Centerspace (CSR) risk factors, FY2025 10-K

Risks Related to Our Strategic Alternatives Review Process

1. 01Our Review of Strategic Alternatives May Not Result in an Executed or Consummated Transaction or Transactions, and the Process of Reviewing Strategic Alternatives or its Conclusion Could Adversely Affect our Business and Our ShareholdersNew

Risks Related to Our Properties and Operations

1. 02We depend on residents for rental payments, which account for most of our revenue, and low occupancy rates or lease terminations could reduce our revenues from rents
2. 03Uncertain global macro-economic and political conditions could materially adversely affect our results of operations and financial condition37% rewritten
3. 04Our financial performance is subject to risks associated with the real estate industry and ownership of apartment communities
4. 05Our 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. 06We may be unable to acquire or develop properties and expand our operations into new or existing markets successfully
6. 07We 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 factors25% rewritten
7. 08Our 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. 09Our 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. 10Inflation and price volatility in the global economy could hurt our business and results of operations
10. 11Catastrophic weather, natural events, and climate change could adversely affect our business
11. 12Our current or future insurance may not protect us against possible losses
12. 13Changes 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. 14Multifamily residential properties may be subject to rent stabilization regulations and other restrictions 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. 15We may face opposition from governmental authorities or third parties alleging that our activities are anti-competitive
15. 16Competition 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. 17Because 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. 18Inability to manage growth effectively may adversely affect our operating results
18. 19Adverse changes in tax laws and other laws may affect our liabilities relating to our properties and operations
19. 20We may be unable to retain or attract qualified management29% rewritten
20. 21We may be unable to attract and retain qualified employees22% rewritten
21. 22The failure of third-party management companies to properly manage our properties could adversely affect our results of operationsNew
22. 23We face risks associated with cyber-attacks, cyber intrusions, or otherwise, which could pose a risk to our systems, networks, and services
23. 24Security breaches could compromise our information and expose us to liability, which would cause our business and reputation to suffer
24. 25The development and use of artificial intelligence in the workplace presents risks and challenges that may adversely impact our business and operating resultsNew
25. 26We may be responsible for potential liabilities under environmental laws
26. 27Expanding social media usage could present new risks
27. 28Risks related to properties under development, redevelopment, or newly developed properties may adversely affect our financial performance
28. 29Complying with zoning and permitting law may affect our acquisition, redevelopment, and development costs
29. 30Future cash flows may be insufficient to ensure recoverability of the carrying value of our real estate assets
30. 31Complying with laws benefiting disabled persons or other safety regulations and requirements may affect our costs and investment strategies
31. 32A potential future pandemic or other outbreak of a 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. 33Our inability to renew, repay, or refinance our debt may prompt losses
2. 34Restrictive 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. 35Mortgage 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. 36Conditions 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. 37Financial 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. 38We 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. 39Interest rate hedging arrangements may lead to losses

Risks Related to Our Shares

1. 40Corporate social responsibility, specifically related to ESG, may impose additional costs and expose us to new risks
2. 41Payment of distributions on our common shares is not guaranteed
3. 42We 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. 43Our future growth depends, in part, on our ability to raise additional equity capital, which could dilute the interests of our common shareholders
5. 44We 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. 45Certain provisions of our Declaration of Trust may delay, limit, or prevent a change in control and deter a takeover23% rewritten

Risks Related to Tax Matters

1. 46We 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. 47Failure of the Operating Partnership to qualify as a partnership would lead to corporate taxation and significantly reduce the amount of cash available for distribution31% rewritten
3. 48Partnership tax audit rules could have a material adverse effect on usNew
4. 49Dividends 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 stock56% rewritten
5. 50We may face risks in connection with Section 1031 exchanges
6. 51We have tax protection agreements in place on 21 properties
7. 52Complying with REIT requirements may force us to forgo otherwise attractive opportunities or liquidate otherwise attractive investments
8. 53Even if we qualify as a REIT, we may face other tax liabilities that reduce our cash flows
9. 54The 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
10. 55Our 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
11. 56Federal, state and foreign income tax laws governing REITs and related interpretations may change at any time, and any such legislative or other actions affecting REITs could have a negative effect on usNew