What changed in this filing

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Item 1A. Risk Factors

2024-02-14 compared with 2023-02-21 · 30 added, 31 removed, 267 unchanged (19% of the section changed)

8 unchanged sentences

by the regional or local economic conditions in the markets in which our assets are located, including any dislocations in the credit markets;

or by competitive business market conditions experienced by us, These conditions may materially affect our value and the 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.

or by competitive business market conditions experienced by us.

These conditions may materially affect our value and the 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.

An economic downturn could result in defaults by retail tenants, which could have an adverse impact on our business, financial condition, result of operations, and ability to make distributions to our stockholders.

12 unchanged sentences

Our retail portfolio is subject to geographic concentration, which exposes us to changing economic and retail market conditions that may reduce our revenues and cash flows.

As of December 31, 2022, approximately 38.7% of the total annualized base rental income in our retail portfolio was generated by properties located in Texas, with 18.3%, 9.6%, 7.4%, and 3.4% of our total annualized base rental income generated by properties in Austin, Dallas-Fort Worth-Arlington, Houston, and San Antonio metropolitan areas, respectively.

As of December 31, 2023, approximately 41.7% of the total annualized base rental income in our retail portfolio was generated by properties located in Texas, with 17.5%, 11.2%, 9.8%, and 3.2% of our total annualized base rental income generated by properties in Austin, Houston, Dallas-Fort Worth-Arlington, and San Antonio metropolitan areas, respectively.

An oversupply of retail properties without corresponding increases in demand 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.

18 unchanged sentences

• competition for tenancy of our leases

As of December 31, 2022, economic occupancy and leased occupancy of our pro rata combined retail portfolio was 93.9% and 96.1%, respectively.

As of December 31, 2022, leases representing approximately 4.9% and 10.0% of our pro rata combined retail portfolio GLA were scheduled to expire in 2023 and 2024.

As of December 31, 2023, economic occupancy and leased occupancy of our retail portfolio was 93.3% and 96.2%, respectively.

As of December 31, 2023, leases representing approximately 5.0% and 12.1% of our retail portfolio GLA were scheduled to expire in 2024 and 2025, 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.

9 unchanged sentences

In such cases, our cash flows, operating results and financial performance may be adversely impacted.

The ongoing COVID-19 pandemic has in the past and may continue to materially and adversely impact and disrupt our business, financial condition, results of operations and cash flows.

Any future outbreak of any COVID-19 variants or any other highly infectious or contagious disease could have a similar impact.

The impact of COVID-19, including any resurgences, future pandemics or other health crises may also heighten other risks discussed herein, which could adversely affect our business, financial condition, results of operations, cash flows and market value.

These type of health crises may impact our business in the following ways:

• 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;

• 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.

Pandemics, epidemics or other health crises may have a negative effect on our and our tenants' businesses, financial condition, results of operations, cash flows, and liquidity.

Our business, and the businesses of our tenants, could be materially and adversely affected by the risks, or the public perception of the risks, related to a pandemic, epidemic, or other health crisis, especially if there is a negative impact to customers' willingness or ability to frequent our tenants' businesses.

Such crises could cause significant disruptions to the United States and global economy and contribute to significant volatility and negative pressure in financial markets.

Government responses, including quarantines, restrictions on travel, mandatory closures of businesses, or other restrictions, as well as changes in consumer behavior, could negatively impact our tenants and their ability to operate their businesses, which could impact our ability to collect on current or past due rent payments or fully recover amounts due under the terms of a lease agreement in the event of a default by a tenant.

The unpredictable nature of pandemics, epidemics, and other health crises precludes any prediction as to one’s ultimate adverse impact.

A worsening of the economic, political and social environment as a result presents material risks and uncertainties with respect to our and our tenants’ business, financial condition, results of operations, cash flows, liquidity, and ability to satisfy debt service obligations.

Risk Factors Related to Real Estate Investments

1 unchanged sentence

Investments in real estate are subject to varying degrees of risk.

Among the factors that could have a negative impact our assets and the value of an investment in us are the following:

Among the factors that could have a negative impact on our assets and the value of an investment in us are the following:

• relative illiquidity of real estate;

10 unchanged sentences

• natural disasters, such as earthquakes, droughts, hurricanes, floods, extreme storms and weather or other under-insured or uninsured losses, which may result from or be exacerbated by climate change, and man-made events, such as terrorist attacks or events of sabotage;

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

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

We face risks with the expansion, development, and re-development of properties.

97 unchanged sentences

• fluctuations in the stock price and operating results of the Company’s competitors;

• the passage of legislations or other regulatory developments that may adversely affect the Company or the REIT industry, including but not limited to Section 1031 of the Internal Revenue Code;

• investor confidence in the stock and bond market generally;

• the passage of legislations or other regulatory developments that may adversely affect the Company or the REIT industry, including but not limited to Section 1031 of the Code;

• investor confidence in the stock and bond markets generally;

• changes in tax laws or accounting principles;

20 unchanged sentences

Furthermore, in the event that we are unable to fund future distributions from our cash flows from operating activities, the value of our stockholders' shares may be materially adversely affected.

For the year ended December 31, 2022, distributions were paid from cash flow from operations, distributions from unconsolidated entities and proceeds from the sales of properties.

For the year ended December 31, 2023, distributions were paid from cash flow from operations and proceeds from the sales of properties.

Risks Factors Related to Our Organization and Corporate Structure

14 unchanged sentences

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

We maintain insurance coverage with third-party carriers who provide a portion of the coverage of potential losses, including wind, flood, named windstorm, earthquake, fire, and other property-related perils.

We currently self-insure a portion of our commercial insurance deductible risk through our captive insurance company.

To the extent that our captive insurance company is unable to bear that risk, we may be required to fund additional capital to our captive insurance company or we may be required to bear that loss.

As a result, our operating results may be adversely affected.

Catastrophic losses, including but not limited to, windstorms, earthquakes, floods, and foreign terrorist activities may not be insurable or may not be economically insurable.

38 unchanged sentences

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.

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.

Cyberattacks are expected to accelerate on a global basis in frequency and magnitude as threat actors are becoming increasingly sophisticated in using techniques and tools – including generative and other artificial intelligence – that circumvent security controls, evade detection and remove forensic evidence.

As a result, we, or our tenants, may be unable to detect, investigate, remediate or recover from future attacks or incidents, or to avoid a material adverse impact to our or their IT networks and related systems, confidential information or business.

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

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

There can be no assurance that our cybersecurity risk management program and processes, including our policies, controls or procedures, will be fully implemented, complied with or effective in protecting our systems and information.

Further, 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.

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

8 unchanged sentences

The determination that we are a REIT requires an analysis of various factual matters that may not be totally within our control.

To qualify as a REIT, our assets must be substantially comprised of real estate assets as defined in the Internal Revenue Code of 1986, as amended (the “Code”), and related guidance and our gross income must generally come from rental and other real estate or passive related sources that are itemized in the REIT tax laws.

To qualify as a REIT, our assets must be substantially comprised of real estate assets as defined in the Code, and related guidance and our gross income must generally come from rental and other real estate or passive related sources that are itemized in the REIT tax laws.

We are also required to distribute to security holders at least 90% of our REIT taxable income excluding net capital gains.

If we fail to qualify as a REIT, we would be subject to U.S.

federal income tax at regular corporate rates (including, for years prior to 2018, any alternative minimum tax) and would have to pay significant income taxes unless the Internal Revenue Service (“IRS”) granted us relief under certain statutory provisions.

federal income tax at regular corporate rates and would have to pay significant income taxes unless the Internal Revenue Service (“IRS”) granted us relief under certain statutory provisions.

In addition, we would remain disqualified from taxation as a REIT for four years following the year in which we failed to qualify as a REIT.

6 unchanged sentences

This ownership limit may delay or prevent a transaction or change in control that could affect our stockholder’s ability to realize a premium over the then prevailing market price for their shares, it could also restrict our stockholders' ability to acquire or transfer certain amounts of our common stock.

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.

What changed 10-K

Item 1A. Risk Factors