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New words:
forced, prepayment, remove
Removed:
borrow, charter, occupied, rate, reference
Financial report summary
?Risks
- We cannot determine at this time the amount or timing of any further liquidating distributions to our stockholders.
- We may be required to invest additional amounts in our properties.
- If our liquidation costs or unpaid liabilities are greater than we expect, our liquidating distributions may be reduced or delayed.
- If we are unable to maintain the occupancy rates of currently leased units or spaces or if tenants default under their leases or other obligations to us during the liquidation process, our cash flow and the sales price of the impacted assets will be reduced and our liquidating distributions may be reduced.
- Our failure to remain qualified as a REIT would reduce the amount of our liquidating distributions.
- The sale of our assets may cause us to be subject to a 100% excise tax on the net income from “prohibited transactions,” which would reduce the amount of our liquidating distributions.
- Distributing interests in a liquidating trust may cause stockholders to recognize taxable gain prior to the receipt of cash.
- The Plan of Liquidation may lead to stockholder litigation, which could result in substantial costs and distract our management.
- Our ability to operate our business and implement the Plan of Liquidation depends to a significant degree upon the contributions of our executive officers and other key personnel of our Business Manager and its affiliates.
- Both the Estimated Per Share NAV and net assets in liquidation value per Class A Share are based on certain assumptions and estimates and may not reflect the amount that our stockholders will receive.
- Our fixed operating expenses constitute a greater percentage of our gross income due to the size of our portfolio and, as a result, may make it more difficult to generate sufficient income to provide for a full return of invested capital to stockholders.
- We have incurred net losses on a U.S. GAAP basis for the period from January 1, 2018 through December 18, 2018 and for the years ended December 31, 2017 and 2016.
- Because no established public trading market for our shares exists and because we have terminated our SRP, our stockholders may not realize the cash value of their shares until we complete our liquidation pursuant to the Plan of Liquidation.
- The failure of any bank in which we deposit our funds would reduce the amount of cash we have available to fund operations, pay distributions or invest in real estate assets.
- We rely on IREIC and its affiliates and subsidiaries to operate our business and implement the Plan of Liquidation. Any material adverse change in IREIC’s financial condition or our relationship with IREIC could have a material adverse effect on our ability to manage our operations and implement the Plan of Liquidation.
- As an “emerging growth company,” we are permitted to rely on exemptions from certain reporting and disclosure requirements, which may make our future public filings different than that of other public companies.
- The occurrence of cyber incidents, or a deficiency in our cybersecurity, could negatively impact our business by causing a disruption to our operations, a compromise or corruption of our confidential information, and/or damage to our business relationships, all of which could negatively impact our financial results.
- A failure of our information technology (IT) infrastructure could adversely impact our business and operations.
- There are inherent risks with real estate investments.
- We may be unable to renew leases as leases expire.
- Increased competition and increased affordability of residential homes could limit our ability to retain tenants, lease multi-family homes or increase or maintain rents.
- Our remaining multi-family assets may not achieve anticipated results.
- We may experience increased costs to own and maintain our properties.
- Operating expenses may increase in the future and to the extent these increases cannot be passed on to our tenants in the form of rent increases, our cash flow and our operating results would decrease.
- Uninsured losses or premiums for insurance coverage may adversely affect the amount of any additional liquidating distributions we pay to our stockholders.
- The costs of complying with environmental laws and other governmental laws and regulations may adversely affect us.
- We incurred mortgage indebtedness which reduces the funds available for any additional liquidating distributions and increases the risk of loss since defaults may cause us to lose the properties securing the loans.
- High mortgage rates may make it difficult for us to refinance our remaining real estate properties.
- Interest-only indebtedness may increase our risk of default and ultimately may reduce our funds available for any additional liquidating distributions to our stockholders.
- The total amount we may borrow is limited by our charter.
- IREIC may face a conflict of interest in allocating personnel and resources among its affiliates, our Business Manager and our Real Estate Manager.
- IREIC and its affiliates, including the Business Manager and the Real Estate Manager, and our directors and executive officers face conflicts of interest caused by their compensation or other arrangements with us, which could result in actions that are not in the long-term best interests of our stockholders.
- We do not have arm’s-length agreements with our Business Manager, our Real Estate Manager or any other affiliates of IREIC.
- Because we conduct all of our operations through the operating partnership, we depend on it and its subsidiaries for cash flow and we are structurally subordinated in right of payment to the obligations of the operating partnership and its subsidiaries.
- Our rights, and the rights of our stockholders, to recover claims against our officers, directors, Business Manager and Real Estate Manager are limited.
- Our board of directors may, in the future, adopt certain measures under Maryland law without stockholder approval that may have the effect of making it less likely that a stockholder would receive a “control premium” for his or her shares.
- Our charter places limits on the amount of common stock that any person may own without the prior approval of our board of directors.
- Maryland law limits, in some cases, the ability of a third party to vote shares acquired in a “control share acquisition.”
- Our failure to remain qualified as a REIT would subject us to U.S. federal income tax and state and local income tax, and would adversely affect our operations and the value of our common stock.
- Even if we maintain our status for tax purposes as a REIT, in certain circumstances, we may incur tax liabilities that would reduce our cash available for distribution to our stockholders.
- To qualify as a REIT we must meet annual distribution requirements, which may force us to forgo otherwise attractive opportunities or borrow funds during unfavorable market conditions. This could delay or hinder our ability to meet our investment objectives and reduce our stockholders’ overall return.
- Our taxable REIT subsidiaries are subject to corporate-level taxes and our dealings with our taxable REIT subsidiaries may be subject to a 100% excise tax.
- If the operating partnership failed to qualify as a partnership or is not otherwise disregarded for U.S. federal income tax purposes, we would cease to qualify as a REIT.
- The ability of our board of directors to revoke our REIT qualification without stockholder approval may subject us to U.S. federal income tax and reduce distributions to our stockholders.
- We may be subject to adverse legislative or regulatory tax changes that could increase our tax liability, reduce our operating flexibility and reduce the market price of our common stock.
- The share ownership restrictions of the Internal Revenue Code for REITs and the 9.8% share ownership limit in our charter may inhibit market activity in our shares of stock and restrict our business combination opportunities.
- Non-U.S. stockholders will be subject to U.S. federal withholding tax and may be subject to U.S. federal income tax on distributions received from us and upon the disposition of our shares.
Management Discussion
- Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
- Certain statements in this Quarterly Report on Form 10-Q constitute “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Words such as “may,” “could,” “should,” “expect,” “intend,” “plan,” “goal,” “seek,” “anticipate,” “believe,” “estimate,” “predict,” “variables,” “potential,” “continue,” “expand,” “maintain,” “create,” “strategies,” “likely,” “will,” “would” and variations of these terms and similar expressions, or the negative of these terms or similar expressions, are intended to identify forward-looking statements.
- These forward-looking statements are not historical facts but reflect the intent, belief or current expectations of the management of Inland Residential Properties Trust, Inc. (which we refer to herein as the “Company,” “we,” “our” or “us”) based on their knowledge and understanding of the business and industry, the economy and other future conditions. These statements are not guarantees of future performance, and we caution stockholders not to place undue reliance on forward-looking statements. Actual results may differ materially from those expressed or forecasted in the forward-looking statements due to a variety of risks, uncertainties and other factors, including but not limited to the factors listed and described under “Risk Factors” in this Quarterly Report on Form 10-Q and in our Annual Report on Form 10-K for the year ended December 31, 2018, as filed with the Securities and Exchange Commission (the “SEC”) on March 29, 2019, and factors described below: