Material factors that may adversely affect our business and operations are summarized below.
REAL ESTATE INVESTMENTS’ VALUE AND INCOME FLUCTUATE DUE TO VARIOUS FACTORS.
The value of real estate fluctuates depending on conditions in the general economy and the real estate business. These conditions may also adversely impact our revenues and cash flows.
The factors that affect the value of our real estate include, among other things:
· national, regional and local economic conditions;
· competition from other available space;
· local conditions such as an oversupply of space or a reduction in demand for real estate in the area;
· how well we manage our properties;
· changes in market rental rates;
· the timing and costs associated with property improvements and rentals;
· whether we are able to pass all or portions of any increases in operating costs through to tenants;
· changes in real estate taxes and other expenses;
· whether tenants and users such as customers and shoppers consider a property attractive;
· the financial condition of our tenants, including the extent of tenant bankruptcies or defaults;
· availability of financing on acceptable terms or at all;
· fluctuations in interest rates;
· our ability to obtain adequate insurance;
· changes in zoning laws and taxation;
· government regulation;
· consequences of any armed conflict involving, or terrorist attack against, the United States;
· potential liability under environmental or other laws or regulations;
· natural disasters;
· general competitive factors; and
· climate changes.
The rents we receive and the occupancy levels at our properties may decline as a result of adverse changes in any of these factors. If our rental revenues and/or occupancy levels decline, we generally would expect to have less cash available to pay our indebtedness and for distribution to our stockholders. In addition, some of our major expenses, including mortgage payments, real estate taxes and maintenance costs generally do not decline when the related rents decline.
Capital markets and economic conditions can materially affect our financial condition and results of operations and the value of our debt and equity securities.
There are many factors that can affect the value of our debt and equity securities, including the state of the capital markets and economy, which over the past few years have negatively affected substantially all businesses, including ours. Demand for office and retail space may continue to decline nationwide as it did in 2008 and 2009, due to bankruptcies, downsizing, layoffs and cost cutting. The cost and availability of credit may be adversely affected by illiquid credit markets and wider credit spreads may adversely affect our liquidity and financial condition, and the liquidity and financial condition of our tenants. Our inability or the inability of our tenants to timely refinance maturing liabilities and access the capital markets to meet liquidity needs may materially affect our financial condition and results of operations and the value of our debt and equity securities.
Real estate is a competitive business.
We operate in a highly competitive environment. All of our properties are located in the greater New York City metropolitan area. We compete with a large number of real estate property owners and developers, some of which may be willing to accept lower returns on their investments than we are. Principal factors of competition include rents charged, attractiveness of location, the quality of the property and breadth and quality of services provided. Our success depends upon, among other factors, trends affecting national and local economies, the financial condition and operating results of current and prospective tenants and customers, availability and cost of capital, construction and renovation costs, taxes, governmental regulations, legislation and population trends.
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