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New words:
admitted, Alexander, AMSR, architecture, artificial, ascribed, assignee, Atlanta, automated, Azure, biochemistry, blended, Brook, CCNP, CF, Cisco, Clawback, conceive, configuration, coupled, CSF, Engineer, entail, epidemic, Equiniti, eviction, explicitly, Feldberg, frequently, Gateway, GSE, harder, hazard, hurdle, incident, intelligence, intrusion, IQHQ, Jim, Jorgensen, JV, launch, Lehman, lien, MCSE, Microsoft, mirror, motion, NIST, notify, Ohio, OSL, penetration, Phoenix, plausible, prevalence, promptly, pronounced, pronouncement, proportional, quotation, radiology, reallow, referenced, Reichman, remeasurement, reperform, resiliency, Resmark, RFGH, Richmond, RTB, scenario, segment, SPG, threat, undergraduate, unfunded, unlevered, VINEB, wrote
Removed:
acceptance, accessing, alter, amend, American, anticipation, attain, AU, banking, bearing, broader, Bureau, chain, clarify, Columbia, concession, conservator, conserving, constructive, context, converting, Council, craft, crafted, designation, drew, exclude, exclusively, Facilitation, family, fluidity, forbearance, FSOC, goal, great, hand, improving, interbank, introduced, irrevocably, JCAP, Jernigan, LIBOR, London, LSTA, minimize, monitoring, MSA, Night, panel, participating, prediction, preserving, pressure, prevented, promote, prudential, reaching, redeploy, regulator, renegotiate, replacing, securitizer, seller, situation, steering, Sterling, surviving, systemically, tailoring, tied, Trump, unaudited, updated
Financial report summary
?Risks
- Our loans and investments expose us to risks similar to and associated with debt-oriented real estate investments generally.
- Our real estate investments are subject to risks particular to real property. These risks may result in a reduction or elimination of or return from an investment secured by a particular property.
- Commercial real estate-related investments that are secured, directly or indirectly, by real property are subject to delinquency, foreclosure and loss, which could result in losses to us.
- Residential loans are subject to increased risks of loss.
- Fluctuations in interest rates and credit spreads could reduce our ability to generate income on our loans and other investments, which could lead to a significant decrease in our results of operations, cash flows and the market value of our investments.
- Macroeconomic trends including inflation, high interest rates or recession may adversely affect our financial condition and results of operations.
- Our loans and investments may be subject to fluctuations in interest rates that may not be adequately protected, or protected at all, by our hedging strategies.
- Our loans and investments are concentrated in terms of type of interest, geography, asset types and sponsors and may continue to be so in the future.
- We operate in a competitive market for lending and investment opportunities and competition may limit our ability to originate or acquire desirable loans and investments in our target assets and could also affect the yields of these assets.
- Prepayment rates may adversely affect the value of our portfolio of assets.
- The lack of liquidity in certain of our target assets may adversely affect our business.
- Any distressed loans or investments we make, or loans and investments that later become distressed, may subject us to losses and other risks relating to bankruptcy proceedings.
- We may not have control over certain of our loans and investments.
- Our investments in CMBS pose additional risks, including the risk that we will not be able to recover some or all of our investment and the risk that we will not be able to hedge or transfer our CMBS B-Piece or CMBS I/O Strip investments for a significant period of time.
- Loans on properties in transition involve a greater risk of loss than conventional mortgage loans.
- We may not realize gains or income from our investments.
- Real estate valuation is inherently subjective and uncertain.
- Some of our portfolio investments may be recorded at fair value not readily available and, as a result, there will be uncertainty as to the value of these investments.
- We may experience a decline in the fair value of our assets.
- The due diligence process that our Manager undertakes in regard to investment opportunities may not reveal all facts that may be relevant in connection with an investment and if our Manager incorrectly evaluates the risks of our loans and investments, we may experience losses.
- Insurance on loans and real estate securities collateral may not cover all losses.
- Terrorist attacks, other acts of violence or war or a prolonged economic slowdown may affect the real estate industry generally and our business, financial condition and results of operations.
- A change in the federal conservatorship of Fannie Mae and Freddie Mac and related efforts, along with any changes in laws and regulations affecting the relationship between Fannie Mae, Freddie Mac and Ginnie Mae and the U.S. government, may materially adversely affect our business, financial condition and results of operations.
- The securitization market is subject to an evolving regulatory environment that may affect certain aspects of these activities.
- Liability relating to environmental matters may impact the value of properties that we may acquire or the properties underlying our investments.
- We may be subject to lender liability claims, and if we are held liable under such claims, we could be subject to losses.
- Our ability to generate returns for our stockholders through our investment, finance and operating strategies is subject to then-existing market conditions, and we may make significant changes to these strategies in response to changing market conditions.
- If we fail to develop, enhance and implement strategies to adapt to changing conditions in the real estate industry and capital markets, our financial condition and results of operations may be materially and adversely affected.
- Any credit ratings assigned to our loans and investments will be subject to ongoing evaluations and revisions and we cannot assure you that those ratings will not be downgraded.
- Some of our investments and investment opportunities may be in synthetic form.
- We may invest in derivative instruments, which would subject us to increased risk of loss.
- Rapid changes in the values of our real estate investments may make it more difficult for us to maintain our qualification as a REIT or exclusion from regulation under the Investment Company Act.
- Although we are an emerging growth company and smaller reporting company, the requirements of being a public company, including compliance with the reporting requirements of the Exchange Act and the requirements of the Sarbanes-Oxley Act, may strain our resources, increase our costs and place additional demands on management, and we may be unable to comply with these requirements in a timely or cost-effective manner.
- Failure of our internal control over financial reporting could harm our business, financial condition and results of operations.
- We have a substantial amount of indebtedness which may limit our financial and operating activities and may adversely affect our ability to incur additional debt to fund future needs.
- Any credit facilities (including term loans and revolving facilities), debt securities, repurchase agreements, warehouse facilities and securitizations may impose restrictive covenants, which may restrict our flexibility to determine our operating policies and investment strategy.
- Inability to access funding could have a material adverse effect on our results of operations, financial condition and business.
- We are subject to counterparty risk associated with our debt obligations.
- Hedging may adversely affect our earnings, which could reduce our cash available for distribution to our stockholders.
- We are subject to counterparty risk associated with our hedging activities.
- We may enter into hedging transactions that could expose us to contingent liabilities in the future.
- We may fail to qualify for, or choose not to elect, hedge accounting treatment.
- Any credit facilities (including term loans and revolving facilities), repurchase agreements, warehouse facilities and securitizations that we may use to finance our assets may require us to provide additional collateral or pay down debt.
- If a counterparty to a repurchase agreement defaults on its obligation to resell the underlying security back to us at the end of the purchase agreement term, or if the value of the underlying asset has declined as of the end of that term, or if we default on our obligations under the repurchase agreement, we may incur losses.
- We have limited operating history as a standalone company and may not be able to operate our business successfully, find suitable investments, or generate sufficient revenue to make or sustain distributions to our stockholders.
- We depend upon key personnel of our Manager and its affiliates.
- We are dependent upon our Manager and its affiliates to conduct our day-to-day operations; thus, adverse changes in their financial health or our relationship with them could cause our operations to suffer.
- Our Manager manages our portfolio pursuant to very broad investment guidelines and is not required to seek the approval of our Board for each investment, financing, asset allocation or hedging decision made by it, which may result in our making riskier investments and which could materially and adversely affect us.
- We may change our targeted investments without stockholder consent.
- We will pay substantial fees and expenses to our Manager and its affiliates, which payments increase the risk that you will not earn a profit on your investment.
- If we internalize our management functions, we may not achieve the perceived benefits of the internalization transaction.
- There are significant potential conflicts of interest that could affect our investment returns.
- The Chapter 11 bankruptcy filing by Highland Capital Management, L.P. (“Highland”) may have materially adverse consequences on our business, financial condition and results of operations.
- Litigation against James Dondero and others may have materially adverse consequences on our business, financial condition and results of operations.
- We may compete with other entities affiliated with our Manager and our Sponsor for investments.
- Our Manager, our Sponsor and their respective affiliates, officers and employees face competing demands relating to their time, and this may cause our operating results to suffer.
- Our charter permits our Board to issue stock with terms that may subordinate the rights of our stockholders or discourage a third party from acquiring us in a manner that could otherwise result in a premium price to our stockholders.
- Our rights and the rights of our stockholders to recover claims against our directors and officers are limited by Maryland law and our organizational documents, which could reduce your and our recovery against them if they cause us to incur losses.
- 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 and provide that claims relating to causes of action under the Securities Act may only be brought in federal district courts, which could limit stockholders' ability to obtain a favorable judicial forum for disputes with us or our directors, officers or employees and could discourage lawsuits against us and our directors, officers and employees.
- Certain provisions of the MGCL may limit the ability of a third party to acquire control of us.
- We have elected to be treated as a REIT commencing with our taxable year ended December 31, 2020. Our failure to qualify or maintain our qualification as a REIT for U.S. federal income tax purposes would reduce the amount of funds we have available for distribution and limit our ability to make distributions to our stockholders.
- Even if we qualify as a REIT for U.S. federal income tax purposes, we may be subject to other tax liabilities that reduce our cash flow and our ability to make distributions to you.
- To maintain our REIT qualification, we may be forced to borrow funds during unfavorable market conditions, and the unavailability of such capital on favorable terms at the desired times, or at all, may cause us to curtail our investment activities and/or to dispose of assets at inopportune times, which could adversely affect our financial condition, results of operations, cash flow and value of our securities.
- The failure of a mezzanine loan to qualify as a real estate asset could adversely affect our ability to qualify as a REIT.
- Complying with REIT requirements may cause us to forego otherwise attractive opportunities or liquidate otherwise attractive investments.
- If our OP failed to qualify as a partnership for U.S. federal income tax purposes, we would cease to qualify as a REIT.
- Our ownership of interests in a TRS raises certain tax risks.
- Dividends payable by REITs generally do not qualify for the reduced tax rates available for some dividends.
- The share ownership restrictions of the Code for REITs and the 6.2% share ownership limits in our charter may inhibit market activity in shares of our stock and restrict our business combination opportunities.
- Complying with REIT requirements may limit our ability to hedge our liabilities effectively and may cause us to incur tax liabilities.
- Certain of our business activities are potentially subject to the prohibited transaction tax, which could reduce the return on your investment.
- We may be required to report taxable income for certain investments in excess of the economic income we ultimately realize from them.
- The ability of our Board to revoke our REIT qualification without stockholder approval may cause adverse consequences to our stockholders.
- Legislative or other actions affecting REITs could have a negative effect on our stockholders or us.
- We and our subsidiaries and stockholders may be subject to state, local or foreign tax filing and payment obligations taxation in various jurisdictions including those in which we or they transact business, own property or reside.
- Foreign investors may 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 disposition of shares of our common stock.
- The concentration of our share ownership may limit your ability to influence corporate matters.
- Broad market fluctuations could negatively impact the market price of our common stock.
- The form, timing and/or amount of dividend distributions on our common stock in future periods may vary and be impacted by economic and other considerations.
- We may be unable to make distributions on our common stock at expected levels, which could result in a decrease in the market price of our common stock.
- Future issuances of debt securities and equity securities may negatively affect the market price of shares of our common stock and, in the case of equity securities, may be dilutive to owners of our common stock and could reduce the overall value of an investment in our common stock.
- Common stock eligible for future sale may have adverse effects on our share price.
- The rights of our common stockholders are limited by and subordinate to the rights of the holders of Series A Preferred Stock and Series B Preferred Stock and these rights may have a negative effect on the value of shares of our common stock.
- Holders of Series A Preferred Stock have extremely limited voting rights.
- The market price and trading volume of the Series A Preferred Stock may fluctuate significantly and be volatile due to numerous circumstances beyond our control.
- Our cash available for distribution may not be sufficient to pay dividends on the Series A Preferred Stock and Series B Preferred Stock at expected levels, and we cannot assure you of our ability to pay dividends in the future. We may use borrowed funds or funds from other sources to pay dividends, which may adversely impact our operations.
- Holders of Series A Preferred Stock may not be permitted to exercise conversion rights upon a change of control. If exercisable, the change of control conversion feature of the Series A Preferred Stock may not adequately compensate such holders, and the change of control conversion and redemption features of the Series A Preferred Stock may make it more difficult for a party to take over our company or discourage a party from taking over our company.
- The Series A Preferred Stock and Series B Preferred Stock are subordinate to our existing and future debt, and such interests could be diluted by the issuance of additional shares of preferred stock and by other transactions.
- The 5.75% Notes, OP Notes and future offerings of debt securities or shares of our capital stock expressly designated as ranking senior to our Series A Preferred Stock and Series B Preferred Stock as to distribution rights and rights upon our liquidation, dissolution or winding up may adversely affect the market price of our Series A Preferred Stock.
- We are highly dependent on information technology and security breaches or systems failures could significantly disrupt our business, which may, in turn, negatively affect the market price of our securities and our ability to pay dividends.
- Risk of Pandemics or Other Health Crises.