Centerspace (CSR) risk factors, FY2024 10-K

Risks Related to Our Properties and Operations

1. 01We depend on residents for rental payments, which accounts for most of our revenue, and low occupancy rates or lease terminations could reduce our revenues from rents
2. 02Uncertain global macro-economic and political conditions could materially adversely affect our results of operations and financial condition
3. 03Our financial performance is subject to risks associated with the real estate industry and ownership of apartment communities
4. 04Our property acquisition activities may not produce the cash flows expected and could subject us to various risks that could adversely affect our operating results
5. 05We may be unable to acquire or develop properties and expand our operations into new or existing markets successfully
6. 06We depend on a concentration of our investments in a single asset class, making our results of operations more vulnerable to a downturn or slowdown in the sector or other economic factors
7. 07Our operations are concentrated in certain regions of the United States, and we are subject to general economic conditions in the regions in which we operate
8. 08Our business depends on our ability to continue to provide high quality housing and consistent operation of our apartment communities, the failure of which could adversely affect our business and results of operations
9. 09Inflation and price volatility in the global economy could hurt our business and results of operations
10. 10Catastrophic weather, natural events, and climate change could adversely affect our business
11. 11Our current or future insurance may not protect us against possible losses
12. 12Changes in federal or state laws and regulations relating to climate change could increase our costs, including capital expenditures to improve the energy efficiency of our existing communities or new development communities without a corresponding increase in revenue
13. 13Multifamily residential properties may be subject to rent stabilization regulations and other restritctions which limit our ability to raise rents above specified maximum amounts and could give rise to claims by residents that their rents exceed such specified maximum amounts
14. 14We may face opposition from governmental authorities or third parties alleging that our activities are anti-competitive
15. 15Competition could limit our ability to acquire attractive investment opportunities and could increase the costs of those opportunities, which may adversely affect our profitability and impede our growth
16. 16Because real estate investments are relatively illiquid and various other factors limit our ability to dispose of assets, we may be unable to sell properties when appropriate
17. 17Inability to manage growth effectively may adversely affect our operating results
18. 18Adverse changes in taxes and other laws may affect our liabilities relating to our properties and operations
19. 19We may be unable to retain or attract qualified management
20. 20We may be unable to attract and retain qualified employees
21. 21We face risks associated with cyber-attacks, cyber intrusions, or otherwise, which could pose a risk to our systems, networks, and services
22. 22Security breaches could compromise our information and expose us to liability, which would cause our business and reputation to suffer
23. 23We may be responsible for potential liabilities under environmental laws
24. 24Expanding social media usage could present new risks
25. 25Risks related to properties under development, redevelopment, or newly developed properties may adversely affect our financial performance
26. 26Complying with zoning and permitting law may affect our acquisition, redevelopment, and development costs
27. 27Future cash flows may be insufficient to ensure recoverability of the carrying value of our real estate assets
28. 28Complying with laws benefiting disabled persons or other safety regulations and requirements may affect our costs and investment strategies
29. 29Risks related to joint ventures may adversely affect our financial performance and results of operations
30. 30The COVID-19 pandemic affected our business in the past, and the potential future outbreak of other highly infectious or contagious diseases may materially and adversely impact and disrupt our business, income, cash flow, results of operations, financial condition, liquidity, prospects, and ability to service our debt obligations, and our ability to pay dividends and other distributions to our equityholders

Risks Related to Our Indebtedness and Financings

1. 31Our inability to renew, repay, or refinance our debt may prompt losses
2. 32Restrictive covenants in our debt agreements may limit our operating and financial flexibility, and our inability to comply with these covenants could have significant implications
3. 33Mortgage 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. 34Conditions in the capital and credit markets, including higher interest rates, may adversely affect our access to various sources of capital or financing and the cost of capital, which could affect our business activities and earnings
5. 35Financial and real estate market disruptions could adversely affect the multifamily property sector’s ability to obtain financing from Fannie Mae and Freddie Mac, which could adversely impact us
6. 36We hold a portion of our cash and cash equivalents in deposit accounts that could be adversely affected if the financial institutions holding such deposits fail
7. 37Interest rate hedging arrangements may lead to losses

Risks Related to Our Shares

1. 38Corporate social responsibility, specifically related to ESG, may impose additional costs and expose us to new risks
2. 39Payment of distributions on our common shares is not guaranteed
3. 40We are a holding company with limited operations and, as such, we will rely on funds received from our Operating Partnership to pay liabilities, and the interests of our shareholders will be structurally subordinated to all liabilities and obligations of our Operating Partnership and its subsidiaries
4. 41Our future growth depends, in part, on our ability to raise additional equity capital, which could dilute the interests of our common shareholders
5. 42We may issue additional classes or series of our shares of beneficial interest with rights and preferences that are superior to the rights and preferences of our common shares
6. 43Certain provisions of our Declaration of Trust may delay, limit, or prevent a change in control and deter a takeover

Risks Related to Tax Matters

1. 44We may incur tax liabilities if we were to fail to qualify as a REIT, which could force us to borrow funds during unfavorable market conditions
2. 45Failure of our operating partnership to qualify as a partnership would lead to corporate taxation and significantly reduce the amount of cash available for distribution
3. 46Dividends payable by REITs may be taxed at higher rates than dividends of non-REIT corporations, which could reduce the net cash received by our shareholders and may harm our ability to raise additional funds through any future sale of our stock
4. 47We may face risks in connection with Section 1031 exchanges
5. 48We have tax protection agreements in place on twenty-eight properties
6. 49Complying with REIT requirements may force us to forgo otherwise attractive opportunities or liquidate otherwise attractive investments
7. 50Even if we qualify as a REIT, we may face other tax liabilities that reduce our cash flows
8. 51The tax imposed on REITs engaging in prohibited transactions and our agreements entered into with certain contributors of our properties may limit our ability to engage in transactions that would be treated as sales for federal income tax purposes
9. 52Our ownership of TRSs is limited, and our transactions with TRSs will cause us to be subject to a 100% penalty tax on certain income or deductions if those transactions are not conducted on arm’s-length terms
10. 53Legislative or regulatory actions affecting REITs could have an adverse effect on us or our shareholders