issues can also stem from inadequate ventilation, chemical contamination from indoor or outdoor sources, and other biological contaminants such as pollen, viruses and bacteria.

Indoor exposure to airborne toxins or irritants above certain levels can be alleged to cause a variety of adverse health effects and symptoms, including allergic or other reactions.

As a result, the presence of significant mold or other airborne contaminants at any of our assets could require us to undertake a costly remediation program to contain or remove the mold or other airborne contaminants from the affected asset or increase indoor ventilation.

In addition, the presence of significant mold or other airborne contaminants could expose us to liability to third parties if property damage or personal injury occurs.

Liabilities and costs associated with environmental contamination at, on, under or emanating from our assets, defending against claims related to alleged or actual environmental issues, or complying with environmental, health and safety laws could be material and could materially and adversely affect us.

We can make no assurances that changes in current laws or regulations or future laws or regulations will not impose additional or new material environmental liabilities or that the current environmental condition of our assets will not be affected by our operations, the condition of the assets in the vicinity of our assets, or by third parties unrelated to us.

The discovery of material environmental liabilities at our assets could subject us to unanticipated significant costs, which could significantly reduce or eliminate our profitability and the cash available for distribution to our stockholders.

Compliance or failure to comply with the Americans with Disabilities Act and other safety regulations and requirements

could result in substantial costs.

Under the Americans with Disabilities Act of 1990 and the Accessibility Guidelines promulgated thereunder, which we refer to collectively as the ADA, all public accommodations must meet various federal requirements related to access and use by disabled persons.

Compliance with the ADA’s requirements could require removal of access barriers, and non-compliance could result in the U.S.

government imposing fines or in private litigants winning damages.

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

If we fail to comply with these requirements, we could incur fines or private damage awards.

We do not know whether existing requirements will change or whether compliance with future requirements would require significant unanticipated expenditures that would affect our cash flow and results of operations.

If we incur substantial costs to comply with the ADA or other safety regulations and requirements, it could materially and adversely affect our revenues and profitability.

Risks Related to our Retail Assets

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In addition, to the extent that the investing public has a negative perception of the retail sector, the value of our retail properties may be negatively impacted.

An economic downturn could have an adverse impact on the retail industry generally.

Slow or negative growth in the retail industry could result in defaults by retail tenants, which could have an adverse impact on our business, financial condition or result of operations.

An economic downturn could have an adverse impact on the retail industry generally.

As a result, the retail industry could face reductions in sales revenues and increased bankruptcies.

Adverse economic conditions may result in an increase in distressed or bankrupt retail companies, which in turn would result in an increase in defaults by tenants at our commercial properties.

An economic downturn, such as the one we are currently experiencing as a result of the COVID-19 pandemic, could have an adverse impact on the retail industry generally.

Continued slow or negative growth in the retail industry could result in defaults by retail tenants, which could have an adverse impact on our business, financial condition or result of operations.

An economic downturn, such as the one we are currently experiencing as a result of the COVID-19 pandemic, could have an adverse impact on the retail industry generally.

As a result, the retail industry could face further reductions in sales revenues and increased bankruptcies.

Adverse economic conditions may result in an increase in distressed or bankrupt retail companies,

which in turn would result in an increase in defaults by tenants at our commercial properties.

Such conditions may also affect shadow anchor retailers in some of our centers, which we cannot control.

Although we do not generate revenue from shadow anchor retailers, their presence drives traffic to some of our centers.

Additionally, slow economic growth could hinder new entrants into the retail market, which may make it difficult for us to fully lease our real properties.

Tenant defaults and decreased demand for retail space would have an adverse impact on the value of our multi-tenant retail properties and our results of operations.

Additionally, continued slow or negative economic growth could hinder new entrants into the retail market, which may make it difficult for us to fully lease our real properties.

Tenant defaults and decreased demand for retail space would have an adverse impact on the value of our retail properties and our results of operations.

Our success depends on the success and continued presence of our anchor tenants.

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If a significant number of our non-anchor tenants experience financial difficulties or are unable to remain open, our cash flow, financial condition and result of operations could be adversely affected.

We may be restricted from re-leasing space at our multi-tenant retail properties.

We may be restricted from re-leasing space at our retail properties.

Leases with retail tenants may contain provisions giving the particular tenant the exclusive right to sell particular types of merchandise or provide specific types of services within the particular retail center.

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Our retail leases may contain co-tenancy provisions, which would have an adverse effect on our operation of such retail properties if exercised.

With respect to any multi-tenant retail properties we own or acquire, we may enter into leases containing co-tenancy provisions.

With respect to any retail properties we own or acquire, we may enter into leases containing co-tenancy provisions.

Co-tenancy provisions may allow a tenant to exercise certain rights if, among other things, another tenant fails to open for business, delays its opening or ceases to operate, or if a percentage of the property’s gross leasable space or a particular portion of the property is not leased or subsequently becomes vacant.

A tenant exercising co-tenancy rights may be able to abate minimum rent, reduce its share or the amount of its payments for common area operating expenses and property taxes or cancel its lease.

Risks Associated with Debt Financing

Volatility in the financial markets and challenging economic conditions could adversely affect our ability to secure debt financing on attractive terms and our ability to service our indebtedness.

Risks Related to Financing and Indebtedness

Volatility in the financial markets and challenging economic conditions could adversely affect our ability to secure debt

financing on attractive terms and our ability to service our indebtedness.

The domestic and international commercial real estate debt markets could become very volatile as a result of, among other things, the tightening of underwriting standards by lenders and credit rating agencies, increased interest rates and changing regulations.

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In addition, we may find it difficult, costly or impossible to refinance indebtedness that is maturing.

Further, economic conditions could negatively impact commercial real estate fundamentals and result in declining values in our multi-tenant retail portfolio and in the collateral securing any loan investments we may make, which could have various negative impacts.

Further, economic conditions could negatively impact commercial real estate fundamentals and result in declining values in our retail portfolio and in the collateral securing any loan investments we may make, which could have various negative impacts.

Specifically, the value of collateral securing any loan we hold could decrease below the outstanding principal amounts of such loans.

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We may borrow money for other purposes to, among other things, satisfy the requirement that we distribute at least 90% of our "REIT taxable income," subject to certain adjustments, annually or as is otherwise necessary or advisable to assure that we qualify as a REIT for federal income tax purposes.

However, payments required on any amounts we borrow reduce the funds

otherwise available for, among other things, capital expenditures or distributions to our stockholders.

However, payments required on any amounts we borrow reduce the funds otherwise available for, among other things, capital expenditures or distributions to our stockholders.

If there is a shortfall between the cash flow from our assets and the cash flow needed to service our debts, the amount of cash flow from operations available for distributions to stockholders may be reduced.

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There is no assurance that we will be able to achieve a favorable outcome on a cooperative or timely basis on any defaulted mortgage loan.

Risk Related to our Spin-off Transactions

Risks Related to our Joint Venture

Actions of our joint venture partner could negatively impact our performance.

With respect to our joint venture, we are not in a position to exercise sole decision-making authority regarding the property or the joint venture.

Consequently, our joint venture may involve risks not present with other methods of investing in real estate.

We have experienced these events from time to time with our former joint venture partners, which in some cases have resulted in litigation.

An adverse outcome in any lawsuit could have a material effect on our business, financial condition or results of operations.

In addition, any litigation increases our expenses and prevents our officers and directors from focusing their time and effort on our retail portfolio and business plans.

Our relationship with our joint venture partner is contractual in nature.

Such joint venture investments may involve other risks not otherwise present with a direct investment in real estate, including the following examples:

• the possibility that the investment may require additional capital that we or our joint venture partner does not have, which lack of capital could affect the performance of the investment or dilute our interest if our joint venture partner were to contribute our share of the capital;

• the possibility that our joint venture partner in an investment might breach a loan agreement or other agreement or otherwise, by action or inaction, act in a way detrimental to us or the investment;

• the possibility that we may incur liabilities as the result of the action taken by our joint venture partner;

• that such joint venture partner may exercise buy/sell rights that force us to either acquire the entire investment, or dispose of our share, at a time, on terms and/or at a price that may not be consistent with our investment objectives.

The termination of our joint venture may adversely affect our cash flow, operating results, and our ability to make distributions to stockholders.

Risks Related to our Spin-off Transactions

We could incur significant indemnification liabilities in connection with the spin-off transactions of our former subsidiaries.

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In 2015 we spun off Xenia and in 2016 we spun off Highlands by distributing 95% and 100%, respectively, of the shares of the common stock of these former subsidiaries to our stockholders.

In connection with each of these spin-off transactions, we entered into a Separation and Distribution Agreement with Xenia or Highlands, as applicable, which provides for, among other things, the allocation between us and Xenia or Highlands, as applicable, of our assets, liabilities and obligations attributable to

periods prior to, at and after the applicable share distribution.

Among other things, each Separation and Distribution Agreement also provides that we will indemnify and be financially responsible for liabilities that may exist relating to the assets that were not included in the spun-off company or for certain liabilities relating to the spin-off transactions.

Among other things, each Separation and Distribution Agreement also provides that we will indemnify and be financially responsible for liabilities that may exist relating to the assets that were

not included in the spun-off company or for certain liabilities relating to the spin-off transactions.

Conversely, each of Xenia and Highlands agreed to indemnify us related to certain of their assets and businesses and for certain liabilities relating to the spin-off transactions.

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Our estimated share value is generally determined only once a year and is based on a number of assumptions and estimates that may not be accurate or complete and is subject to a number of limitations as described below.

The estimated value per share of our common stock is based on a number of assumptions and estimates that may not be accurate or complete and is also subject to a number of limitations.

On May 9, 2019, we announced an estimated value of our common stock equal to $3.14 per share.

Our Board engaged Duff & Phelps, LLC ("Duff & Phelps"), an independent third-party valuation advisory firm that specializes in providing real estate valuation services, to advise the Audit Committee and the Board in their estimate of the per share value of our common stock outstanding as of May 1, 2019.

The estimated per share value of our common stock is based on a number of assumptions and estimates that may not be accurate or complete and is also subject to a number of limitations.

On December 21, 2021, we announced an estimated value of our common stock as of December 1, 2020, equal to $2.89 per share.

As with any methodology used to estimate value, the methodology employed by Duff & Phelps and the recommendations made by us were based upon a number of estimates and assumptions that may not have been accurate or complete.

Further, different parties using different assumptions and estimates could have derived a different estimated value per share, which could be significantly different from our estimated value per share.

Further, different parties using different assumptions and estimates could have derived a different estimated per share value, which could be significantly different from our estimated per share value.

The estimated per share value does not represent:

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Furthermore, the estimated share value is generally determined only as of a particular date once a year and could be subject to significant volatility due to a variety of economic, political, market, competitive and other factors, which could cause the estimated share value to go up or down over time.

Accordingly, with respect to the estimated value per share, we can give no assurance that:

Accordingly, with respect to the estimated per share value, we can give no assurance that:

• a stockholder would be able to resell his, her or its shares at this estimated value;

a stockholder would ultimately realize distributions per share equal to our estimated value per share upon liquidation of our assets and settlement of our liabilities or a sale of the Company;

our shares would trade at a price equal to or greater than the estimated value per share if we listed them on a national securities exchange;

the methodology used to estimate our value per share would be acceptable to the Financial Industry Regulatory Authority ("FINRA") or that the estimated value per share will satisfy the applicable annual valuation requirements under the

Employee Retirement Income Security Act of 1974, as amended ("ERISA"), and the Code with respect to employee benefit plans subject to ERISA and other retirement plans or accounts subject to Section 4975 of the Code;

• a stockholder would ultimately realize distributions per share equal to our estimated per share value upon liquidation of our assets and settlement of our liabilities or a sale of the Company;

• our shares would trade at a price equal to or greater than the estimated per share value if we listed them on a national securities exchange;

• the methodology used to estimate our per share value would be acceptable to the Financial Industry Regulatory Authority ("FINRA") or that the estimated per share value will satisfy the applicable annual valuation requirements under the Employee Retirement Income Security Act of 1974, as amended ("ERISA"), and the Code with respect to

employee benefit plans subject to ERISA and other retirement plans or accounts subject to Section 4975 of the Code;

• this estimated value will increase, stay at the current level, or not continue to decrease, over time.

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Historically we have paid, and we intend to continue to pay, regular cash distributions to our stockholders.

On November 7, 2018, our Board approved an increase to our annual distribution rate effective for the quarterly distribution paid in April 2019 from $0.0716 per share to $0.0737 per share, on an annualized basis.

The adjustment to the distribution rate equates to a 2019 calendar year total distribution of $0.0732 per share (an annual rate of $0.0716 per share paid in January 2019 and an annual rate of $0.0737 per share paid in April, July and October 2019).

On November 11, 2019, our Board approved an increase to our annual distribution rate effective for the quarterly distribution payable in April 2020 from $0.0737 per share to $0.0759, on an annualized basis.

The adjustment to the distribution rate equates to a 2020 calendar year total distribution of $0.07535 per share (an annual rate of $0.0737 per share paid in January 2020 and an annual rate of $0.0759 per share paid in April, July and October 2020).

On December 17, 2020, our Board approved an increase to our annual distribution rate effective for the quarterly distribution payable in April 2021, from $0.0759 to $0.0782, on an annualized basis.

Our ability to continue to pay dividends at current rates or to continue to increase our dividend rate will depend on a number of factors, including, among others, the following:

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Factors that can affect the availability and timing of cash distributions include our ability to earn positive yields on our real estate assets, the yields on securities in which we invest and our operating expense levels, and many others.

Our multi-tenant retail platform strategy may also affect our ability to pay our cash distributions if we are not able to timely reinvest the capital we receive from our property dispositions.

Our retail platform strategy may also affect our ability to pay our cash distributions if we are not able to timely reinvest the capital we receive from our property dispositions.

There is no assurance that we will be able to continue paying distributions at the current level or that the amount of distributions will increase, or not continue to decrease, over time.

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Any amendments to or suspension or termination of, the Share Repurchase Program may restrict or eliminate a stockholder's ability to resell shares to us.

Risks Related to Our Organization and Structure

Stockholders have limited control over changes in our policies and operations.

Our Board determines our major policies, including our investment policies and strategies and policies regarding financing, debt and equity capitalization, REIT qualification and distributions.

Our Board may amend or revise certain of these and other policies without a vote of the stockholders.

Stockholders' interest in us may be diluted if we issue additional shares.

Stockholders do not have preemptive rights with respect to any shares issued by us in the future.

Our charter authorizes our Board, without stockholder approval, to amend the charter from time to time to increase or decrease the aggregate number of shares of stock or the number of shares of stock of any class or series that the Company has authority to issue.

Future issuances of common stock reduce the percentage of our shares owned by our current stockholders who do not participate in future stock issuances.

Stockholders are not entitled to vote on whether or not we issue additional shares.

In addition, depending on the terms and pricing of an additional offering of our shares and the value of our properties, our stockholders may experience dilution in the value of their shares.

Further, our Board could issue stock on terms and conditions that subordinate the rights of the holders of our current common stock or have the effect of delaying, deferring or preventing a change in control in us, including an extraordinary transaction (such as a merger, tender offer or sale of all or substantially all our assets) that might provide a premium price for our stockholders.

On June 11, 2020, we announced that our Board voted to suspend the SRP until further notice.

Pursuant to the terms of the SRP, the suspension went into effect on July 11, 2020.

Increases in market interest rates may reduce demand for our common stock and result in a decline in the value of our common stock.

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If we or any of our subsidiaries become obligated to register as an investment company, the registered entity would have to comply with regulation under the Investment Company Act with respect to capital structure (including the registered entity’s ability to use borrowings), management, operations, transactions with affiliated persons (as defined in the Investment Company Act) and portfolio composition, including disclosure requirements and restrictions with respect to diversification and industry concentration, and other matters.

Compliance with the Investment Company Act may not be feasible as it would limit our ability to make certain

investments and require us to significantly restructure our operations and business plan.

Compliance with the Investment Company Act may not be feasible as it would limit our ability to make certain investments and require us to significantly restructure our operations and business plan.

The costs we would incur and the limitations that would be imposed on us as a result of such compliance and restructuring would negatively affect the value of our common stock, our ability to make distributions and the sustainability of our business and investment strategies.

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The term "investment securities" generally includes all securities except government securities and securities of majority-owned subsidiaries that are not themselves investment companies and are not relying on the exclusion from the definition of investment company under Section 3(c)(1) or Section 3(c)(7) of the Investment Company Act.

We and our subsidiaries are primarily engaged in the business of investing in real property and, as such, we believe we and our subsidiaries should fall outside of the definition of an investment company under Section 3(a)(1)(A) of the Investment Company Act.

We and our subsidiaries are primarily engaged in the business of investing in

real property and, as such, we believe we and our subsidiaries should fall outside of the definition of an investment company under Section 3(a)(1)(A) of the Investment Company Act.

Accordingly, we believe that neither we nor any of our wholly and majority-owned subsidiaries are considered investment companies under either Section 3(a)(1)(A) or Section 3(a)(1)(C) of the Investment Company Act.

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If we or our subsidiaries were required to register as an investment company but failed to do so, we or the applicable subsidiary would be prohibited from engaging in our or its business, and criminal and civil actions could be brought against us or the applicable subsidiary.

we or the applicable subsidiary were deemed an unregistered investment company, unless the court found that under the circumstances, enforcement (or denial of rescission) would produce a more equitable result than no enforcement (or grant of rescission) and would not be inconsistent with the Investment Company Act.

If we or any of our subsidiaries were deemed an unregistered investment company, we or the applicable subsidiary could be subject to monetary penalties and injunctive relief and we or the applicable subsidiary could be unable to enforce contracts with third parties and third parties could seek to obtain rescission of transactions undertaken during the period we or the applicable subsidiary were deemed an unregistered investment company, unless the court found that under the circumstances, enforcement (or denial of rescission) would produce a more equitable result than no enforcement (or grant of rescission) and would not be inconsistent with the Investment Company Act.

Risks Related to Our Organization and Corporate Structure

Stockholders have limited control over changes in our policies and operations.

Our Board determines our major policies, including our investment policies and strategies and policies regarding financing, debt and equity capitalization, REIT qualification and distributions.

Our Board may amend or revise certain of these and other policies without a vote of the stockholders.

Stockholders' interest in us may be diluted if we issue additional shares.

Stockholders do not have preemptive rights with respect to any shares issued by us in the future.

Future issuances

of common stock reduce the percentage of our shares owned by our current stockholders who do not participate in future stock issuances.

Stockholders are not entitled to vote on whether or not we issue additional shares.

In addition, depending on the terms and pricing of an additional offering of our shares and the value of our properties, our stockholders may experience dilution in the value of their shares.

Our rights and the rights of our stockholders to take action against our directors and officers are limited.

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Certain provisions of the Maryland General Corporation Law ("MGCL"), may have the effect of deterring a third party from making a proposal to acquire us or of impeding a change in our control under circumstances that otherwise could provide the holders of our common stock with the opportunity to benefit from a sale of our common stock, including the following:

"business combination" provisions that, subject to limitations, prohibit certain business combinations between us and an “interested stockholder” (defined generally as any person who beneficially owns, directly or indirectly, 10% or more of the voting power of our outstanding voting stock or an affiliate or associate of ours who was the beneficial owner, directly or indirectly, of 10% or more of the voting power of our then outstanding stock at any time within the two-year period immediately prior to the date in question) for five years after the most recent date on which the stockholder becomes an interested stockholder, and thereafter impose fair price and/or supermajority stockholder voting requirements on these combinations;

• "business combination" provisions that, subject to limitations, prohibit certain business combinations between us and an “interested stockholder” (defined generally as any person who beneficially owns, directly or indirectly, 10% or more of the voting power of our outstanding voting stock or an affiliate or associate of ours who was the beneficial owner, directly or indirectly, of 10% or more of the voting power of our then outstanding stock at any time within the

two-year period immediately prior to the date in question) for five years after the most recent date on which the stockholder becomes an interested stockholder, and thereafter impose fair price and/or supermajority stockholder voting requirements on these combinations;

• "control share" provisions that provide that "control shares" of our company (defined as voting shares that, when aggregated with other shares controlled by the stockholder, entitle the stockholder to exercise one of three increasing ranges of voting power in electing directors) acquired in a "control share acquisition" (defined as the direct or indirect acquisition of ownership or control of issued and outstanding control shares) have no voting rights except to the extent approved by our stockholders by the affirmative vote of at least two-thirds of all the votes entitled to be cast on the matter, excluding all interested shares.

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A change in our investment strategy may, among other things, increase our exposure to interest rate risk, default risk and real property market fluctuations, all of which could materially and adversely affect our ability to achieve our investment objectives.

Operational Risks