Item 3. Quantitative and Qualitative Disclosures About Market Risk
Item 3.
QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK
Our current securities portfolio, as well as our future investments in securities, primarily consists of equity and debt securities issued by smaller U.S. companies that primarily own commercial
real estate that are either illiquid or not listed on any exchange, and our investments in these securities are considered speculative in nature. Our investments often include securities that are subject to legal or contractual restrictions on
resale that adversely affect the liquidity and marketability of such securities. As a result, we are subject to risk of loss which may prevent our stockholders from achieving price appreciation, dividend distributions and a return of their
capital. However, now that we are no longer a BDC, most of our investments will be investments in real estate or interests in real estate that are not subject to the same market risks, but are instead subject to market risk associated with changes
in interest rates both in terms of variable-rate debt and the price of new fixed-rate debt upon maturity of existing debt and for acquisitions.
At September 30, 2021, financial instruments that subjected us to concentrations of market risk consisted principally of equity investments, which represented approximately 44% of our total assets as of that date. As
discussed in Note 4 – Investments, to our consolidated financial statements, these investments primarily consist of securities in companies with no readily determinable market values and as such are valued in accordance with our fair value policies
and procedures. Our investment portfolio also includes shares of publicly traded REITs, which are valued at recently quoted trading prices. Our investment strategy represents a high degree of business and financial risk due primarily to the general
illiquidity of our investments. We may make short-term investments in cash equivalents, U. S. government securities and other high-quality investments that mature in one year or less, pending investments in portfolio companies made according to our
principal investment strategy.
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