What changed in this filing

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Item 1A. Risk Factors

2021-05-14 compared with 2021-02-22 · 64 added, 59 removed, 61 unchanged (67% of the section changed)

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Thus, we are no longer regulated as a BDC and are no longer subject to the regulatory provisions of the

The 1940 Act is designed to protect the interests of investors in investment companies, with requirements relating to insurance, custody, capital structure, composition of the Board of Directors, affiliated transactions, leverage limitations,

and compensation arrangements.

limitations, and compensation arrangements.

Our organizational documents have no limitation on the amount of indebtedness we may incur.

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our debt and resulting maturities may increase our vulnerability to adverse economic and industry conditions;

we may be required to dedicate a substantial portion of our cash flows from operations to payments on our debt, thereby reducing cash available for distribution to our stockholders, funds available for operations and capital

expenditures, future business opportunities or other purposes;

operations and capital expenditures, future business opportunities or other purposes;

the terms of any refinancing may not be in the same amount or on terms as favorable as the terms of the existing debt being refinanced, or we may not be able to refinance our debt at all;

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If we are unable to borrow money at favorable rates, or at all, we may be unable to refinance existing loans at maturity.

Further, we may enter into loan agreements or other credit arrangements that

require us to pay interest on amounts we borrow at variable or “adjustable” rates.

Further, we may enter into loan agreements or other credit arrangements

that require us to pay interest on amounts we borrow at variable or “adjustable” rates.

Increases in interest rates will increase our interest costs.

If interest rates are higher when we refinance our loans, our expenses will increase.

Any increases in

our operating costs due to increased interest costs would reduce our cash flow, which could reduce the amount we are able to distribute to our stockholders.

Further, during periods of rising interest rates, we may be forced to sell one or more of

our assets earlier than anticipated in order to repay existing loans, which may not permit us to maximize the return on the particular assets being sold.

increases in our operating costs due to increased interest costs would reduce our cash flow, which could reduce the amount we are able to distribute to our stockholders.

Further, during periods of rising interest rates, we may be forced to sell one

or more of our assets earlier than anticipated in order to repay existing loans, which may not permit us to maximize the return on the particular assets being sold.

Uninsured and underinsured losses at our assets could materially and adversely affect our revenues and profitability.

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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 also keep us from using insurance proceeds to replace or renovate an asset after it has been

damaged or destroyed.

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 also keep us from using insurance proceeds 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.

These insurers must make terrorism insurance available under their property and

casualty insurance policies;

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.

These 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.

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, either

through financial assurances or self-insurance, to cover potential losses.

In such instances, we may be required to provide other financial support,

either through financial assurances or self-insurance, to cover potential losses.

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

Potential Lack of Diversification.

If we are unable to raise substantial funds in the future or redeploy existing assets into additional real estate properties, we will make fewer investments resulting in less diversification in terms of the type,

number, and size of investments we make, and the value of an investment in us will fluctuate with the performance of the specific assets we acquire.

Further, we will have certain fixed operating expenses regardless of whether we are able to raise

substantial funds.

Our inability to raise substantial funds would increase our fixed operating expenses as a percentage of gross income, reducing our net income and limiting our ability to make distributions.

we make, and the value of an investment in us will fluctuate with the performance of the specific assets we acquire.

Further, we will have certain fixed operating expenses regardless of whether we are able to raise substantial funds.

Our inability

to raise substantial funds would increase our fixed operating expenses as a percentage of gross income, reducing our net income and limiting our ability to make distributions.

We may be unable to identify and complete acquisitions of real property assets.

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competition from other investors may significantly increase the purchase price of a desired real property asset or result in less favorable terms;

we may not complete the acquisition of a desired real property asset even if we have signed an agreement to acquire such real property asset because such agreements are subject to customary conditions to

closing, including completion of due diligence investigations to our satisfaction;

we may not complete the acquisition of a desired real property asset even if we have signed an agreement to acquire such real property asset because such agreements are subject to

customary conditions to closing, including completion of due diligence investigations to our satisfaction;

we may be unable to finance acquisitions of real property assets on favorable terms or at all.

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Investments in real property assets are relatively illiquid compared to other investments.

Accordingly, we may not be able to sell real property asset investments when we desire or at prices

acceptable to us in response to changes in economic or other conditions.

Accordingly, we may not be able to sell real property asset investments when we desire or at prices acceptable to us in response to changes in economic

or other conditions.

This could substantially reduce the funds available for satisfying our obligations and for distribution to our stockholders.

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Some of these laws and regulations have been amended so as to require compliance with new or more stringent standards as of future dates.

Compliance with new or more stringent laws or regulations or

stricter interpretation of existing laws may require material expenditures by us.

Compliance with new or more stringent laws or

regulations or stricter interpretation of existing laws may require material expenditures by us.

Future laws, ordinances or regulations may impose material environmental liability.

Additionally, our tenant companies’ operations, the existing condition of land

when we buy it, operations in the vicinity of our properties, such as the presence of underground storage tanks, or activities of unrelated third parties may affect our properties.

In addition, there are various local, state and federal fire,

health, life-safety and similar regulations with which we may be required to comply, and that may subject us to liability in the form of fines or damages for noncompliance.

Any material expenditures, fines, or damages we must pay will reduce our

ability to make distributions.

State and federal laws in this area are constantly evolving, and we intend to monitor these laws and take commercially reasonable steps to protect ourselves from the impact of these laws, including

where deemed necessary, obtaining environmental assessments of properties that we acquire;

Additionally, our tenant companies’ operations, the existing

condition of land when we buy it, operations in the vicinity of our properties, such as the presence of underground storage tanks, or activities of unrelated third parties may affect our properties.

In addition, there are various local, state and

federal fire, health, life-safety and similar regulations with which we may be required to comply, and that may subject us to liability in the form of fines or damages for noncompliance.

Any material expenditures, fines, or damages we must pay

will reduce our ability to make distributions.

State and federal laws in this area are constantly evolving, and we intend to monitor these laws and take commercially reasonable steps to protect ourselves from the impact of these laws,

including where deemed necessary, obtaining environmental assessments of properties that we acquire;

however, we will not obtain an independent third-party environmental assessment for every property we acquire.

In addition, any such assessment that we do

obtain may not reveal all environmental liabilities or whether a prior owner of a property created a material environmental condition not known to us.

The cost of defending against claims of liability, of compliance with environmental regulatory

requirements, of remediating any contaminated property, or of paying personal injury claims would materially adversely affect our business, assets or results of operations and, consequently, amounts available for distribution.

In addition, any such assessment

that we do obtain may not reveal all environmental liabilities or whether a prior owner of a property created a material environmental condition not known to us.

The cost of defending against claims of liability, of compliance with environmental

regulatory requirements, of remediating any contaminated property, or of paying personal injury claims would materially adversely affect our business, assets or results of operations and, consequently, amounts available for distribution.

We will be dependent upon key personnel of Real Estate Adviser for our future success.

We anticipate entering into an agreement with Real Estate Adviser to provide full management services to us for real property asset investments.

We will be dependent on the diligence, expertise and

business relationships of the management of Real Estate Adviser to implement our strategy of acquiring real property assets.

The departure of one or more investment professionals of Real Estate Adviser could have a material adverse effect on our

ability to implement this strategy and on the value of our common shares.

We will be dependent on the diligence, expertise and business relationships of the management of Real

Estate Adviser to implement our strategy of acquiring real property assets.

The departure of one or more investment professionals of Real Estate Adviser could have a material adverse effect on our ability to implement this strategy and on the

value of our common shares.

There can be no assurance that we will be successful in implementing our strategy.

The lack of liquidity in our securities investments may make it difficult to liquidate our securities portfolio at favorable prices.

As a result, we may suffer

We have historically invested in the equity of companies whose securities are not publicly traded, and whose securities may be subject to legal and other restrictions on resale or otherwise be less

liquid than publicly traded securities.

As a result, we may

suffer losses.

We have historically invested in the equity of companies whose securities are not publicly traded, and whose securities may be subject to legal and other restrictions on resale or otherwise be

less liquid than publicly traded securities.

We also have invested in debt securities and may hold such investments until maturity.

The illiquidity of these investments may make it difficult for us to sell these investments when desired.

we may realize significantly less than the value at which we had previously recorded these investments when we liquidate our securities portfolio.

The illiquidity of most of our securities investments may make it difficult for us to dispose of

them at favorable prices, and, as a result, we may suffer losses.

addition, we may realize significantly less than the value at which we had previously recorded these investments when we liquidate our securities portfolio.

The illiquidity of most of our securities investments may make it difficult for us to

dispose of them at favorable prices, and, as a result, we may suffer losses.

In addition to the other information set forth in this report, you should carefully consider the factors discussed in Part I, “Item 1A.

Risk Factors” in our Annual Report on Form 10-K for the fiscal

year ended June 30, 2020, which could materially affect our business, financial condition or operating results.

Risk Factors” in our Annual Report on Form 10-K for the

fiscal year ended June 30, 2020, which could materially affect our business, financial condition or operating results.

The risks described above and in our Annual Report on Form 10-K are not the only risks facing our Company.

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uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition and/or operating results.

UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

Issuer Purchases of Equity Securities

DEFAULTS UPON SENIOR SECURITIES

MINE SAFETY DISCLOSURES

Not applicable.

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-Q

Item 1A. Risk Factors