Public companies are required to disclose risks that can affect the business and impact the stock. These disclosures are known as “Risk Factors”. Companies disclose these risks in their yearly (Form 10-K), quarterly earnings (Form 10-Q), or “foreign private issuer” reports (Form 20-F). Risk factors show the challenges a company faces. Investors can consider the worst-case scenarios before making an investment. TipRanks’ Risk Analysis categorizes risks based on proprietary classification algorithms and machine learning.

Presidential Realty disclosed 29 risk factors in its most recent earnings report. Presidential Realty reported the most risks in the “Finance & Corporate” category.

Risk Overview Q3, 2023

Risk Distribution

72% Finance & Corporate

10% Production

7% Legal & Regulatory

7% Macro & Political

3% Ability to Sell

0% Tech & Innovation

Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy

This chart displays the stock's most recent risk distribution according to category. TipRanks has identified 6 major categories: Finance & corporate, legal & regulatory, macro & political, production, tech & innovation, and ability to sell.

Risk Change Over Time

S&P500 Average

Sector Average

Risks removed

Risks added

Risks changed

Presidential Realty Risk Factors

New Risk (0)

Risk Changed (0)

Risk Removed (0)

No changes from previous report

The chart shows the number of risks a company has disclosed. You can compare this to the sector average or S&P 500 average.

The quarters shown in the chart are according to the calendar year (January to December). Businesses set their own financial calendar, known as a fiscal year. For example, Walmart ends their financial year at the end of January to accommodate the holiday season.

Risk Highlights Q3, 2023

Main Risk Category

Finance & Corporate

With 21 Risks

Finance & Corporate

With 21 Risks

Number of Disclosed Risks

No changes from last report

S&P 500 Average: 31

No changes from last report

S&P 500 Average: 31

Recent Changes

0Risks added

0Risks removed

0Risks changed

Since Sep 2023

0Risks added

0Risks removed

0Risks changed

Since Sep 2023

Number of Risk Changed

No changes from last report

S&P 500 Average: 1

No changes from last report

S&P 500 Average: 1

See the risk highlights of Presidential Realty in the last period.

Risk Word Cloud

The most common phrases about risk factors from the most recent report. Larger texts indicate more widely used phrases.

Risk Factors Full Breakdown - Total Risks 29

Finance & Corporate

Total Risks: 21/29 (72%)Above Sector Average

Share Price & Shareholder Rights10 | 34.5%

Share Price & Shareholder Rights - Risk 1

We are subject to the penny stock rules adopted by the Securities and Exchange Commission ("SEC") that require brokers to provide extensive disclosure to its customers prior to executing trades in penny stocks. These disclosure requirements may cause a reduction in the trading activity of our common stock, which in all likelihood would make it difficult for our stockholders to sell their securities.

Rule 3a51-1 of the Securities Exchange Act of 1934, as amended, establishes the definition of a "penny stock," for purposes relevant to us, as any equity security that has a minimum bid price of less than $5.00 per share or with an exercise price of less than $5.00 per share, subject to a limited number of exceptions which are not available to us. This classification would severely and adversely affect any market liquidity for our common stock. For any transaction involving a penny stock, unless exempt, the penny stock rules require that a broker or dealer approve a person's account for transactions in penny stocks and the broker or dealer receive from the investor a written agreement to the transaction setting forth the identity and quantity of the penny stock to be purchased. In order to approve a person's account for transactions in penny stocks, the broker or dealer must obtain financial information and investment experience and objectives of the person and make a reasonable determination that the transactions in penny stocks are suitable for that person and that that person has sufficient knowledge and experience in financial matters to be capable of evaluating the risks of transactions in penny stocks. The broker or dealer must also deliver, prior to any transaction in a penny stock, a disclosure schedule required by the SEC relating to the penny stock market, which, in highlight form, sets forth: - The basis on which the broker or dealer made the suitability determination; and - That the broker or dealer received a signed, written agreement from the investor prior to the transaction. Disclosure also has to be made about the risks of investing in penny stocks in both public offerings and in secondary trading and commission payable to both the broker-dealer and the registered representative, current quotations for the securities and the rights and remedies available to an investor in cases of fraud in penny stock transactions. Finally, monthly statements have to be sent disclosing recent price information for the penny stock held in the account and information on the limited market in penny stocks. Because of these regulations, broker-dealers may not wish to engage in the above-referenced necessary paperwork and disclosures and/or may encounter difficulties in their attempt to sell shares of our common stock, which may affect the ability of selling stockholders or other holders to sell their shares in any secondary market and have the effect of reducing the level of trading activity in any secondary market. These additional sales practice and disclosure requirements could impede the sale of our common stock, if and when our common stock becomes publicly traded. In addition, the liquidity for our common stock may decrease, with a corresponding decrease in the price of our common stock. Our common stock, in all probability, will be subject to such penny stock rules for the foreseeable future and our stockholders will, in all likelihood, find it difficult to sell their common stock.

Share Price & Shareholder Rights - Risk 2

Our common stock is thinly traded, so stockholders may be unable to sell at or near asking prices or at all if you need to sell your shares to raise money or otherwise desire to liquidate your shares.

Currently, our common stock is quoted in the Pink Sheets OTCQB market and the trading volume the Company anticipates to develop may be limited by the fact that many major institutional investment funds, including mutual funds, as well as individual investors follow a policy of not investing in unlisted stocks and certain major brokerage firms restrict their brokers from recommending unlisted stocks because they are considered speculative, volatile and thinly traded. The Pink Sheets OTCQB market is an inter-dealer market much less regulated than the major exchanges, and our common stock is subject to abuses, volatility and shorting. Thus, there is currently no broadly followed and established trading market for our common stock. An established trading market may never develop or be maintained. Active trading markets generally result in lower price volatility and more efficient execution of buy and sell orders. Absence of an active trading market reduces the liquidity of the shares traded there. The trading volume of our common stock has been, and may continue to be, limited and sporadic. As a result of such trading activity, the quoted price for our common stock on the OTCQB may not necessarily be a reliable indicator of its fair market value. Further, if we cease to be quoted, holders would find it more difficult to dispose of our common stock or to obtain accurate quotations as to the market value of our common stock and as a result, the market value of our common stock likely would decline.

Share Price & Shareholder Rights - Risk 3

Our common stock is quoted on the Pink Sheets OTCQB market which may have an unfavorable impact on our stock price and liquidity.

Our common stock is quoted on the Pink Sheets OTCQB market, which is a significantly more limited trading market than the New York Stock Exchange or The NASDAQ Stock Market. The quotation of the Company's shares on the OTCQB may result in a less liquid market available for existing and potential stockholders to trade shares of our common stock, could depress the trading price of our common stock and could have a long-term adverse impact on our ability to raise capital in the future. When fewer shares of a security are being traded on the OTCQB, volatility of prices may increase and price movement may outpace the ability to deliver accurate quote information. Due to lower trading volumes in shares of our common stock, there may be a lower likelihood of one's orders for shares of our common stock being executed, and current prices may differ significantly from the price one was quoted at the time of one's order entry.

Share Price & Shareholder Rights - Risk 4

Our share price will fluctuate.

The market price and trading volume of our common shares are subject to fluctuation due to general market conditions, the risks discussed in this report and other matters, including the following: - operating results which vary from the expectations of securities analysts and investors;- investor interest in our property portfolio;- the reputation and performance of REITs;- the attractiveness of REITs as compared to other investment vehicles;- the results of our financial condition and operations;- the perception of our growth and earnings potential;- dividend payment rates;- increases in market interest rates, which may lead purchasers of our common shares to demand a higher yield; and - changes in financial markets and national economic and general market conditions.

Share Price & Shareholder Rights - Risk 5

Share ownership limits and our ability to issue additional equity securities may prevent takeovers beneficial to shareholders and limits our ability to make investments using our common stock.

For us to maintain our qualification as a REIT, we must have 100 or more shareholders during the year and not more than 50% in value of our outstanding shares may be owned, directly or indirectly, by five or fewer individuals. As defined for federal income tax purposes, the term "individuals" includes a number of specified entities. To minimize the possibility of us failing to qualify as a REIT under this test, our articles of incorporation include restrictions on transfers of our shares and ownership limits. The ownership limits, as well as our ability to issue other classes of equity securities, may delay, defer, or prevent a change in control. These provisions may also deter tender offers for our common shares which may be attractive to you or limit your opportunity to receive a premium for your shares which might otherwise exist if a third party were attempting to effect a change in control transaction. Our Certificate of Incorporation limits ownership of our common stock by a single holder or group of related holders to 9.2%. Until we can increase the market price of our stock and increase our asset base, the number of shares that can be issued to any single holder or group of related holders adversely affects our ability to use our common stock as the purchase price for new assets.

Share Price & Shareholder Rights - Risk 6

Our stockholders have limited control over changes in our policies and operations, which increases the uncertainty and risks of an investment in us.

Our board's broad discretion in setting policies and our stockholders' inability to exert control over those policies increases the uncertainty and risks of an investment in us.

Share Price & Shareholder Rights - Risk 7

Our organization documents permit our board of directors to issue stock or securities convertible or exchangeable into equity securities, with terms that maybe subordinate the rights of our common stockholders or discourage a third party from acquiring us in a manner that could result in a premium price to our stockholders.

Our board of directors may issue, classify and establish the preferences, conversion or other rights, voting powers, restrictions, and limitations as to distributions, qualifications and terms or conditions of redemption of any of our preferred stock. Our board of directors could authorize the issuance of preferred stock or securities convertible or exchangeable into equity securities, with terms and conditions that could have priority as to distributions and amounts payable upon liquidation over the rights of the holders of our common stock. Such preferred stock and convertible or exchangeable securities could also have the effect of delaying, deferring or preventing a change in control of us, including an extraordinary transaction (such as a merger, tender offer or sale of all or substantially all of our assets) that might provide a premium price to holders of our common stock.

Share Price & Shareholder Rights - Risk 8

A stockholder's interest in us may be diluted if we issue additional stock.

Our common stockholders do not have preemptive rights to any stock we issue in the future. Therefore, in the event that we (1) sell stock in the future, (2) sell securities that are convertible into stock, (3) issue stock in a private offering, (4) issue stock upon the exercise of options granted to our directors, executives, employees or others, or (5) issue stock to sellers of assets acquired by us in connection with an exchange of limited partnership interests in our operating partnership, holders of our common stock will experience dilution of their percentage ownership in us. Depending on the terms of such transactions, most notably the price per share, which may be less than the price paid per share in our public or private offerings, and the value of our properties, holders of our common stock might also experience a dilution in the book value per share of their stock.

Share Price & Shareholder Rights - Risk 9

We may change our targeted investments without stockholder consent.

We have no restrictions in our Certificate of Incorporation or other organization documents with respect to the types of investments we may make. We may make adjustments to our target portfolio based on real estate market conditions and investment opportunities, and we may change our targeted investments and investment guidelines at any time without the consent of our common stockholders, which could result in our making investments that are different from, and possibly riskier than, the investments that we have made in the past. A change in our targeted investments or investment guidelines may increase our exposure to real estate market risk, interest rate risk, default risk and concentration risk, all of which could adversely affect the value of our common stock and our ability to make distributions to our stockholders.

Share Price & Shareholder Rights - Risk 10

Potential conflicts of interest between related parties.

We outsource the management of the Mapletree property to Signature Community Management LLC and Signature Community Investment Group LLC, companies owned by our CEO. This is a related party relationship and while monitored by our Board of Directors could be subject to conflicts of interest.

Accounting & Financial Operations4 | 13.8%

Accounting & Financial Operations - Risk 1

The form, timing and/or amount of dividend distributions in future periods may vary and be impacted by economic and other considerations.

The form, timing and/or amount of dividend distributions will be declared at the discretion of our Board of Directors and will depend on actual cash from operations, our financial condition, capital requirements, the annual distribution requirements under the REIT provisions of the Code and other factors as the Board may consider relevant. The Board may modify the form, timing and/or amount of dividends from time to time.

Accounting & Financial Operations - Risk 2

We have limited assets so that an adverse event occurring with respect to one asset may not be offset by the performance of the remaining assets.

At the end of 2022 we owned two investments: Mapletree Industrial Center and Avalon Jubilee. We are vulnerable to significant losses as a percentage of our assets if there is an adverse effect to the Mapletree Property.

Accounting & Financial Operations - Risk 3

The Company is leveraged and may not be able to generate sufficient revenue to pay its debt service and operating expenses.

The Company's largest asset and its primary income producing asset, the Mapletree Industrial Center, acts as security for a mortgage loan. There is no guaranty that the Mapletree Property will continue to generate revenues sufficient to pay the debt service on the loan and, together with other income, to pay the Company's operating expenses. If the Company is unable to service the debt, or pay its operating expenses, then the Company will be required to sell the Mapletree Property and may cease to qualify as a REIT.

Accounting & Financial Operations - Risk 4

Historical losses have limited our ability to raise working capital for growth.

The Company has a history of operating losses and working capital deficiency, which could be detrimental to future growth. Our ability to grow is dependent upon our ability to acquire additional properties through raising capital either through debt and/or equity financing. We may encounter unforeseen expenses, difficulties, complications, delays, and other unknown factors that may adversely affect our business and the ability to finance growth. As a result, we may not be able to sustain profitability in subsequent periods. Our prior losses and potential future losses have had and could continue to have an adverse effect on our stockholders' equity and working capital.

Debt & Financing3 | 10.3%

Debt & Financing - Risk 1

Issuances of additional debt may adversely impact our financial condition.

Our capital requirements depend on numerous factors, including the rental and occupancy rates of our properties, dividend payment rates to our stockholders, capital expenditures, costs of operations and potential acquisitions. If our capital requirements vary materially from our plans, we may require additional financing earlier than anticipated. If we issue more debt, we could become more leveraged, resulting in increased risk of default on our obligations and an increase in our debt service requirements, both of which could adversely affect our financial condition and ability to access debt and equity capital markets in the future.

Debt & Financing - Risk 2

We may be unable to renew, repay or refinance our outstanding debt.

We are subject to the risk that indebtedness on our properties will not be renewed, repaid or refinanced when due or the terms of any renewal or refinancing will not be as favorable as the existing terms of such indebtedness. If we are unable to refinance our indebtedness on acceptable terms, or at all, we might be forced to dispose of one or more of the properties on disadvantageous terms, which might result in losses to us. Such losses could have a material adverse effect on us and our ability to make distributions to our shareholders and pay amounts due on our debt. Furthermore, if a property is mortgaged to secure payment of indebtedness and we are unable to meet mortgage payments, the mortgagee could foreclose on the property, appoint a receiver and exercise rights under an assignment of rents and leases, or pursue other remedies, all with a consequent loss of our revenues and asset value. Foreclosures could also create taxable income without accompanying cash proceeds, thereby hindering our ability to meet the REIT distribution requirements of the Code.

Debt & Financing - Risk 3

Insufficient cash flows could limit our ability to pay our operating expenses to make required payments for debt obligations or pay distributions to shareholders.

All of our income is derived from rental and other income from our Mapletree Property. As a result, our performance depends in large part on our ability to collect rent from tenants, which could be negatively affected by a number of factors, including the following: - delay in lease commencements;- decline in occupancy;- failure of tenants to make rental payments when due;- the attractiveness of our properties to tenants and potential tenants;- our ability to adequately manage and maintain our properties;- competition from other available commercial alternatives; and - changes in market rents. Cash flow could be insufficient to meet required payments of principal and interest with respect to debt financing. In order for us to continue to qualify as a REIT, we must meet a number of organizational and operational requirements, including a requirement to distribute annual dividends to our stockholders equal to a minimum of 90% of our REIT taxable income, computed without regard to the dividends paid deduction and our net capital gains. This requirement limits the cash available to meet required principal payments on our debt.

Corporate Activity and Growth4 | 13.8%

Corporate Activity and Growth - Risk 1

We may pursue business development and strategic transactions that could result in a change of strategy, dilution to our current stockholders or an acquisition at a per share value that is less than our stockholders may have paid for their investment in the Company.

Our board of directors is continually evaluating business development opportunities and other opportunities for strategic transactions with third parties. This may include the sale of additional stock, the sale of our assets or even the sale of the entire company. If any of these transactions occur there may be an adverse effect on our stockholders. For instance, depending on the terms of such transactions, most notably the price per share, which may be less than the price paid per share in our public or private offerings, and the value of our properties, holders of our common stock might experience a dilution in the book value per share of their stock.

Corporate Activity and Growth - Risk 2

Our acquisition strategy may not produce the cash flows expected.

We may acquire additional operating properties on a selective basis. Our acquisition activities are subject to a number of risks, including the following: - our percentage ownership in any new property may be small;- we may not be able to successfully integrate acquired properties into our existing operations;- our estimates of the costs, if any, of repositioning or redeveloping the acquired property may prove inaccurate;- the expected occupancy and rental rates may differ from the actual results; and - we may not be able to obtain adequate financing. A portion of any acquisitions we may make in the near future will have to be made through the issuance and/or sale of shares of our common stock and will likely result in our ownership together with other partners. We may not be able to identify suitable partners or properties on terms acceptable to us and may not achieve expected returns or other benefits.

Corporate Activity and Growth - Risk 3

Investments through joint ventures involve risks not present in investments in which we are the sole investor.

We have invested, and may continue to invest, as a joint venture partner in joint ventures. These investments involve risks, including the possibility the other joint venture partner may have business goals which are inconsistent with ours, possess the ability to take action or withhold consent contrary to our requests, or become insolvent and require us to assume and fulfill the joint venture's financial obligations. We and our joint venture partner may each have the right to initiate a buy-sell arrangement, which could cause us to sell our interest, or acquire our joint venture partner's interest, at a time when we otherwise would not have entered into such a transaction. Each joint venture agreement is individually negotiated, and our ability to operate, finance, and/or dispose of a community in our sole discretion may be limited to varying degrees depending on the terms of the joint venture agreement. Such investments may involve risks not otherwise present when acquiring real estate directly, including for example: - joint ventures may share certain approval rights over major decisions;- co-ventures, co-owner or partner may at any time have economic or business interests or goals which are or which may become inconsistent with our business interests or goals, including inconsistent goals relating to the sale of properties held in the joint venture or the timing of termination or liquidation of the joint venture;- the possibility that our co-ventures, co-owner or partner in an investment might become insolvent or bankrupt;- the possibility that we may incur liabilities as a result of an action taken by our co-venture, co-owner or partner;- a co-venture, co-owner or partner may be in a position to take action contrary to our instructions or requests or contrary to our policies or objectives, including our policy with respect to qualifying and maintaining our qualification as a REIT;- disputes between us and our co-ventures may result in litigation or arbitration that would increase our expenses and prevent its officers and directors from focusing their time and effort on our business and result in subjecting the properties owned by the applicable joint venture to additional risk; or - under certain joint venture arrangements, neither joint venture partner may have the power to control the venture, and an impasse could be reached which might have a negative influence on the joint venture.

Corporate Activity and Growth - Risk 4

Newly developed and acquired properties may not produce the cash flow that we expect, which could adversely affect our overall financial performance.

In deciding whether to acquire or develop a particular property, we make assumptions regarding the expected future performance of that property. If our estimated return on investment proves to be inaccurate, it may fail to perform as we expected. With certain properties, our business plan contemplates reposition or redeveloping that property with the goal of increasing its cash flow, value or both. Our estimate of the costs of repositioning or redeveloping an acquired property may prove to be inaccurate, which may result in our failure to meet our profitability goals. Additionally, we may acquire new properties not fully leased or developed and the cash flow from those properties may be insufficient to pay the operating expenses and debt service associated with that property until the property is more fully leased or developed. If one or more of these new properties do not perform as expected or we are unable to successfully integrate new properties into our operations, our financial performance and ability to make distributions may be adversely affected.

Production

Total Risks: 3/29 (10%)Below Sector Average

Employment / Personnel2 | 6.9%

Employment / Personnel - Risk 1

Competition and changing rental needs due to companies allowing employees to work remotely could limit our ability to lease our properties or increase or maintain rental income.

There are numerous alternatives which compete with our properties in attracting tenants. Some of these other properties may be newer and offer more modern amenities. This competitive environment could have a material adverse effect on our ability to lease our present properties as well as on the rents realized. In addition, companies allowing employees to work remotely could reduce demand and lease prices for rental space and reduce income derived from our properties.

Employment / Personnel - Risk 2

We depend on our key personnel.

Our success depends in part on our ability to attract and retain the services of executive officers and other personnel. There is substantial competition for qualified personnel in the real estate industry, and the loss of key personnel could have an adverse effect on us.

Costs1 | 3.4%

Costs - Risk 1

Losses from catastrophes may exceed our insurance coverage.

We carry comprehensive property and liability insurance on our properties, which we believe is of the type and amount customarily obtained on similar real property assets by similar types of owners. We intend to obtain similar coverage for properties we acquire in the future. However, some losses, generally of a catastrophic nature, such as losses from floods, hurricanes, or earthquakes, may be subject to coverage limitations. We exercise our discretion in determining amounts, coverage limits, and deductible provisions of insurance to maintain appropriate insurance on our investments at a reasonable cost and on suitable terms. If we suffer a catastrophic loss, our insurance coverage may not be sufficient to pay the full current market value or current replacement value of our lost investment, as well as the anticipated future revenues from the property. Inflation, changes in building codes and ordinances, environmental considerations, and other factors also may reduce the feasibility of using insurance proceeds to replace a property after it has been damaged or destroyed.

Legal & Regulatory

Total Risks: 2/29 (7%)Below Sector Average

Taxation & Government Incentives1 | 3.4%

Taxation & Government Incentives - Risk 1

Tax matters, including failure to qualify as a REIT, could have adverse consequences.

We may not continue to qualify as a REIT in the future. The Internal Revenue Service may challenge our qualification as a REIT for prior years and new legislation, regulations, administrative interpretations, or court decisions may change the tax laws or the application of the tax laws with respect to qualification as a REIT or the federal tax consequences of such qualification. For any taxable year that we fail to qualify as a REIT and do not qualify under statutory relief provisions: - we would be subject to federal income tax on our taxable income at regular corporate rates, including any applicable alternative minimum tax;- we would be disqualified from treatment as a REIT for the four taxable years following the year in which we failed to qualify, thereby reducing our net income, including any distributions to shareholders, as we would be required to pay significant income taxes for the year or years involved; and - our ability to expand our business and raise capital would be impaired, which may adversely affect the value of our common shares. We may face other tax liabilities in the future which may impact our cash flow. These potential tax liabilities may be calculated on our income or property values at either the corporate or individual property levels. Any additional tax expense incurred would decrease the cash available for cash distributions to our shareholders.

Environmental / Social1 | 3.4%

Environmental / Social - Risk 1

We may incur significant costs to comply with environmental laws and environmental contamination may impair our ability to lease and/ or sell real estate.

Our operations and properties are subject to various federal, state and local laws and regulations concerning the protection of the environment, including air and water quality, hazardous or toxic substances and health and safety. Under some environmental laws, a current or previous owner or operator of real estate may be required to investigate and clean up hazardous or toxic substances released at a property. The owner or operator may also be held liable to a governmental entity or to third parties for property damage or personal injuries and for investigation and clean-up costs incurred by those parties because of the contamination. These laws often impose liability without regard to whether the owner or operator knew of the release of the substances or caused the release. The presence of contamination or the failure to remediate contamination may also impair our ability to sell or lease real estate or to borrow using the real estate as collateral. Other laws and regulations govern indoor and outdoor air quality including those that can require the abatement or removal of asbestos-containing materials in the event of damage, demolition, renovation or remodeling and govern emissions of and exposure to asbestos fibers in the air. The maintenance and removal of lead paint and certain electrical equipment containing polychlorinated biphenyls (PCBs) are also regulated by federal and state laws. We are also subject to risks associated with human exposure to chemical or biological contaminants such as molds, pollens, viruses and bacteria which, above certain levels, can be alleged to be connected to allergic or other health effects and symptoms in susceptible individuals. We could incur fines for environmental compliance and be held liable for the costs of remedial action with respect to the foregoing regulated substances or related claims arising out of environmental contamination or human exposure to contamination at or from our properties. Each of our properties has been subject to varying degrees of environmental assessment. Our Mapletree Property has a controlled recognized environmental condition that was remediated by the Company during the years 2009-2012. This remediation plan was fully approved and audited after completion by the Massachusetts Department of Environmental Protection. The property currently has certain use restrictions and has to perform ongoing required monitoring that was part of the remediation plan. While there are currently no further actions required with regards to this environmental condition, the company could experience future risks related to this condition or other conditions that could develop at its properties.

Macro & Political

Total Risks: 2/29 (7%)Below Sector Average

Natural and Human Disruptions1 | 3.4%

Natural and Human Disruptions - Risk 1

Our business, financial condition, results of operations and cash flows may be adversely affected by the recent COVID-19 pandemic and the impact could be material to us.

In December 2019, the Novel Corona Virus, COVID-19 was reported to have emerged in Wuhan, China. In March 2020, the World Health Organization ("WHO") declared the COVID-19 outbreak a global pandemic. The long term extent of the pandemic on the Company's business, financial condition, liquidity, result of operations will depend on future developments, which are highly uncertain and cannot be predicted, including, among others, the duration and scope of the pandemic; actions that have been and continue to be taken by governmental entities, individuals and businesses in response to the pandemic; the impact on economic activity from the pandemic and actions taken in response thereto; the impact on capital availability and costs of capital; the impact on our employees; any other operational disruptions or difficulties we may face; and the effect on our customers and their ability to make rental payments. Many companies are implementing work from home polices that could negatively affect the ability to rent our properties. These polices could further impact the commercial real estate markets and decrease the leasing rates the Company can charge. Any of these events, individually or in aggregate, could have a material adverse impact on the Company's business, financial condition, results of operations and share price.

Capital Markets1 | 3.4%

Capital Markets - Risk 1

Volatility in capital and credit markets, or other unfavorable changes in economic conditions, could adversely impact us.

The capital and credit markets are subject to volatility and disruption. We may not be able to obtain new debt financing or refinance our existing debt on favorable terms or at all, which would adversely affect our liquidity, our ability to make distributions to stockholders and acquire and dispose of assets. Other weakened economic conditions, including job losses and high unemployment rates, could adversely affect rental rates and occupancy levels. Unfavorable changes in economic conditions may have a material adverse impact on our cash flows and operating results. Additional key economic risks which may adversely affect conditions in the markets in which we operate include the following: - local conditions, such as an oversupply of office space available to rent, or a reduction in demand for office space in the area;- declines in the financial condition of our tenants, which may make it more difficult for us to collect rents from some tenants;- declines in market rental rates;- regional economic downturns which may affect one or more of our geographical markets;- increased operating costs, if these costs cannot be passed through to tenants;- material changes in any significant tenant industry concentration;- the general reputation of real estate as an attractive investment in comparison to other equity securities;- changes in market valuations of our properties;- the attractiveness of our assets compared to other sectors of the real estate industry;- changes in tax law;- adverse market reaction to the amount of our outstanding debt at any time, the amount of our maturing debt and our ability to refinance such debt on favorable terms;- any failure to comply with existing debt covenants; and - the realization of any other risk factors described in this report.

Ability to Sell

Total Risks: 1/29 (3%)Below Sector Average

Sales & Marketing1 | 3.4%

Sales & Marketing - Risk 1

Difficulties of selling real estate could limit our flexibility.

We intend to continue to evaluate the potential disposition of assets which may no longer meet our investment objectives. When we decide to sell an asset, we may encounter difficulty in finding buyers in a timely manner as real estate investments generally cannot be disposed of quickly, especially when market conditions are poor. These factors may limit our ability to vary our portfolio promptly in response to changes in economic or other conditions and may also limit our ability to utilize sales proceeds as a source of liquidity, which would adversely affect our ability to make distributions to stockholders or repay debt.

See a full breakdown of risk according to category and subcategory. The list starts with the category with the most risk. Click on subcategories to read relevant extracts from the most recent report.

FAQ

What are “Risk Factors”?

Risk factors are any situations or occurrences that could make investing in a company risky.

The Securities and Exchange Commission (SEC) requires that publicly traded companies disclose their most significant risk factors. This is so that potential investors can consider any risks before they make an investment.

They also offer companies protection, as a company can use risk factors as liability protection. This could happen if a company underperforms and investors take legal action as a result.

It is worth noting that smaller companies, that is those with a public float of under $75 million on the last business day, do not have to include risk factors in their 10-K and 10-Q forms, although some may choose to do so.

How do companies disclose their risk factors?

Publicly traded companies initially disclose their risk factors to the SEC through their S-1 filings as part of the IPO process.

Additionally, companies must provide a complete list of risk factors in their Annual Reports (Form 10-K) or (Form 20-F) for “foreign private issuers”.

Quarterly Reports also include a section on risk factors (Form 10-Q) where companies are only required to update any changes since the previous report.

According to the SEC, risk factors should be reported concisely, logically and in “plain English” so investors can understand them.

How can I use TipRanks risk factors in my stock research?

Use the Risk Factors tab to get data about the risk factors of any company in which you are considering investing.

You can easily see the most significant risks a company is facing. Additionally, you can find out which risk factors a company has added, removed or adjusted since its previous disclosure. You can also see how a company’s risk factors compare to others in its sector.

Without reading company reports or participating in conference calls, you would most likely not have access to this sort of information, which is usually not included in press releases or other public announcements.

A simplified analysis of risk factors is unique to TipRanks.

What are all the risk factor categories?

TipRanks has identified 6 major categories of risk factors and a number of subcategories for each. You can see how these categories are broken down in the list below.

1. Financial & Corporate

Accounting & Financial Operations - risks related to accounting loss, value of intangible assets, financial statements, value of intangible assets, financial reporting, estimates, guidance, company profitability, dividends, fluctuating results.
Share Price & Shareholder Rights – risks related to things that impact share prices and the rights of shareholders, including analyst ratings, major shareholder activity, trade volatility, liquidity of shares, anti-takeover provisions, international listing, dual listing.
Debt & Financing – risks related to debt, funding, financing and interest rates, financial investments.
Corporate Activity and Growth – risks related to restructuring, M&As, joint ventures, execution of corporate strategy, strategic alliances.

2. Legal & Regulatory

Litigation and Legal Liabilities – risks related to litigation/ lawsuits against the company.
Regulation – risks related to compliance, GDPR, and new legislation.
Environmental / Social – risks related to environmental regulation and to data privacy.
Taxation & Government Incentives – risks related to taxation and changes in government incentives.

3. Production

Costs – risks related to costs of production including commodity prices, future contracts, inventory.
Supply Chain – risks related to the company’s suppliers.
Manufacturing – risks related to the company’s manufacturing process including product quality and product recalls.
Human Capital – risks related to recruitment, training and retention of key employees, employee relationships & unions labor disputes, pension, and post retirement benefits, medical, health and welfare benefits, employee misconduct, employee litigation.

4. Technology & Innovation

Innovation / R&D – risks related to innovation and new product development.
Technology – risks related to the company’s reliance on technology.
Cyber Security – risks related to securing the company’s digital assets and from cyber attacks.
Trade Secrets & Patents – risks related to the company’s ability to protect its intellectual property and to infringement claims against the company as well as piracy and unlicensed copying.

5. Ability to Sell

Demand – risks related to the demand of the company’s goods and services including seasonality, reliance on key customers.
Competition – risks related to the company’s competition including substitutes.
Sales & Marketing – risks related to sales, marketing, and distribution channels, pricing, and market penetration.
Brand & Reputation – risks related to the company’s brand and reputation.

6. Macro & Political

Economy & Political Environment – risks related to changes in economic and political conditions.
Natural and Human Disruptions – risks related to catastrophes, floods, storms, terror, earthquakes, coronavirus pandemic/COVID-19.
International Operations – risks related to the global nature of the company.
Capital Markets – risks related to exchange rates and trade, cryptocurrency.

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