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• The USPS’ potential insolvency, inability to pay rent or bankruptcy.
−Removed: • Implementation of the Ten-Year Plan proposed by the USPS.
• Our properties may have a higher risk of terrorist attacks.
• Litigation and catastrophic events involving the USPS may disrupt our business.
−Removed: Risks Related to Our Business Operations
+Added: Risks Related to Our Business and Operations
• We may be unable to acquire and/or manage additional USPS-leased properties at competitive prices or at all.
+Added: • Our acquisitions may not achieve the returns we expect.
• Concentration of our postal properties in certain regions.
• We may be unable to renew leases or sell vacated properties on favorable terms, or at all, as leases expire.
+Added: • We may incur significant maintenance, repair and capital expenses under our leases.
• Property vacancies could result in significant capital expenditures and illiquidity.
−Removed: • As of March 7, 2023, the leases at 100 of our properties were expired.
+Added: • As of February 29, 2024, the leases at 91 of our properties were expired.
• Our use of OP Units as consideration to acquire properties.
−Removed: • Postal properties are illiquid.
+Added: • Commercial real estate investments may be illiquid.
• An increase in the amount of USPS or U.S.
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• Our real estate taxes for properties where we are not reimbursed could increase.
+Added: • We may be exposed to risks associated with property development and redevelopment.
• Increases in interest rates or unavailability of debt financing.
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• Risks associated with on-going or future litigation.
−Removed: • Insurance on our properties may not adequately cover all losses and uninsured losses.
−Removed: • Risks associated with joint venture investments.
+Added: • Insurance on our properties may not adequately cover all losses.
+Added: • Risks associated with potential joint venture investments.
• Competition for skilled personnel could increase our labor costs.
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• We are subject to risks from natural disasters and risks associated with climate change.
−Removed: • Our properties may be subject to impairment charges.
+Added: • Our properties may be subject to impairment charges or reduction in value.
• Our title insurance policies may not cover all title defects.
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• Use of social media may adversely impact our reputation and business.
+Added: • Our ability to pay dividends in the future.
Risks Related to Our Organizational Structure
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• Our charter contains certain provisions restricting the ownership and transfer of our stock.
−Removed: • We could increase the number of authorized shares of stock, classify and reclassify unissued stock and issue stock without stockholder approval.
+Added: • We could increase our equity issuance without stockholder approval.
• Certain provisions of the Maryland General Corporation Law could inhibit changes of control.
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• Changes in accounting pronouncements could adversely impact our reported financial performance.
−Removed: • We could be adversely impacted if there are deficiencies in our disclosure controls and procedures or internal control over financial reporting.
+Added: • We could be adversely impacted if there are deficiencies in our disclosure controls or internal controls.
• Future offerings of equity securities may adversely affect the market price of our Class A common stock.
−Removed: • The market price of our Class A common stock has been, and may continue to be, volatile and has declined, and may continue to decline.
+Added: • The market price of our Class A common stock may be volatile and may decline.
• We face cybersecurity risks and risks associated with security breaches.
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or the market price of our Class A common stock, as further described in each risk factor below.
−Removed: In addition to the information set forth herein, in this Annual Report on Form 10-K, one should carefully review and consider the information contained in our other reports and periodic filings that we make with the SEC.
+Added: In addition to the information set forth in this Annual Report on Form 10-K, one should carefully review and consider the information contained in our other reports and periodic filings that we make with the SEC.
Those risk factors could materially affect our overall business, financial condition, results of operations, cash flows and prospects;
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Our business is substantially dependent on the demand for leased postal properties.
+Added: Substantially all of our revenue come from properties leased to the USPS.
Any significant decrease in the demand for leased postal properties could have a material adverse effect on our business.
−Removed: The number of retail postal locations nationwide has been decreasing over the prior decade.
−Removed: Additionally, on March 23, 2021, the USPS released a ten-year plan entitled Delivering for America:
+Added: The number of postal locations nationwide has been decreasing over the prior decade.
+Added: Additionally, on March 23, 2021, the USPS released the Delivering for America:
Our Vision and Ten-Year Plan to Achieve Financial Sustainability and Service Excellence (the “Ten-Year Plan”), which includes evaluating the facility consolidations that were deferred in 2015 and potentially consolidating the facilities that remain underutilized.
−Removed: The USPS has recently began to undertake, and proposes to further undertake, a number of operational reforms and cost reduction measures under the Ten-Year Plan, such as higher rates, slower deliveries for certain services, formation of large sorting and delivery centers and closure, relocation or consolidation of certain facilities and delivery units.
−Removed: Consolidation of our postal properties or delivery units attached to our postal properties would materially adversely affect our operations.
−Removed: Further reductions in the number of postal properties could result in entering into leases with the USPS in the future on less favorable terms than current leases, the failure of the USPS to renew leases or the termination by the USPS of existing leases for our properties and the reduction of the number of acquisition opportunities available to us.
−Removed: The level of demand for postal properties may be impacted by a variety of factors outside of our control, including changes in U.S.
−Removed: federal government and USPS policies or funding, changes in population density, the health and sustainability of local, regional and national economies, the existence of epidemics and pandemics, such as the ongoing COVID-19 pandemic, and the demand and use of the USPS.
−Removed: Moreover, technological innovations, such as autonomous delivery devices, may decrease the need for hand delivery or in-person pick up, thereby decreasing the demand for retail post offices.
−Removed: In addition, package delivery service providers, such as FedEx, Amazon, UPS and DHL, begun implementing autonomous delivery devices to assist retail companies with same-day and last-mile deliveries, in addition to publicly stating their intention to expand their last-mile delivery capabilities.
+Added: The USPS has begun to undertake, and proposes to further undertake, a number of operational reforms and cost reduction measures under the Ten-Year Plan and other USPS initiatives, such as higher rates, slower deliveries for certain services, formation of large sorting and delivery centers and closure, relocation or consolidation of certain facilities and delivery routes.
+Added: Consolidation of our postal properties or delivery routes attached to our postal properties under the Ten-Year Plan or other USPS initiatives may lead to the USPS vacating or declining to renew leases on such properties and materially adversely affect our operations.
+Added: As part of its larger, multi-phased plan, the USPS has included a number of our properties on lists identifying postal facilities under consideration to relocate delivery routes into larger sorting and delivery centers.
+Added: As of the date of this report, the USPS had not vacated or notified us of its intention to vacate any properties related to route relocations.
+Added: Further reductions in the number of postal properties or downsizing of operations in existing postal properties under the Ten-Year Plan or other USPS initiatives could result in entering into leases with the USPS in the future on less favorable terms than current leases, the failure of the USPS to renew leases or the termination by the USPS of existing leases for our properties, the decrease in value of the affected properties upon sale and the reduction of the number of acquisition opportunities available to us.
+Added: The level of demand for postal properties may also be impacted by a variety of factors outside of our control, including changes in U.S.
+Added: federal government and USPS policies or funding, changes in population density, the health and sustainability of local, regional and national economies, the existence of epidemics and pandemics, such as the COVID-19 pandemic, changes in demand for the products and services of the USPS by its customers and the changing demands and uses of the USPS itself for postal properties.
+Added: Moreover, technological innovations, such as autonomous delivery devices, may decrease the need for hand delivery or in-person pick up, thereby decreasing the demand for retail post offices or other postal properties.
+Added: In addition, package delivery service providers, such as FedEx, Amazon, UPS and DHL, began implementing autonomous delivery devices to assist retail companies with same-day and last-mile deliveries, in addition to significantly expanding their own last-mile delivery capabilities.
The development, implementation and broad adoption of these devices may decrease the demand for postal services.
The USPS is facing legislative constraints that are hindering its ability to maintain adequate liquidity to sustain its current operations.
−Removed: If the USPS’ revenues decrease due to reduced demand for postal services, then the USPS may reduce its number of post office locations.
+Added: If the USPS’ revenues decrease due to reduced demand for postal services, then the USPS may reduce its number of postal properties.
The USPS’ inability to meet its financial obligations may render it insolvent or increase the likelihood of Congressional or regulatory reform of the USPS, which may have a material adverse effect on our business and operations.
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The USPS has significant outstanding debt obligations to the Federal Financing Bank (the “FFB”).
−Removed: Under the note purchase agreement between the USPS and the FFB (the "NPA"), USPS can issue short-term or long-term notes to the FFB and receive funds within two business days.
+Added: Under the note purchase agreement between the USPS and the FFB (the "NPA"), the USPS can issue short-term or long-term notes to the FFB and receive funds within two business days.
If the FFB elects not to purchase the USPS' notes, the USPS would need to issue and sell such notes potentially in the public or private debt markets to other parties or seek financing through other means.
The NPA will expire on September 30, 2025.
−Removed: There can be no assurance that the USPS will be able to extend the term of the NPA beyond expiration or, if the FFB declines to purchase the notes issued by the USPS, obtain alternative sources of financing on the terms or timing that it expects or at all.
+Added: There can be no assurance that the USPS will be able to extend the term of the NPA beyond expiration or, if the FFB declines to purchase the notes issued by the USPS, obtain alternative sources of financing on
+Added: the terms or timing that it expects or at all.
If the USPS is unable to extend the NPA beyond expiration, the USPS may not be able to refinance debt with the FFB in the future at comparable terms to those currently available.
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Additionally, the USPS has significantly underfunded retirement benefits amortization payable to the Civil Service Retirement System (the "CSRS") and Federal Employees Retirement System (the "FERS") funds, which the USPS is required to fund in future periods.
−Removed: On March 8, 2022, Congress passed the Postal Service Reform Act, which significantly alleviated the obligations of the USPS by repealing the requirement for USPS to pre-fund the PSRHBF, forgiving the USPS' $57 billion outstanding liability under the PSRHBF and requiring future postal retirees to enroll
−Removed: in Medicare, although significant underfunded liability remains under the PSRHBF in the long term.
+Added: On March 8, 2022, Congress passed the Postal Service Reform Act, which significantly alleviated the obligations of the USPS by repealing the requirement for USPS to pre-fund the PSRHBF, forgiving the USPS' $57 billion outstanding liability under the PSRHBF and requiring future postal retirees to enroll in Medicare, although significant underfunded liability remains under the PSRHBF in the long term.
The USPS’ substantial obligations under the NPA and the CSRS and FERS funds also remain outstanding.
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government and, as a result, is subject to a variety of regulations and other limitations applicable to federal agencies.
+Added: The USPS is constrained by laws and regulations that restrict revenue sources and mandate certain expenses.
The ability of the USPS to raise rates for its products and services and sell new products and services in new or existing markets is subject to the regulatory oversight and approval of the PRC.
+Added: However, the USPS' costs are not similarly constrained or capped.
+Added: A large portion of the USPS' cost structure cannot be altered expeditiously due to its universal service mission.
+Added: Many of its employee costs, such as compensation and employee health benefit premiums, are subject to contractual arrangements.
+Added: Other employee costs such as workers' compensation costs and retiree pension benefit amortization costs are mandated by law.
Limitations on the USPS’ ability to take action could adversely affect its operating and financial results, and as a result, reduce demand for leasing postal properties.
−Removed: Furthermore, a change in the structure, mission or leasing requirements of the USPS, a significant reduction in the USPS’ workforce, relocation of personnel resources, delivery units or postal offices, other internal reorganization or a change in the post offices or delivery units occupying our properties would affect our lease renewal opportunities and have a material adverse effect on our business.
+Added: Furthermore, a change in the structure, mission or leasing requirements of the USPS, a significant reduction in the USPS’ workforce, relocation of personnel resources, delivery routes or postal offices, other internal reorganization or a change in the delivery routes serviced by our properties could affect our lease renewal opportunities and have a material adverse effect on our business.
In addition, any change in the U.S.
−Removed: federal government’s treatment of the USPS as an independent agency, including, but not limited to, the privatization of all or a portion of the USPS business operations, may have a material adverse effect on our business.
+Added: federal government’s treatment of the USPS as an independent agency, including, but not limited to, the privatization or outsourcing of all or a portion of the USPS business operations, may have a material adverse effect on our business.
The business and results of operations of the USPS are significantly affected by competition from both competitors in the delivery marketplace as well as substitute products and digital communication.
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The use of e-mail and other forms of electronic communication have reduced first class mail volume, as have electronic billing and payment.
−Removed: Marketing mail has recently experienced declines due to mailers’ growing use of digital advertising including digital mobile advertising.
+Added: Marketing mail continues to experience declines due to mailers’ growing use of digital advertising including digital mobile advertising and a cyclical decline in advertising spending due to economic pressures.
The volume of periodicals services continues to decline as consumers increasingly use electronic media for news and information.
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The growth in the USPS’ competitive service volumes, such as Priority Mail, Priority Mail Express, First-Class Package Service, Parcel Select, Parcel Return Service and some types of International Mail, is largely attributable to certain of the USPS’ largest customers, including UPS, FedEx and Amazon.
−Removed: Each of these customers is building its own delivery capability that could enable it to divert volume away from the USPS over time.
−Removed: If these customers divert significant volume away from the USPS, the growth in the USPS’ competitive service volumes may not continue, and there may be reduced demand for leasing postal properties by the USPS.
+Added: In recent years, each of these customers has been significantly expanding its own delivery capability that enables it to divert volume away from the USPS over time.
+Added: If these customers continue to divert significant volume away from the USPS, the growth in the USPS’ competitive service volumes may not continue, and there may be reduced demand for leasing postal properties by the USPS, which would have a material adverse effect on our business and operations.
The USPS’ potential insolvency, inability to pay rent or bankruptcy would have a material adverse effect on our financial condition, results of operations, cash flow, cash available for distribution and our ability to service our debt obligations and could result in our inability to continue as a going concern.
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There can be no assurance that the USPS will be able to avoid insolvency, make timely rental payments or avoid defaulting under or terminating its leases.
−Removed: If the USPS defaults, we may experience delays in enforcing our rights as landlord
−Removed: and may incur substantial costs in protecting our investment.
+Added: If the USPS defaults, we may experience delays in enforcing our rights as landlord and may incur substantial costs in protecting our investment.
Because we depend on rental payments from the USPS, the inability of the USPS to make its lease payments could adversely affect us and our ability to make distributions to our stockholders.
Although we do not believe that bankruptcy protection under the United States bankruptcy code is available to the USPS, the law is unclear.
−Removed: If the USPS were to file for bankruptcy, we would become a creditor, but we may not be able to collect all or any of the pre-bankruptcy amounts owed to owe us by the USPS.
+Added: If the USPS were to file for bankruptcy, we would become a creditor, but we may not be able to collect all or any of the pre-bankruptcy amounts owed to us by the USPS.
In addition, if the USPS were to file for bankruptcy protection, it potentially could terminate its leases with us under federal law, in which event we would have a general unsecured claim against the USPS that would likely be worth less than the full amount owed to us for the remainder of the lease term.
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The strategic initiatives are designed to reverse projected losses and to operate at a positive net income in the long term.
−Removed: The Ten-Year Plan includes realignment, procurement of new facilities, expansion of existing facilities and consolidation of underused facilities as well as modernization of retail lobbies to enable expanded digital, small, medium-sized business and government services, which could affect our operations if our postal properties are consolidated.
−Removed: The USPS has recently begun to undertake a number of operational reforms and cost reduction measures under the Ten-Year Plan, such as higher rates, slower deliveries for certain services, formation of large sorting and delivery centers and closure, relocation or consolidation of certain facilities and delivery units.
+Added: The Ten-Year Plan includes realignment, procurement of new facilities, expansion of existing facilities and consolidation of underused facilities and delivery routes as well as modernization of retail lobbies to enable expanded digital, small, medium-sized business and government services, which could affect our operations if our postal properties are consolidated.
+Added: The USPS has recently begun to undertake a number of operational reforms and cost reduction measures under the Ten-Year Plan, such as higher rates, slower deliveries for certain services, formation of large sorting and delivery centers and closure, relocation or consolidation of certain facilities and delivery routes.
The extent to which the implementation of this Ten-Year Plan will affect our business, liquidity, financial condition and results of operations will depend on numerous factors that we may not be able to accurately predict or assess.
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The results of these changes or any future changes could lead to additional delays or financing shortfalls for the USPS.
−Removed: The COVID-19 pandemic has also had severe impacts on the USPS and its operations, customer demands, supply chains and labor force.
−Removed: The USPS will continue to be at risk of the adverse impact of another regional epidemic, global pandemic or other adverse public health developments in the future, which could reduce demand for USPS properties and adversely affect our business, financial condition and results of operations.
+Added: The USPS is also at risk of the adverse impact of another regional epidemic, global pandemic or other adverse public health developments in the future, such as those experienced during the COVID-19 pandemic, which could reduce demand for USPS properties and adversely affect our business, financial condition and results of operations.
Risks Related to Our Business and Operations
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In addition, the current ownership of properties leased to the USPS is highly fragmented with the overwhelming majority of owners holding a single property.
−Removed: As a result, we may need to expend significant resources to source acquisition opportunities and complete our due diligence, underwriting and acquisition accounting process on many individual properties, thereby increasing our acquisition costs, lengthening the acquisition timeline and possibly reducing the amount that we are able to pay for a particular property.
+Added: As a result, we have expended, and may in the future continue to expend, significant resources to source acquisition opportunities and complete our due diligence, underwriting and acquisition accounting process on many individual properties, thereby increasing our acquisition costs, lengthening the acquisition timeline and possibly reducing the amount that we are able to pay for a particular property.
+Added: Agreements for the acquisitions of postal properties are also subject to customary conditions to closing, including completion of due diligence investigations and other conditions that are not within our control and may not be satisfied.
+Added: In this event, we may be unable to complete an acquisition after incurring significant acquisition-related costs.
Accordingly, our plan to grow our business largely by acquiring additional properties that are leased to the USPS and managing properties leased to the USPS by third parties may not succeed.
−Removed: We also face significant competition for acquisition opportunities for properties leased to the USPS from other market participants, including private investment funds, individual investors and others, and, as a result, we may be unable to acquire a desired property at competitive price, or at all.
+Added: We also face regular and significant competition for acquisition opportunities for properties leased to the USPS from other market participants, including private investment funds, individual investors and others, and, as a result, we may be unable to acquire a desired property at competitive price, or at all.
+Added: This competition could also increase prices for properties we may pursue and adversely affect our profitability and impede our growth.
In addition, because of our public profile as the only publicly traded REIT dedicated to USPS properties, our operations may generate new interest in USPS-leased properties from other REITs, real estate companies and other investors with more resources than we have that did not previously focus on investment opportunities with USPS-leased properties.
+Added: Our acquisitions may not achieve the returns we expect.
+Added: Our business has grown significantly through active acquisitions of postal properties.
+Added: However, our acquisitions and our ability to successfully integrate and operate the acquired properties are subject to the following significant risks:
+Added: • we may acquire properties that are not accretive to our results upon acquisition;
+Added: • we may not successfully manage and lease newly acquired properties to meet our financial or strategic goals and realize the anticipated benefits;
+Added: • we may have to spend more than budgeted to make necessary improvements to acquired properties and we may underestimate the repair, maintenance and capital expenses for the acquired properties;
+Added: • we may not be able to obtain sufficient and economical insurance coverage for the acquired properties;
+Added: • our cash flows from the acquired properties may be insufficient to meet the required principal and interest payments on the property-level financing, if any;
+Added: • the integration of acquired properties into our existing portfolio may require significant expenses and time from our management team and may divert attention from other important areas of our business;
+Added: • changing market and regulatory conditions, particularly those associated with the USPS, may result in higher-than-expected vacancy rates and lower than expected rental rates on newly acquired properties;
+Added: • we may acquire properties subject to liabilities and without any recourse, or with only limited recourse, with respect to unknown liabilities such as undisclosed environmental contamination, claims by tenants, vendors or other persons dealing with the former owners of the properties and liabilities incurred in the ordinary course of business.
+Added: If we cannot integrate and operate acquired properties to meet our financial or strategic goals, our financial condition, results of operations, cash flow, cash available for distributions and our ability to service our debt obligations could be materially adversely affected.
We currently have a concentration of postal properties in certain regions and are exposed to changes in regional or local conditions in these states.
−Removed: Our business may be adversely affected by regional or local conditions and events in the areas in which we operate, particularly in Wisconsin, Pennsylvania, Kansas, Alabama and Texas, where many of our postal properties are concentrated.
+Added: Our business may be adversely affected by regional or local conditions and events in the areas in which we operate, particularly in Pennsylvania, Wisconsin, Texas, California and North Carolina, where many of our postal properties are concentrated.
Developments or conditions in these regions that may adversely affect our occupancy levels and renewals, our rental revenues, our funds from operations or the value of our properties include the following, among others:
−Removed: • downturns in economic conditions, including as a result of the COVID-19 pandemic;
+Added: • downturns in economic conditions;
• unforeseen events beyond our control, including, among others, natural disasters, terrorist attacks and travel related health concerns including pandemics and epidemics;
−Removed: • possible reduction of the USPS workforce, relocation of postal offices or consolidation of delivery units by the USPS;
+Added: • possible reduction of the USPS workforce, relocation of postal offices or consolidation of delivery routes by the USPS;
• economic conditions that could cause an increase in our operating expenses, insurance and routine maintenance.
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We cannot assure you that any leases will be renewed or that vacated properties will be sold on favorable terms, or at all.
−Removed: As of the date of this report, the USPS has vacated one property in our portfolio.
+Added: Some of our leases also provide the tenants with a right to vacate their space during a specified period before the stated terms of their leases expire.
+Added: If they were to occur and we were not able to lease the vacant space to another tenant in a timely manner or at all, such event could have a material adverse effect on our business, financial condition and results of operations.
+Added: As of the date of this report, the USPS has vacated two properties in our portfolio.
For leases which include renewal options that specify a maximum rate, the renewal may result in below-market lease rates over time.
+Added: In addition, when we renew leases with the USPS, we may have to spend substantial amounts for improvements and other inducements in order to renew such leases.
If we are subject to below-market lease rates on a significant number of our properties, rental rates for our properties decrease, our existing tenants do not renew their leases or we do not sell vacated properties on favorable terms, our financial condition, results of operations, cash flow, cash available for distributions and our ability to service our debt obligations could be materially adversely affected.
−Removed: In addition, under some of our leases, we retain certain obligations with respect to the property, including, among other things, the responsibility for maintenance and repair of the property and capital improvements such as roof replacement and major structural improvements.
+Added: We may incur significant maintenance, repair and capital expenses under our leases.
+Added: Under some of our leases, we retain certain obligations with respect to the property, including, among other things, the responsibility for certain maintenance and repair obligations of the property and capital improvements such as roof or parking lot replacement, asbestos-related projects, replacement of heating or ventilation equipment and major structural improvements.
The expenditure of any sums in connection therewith will reduce the cash available for distribution and may require us to fund deficits resulting from operating a property.
+Added: In addition, risks beyond our control, such as weather, labor conditions, material shortages caused by supply chain disruptions or inflationary price increases for materials, could lead to cost overruns and untimely completion of projects, which could also damage our relationship with tenants.
+Added: Meeting these obligations also require us to hire and maintain a sizable project management team and incur significant property management and administrative expenses, which may continue to grow as we acquire more properties, particularly those with landlord being responsible for certain maintenance and capital improvements.
+Added: In addition, we may incur unexpected increase in maintenance, repair or capital expenses as tenants adjust their standards, requirements, demands and expectations for the operation of the leased properties, increase their inspection efforts and require certain upgrades or as we acquire more properties with landlord being responsible
+Added: for certain maintenance and capital improvements.
If we were to fail to meet these obligations, then the tenant could abate rent or terminate the applicable lease, which could have a material adverse effect on our business, financial condition and results of operations.
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This potential illiquidity may limit our ability to quickly modify our portfolio in response to changes in economic or other conditions, which may materially and adversely affect us.
−Removed: As of March 7, 2023, the leases at 100 of our properties were expired and the USPS is occupying such properties as a holdover tenant.
+Added: As of February 29, 2024, the leases at 91 of our properties were expired and the USPS is occupying such properties as a holdover tenant.
If we are not successful in renewing these expired leases, we will likely experience reduced occupancy, rental income and net operating income and potential impairment loss.
−Removed: As of March 7, 2023, the leases at 100 of our properties, representing approximately 320,000 net leasable interior square feet and $4.0 million in annual contractual rental revenue, were expired and the USPS is occupying such properties as a holdover tenant.
+Added: As of February 29, 2024, the leases at 91 of our properties, representing approximately 631,000 net leasable interior square feet, were expired and the USPS is occupying such properties as a holdover tenant.
When a lease expires, the USPS becomes a holdover tenant on a month-to-month basis, typically paying the greater of estimated market rent or the rent amount under the expired lease.
−Removed: While we currently anticipate that we will renew the leases that have expired or will expire, there can be no guarantee that we will be successful in renewing these leases, obtaining positive rent renewal spreads or renewing the leases on terms comparable to those of the expiring leases.
+Added: While we currently anticipate that we will renew the leases that have expired or will expire, there can be no guarantee that we will be successful in renewing these leases, obtaining positive rent renewal spreads or renewing the leases in an expeditious manner on terms comparable to those of the expiring leases.
Even if we are able to renew these expired leases, the lease terms may not be comparable to those of the previous leases.
2 unchanged sentences
We have acquired and may continue to acquire properties or portfolios of properties through tax deferred contribution transactions in exchange for OP Units, which may result in stockholder dilution.
−Removed: This acquisition structure may have the effect of, among other things, reducing the amount of tax depreciation we could deduct over the tax life of the acquired properties, and may require that we agree to protect the contributors’ ability to defer recognition of taxable gain through restrictions on our ability to dispose of the acquired properties and/or the allocation of partnership debt to the contributors to maintain their tax bases.
+Added: This acquisition structure may have the effect of, among other things, reducing the amount of tax depreciation we could deduct over the tax life of the acquired properties and increasing our tax compliance and other administrative expenses, and may require that we agree to protect the contributors’ ability to defer recognition of taxable gain through restrictions on our ability to dispose of the acquired properties and/or the allocation of partnership debt to the contributors to maintain their tax bases.
These restrictions could limit our ability to sell properties at a time, or on terms, that would be favorable absent such restrictions.
−Removed: Illiquidity of postal properties could significantly impede our ability to respond to adverse changes in the performance of our properties and harm our financial condition.
−Removed: Our ability to promptly sell one or more postal properties in our portfolio in response to changing economic, financial and investment conditions and conditions of the USPS may be limited.
−Removed: Certain types of real estate and in particular, postal offices, may have limited alternative uses and thus are relatively illiquid.
+Added: Illiquidity of commercial real estate could significantly impede our ability to respond to adverse changes in the performance of our properties and harm our financial condition.
+Added: Our ability to promptly sell one or more properties in our portfolio in response to changing economic, financial and investment conditions and conditions of the USPS may be limited.
+Added: Certain types of real estate and in particular, postal properties, may have limited alternative uses and thus are relatively illiquid.
Return of capital and realization of gains, if any, from an investment generally will occur upon disposition or refinancing of the underlying property.
We may be unable to realize our investment objectives by sale, other disposition or refinancing at attractive prices within any given period of time or may otherwise be unable to complete any exit strategy.
−Removed: In particular, our ability to dispose of one or more postal properties within a specific time period is subject to certain limitations imposed by our tax protection agreements, as well as weakness in or even the lack of an established market for a property, changes in the financial condition or prospects of prospective purchasers, changes in national or international economic conditions and changes in laws, regulations or fiscal policies of jurisdictions in which the property is located.
+Added: In particular, our ability to dispose of one or more properties within a specific time period is subject to certain limitations imposed by our tax protection agreements, as well as weakness in or even the lack of an established market for a property, changes in the financial condition or prospects of prospective purchasers, changes in national or international economic conditions and changes in laws, regulations or fiscal policies of jurisdictions in which the property is located.
+Added: Furthermore, if we dispose any property in transactions that are intended to qualify for federal income tax deferral as a “like-kind exchange” under Section 1031 of the Code, it is possible that such transaction could later be determined to have been taxable or that we may be unable to identify and complete the acquisition of a suitable replacement property to complete a 1031 exchange and therefore face adverse tax consequences.
In addition, the Internal Revenue Code of 1986, as amended (the "Code"), imposes restrictions on a REIT’s ability to dispose of properties that are not applicable to other types of real estate companies.
2 unchanged sentences
government-owned real estate may adversely affect us.
−Removed: If there is a large increase in the amount of real estate owned by the USPS or other U.S.
+Added: In recent years, the USPS completed and also announced plans to further construct a significant number of new sorting and delivery and other facilities across the country.
+Added: If there is a large increase in the amount of real estate constructed and owned by the USPS or other U.S.
government agencies, the USPS may relocate from our properties to such USPS or U.S.
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If the property taxes we pay increase, our financial condition, results of operations, cash flows, per share trading price of our Class A common stock and our ability to satisfy our principal and interest obligations and to make distributions to our stockholders could be adversely affected.
+Added: We may be exposed to risks associated with property development and redevelopment.
+Added: We may engage in development and redevelopment activities with respect to our properties, including build-to-suit renovations and new developments for our existing or prospective tenants and, as a result, will be subject to certain risks, which could adversely affect us, including our financial condition and results of operations.
+Added: These risks include:
+Added: • development costs that may be higher than anticipated;
+Added: • cost overruns and delays of construction;
+Added: • the availability of financing on favorable terms or at all;
+Added: • various local, state and federal statutes, ordinances, rules and regulations concerning zoning, building design, construction and similar matters;
+Added: • registration and filing requirements in connection with these developments in certain states and localities;
+Added: • the potential that we may expend funds on and devote management time to projects that we do not complete;
+Added: • the inability to complete construction and leasing of a property on schedule, resulting in increased debt service expense and development and renovation costs.
+Added: These risks could result in substantial unanticipated delays or expenses and could prevent the initiation or the completion of development and renovation activities, any of which could have a material adverse effect on our business, financial condition and results of operations.
Increases in interest rates or unavailability of debt financing may make it difficult for us to finance or refinance our debt.
1 unchanged sentence
If interest rates are higher when we refinance our existing debt, our income and cash flow could be reduced, which would reduce cash available for distribution to our stockholders and may hinder our ability to raise more capital by issuing more stock or by borrowing more money.
−Removed: In addition, to the extent we are unable to refinance our debt when it becomes due, we will have fewer debt guarantee opportunities available to offer under our tax protection agreements, which could trigger an obligation to indemnify the protected parties under the tax protection agreements.
+Added: addition, to the extent we are unable to refinance our debt when it becomes due, we will have fewer debt guarantee opportunities available to offer under our tax protection agreements, which could trigger an obligation to indemnify the protected parties under the tax protection agreements.
Mortgage debt obligations expose us to the possibility of foreclosure, which could result in the loss of our investment in a property or group of properties subject to mortgage debt.
4 unchanged sentences
Foreclosures could also trigger our tax indemnification obligations under the terms of our tax protection agreements with respect to the sales of certain properties.
+Added: In addition, some of our financing arrangements require us to make a lump-sum or “balloon” payment at maturity.
+Added: Our ability to satisfy a balloon payment at maturity is uncertain and may depend upon our ability to obtain additional financing or our ability to sell the property.
+Added: At the time the balloon payment is due, we may or may not be able to refinance the existing financing on terms as favorable as the original loan or sell the property at a price sufficient to satisfy the balloon payment.
+Added: Such a refinancing or sale could affect the rate of return to stockholders and the projected time of disposition of our assets.
Covenants in our debt instruments could adversely affect our financial condition.
7 unchanged sentences
Alternatively, even if a secured debt instrument is below the cross-default threshold for non-recourse secured debt under our Credit Facilities, a default under such secured debt instrument may still cause a cross default under our Credit Facilities because such secured debt instrument may not qualify as “non-recourse” under our Credit Facilities.
−Removed: Another possible
−Removed: cross default could occur between the credit facilities that we enter into and any senior unsecured notes that we issue.
+Added: Another possible cross default could occur between the credit facilities that we enter into and any senior unsecured notes that we issue.
Any of the foregoing default or cross-default events could cause our lenders to accelerate the timing of payments and/or prohibit future borrowings, either of which would have a material adverse effect on our business, operations, financial condition and liquidity.
4 unchanged sentences
These agreements involve risks, such as the risk that such arrangements would not be effective in reducing our exposure to interest rate changes or that a court could rule that such an agreement is not legally enforceable.
−Removed: In addition, interest rate hedging can be expensive, particularly during periods of rising and volatile interest rates.
+Added: In addition, interest rate hedging can be expensive, particularly during the recent period of rising and volatile interest rates.
Hedging could increase our costs and reduce the overall returns on our investments.
−Removed: In addition, while hedging agreements would be intended to lessen the impact of rising interest rates on us, they could also expose us to the risk that the other parties to the agreements would not perform, we could incur significant costs associated with the settlement of the agreements or that the underlying transactions could fail to qualify as highly-effective cash flow hedges under Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC"), Topic 815, Derivatives and Hedging.
+Added: In addition, while hedging agreements would be intended to lessen the impact of rising interest rates on us, they could also expose us to the risk
+Added: that the other parties to the agreements would not perform, we could incur significant costs associated with the settlement of the agreements or that the underlying transactions could fail to qualify as highly-effective cash flow hedges under Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC"), Topic 815, Derivatives and Hedging.
The REIT provisions of the Code also limit our ability to hedge our liabilities.
14 unchanged sentences
We may be subject to on-going or future litigation, including existing claims relating to the entities that owned the properties previously and otherwise in the ordinary course of business, which could have a material adverse effect on our financial condition, results of operations, cash flow and the per share trading price of our Class A common stock.
−Removed: We may be subject to litigation, including existing claims relating to the entities that owned the properties previously and otherwise in the ordinary course of business.
+Added: We are, and may in the future be subject to, various claims, disputes and litigation, which may include existing claims relating to the entities that owned the properties previously, disputes during the acquisition process and otherwise in the ordinary course of business.
Some of these claims may result in significant defense costs and potentially significant judgments against us, some of which are not, or cannot be, insured against.
3 unchanged sentences
Court of Federal Claims.
+Added: government could also institute condemnation proceedings against us and seek to take our property, or a leasehold interest therein, through its power of eminent domain, which may result in a costly and time consuming dispute with the government.
We generally intend to vigorously defend ourselves or pursue our claims.
However, we cannot be certain of the ultimate outcomes of any currently asserted claims or of those that may arise in the future.
−Removed: Resolution of these types of matters against us may result in our having to pay significant fines, judgments, or settlements, which, if uninsured, or if the fines, judgments, and settlements and any related expenses exceed insured levels, could adversely impact our earnings and cash flows, thereby having an adverse effect on our financial condition, results of operations, cash flow, cash available for distribution and our ability to service our debt obligations.
−Removed: Certain litigation or the resolution of certain litigation may adversely affect our relationship with tenants, vendors and other parties involved in the disputes and impact the availability or cost of some of our insurance coverage, which could materially adversely affect our results of operations and cash flows, expose us to increased risks that would be uninsured and/or adversely impact our ability to attract officers and directors.
+Added: Resolution of these types of matters against us may result in our having to pay significant fines, judgments, legal expenses or settlements, which, if uninsured, or if the fines, judgments, and settlements and any related expenses exceed insured levels, could adversely impact our earnings and cash flows, thereby having an adverse effect on our financial condition, results of operations, cash flow, cash available for distribution and our ability to service our debt obligations.
+Added: Certain litigation or the resolution of certain litigation
+Added: may adversely affect our relationship with tenants, vendors and other parties involved in the disputes and impact the availability or cost of some of our insurance coverage, which could materially adversely affect our results of operations and cash flows, expose us to increased risks that would be uninsured and/or adversely impact our ability to attract officers and directors.
+Added: In addition, assets that we have acquired or may acquire in the future may be subject to unknown or contingent liabilities for which we may have limited recourse against the sellers.
+Added: Unknown or contingent liabilities might include liabilities for clean-up or remediation of environmental conditions, claims of customers, vendors or other persons dealing with the acquired entities, tax liabilities and other liabilities whether incurred in the ordinary course of business or otherwise.
+Added: In the future, we may enter into transactions with limited representations and warranties or with representations and warranties that do not survive the closing of the transactions, in which event we would have no or limited recourse against the sellers of such properties.
+Added: The total amount of costs and expenses that we may incur with respect to liabilities associated with acquired properties may also exceed our expectations, which may adversely affect our business, financial condition and results of operations.
Insurance on our properties may not adequately cover all losses and uninsured losses if we experience a substantial or comprehensive loss of such properties.
−Removed: Inflation, changes in building codes and ordinances, environmental considerations and other factors, including terrorism or acts of war, may make any insurance proceeds we receive insufficient to repair or replace a property if it is damaged or destroyed.
+Added: We carry commercial property, liability, environmental, earthquake and terrorism coverage on our properties in our portfolio, some of which are insured subject to limitations involving significant deductibles or co-payments and policy limits that may not be sufficient to cover losses.
+Added: Inflation, changes in building codes and ordinances, environmental considerations and other factors, including terrorism or acts of war, may also make any insurance proceeds we receive insufficient to repair or replace a property if it is damaged or destroyed.
In those circumstances, the insurance proceeds received may not be adequate to restore our economic position with respect to the affected real property and its generation of rental revenue.
−Removed: Certain types of losses, generally of a catastrophic nature, such as earthquakes, hurricanes and floods, may be uninsurable or not economically insurable by us.
+Added: Certain types of losses, generally of a catastrophic nature, such as earthquakes, storms, hurricanes and floods, are often subject to material deductibles, may be uninsurable or are not economically insurable by us.
In addition, in the event that we experience a substantial or comprehensive loss of one of our properties, we may not be able to rebuild such property to its existing specifications without significant capital expenditures which may exceed any amounts received pursuant to insurance policies.
1 unchanged sentence
The loss of our capital investment in or anticipated future returns from our properties due to material uninsured losses could materially and adversely affect us.
−Removed: Joint venture investments could be adversely affected by our lack of sole decision-making authority, our reliance on co-venturers’ financial condition and disputes between us and our co-venturers.
+Added: In addition, if any one of insurance carriers or insurance programs that we work with were to become insolvent, we would be forced to replace the existing insurance coverage with another suitable carrier, and any outstanding claims would be at significant risk for collection.
+Added: In such an event, we cannot be certain that we would be able to replace the coverage at similar or otherwise favorable terms, or at all.
+Added: Potential future joint venture investments could be adversely affected by our lack of sole decision-making authority, our reliance on co-venturers’ financial condition and disputes between us and our co-venturers.
In the future, we may co-invest with third parties through partnerships, joint ventures or other entities, acquiring non-controlling interests in and managing the affairs of a property, partnership, joint venture or other entity.
31 unchanged sentences
Historically, the capital markets have been subject to significant disruptions.
−Removed: If we cannot obtain capital from third-party sources, we may not be able to acquire or develop properties when strategic opportunities exist, meet the capital and operating needs of our existing properties, satisfy our debt service obligations or make the cash distributions to our stockholders necessary to qualify and maintain our qualification as a REIT.
+Added: If we cannot obtain capital from third-party sources on cost effective terms, we may not be able to acquire or develop properties when strategic opportunities exist, meet the capital and operating needs of our existing properties, satisfy our debt service obligations or make the cash distributions to our stockholders necessary to qualify and maintain our qualification as a REIT.
+Added: To the extent that we are able or choose to access capital at a higher cost than we have experienced in recent years, as reflected in higher interest rates for debt financing or a lower stock price for equity financing, our earnings per share and cash flow could also be adversely affected.
We could incur significant costs and liabilities related to environmental matters.
2 unchanged sentences
These liabilities could be substantial and the cost of any required investigation, remediation, removal, fines or other costs could exceed the value of the property and/or our aggregate assets.
−Removed: In addition, the presence of contamination or the failure to remediate contamination at our properties may expose us to third-party liability for costs of remediation and/or personal or property damage or materially adversely affect our ability to sell, lease or develop our properties or to borrow using the properties as collateral.
−Removed: In addition, environmental laws may create liens on
−Removed: contaminated sites in favor of the government for damages and costs it incurs to address such contamination.
+Added: In addition, the presence of contamination or the failure to remediate contamination at our properties may expose us to third-party
+Added: liability for costs of remediation and/or personal or property damage or materially adversely affect our ability to sell, lease or develop our properties or to borrow using the properties as collateral.
+Added: 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.
Moreover, if contamination is discovered on our properties, environmental laws may impose restrictions on the manner in which property may be used or businesses may be operated, and these restrictions may require substantial expenditures.
"Business—Environmental Matters.”
−Removed: Some of our properties may have been or may be impacted by contamination arising from current or prior uses of the property, or adjacent properties, for commercial or industrial purposes.
−Removed: Such contamination may arise from spills of petroleum or hazardous substances or releases from tanks used to store such materials.
−Removed: We may not be aware of all potential or existing environmental contamination liabilities at the properties in our portfolio.
+Added: We generally obtain environmental assessments by independent environmental consultants at the time of acquisition of a property.
+Added: If the consultant identifies any unexplained recognized environmental concerns, then the consultant may recommend further investigation, usually through specific invasive property tests.
+Added: Invasive testing may or may not include air, soil, soil vapor or ground water sampling.
+Added: Additionally, it may or may not include an asbestos and/or lead-based paint survey.
+Added: These environmental assessments may not reveal all environmental risks that might have a materially adverse economic effect on our business, assets and results of operations or liquidity, and may not identify all potential environmental liabilities, and our portfolio environmental and any site-specific insurance policies may be insufficient to cover any such environmental costs and liabilities.
+Added: Some of our properties have been or may in the future be impacted by contamination arising from current or prior uses of the property, or adjacent properties, for commercial or industrial purposes.
+Added: Such contamination can arise from spills of petroleum or hazardous substances or releases from tanks used to store such materials.
+Added: We may not be aware of all potential or existing environmental contamination liabilities at the properties in our portfolio or at the properties we acquire.
As a result, we could potentially incur material liability for these issues.
10 unchanged sentences
In addition, the presence of significant mold or other airborne contaminants could expose us to liability from the USPS, employees of the USPS or others if property damage or personal injury is alleged to have occurred.
−Removed: We are subject to risks from natural disasters, such as earthquakes and severe weather, and the risks associated with climate change.
−Removed: Natural disasters and severe weather such as flooding, earthquakes, tornadoes or hurricanes may result in significant damage to our properties.
+Added: We are subject to risks from natural disasters and the risks associated with climate change.
+Added: Natural disasters and severe weather such as flooding, wildfires, earthquakes, tornadoes or hurricanes have resulted in the past and may in the future result in damages to our properties.
Many of our properties are located in states like Oklahoma, Texas, Missouri, Louisiana and Florida that historically have experienced heightened risk for natural disasters like tornados and hurricanes.
The extent of our casualty losses and loss in operating income in connection with such events is a function of the severity of the event and the total amount of exposure in the affected area.
−Removed: While we carry insurance to cover a substantial portion of the cost of such events, our insurance includes deductible amounts and certain items may not be covered by insurance.
+Added: While we carry insurance to cover a substantial portion of the cost of such events, our insurance includes significant deductible amounts and certain items are not covered by insurance.
When we have geographic concentration of exposures, a single catastrophe (such as an earthquake) or destructive weather event (such as a tornado or hurricane) affecting a region may have a significant negative effect on our financial condition and results of operations.
4 unchanged sentences
However, the effects of climate change could have a material adverse effect on our properties, operations and business.
−Removed: To the extent climate change causes changes in weather patterns, our markets could experience increases in severe weather, including hurricanes, severe winter storms and tornadoes, and unpredictable weather patterns.
+Added: To the extent climate change causes changes in weather patterns, our markets could experience increases in extreme and severe weather, including floods, hurricanes, severe winter storms and tornadoes and unpredictable weather patterns.
These conditions could result in physical damage to our properties or declining demand for space in our buildings or the inability of us to operate the buildings at all in the areas affected by these conditions.
−Removed: Climate change also may have indirect adverse effects on our business by increasing the cost of (or making unavailable)
−Removed: property insurance on terms we find acceptable, increasing the cost of energy, maintenance, repair of water and/or wind damage, cost of snow removal or related costs at our properties or causing the USPS to relocate its postal offices to other locations.
+Added: Climate change also may have indirect adverse effects on our business by increasing the cost of (or making unavailable) property insurance on terms we find acceptable, increasing the cost of energy, maintenance, repair of water and/or wind damage, cost of snow removal or related costs at our properties or causing the USPS to relocate its postal offices to other locations.
In recent years, a number of states and municipalities have adopted laws and policies on climate change and emission reduction targets.
−Removed: Changes in federal, state, and local legislation and regulation based on concerns about climate change could result in increased capital expenditures on our properties (for example, to improve their energy efficiency and/or resistance to severe weather) without a corresponding increase in revenue, which may result in adverse impacts to our net income.
+Added: Changes in federal, state, and local legislation and regulation based on concerns about climate change could result in increased capital expenditures on our properties (for example, to improve their energy efficiency and/or resistance to severe weather or limit greenhouse gas emissions) and administrative expenses (such as the climate change disclosure rules proposed by the SEC) without a corresponding increase in revenue, which may result in adverse impacts to our net income.
Should the impact of climate change be material in nature or occur for lengthy periods of time, our properties, operations or business would be adversely affected.
−Removed: Our properties may be subject to impairment charges.
+Added: Our properties may be subject to impairment charges and we are subject to risks related to commercial real estate ownership that could reduce the value of our properties.
We will assess whether there are any indicators that the value of our properties may be impaired.
3 unchanged sentences
We will be required to make subjective assessments as to whether there are impairments in the value of our properties.
−Removed: These assessments may be influenced by factors beyond our control, such as early vacating or relocation by a tenant or damage to properties due to earthquakes, tornadoes, hurricanes and other natural disasters, fire, civil unrest, terrorist acts or acts of war.
+Added: These assessments may be influenced by factors beyond our control, such as early vacating or relocation by a tenant or damage to properties due to flooding, earthquakes, tornadoes, hurricanes and other natural disasters, accidents, fire, civil unrest, terrorist acts or acts of war.
These assessments may have a direct impact on our earnings because recording an impairment charge results in an immediate negative adjustment to earnings.
1 unchanged sentence
Any such impairment could have a material adverse effect on our business, financial condition and results of operations in the period in which the charge is taken.
+Added: In addition, our core business is the ownership of single-tenant commercial real estate.
+Added: Accordingly, our performance is subject to risks incident to the ownership of commercial real estate, which include the inability to collect rents from tenants due to financial hardship, including bankruptcy;
+Added: changes in local real estate conditions in the markets in which we operate;
+Added: changes in consumer trends and preferences that affect the demand for products and services offered by our tenants;
+Added: inability to lease or sell properties upon expiration or termination of existing leases;
+Added: environmental risks, including the presence of hazardous or toxic substances or materials on our properties;
+Added: the subjectivity of real estate valuations and changes in such valuations over time;
+Added: the illiquid nature of real estate compared to most other financial assets;
+Added: changes in laws and governmental regulations, including those governing real estate usage and zoning;
+Added: changes in interest rates and the availability of financing;
+Added: and changes in the general economic and business climate.
+Added: The occurrence of any of these may cause the value of our real estate to decline, which could materially and adversely affect us.
Our title insurance policies may not cover all title defects.
34 unchanged sentences
In accordance with U.S.
−Removed: generally accepted accounting practices ("GAAP"), we are required to assess any goodwill and indefinite-lived intangible assets assumed in any acquisition transactions, annually, or more frequently whenever events or changes in circumstances indicate potential impairment, such as changing market conditions or any changes in key assumptions.
+Added: generally accepted accounting practices ("GAAP"), we are required to assess any goodwill and indefinite-lived intangible assets assumed in any acquisition transactions, annually, or more frequently whenever events or
+Added: changes in circumstances indicate potential impairment, such as changing market conditions or any changes in key assumptions.
If the testing performed indicates that an asset may not be recoverable, we are required to record a non-cash impairment charge for the difference between the carrying value of the goodwill or indefinite-lived intangible assets and the implied fair value of the goodwill or intangible assets in the period the determination is made.
14 unchanged sentences
As laws and regulations rapidly evolve to govern the use of these platforms and devices, the failure by us, our employees or third parties acting at our direction to abide by applicable laws and regulations in the use of these platforms and devices could adversely impact our business or subject us to fines or other penalties.
+Added: Furthermore, our reputation and our tenants’ reputations are important to our business.
+Added: Our reputation affects our ability to access capital, acquire additional properties and recruit and retain talented employees.
+Added: Our tenants’ reputations affect their ability to continue to operate profitably and make payments under their lease agreements with us on time.
+Added: There are numerous ways our reputation or our tenants’ reputation could be damaged.
+Added: These include unethical behavior or misconduct, workplace safety incidents, environmental impact, corporate governance issues, data breaches or human rights records.
+Added: We or our tenants may experience backlash from customers, government entities, advocacy groups, employees, and other stakeholders that disagree with our operating decisions or public policy positions.
+Added: If our or our tenants’ reputation is damaged, it could adversely affect our business, results of operations, financial condition or ability to attract the most highly qualified employees.
+Added: We cannot assure shareholders of our ability to pay dividends in the future.
+Added: Our ability to pay dividends may be adversely affected by a number of factors, including the risk factors described in this Annual Report on Form 10-K.
+Added: Dividends and other distributions made by us will be authorized and determined by our Board of Directors in its sole discretion out of funds legally available therefor and will be dependent upon a number of factors, including restrictions under applicable law and other factors described below.
+Added: We cannot assure you that future dividends will be made or sustained or that our board of directors will not change our dividend policy in the future.
+Added: Any dividends or other distributions that we pay in the future will depend upon our actual results of operations, economic conditions, debt service requirements, capital expenditures and other factors that could differ materially from our current expectations.
+Added: We may also pay a portion of our dividends in common stock.
Risks Related to Our Organizational Structure
Spodek and his affiliates own, directly or indirectly, a substantial beneficial interest in our company on a fully diluted basis and have the ability to exercise significant influence on our company and our Operating Partnership, including the approval of significant corporate transactions.
−Removed: Spodek and his affiliates held approximately 10.3% of the combined voting power of our outstanding shares of common stock as of March 7, 2023.
+Added: Spodek and his affiliates held approximately 9.4% of the combined voting power of our outstanding shares of common stock as of February 29, 2024.
Pursuant to his ownership of Class A common stock and Class B common stock, $0.01 par value per share (the “Voting Equivalency stock”), Mr.
9 unchanged sentences
Spodek owns a significant interest in our Operating Partnership as a limited partner and may have conflicts of interest in making decisions that affect both our stockholders and the limited partners of our Operating Partnership.
+Added: In addition, certain of our executive officers and directors have outside business interests, including in the real estate industry.
+Added: Their involvement in other businesses and real estate-related activities could divert their attention from our day-to-day operations and also create conflicts of interest in potential acquisitions or other business transactions.
The partnership agreement provides that, in the event of a conflict between the interests of our Operating Partnership or any partner, on the one hand, and the separate interests of our company or our stockholders, on the other hand, we, in our capacity as the general partner of our Operating Partnership, are under no obligation not to give priority to the separate interests of our company or our stockholders, and that any action or failure to act on our part or on the part of our Board of Directors that gives priority to the separate interests of our company or our stockholders that does not result in a violation of the contract rights of the limited partners of the Operating Partnership under its partnership agreement does not violate the duty of loyalty that we, in our capacity as the general partner of our Operating Partnership, owe to the Operating Partnership and its partners.
2 unchanged sentences
Our Operating Partnership must also pay or reimburse the reasonable expenses of any such person upon its receipt of a written affirmation of the person’s good faith belief that the standard of conduct necessary for indemnification has been met and a written undertaking to repay any amounts paid or advanced if it is ultimately determined that the person did not meet the standard of conduct for indemnification.
−Removed: Our Operating Partnership will not indemnify or advance funds to any person with
−Removed: respect to any action initiated by the person seeking indemnification without our approval (except for any proceeding brought to enforce such person’s right to indemnification under the partnership agreement) or if the person is found to be liable to our Operating Partnership on any portion of any claim in the action.
+Added: Our Operating Partnership will not indemnify or advance funds to any person with respect to any action initiated by the person seeking indemnification without our approval (except for any proceeding brought to enforce such person’s right to indemnification under the partnership agreement) or if the person is found to be liable to our Operating Partnership on any portion of any claim in the action.
Our charter contains certain provisions restricting the ownership and transfer of our stock that may delay, defer or prevent a change of control transaction that might involve a premium price for our Class A common stock or that our stockholders otherwise believe to be in their best interests.
14 unchanged sentences
• “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 10% or more of the voting power of our shares or an affiliate thereof 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 voting 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 imposes certain fair price and/or supermajority stockholder voting requirements on these combinations;
−Removed: • “control share” provisions that provide that holders of “control shares” of our company (defined as 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 with respect to their control shares, 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.
+Added: • “control share” provisions that provide that holders of “control shares” of our company (defined as 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
+Added: rights with respect to their control shares, 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.
By resolution of our Board of Directors, we have opted out of the business combination provisions of the MGCL and provide that any business combination between us and any other person is exempt from the business combination provisions of the MGCL, provided that the business combination is first approved by our Board of Directors (including a majority of directors who are not affiliates or associates of such persons).
18 unchanged sentences
• the right of the limited partners to consent to direct or indirect transfers of the general partnership interest, including as a result of a merger or a sale of all or substantially all of our assets, in the event that such transfer requires approval by our common stockholders.
−Removed: As of March 7, 2023, Mr.
+Added: As of February 29, 2024, Mr.
Spodek and his affiliates owned approximately 37.5% of the outstanding OP Units (including LTIP Units) that are not owned by us and approximately 3.9% of the outstanding shares of our Class A common stock and all of the Voting Equivalency stock, which together represent an approximate 10.6% beneficial economic interest in our Company on a fully diluted basis.
20 unchanged sentences
Our charter requires us to indemnify, and advance expenses to, each director and officer, to the maximum extent permitted by Maryland law, in the defense of any proceeding to which he or she is made, or threatened to be made, a party by reason of his or her service to us.
−Removed: We have entered into indemnification agreements with each of our executive officers and directors whereby we will indemnify our directors and executive officers to the fullest extent permitted by Maryland law against all expenses and liabilities incurred in their capacity as an officer and/or director, subject to limited exceptions.
+Added: We have entered into indemnification agreements with each of our executive officers and directors whereby we will indemnify our directors and executive officers to the fullest extent permitted by Maryland law
+Added: against all expenses and liabilities incurred in their capacity as an officer and/or director, subject to limited exceptions.
As a result, we and our stockholders may have more limited rights against our directors and officers than might otherwise exist absent the current provisions in our charter or that might exist with other companies.
7 unchanged sentences
Our Operating Partnership may issue additional OP Units to third parties without the consent of our stockholders, which would reduce our ownership percentage in our Operating Partnership and could have a dilutive effect on the amount of distributions made to us by our Operating Partnership and, therefore, the amount of distributions we can make to our stockholders.
−Removed: As of March 7, 2023, approximately 20.0% of the outstanding OP Units (including the LTIP Units) of our Operating Partnership were held by third parties.
+Added: As of February 29, 2024, approximately 19.7% of the outstanding OP Units (including the LTIP Units) of our Operating Partnership were held by third parties.
We may, in connection with our acquisition of properties or otherwise, continue to issue additional OP Units to third parties.
137 unchanged sentences
Inflation may adversely affect our financial condition and results of operations.
−Removed: An increase in inflation could have an adverse impact on our operating and general and administrative expenses, interest expense and real estate acquisition costs.
+Added: In recent years, the consumer price index has increased substantially.
+Added: Federal policies and recent global events, such as the rising price of oil and the conflict between Russia and Ukraine, may have exacerbated, and may continue to exacerbate, increases in the consumer price index.
+Added: A sustained increase in inflation could have an adverse impact on our operating and general and administrative expenses, interest expense and real estate acquisition costs.
+Added: Similarly, professional service fees are also subject to the impact of inflation and expected to increase proportionately with increasing market prices for such services.
During inflationary periods, these costs could increase at a rate higher than our rental revenue.
Inflation could also have an adverse effect on consumer spending, which could adversely impact demand for postal services and therefore the demand for postal properties.
−Removed: Periodic rental increases through lease renewal may not adequately protect us from the impact of inflation.
+Added: Increased costs may also have an adverse impact on our tenants if increases in their operating expenses exceed increases in revenue, which may adversely affect the tenants’ ability to pay rent owed to us.
+Added: While certain of our leases contain provisions, such as rent escalators, designed to mitigate the adverse impact of inflation, the increases in rent provided by many of our leases may not keep up with the rate of inflation.
+Added: Similarly, periodic rental increases through lease renewal may not adequately protect us from the impact of inflation.
If our operating and other expenses are increasing faster than anticipated due to inflation, our financial condition, results of operations, cash flow, cash available for distributions and our ability to service our debt obligations could be materially adversely affected.
+Added: In addition, historically, during periods of increasing interest rates, real estate valuations have generally decreased as a result of rising capitalization rates, which tend to be positively correlated with interest rates.
+Added: Consequently, prolonged periods of higher interest rates may negatively impact the valuation of our portfolio and result in the decline of the quoted trading price of our securities and market capitalization, as well as lower sales proceeds from future dispositions.
Changes in accounting pronouncements could adversely impact our reported financial performance.
6 unchanged sentences
There can be no guarantee that our internal control over financial reporting will be effective in accomplishing all control objectives all of the time.
−Removed: Deficiencies in our internal controls over financial reporting that may occur in the future could result in misstatements of our results of operations, restatements of our financial statements or otherwise adversely impact our financial condition, results of operations, cash flows, or the market price of our Class A common stock and our ability to satisfy our debt service obligations and to pay dividends and distributions to the holders of our Class A common stock.
+Added: Deficiencies in our internal controls over financial reporting that may occur in the future could result in misstatements of our results of operations, restatements of our financial statements or otherwise adversely impact our financial condition, results of operations, cash flows, or the market price of our Class A
+Added: common stock and our ability to satisfy our debt service obligations and to pay dividends and distributions to the holders of our Class A common stock.
Future offerings of equity securities, which would dilute our existing stockholders and may be senior to our Class A common stock for the purposes of dividend distributions, may adversely affect the market price of our Class A common stock.
22 unchanged sentences
• pandemics and epidemics, such as the COVID-19 pandemic, and the related governmental and economic responses thereto.
−Removed: In addition, while we expect to continue to make regular quarterly distributions to the holders of our Class A common stock, if sufficient cash is not available for distribution from our operations, we may have to fund distributions from working capital or net proceeds from asset sales, borrow to provide funds for such distributions, or reduce the amount of such distributions.
+Added: In addition, while we expect to continue to make regular quarterly distributions to the holders of our Class A common stock, if sufficient cash is not available for distribution from our operations, we may have to fund distributions from working
+Added: capital or net proceeds from asset sales, borrow to provide funds for such distributions, or reduce the amount of such distributions.
To the extent we borrow to fund distributions, our future interest costs would increase, thereby reducing our earnings and cash available for distribution from what they otherwise would have been.
4 unchanged sentences
We cannot predict whether future sales of our Class A common stock, preferred stock, or securities convertible into or exchangeable or exercisable for our Class A common stock or the availability of these securities for resale in the open market will decrease the market price of our Class A common stock.
−Removed: Sales of a substantial number of these securities in the public
−Removed: market, including sales upon the redemption of OP Units, or the perception that these sales might occur, may cause the market price of our common shares to decline and you could lose all or a portion of your investment.
+Added: Sales of a substantial number of these securities in the public market, including sales upon the redemption of OP Units, or the perception that these sales might occur, may cause the market price of our common shares to decline and you could lose all or a portion of your investment.
Future issuances of our Class A common stock, preferred stock, or other securities convertible into or exchangeable or exercisable for our Class A common stock, including, without limitation, OP Units, in connection with property, portfolio or business acquisitions and issuances of equity-based awards to participants in our 2019 Equity Incentive Plan, could have an adverse effect on the market price of our Class A common stock.
1 unchanged sentence
In addition, future sales or issuances of our Class A common stock may be dilutive to existing stockholders.
−Removed: We face cybersecurity risks.
−Removed: We face cybersecurity risks and risks associated with security breaches or disruptions, such as through cyber-attacks or cyber intrusions over the Internet, malware, computer viruses, attachments to emails, social engineering and phishing schemes or persons inside our organization.
+Added: We face cybersecurity risks and risks associated with security breaches.
+Added: We face cybersecurity risks and risks associated with security breaches or disruptions, such as through physical or electronic break-ins, cyber-attacks or cyber intrusions over the Internet, malware, computer viruses, attachments to emails, social engineering and phishing schemes or persons inside our organization.
The risk of a security breach or disruption, particularly through cyber-attacks or cyber intrusions, including by computer hackers, nation-state affiliated actors, and cyber terrorists, has generally increased as the number, intensity and sophistication of attempted attacks and intrusions from around the world have increased.
−Removed: These incidents may result in disruption of our operations, material harm to our financial condition, cash flows and the market price of our common shares, misappropriation of assets, compromise or corruption of confidential information collected in the course of conducting our business, liability for stolen information or assets, increased cybersecurity protection and insurance costs, regulatory enforcement, litigation and damage to our stakeholder relationships.
+Added: These incidents may result in disruption of our operations, delays or interruptions to our ability to meet tenant needs, material harm to our financial condition, cash flows and the market price of our common shares, misappropriation of assets, compromise or corruption of confidential information collected in the course of conducting our business, liability for stolen information or assets, increased cybersecurity protection and insurance costs, regulatory enforcement, litigation, inability to access or rely upon critical business records and damage to our stakeholder relationships.
These risks require continuous and likely increasing attention and other resources from us to, among other actions, identify and quantify these risks, upgrade and expand our technologies, systems and processes to adequately address them and provide periodic training for our employees and contractors to assist them in detecting phishing, malware and other schemes.
Such attention diverts time and other resources from other activities and there is no assurance that our efforts will be effective.
+Added: There can be no assurance that our security efforts and measures will be effective or that attempted security breaches or disruptions would not be successful or damaging.
+Added: Even the most well protected information, networks, systems and facilities remain potentially vulnerable because the techniques used in such attempted security breaches evolve and generally are not recognized until launched against a target, and in some cases, are designed to not be detected and, in fact, may not be detected.
+Added: Accordingly, we may be unable to anticipate these techniques or to implement adequate security barriers or other preventative measures, and thus it is impossible for us to entirely mitigate this risk.
Additionally, we rely on third-party service providers in our conduct of day-to-day property management, leasing and other activities at our properties and we can provide no assurance that the networks and systems that our third-party vendors have established or used will be effective.
5 unchanged sentences
Some of our employees also work remotely, which could introduce additional cybersecurity risks.
−Removed: There can be no assurance that our efforts to maintain the security and integrity of the information we and our service providers collect and our and their computer systems will be effective or that attempted security breaches or disruptions would not be successful or damaging with the potential for disruption in our operations, material harm to our financial condition, cash flows and the market price of our common shares, increased cybersecurity protection and insurance costs, regulatory enforcement, litigation and damage to our stakeholder relationships.
+Added: There can be no assurance that our efforts to maintain the security and
+Added: integrity of the information we and our service providers collect and our and their computer systems will be effective or that attempted security breaches or disruptions would not be successful or damaging with the potential for disruption in our operations, material harm to our financial condition, cash flows and the market price of our common shares, increased cybersecurity protection and insurance costs, regulatory enforcement, litigation and damage to our stakeholder relationships.
Third-party expectations relating to environmental, social and governance factors may impose additional costs and expose us to new risks.
5 unchanged sentences
If we fail to satisfy the expectations of investors, tenants and other stakeholders or our initiatives are not executed as planned, our reputation and financial results could be adversely affected.
−Removed: UNRESOLVED STAFF COMMENTS
Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.