Risks

Real Estate Risks

Property vacancy rates may change.

There can be no assurance that cash flow or profits will be generated by properties.

Environmental liabilities are possible and can be costly.

Changes in national, regional or local economic conditions, which could negatively impact the ability to lease vacancies on favorable terms and a tenants ability to pay rent.

Changes in local market conditions or characteristics, including new construction of office and mixed-use facilities that compete with a property.

Changes in interest rates in the availability, cost and terms of borrowings, which may make the sale or refinancing of a property difficult.

Changes in federal, state or local regulations, and controls affecting rents, prices of goods, fuel and energy consumption, environmental restrictions, real estate taxes, zoning and other factors affecting real property.

Continued validity and enforceability of leases.

The financial condition and profitability of tenants.

The ongoing need for capital improvements.

Changes in operating costs such as utilities.

Acts of nature, such as earthquakes, tornadoes and floods.

Insurance may not cover acts of terrorism.

TIC Risks

Tenants in Common will own undivided interest in property and none will have the rights to exclusive ownership of property.

Bankruptcy of a Tenant in Common may adversely affect the other Tenants in Common.

A default by a Tenant in Common may adversely affect the other Tenants in Common.

Loans on Tenant in Common properties restrict transfers of interest.

Loans on Tenant in Common properties may have limited prepayment rights.

Tenant in Common properties may be significantly leveraged.

Tenant in Common rely on a property manager to manager the property.

Tenant in Common owners may be subject to capital calls.

Tenant in Common purchases may include substantial fees and commissions.

Tenant in Common purchases may not be suitable for all investors.

Tenant in Common offering price may be arbitrarily established.

1031 Risks

Classification of Tenant in Common property for purposes of Code Section 1031.

Potential significant federal income tax costs if interests are deemed to be interests in a partnership.

Possible adverse tax treatment for closing costs, financing expenses and reserves.

Notes

¹ Anyone contemplating a 1031 Exchange should seek the advice of his or her tax, legal and/or other advisors in order to ensure compliance with the various rules and to be certain that an Exchange is in their best interests.

² There may be alternatives to a 1031 Exchange that could be beneficial to an investor from a diversification standpoint. These alternatives should be discussed with a qualified tax advisor.

³ An exchanger should consult a tax advisor for any tax related issues related to the sale of real property.