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New words:
amidst, architecture, artificial, Brown, CEO, certainty, CFO, chairperson, CISO, compromise, contemporary, deadline, dedicated, destroyed, disaster, East, elevate, entrust, ERC, extinguish, extinguishment, forfeited, frequency, identification, immaterial, instruction, Israel, leadership, leaseback, macro, magnitude, maker, Middle, Morgan, MRA, notably, notification, official, ourself, permeated, phishing, pleading, precipitation, prevalence, quantitative, rebound, retrospective, sea, shortage, signaled, singular, softening, spite, stemming, tightening, trend, turnover, unchanged, unfolded, University, unspent, venue, vested, weather, widespread
Removed:
absorption, accelerated, advanced, binding, blind, Blumberg, central, coerce, curtail, denominator, diversified, dramatically, employ, evan, Foerster, functional, gaming, hard, hospitality, housing, immune, Jersey, justified, LIBOR, living, Morrison, Mulvihill, numerator, office, online, outbreak, promulgated, remote, renewed, ruling, shifting, shopping, student, submitting, Technological, thinly, unjustified, unwinding, validity, waive, waiver, zucker
Financial report summary
?Risks
- There is no assurance that we will be able to successfully achieve our investment objectives; the prior performance of other entities affiliated with our Advisor may not be an accurate barometer of our future results.
- There is no public trading market for the shares of our common stock and we do not anticipate that there will be a public trading market for our shares; therefore, our stockholders’ ability to dispose of their shares will likely be limited to redemption by us. If our stockholders do sell their shares to us, they may receive less than the price they paid.
- Our ability to redeem our stockholders’ shares may be limited. In addition, our board of directors may modify or suspend our share redemption program at any time.
- Our capacity to redeem shares may be further limited if we experience a concentration of investors.
- Purchases and redemptions of our common shares will not be made based on the current NAV per share of our common stock.
- Economic events that may cause our stockholders to request that we redeem their shares may materially adversely affect our cash flow and our results of operations and financial condition.
- A portion of the proceeds raised in our securities offerings is expected to be used to satisfy redemption requests, and such portion of the proceeds may be substantial.
- Our current public offering is a “best efforts” offering and if we are unable to raise substantial funds, we will be limited in the number and type of investments we may make which could negatively impact an investment in shares of our common stock.
- Valuations and appraisals of our properties, real estate-related assets and real estate-related liabilities are estimates of value and may not necessarily correspond to realizable value.
- In order to disclose a monthly NAV, we are reliant on the parties that we engage for that purpose, in particular the Independent Valuation Advisor and the appraisers that we hire to value and appraise our real estate portfolio.
- Our NAV is not subject to GAAP, is not independently audited and involves subjective judgments by the Independent Valuation Advisor and other parties involved in valuing our assets and liabilities.
- No rule or regulation requires that we calculate our NAV in a certain way, and our board of directors, including a majority of our independent directors, may adopt changes to the valuation procedures.
- Our NAV per share may suddenly change if the valuations of our properties materially change from prior valuations or the actual operating results or observed market transactions materially differ from what we originally budgeted.
- New acquisitions may be valued for purposes of our NAV at less than what we pay for them, which would dilute our NAV.
- The NAV per share that we publish may not necessarily reflect changes in our NAV that are not immediately quantifiable.
- The realizable value of specific properties may change before the value is adjusted by the Independent Valuation Advisor and reflected in the calculation of our NAV.
- Our NAV and the NAV of our stockholders’ shares may be diluted in connection with this and future securities offerings.
- Interest rate changes may cause volatility in our monthly NAV.
- Our stockholders will experience dilution in the net tangible book value of our stockholders’ shares equal to the upfront offering costs associated with their shares.
- Our stockholders may be at a greater risk of loss than the Sponsor or the Advisor since our primary source of capital is funds raised through the sale of shares of our common stock.
- Stockholders will not have the benefit of an independent due diligence review in connection with our securities offerings, which increases the risk of their investment.
- The performance component of the advisory fee is calculated on the basis of the overall investment return provided to holders of Fund Interests over a calendar year, so it may not be consistent with the return on our stockholders’ shares.
- The payment of fees and expenses to the Advisor and its affiliates and the Dealer Manager reduces the cash available for distribution and increases the risk that our stockholders will not be able to recover the amount of their investment in our shares.
- We will be required to pay substantial compensation to the Advisor and its affiliates or related parties, which may be increased or decreased during our current securities offerings or future offerings by a majority of our board of directors, including a majority of the independent directors.
- There is very limited liquidity for our shares of common stock. If we do not effect a Liquidity Event, it will be very difficult for our stockholders to have liquidity for their investment in shares of our common stock.
- We currently do not have research analysts reviewing our performance.
- Our investors may be at a greater risk of loss than the Advisor and members of our management team.
- The availability and timing of cash distributions to our stockholders is uncertain.
- If we internalize our management functions, the percentage of our outstanding shares of common stock owned by our other stockholders could be reduced, we could incur other significant costs associated with being self-managed, and any internalization could have other adverse effects on our business and financial condition.
- If another investment program, whether sponsored by the Sponsor or otherwise, hires the current executives or key personnel of the Advisor in connection with an internalization transaction or otherwise, or if we were to internalize our management but cannot retain some or all of our current executives or key personnel of the Advisor, our ability to conduct our business may be adversely affected.
- If we are delayed in finding or unable to find suitable investments, we may not be able to achieve our investment objectives and make distributions to our stockholders.
- We anticipate that our investments will continue to be concentrated in the industrial real estate sector and primarily in the largest distribution and logistics markets in the U.S., and our business could be adversely affected by an economic downturn in that sector or in those geographic areas.
- We are dependent on customers for revenue and our inability to lease our properties or to collect rent from our customers will adversely affect our results of operations and returns to our stockholders.
- Our business could be adversely affected by the effects of health pandemics or epidemics.
- Yields on and safety of deposits may be lower due to the extensive decline in the financial markets.
- Our business is dependent on bank relationships and strain on the banking system may severely impact us. Similarly, the failure of any bank in which we deposit our funds could reduce the amount of cash we have available to pay distributions and make additional investments.
- Terrorist attacks and other acts of violence, civilian unrest, military conflict, or war may affect the markets in which we operate, our operations and our profitability.
- Our board of directors determines our major policies and operations which increases the uncertainties faced by our stockholders.
- Certain provisions in the partnership agreement of the Operating Partnership may delay, defer or prevent an unsolicited acquisition of us or a change of our control.
- We may acquire co-ownership interests in property that are subject to certain co-ownership agreements which may have an adverse effect on our results of operations, relative to if the co-ownership agreements did not exist.
- If we invest in a limited partnership as a general partner, we could be responsible for all liabilities of such partnership.
- Maryland law and our organizational documents limit our stockholders’ rights to bring claims against our officers and directors.
- We may issue preferred stock, additional shares of common stock or other classes of common stock, which issuance could adversely affect the holders of our common stock issued pursuant to our securities offerings.
- The limit on the percentage of shares of our common stock that any person may own may discourage a takeover or business combination that could benefit our stockholders.
- Maryland law and our organizational documents limit our stockholders’ ability to amend our charter or terminate our company without the approval of our board of directors.
- Our bylaws designate the Circuit Court for Baltimore City, Maryland as the sole and exclusive forum for certain types of actions and proceedings that may be initiated by our stockholders, which could limit our stockholders’ ability to obtain a favorable judicial forum for disputes with us or our directors, officers or employees.
- Adverse economic and other conditions in the regions where our assets are located may adversely affect our levels of occupancy, the terms of our leases, and our ability to lease available areas, which could have an adverse effect on our results of operations.
- Properties that we may own or acquire that incur vacancies for a significant period of time could be difficult to sell, which could diminish the return to our stockholders.
- Risks related to the development of properties may have an adverse effect on our results of operations and returns to our stockholders.
- Delays in the acquisition, development and construction of properties or debt investments may have adverse effects on portfolio diversification, results of operations, and returns on our stockholders’ investment.
- Changes in supply of or demand for similar properties in a particular area may increase the price of real estate assets we seek to purchase or adversely affect the value of the properties we own.
- Actions of joint venture partners could adversely impact our performance.
- Properties are illiquid investments and we may be unable to adjust our portfolio in response to changes in economic or other conditions or sell a property if or when we decide to do so.
- Our operating expenses may increase in the future and to the extent such increases cannot be passed on to our customers, our cash flow and our operating results would decrease.
- We compete with numerous other parties or entities for property investments and customers and may not compete successfully.
- The operating results of the assets that we own may be impacted by our customers’ financial condition.
- If we enter into long-term leases with customers, those leases may not result in market rental rates over time, which could adversely affect our revenues and ability to make distributions to our stockholders.
- Lease agreements may have specific provisions that create risks to our business and may adversely affect us.
- We depend on the availability of public utilities and services, especially for water and electric power. Any reduction, interruption or cancellation of these services may adversely affect us.
- Our industry is subject to extensive regulation, which may result in higher expenses or other negative consequences that could adversely affect us.
- Our properties will be subject to property and other taxes that may increase in the future, which could adversely affect our cash flow.
- Uninsured losses or premiums for insurance coverage relating to property may adversely affect our operating results.
- Environmentally hazardous conditions may adversely affect our operating results.
- Costs of complying with environmental laws and regulations may adversely affect our income and the cash available for any distributions.
- The costs associated with complying with the Americans with Disabilities Act may reduce the amount of cash available for distribution to our stockholders.
- We may not have funding for future customer improvements which may adversely affect the value of our assets, our results of operations and returns to our stockholders.
- Investments made outside of the U.S. will be subject to currency rate exposure and risks associated with the uncertainty of foreign laws and markets.
- We intend to continue to incur mortgage indebtedness, corporate indebtedness and other borrowings, which may increase our business risks, and could hinder our ability to make distributions to our stockholders.
- We may not be able to obtain debt financing necessary to run our business.
- Increases in mortgage interest rates and/or unfavorable changes in other financing terms may make it more difficult for us to finance or refinance properties, which could reduce the number of properties we can acquire and the amount of cash distributions we can make to our stockholders.
- Increases in interest rates could increase the amount of our debt payments and therefore negatively impact our operating results.
- Lenders may require us to enter into restrictive covenants that relate to or otherwise limit our operations, which could limit our ability to make distributions to our stockholders, to replace the Advisor or to otherwise achieve our investment objectives.
- Risks related to floating rate indebtedness rates could increase the amount of our debt payments and therefore negatively impact our operating results.
- We may enter into financing arrangements that require us to use and pledge offering proceeds to secure and repay such borrowings, and such arrangements may adversely affect our ability to make investments and operate our business.
- We may enter into financing arrangements involving balloon payment obligations, which may adversely affect our ability to refinance or sell properties on favorable terms, and to make distributions to our stockholders.
- The derivative instruments that we may use to hedge against interest rate fluctuations may not be successful in mitigating our risks associated with interest rates and could reduce the overall returns on our stockholders’ investment.
- Failure to hedge effectively against interest rate changes may materially adversely affect our results of operations and financial condition.
- We assume the risk that our credit facility lenders may not honor their commitments to us.
- The mortgage loans in which we may invest, either directly or indirectly through real estate-related debt securities, will be subject to the risk of delinquency, foreclosure and loss, which could result in losses to us.
- The mezzanine loans, B-notes, and other junior financings in which we may invest would involve greater risks of loss than senior loans secured by income-producing properties.
- The B-notes in which we may invest may be subject to additional risks relating to the privately negotiated structure and terms of the transaction, which may result in losses to us.
- Bridge loans may involve a greater risk of loss than conventional mortgage loans.
- Investment in non-conforming and non-investment grade loans may involve increased risk of loss.
- Risks of cost overruns and non-completion of the construction or renovation of the properties underlying loans we make or acquire may materially adversely affect our investment.
- Interest rate fluctuations, changes in prepayment rates and reinvestment risk could cause the value of our debt investments to decrease or could reduce our ability to generate income from such investments.
- Our debt investments may be considered illiquid and we may not be able to adjust our portfolio in response to changes in economic and other conditions.
- Delays in liquidating defaulted loans could reduce our investment returns.
- We may make investments in non-U.S. dollar denominated securities, which will be subject to currency rate exposure and risks associated with the uncertainty of foreign laws and markets.
- Investments in real estate-related debt securities are subject to risks including various creditor risks and early redemption features which may materially adversely affect our results of operations and financial condition.
- We will depend on debtors for our revenue, and, accordingly, our revenue and our ability to make distributions to our stockholders will be dependent upon the success and economic viability of such debtors.
- We may invest in real estate-related preferred equity securities, which may involve a greater risk of loss than traditional debt financing.
- Investments in real estate-related securities are subject to specific risks relating to the particular issuer of the securities and may be subject to the general risks of investing in subordinated real estate-related securities.
- We have and may in the future make open market purchases or invest in traded securities.
- Debt-oriented real estate investments face a number of general market-related risks that can affect the creditworthiness of issuers, and modifications to certain loan structures and market terms make it more difficult to monitor and evaluate investments.
- Political changes may affect the real estate debt markets.
- Our Advisor faces conflicts of interest because certain of the fees it receives for services performed are based on our NAV, the procedures for which the Advisor will assist our board of directors in developing, overseeing, implementing and coordinating.
- Advisory fees may not create proper incentives or may induce the Advisor and its affiliates to make certain investments, including speculative investments, that increase the risk of our real estate portfolio.
- The Advisor’s management personnel, other employees and affiliates face conflicts of interest relating to time management and, accordingly, the Advisor’s management personnel, other employees and affiliates may not be able to devote significant time to our business activities and the Advisor may not be able to hire adequate additional employees.
- The Advisor and its affiliates, including our officers and three of our directors, face conflicts of interest caused by compensation arrangements with us, and other entities sponsored or advised by affiliates of our Sponsor, which could result in actions that are not in our stockholders’ best interests.
- The time and resources that Sponsor affiliated entities and related parties devote to us may be diverted and we may face additional competition due to the fact that Sponsor affiliated entities and related parties are not prohibited from raising money for another entity that makes the same types of investments that we target.
- We may co-invest or joint venture an investment with a Sponsor affiliated entity or related party.
- We may invest in, acquire, sell assets to or provide financing to investment vehicles managed by our Advisor or its affiliates.
- We depend on the Advisor and its key personnel; if any of such key personnel were to cease employment with the Advisor or its affiliates, our business could suffer.
- The fees we pay to entities sponsored or advised by affiliates of our Sponsor in connection with our offerings of securities and in connection with the management of our investments were not determined on an arm’s-length basis, and therefore, we do not have the benefit of arm’s-length negotiations of the type normally conducted between unrelated parties.
- We compete with entities sponsored or advised by affiliates of the Advisor, for whom affiliates of the Advisor provide certain advisory or management services, for opportunities to acquire, lease, finance, or sell investments, and for customers, which may have an adverse impact on our operations.
- If we invest in joint venture or co-ownership arrangements with the Advisor or its affiliates, they may retain significant control over our investments even if our independent directors terminate the Advisor.
- Failure to qualify as a REIT could adversely affect our operations and our ability to make distributions.
- To qualify as a REIT, we must meet annual distribution requirements, which may result in us distributing amounts that may otherwise be used for our operations.
- Recharacterization of sale-leaseback transactions may cause us to lose our REIT status.
- Our stockholders may have current tax liability on distributions if they elect to reinvest in shares of our common stock.
- Distributions payable by REITs do not qualify for the reduced tax rates that apply to other corporate distributions.
- In certain circumstances, we may be subject to federal and state income taxes as a REIT, which would reduce our cash available for distribution to our stockholders.
- Distributions to tax-exempt investors may be classified as unrelated business taxable income.
- Investments in other REITs and real estate partnerships could subject us to the tax risks associated with the tax status of such entities.
- Complying with the REIT requirements may cause us to forego otherwise attractive opportunities.
- Complying with the REIT requirements may force us to liquidate otherwise attractive investments.
- The stock ownership limit imposed by the Code for REITs and our charter may restrict our business combination opportunities.
- The failure of a mezzanine loan to qualify as a real estate asset could adversely affect our ability to qualify as a REIT.
- Liquidation of assets may jeopardize our REIT status.
- Foreign investors may be subject to FIRPTA on the sale of common stock if we are unable to qualify as a domestically controlled REIT.
- We are not registered as an investment company under the Investment Company Act, and therefore we will not be subject to the requirements imposed on an investment company by the Investment Company Act which may limit or otherwise affect our investment choices.
- If we or the Operating Partnership are required to register as an investment company under the Investment Company Act, the additional expenses and operational limitations associated with such registration may reduce our stockholders’ investment return or impair our ability to conduct our business as planned.
- If our assets are deemed to be ERISA plan assets, the Advisor and we may be exposed to liabilities under Title I of ERISA and the Internal Revenue Code.
Management Discussion
- Cash provided by operating activities during the year ended December 31, 2023 decreased by approximately $99.6 million as compared to the same period in 2022, primarily as a result of (i) the partial cash settlement of the 2022 performance participation allocation owed in the amount of $77.8 million in January 2023, while the 2021 performance participation allocation was settled entirely through the issuance of OP Units in January 2022; (ii) a $62.5 million increase in interest expense related to our consolidated indebtedness as a result of increased borrowings and the effect of increased interest rates on certain variable rate debt.
- Cash used in investing activities during the year ended December 31, 2023 decreased by approximately $1.6 billion as compared to the same period in 2022, primarily due to (i) a net decrease in acquisition activity of $1.7 billion, which was primarily driven by the closing of the BTC II Partnership Transaction and the acquisition of 49 industrial properties during the year ended December 31, 2022, as compared to the acquisition of four industrial properties during the year ended December 31, 2023; (ii) a decrease in the contributions made to our joint venture partnerships of $8.1 million, partially offset by (i) a net $128.8 million of investments in debt-related investments during the year ended December 31, 2023; (ii) a net increase in capital expenditure activity of $21.6 million related to increased development activity during the year ended December 31, 2023.
- Cash provided by financing activities during the year ended December 31, 2023 decreased by approximately $1.5 billion as compared to the same period in 2022, primarily driven by (i) the $745.1 million decrease in capital raised through our public offering, net of offering costs paid; (ii) the $439.3 million increase in redemptions of our common stock; and (iii) a decrease in net proceeds from financing obligations associated with the DST Program of $315.5 million; partially offset by (i) $42.3 million of borrowings under the Morgan Stanley MRA (net of repayments), which closed during 2023; (ii) a $37.9 million decrease in redemptions of our Class I OP Units; and (iii) an increase in net borrowings of $9.4 million.