| LIBERTY PROPERTY TRUST ITEM 1A RISK FACTORS The Company’s results from operations and the ability to make distributions to our shareholders and pay debt service on our indebtedness may be affected by the risk factors set forth below |
| (The Company refers to itself as “we”, “us” or “our” in the following risk factors |
| ) This section contains some forward looking statements |
| You should refer to the explanation of the qualifications and limitations on forward looking statements on page 3 |
| Risks Related to Our Business Unfavorable events affecting our existing tenants, or negative market conditions that may affect our existing tenants, could have an adverse impact on our ability to attract new tenants, relet space, collect rent or renew leases, and thus could have a negative effect on our cash flow from operations and inhibit growth |
| Our cash flow from operations depends on our ability to lease space to tenants on economically favorable terms |
| Therefore, we could be adversely affected by various facts and events over which we have limited control, such as: • lack of demand for space in the areas where our Properties are located • inability to retain existing tenants and attract new tenants • oversupply of or reduced demand for space and changes in market rental rates • defaults by our tenants or their failure to pay rent on a timely basis • the need to periodically renovate and repair our space • physical damage to our Properties • economic or physical decline of the areas where our Properties are located • potential risk of functional obsolescence of our Properties over time At any time, any of our tenants may experience a downturn in its business that may weaken its financial condition |
| As a result, a tenant may delay lease commencement, fail to make rental payments when due, decline to extend a lease upon its expiration, become insolvent or declare bankruptcy |
| Any tenant bankruptcy or insolvency, leasing delay or failure to make rental payments when due could result in the termination of the tenant’s lease and material losses to our Company |
| If our tenants do not renew their leases as they expire, we may not be able to rent the space |
| Furthermore, leases that are renewed, and some new leases for space that is relet, may have terms that are less economically favorable to us than current lease terms, or may require us to incur significant costs, such as for renovations, tenant improvements or lease transaction costs |
| Any of these events could adversely affect our cash flow from operations and our ability to make expected distributions to our shareholders and service our indebtedness |
| A significant portion of our costs, such as real estate taxes, insurance costs, and debt service payments, generally are not reduced when circumstances cause a decrease in cash flow from our Properties |
| We may not be able to compete successfully with other entities that operate in our industry |
| We experience a great deal of competition in attracting tenants for our Properties and in locating land to develop and properties to acquire |
| In our effort to lease our Properties, we compete for tenants with a broad spectrum of other landlords in each of our markets |
| These competitors include, among others, publicly-held REITs, privately-held entities, individual property owners and tenants who wish to sublease their space |
| Some of these competitors may be able to offer prospective tenants more attractive financial or other terms than we are able to offer |
| We may experience increased operating costs, which could adversely affect our operations |
| Our Properties are subject to increases in operating expenses such as insurance, cleaning, electricity, heating, ventilation and air conditioning, general and administrative costs and other costs associated with security, landscaping, repairs and maintenance |
| While our current tenants generally are obligated to pay a significant portion of these costs, there is no assurance that these tenants will make such payments or agree to pay these costs upon renewal or that new tenants will agree to pay these costs |
| If operating expenses increase in our markets, we may not be able to increase rents or reimbursements in all of these markets so as to meet increased expenses without at the same time decreasing occupancy rates |
| If this occurs, our ability to make distributions to shareholders and service our indebtedness could be adversely affected |
| 8 _________________________________________________________________ [50]Table of Contents Our ability to achieve growth in operating income depends in part on our ability to develop properties which may suffer under certain circumstances |
| We intend to continue to develop properties where warranted by market conditions |
| We have a number of ongoing development projects and a number of land projects being readied for development |
| These projects include the Comcast Center, a 1dtta25 million square foot office tower in Philadelphia’s central business district, which is discussed below |
| Additionally, our general construction and development activities include the risks that: • construction and leasing of a property may not be completed on schedule, which could result in increased expenses and construction costs, and would result in reduced profitability for that property • construction costs may exceed our original estimates due to increases in interest rates and increased materials, labor or other costs, possibly making the property unprofitable because we may not be able to increase rents to compensate for the increase in construction costs • some developments may fail to achieve expectations, possibly making them unprofitable • we may be unable to obtain, or may face delays in obtaining, required zoning, land-use, building, occupancy, and other governmental permits and authorizations, which could result in increased costs and could require us to abandon our activities entirely with respect to a project • we may abandon development opportunities after we begin to explore them and as a result, we may fail to recover costs already incurred |
| If we alter or discontinue our development efforts, past and future costs of the investment may need to be expensed rather than capitalized and we may determine the investment is impaired, resulting in a loss • we may expend funds on and devote management’s time to projects that we do not complete • occupancy rates and rents at newly completed properties may fluctuate depending on a number of factors, including market and economic conditions, and may result in lower than projected rental rates with the result that our investment is not profitable Our Comcast Center project is subject to a number of risks related to its development, construction, financing and leasing |
| We commenced construction of a 1dtta25 million square foot office tower in Philadelphia in January 2005 |
| The office tower, known as the Comcast Center, is expected to be shell complete in late 2007 |
| Comcast Corporation has signed a 15^1/2 year lease for 874cmam000 square feet, or 69dtta7prca, of the building’s leasable space |
| Including the lease with Comcast Corporation and leases with other tenants, there are signed leases for 72dtta8prca of the Comcast Center’s leasable space |
| The total project cost to be incurred by us is expected to be dlra459dtta6 million |
| The project is subject to substantial leasing risk as to the portion of the building not leased to Comcast |
| The Philadelphia office market generally contains substantial vacancy and has experienced a highly competitive leasing environment |
| Many of the premier office properties in the central business district contain significant vacancy |
| These conditions have had an adverse impact on market rental rates |
| Nevertheless, we believe that because of the unique features of this state-of-the-art commercial office building, sufficient demand exists from lease expirations of large commercial tenants in Philadelphia’s central business district during the 2006 to 2009 time frame and from prospective new tenants to the market to lease the remainder of the building at suitable rental rates |
| Development of a project such as Comcast Center is subject to the general development and construction risks noted above |
| Those risks are magnified by the size of the project, and include construction risks associated with undertaking a construction project with the engineering and design complexities of an office tower |
| If we fail to achieve the completion deadlines set forth in the lease with Comcast, we will be responsible for damages incurred by Comcast |
| The project also bears the investment risk that the market value of this 1dtta25 million square foot office tower may not support the construction costs of dlra360 per square foot |
| Sales that occurred in the past few years of a few Philadelphia office towers, which were constructed on average 15 years ago, were estimated to be for an average price of dlra183 per square foot |
| 9 _________________________________________________________________ [51]Table of Contents We face risks associated with property acquisitions |
| Our acquisition activities and their success are subject to the following risks: • when we are able to locate a desirable property, competition from other real estate investors may significantly increase the purchase price • acquired properties may fail to perform as expected • the actual costs of repositioning or redeveloping acquired properties may be higher than our estimates • acquired properties may be located in new markets where we face risks associated with an incomplete knowledge or understanding of the local market, a limited number of established business relationships in the area and a relative unfamiliarity with local governmental and permitting procedures • we may be unable to quickly and efficiently integrate new acquisitions, particularly acquisitions of portfolios of properties, into our existing operations, and as a result, our results of operations and financial condition could be adversely affected We may acquire properties subject to liabilities and without any recourse, or with only limited recourse, with respect to unknown liabilities |
| As a result, if a liability were asserted against us based upon ownership of those properties, we might have to pay substantial sums to settle it, which could adversely affect our cash flow |
| Many of our Properties are concentrated in our primary markets, and we therefore may suffer economic harm as a result of adverse conditions in those markets |
| Our Properties are located principally in specific geographic areas in the Mid-Atlantic, Southeastern and Midwestern United States and the United Kingdom |
| Due to the concentration of our Properties in these areas, performance is dependent on economic conditions in these areas |
| These areas have experienced periods of economic decline |
| We may not be able to access financial markets to obtain capital on a timely basis, or on acceptable terms |
| In order to qualify as a REIT for federal income tax purposes, we are required to distribute at least 90prca of our taxable income to shareholders each year, and thus cannot reinvest this portion of income in the business |
| As a result, retained cash flows are somewhat limited and we rely on proceeds from Property dispositions and third party capital sources for a portion of our capital needs, including capital for acquisitions and development |
| The public debt and equity markets are among the sources we rely on |
| There is no guarantee that we will be able to access these markets, or any other source of capital, on attractive terms or at all |
| The ability to access the public debt and equity markets depends on a variety of factors, including: • general economic conditions affecting these markets • our own financial structure and performance • the market’s opinion of REITs in general • the market’s opinion of REITs that own properties like ours We may suffer adverse effects as a result of the terms of and covenants relating to our indebtedness |
| Required payments on our indebtedness generally are not reduced if the economic performance of the portfolio declines |
| If the economic performance declines, net income, cash flow from operations and cash available for distribution to shareholders will be reduced |
| If payments on debt cannot be made, we could sustain a loss, or in the case of mortgages, suffer foreclosures by mortgagees or suffer judgments |
| Further, some obligations, including our dlra600 million credit facility and unsecured notes, as well as, at December 31, 2005, dlra55dtta5 million in outstanding mortgage indebtedness, contain cross-default and/or cross-acceleration provisions, which means that a default on one obligation may constitute a default on other obligations |
| We anticipate that only a small portion of the principal of our debt will be repaid prior to maturity |
| Therefore, we generally need to refinance our outstanding debt as it matures |
| There is a risk that we may not be able to refinance existing debt or that the terms of any refinancing will not be as favorable as the terms of our existing debt |
| If principal payments due at maturity cannot be refinanced, extended or repaid with proceeds from other sources, such as the proceeds of sales of assets or new equity securities, our cash flow will not be sufficient to repay all maturing debt in years when significant “balloon” payments come due |
| Our credit facility and unsecured debt securities contain customary restrictions, requirements and other limitations on our ability to incur indebtedness, including total debt to asset ratios, secured debt to total asset ratios, debt service coverage ratios and minimum ratios of unencumbered assets to unsecured debt which we must maintain |
| Our continued ability to borrow under our dlra600 million credit facility is subject to compliance with our financial and other covenants |
| In addition, our failure to comply with such covenants could cause a default under this credit 10 _________________________________________________________________ [52]Table of Contents facility, and we may then be required to repay such debt with capital from other sources |
| Under those circumstances, other sources of capital may not be available to us, or be available only on unattractive terms |
| Our degree of leverage could limit our ability to obtain additional financing or affect the market price of our common stock |
| Our degree of leverage could affect our ability to obtain additional financing for working capital, capital expenditures, acquisitions, development or other general corporate purposes |
| Our senior unsecured debt is currently rated investment grade by the three major rating agencies |
| However, there can be no assurance we will be able to maintain this rating, and in the event our senior debt is downgraded from its current rating, we would likely incur higher borrowing costs |
| Our degree of leverage could also make us more vulnerable to a downturn in business or the economy generally |
| Further issuances of equity securities may be dilutive to current shareholders |
| The interests of our existing shareholders could be diluted if we issue additional equity securities to finance future developments, acquisitions, or repay indebtedness |
| Our Board of Trustees may authorize the issuance of additional securities without shareholder approval |
| Our ability to execute our business strategy depends on our access to an appropriate blend of debt financing, including unsecured lines of credit and other forms of secured and unsecured debt, and equity financing, including issuances of common and preferred equity |
| An increase in interest rates would increase our interest costs on variable rate debt and could adversely impact our ability to refinance existing debt |
| We currently have, and may incur more, indebtedness that bears interest at variable rates |
| Accordingly, if interest rates increase, so will our interest costs, which would adversely affect our cash flow and our ability to pay principal and interest on our debt and our ability to make distributions to our shareholders |
| Further, rising interest rates could limit our ability to refinance existing debt when it matures |
| Property ownership through joint ventures will limit our ability to act exclusively in our interests |
| From time to time we invest in joint ventures in which we do not hold a controlling interest |
| These investments involve risks that do not exist with properties in which we own a controlling interest, including the possibility that our partners may, at any time, have business, economic or other objectives that are inconsistent with our objectives |
| In instances where we lack a controlling interest, our partners may be in a position to require action that is contrary to our objectives |
| While we seek to negotiate the terms of these joint ventures in a way that secures our ability to act in our best interests, there can be no assurance that those terms will be sufficient to fully protect us against actions contrary to our interests |
| If the objectives of our co-venturers are inconsistent with ours, we may not in every case be able to act exclusively in our interests |
| Risks Related to the Real Estate Industry Real estate investments are illiquid, and we may not be able to sell our Properties if and when we determine it is appropriate to do so |
| Real estate generally cannot be sold quickly |
| We may not be able to dispose of Properties promptly in response to economic or other conditions |
| In addition, provisions of the Internal Revenue Code (the “Code”) limit a REIT’s ability to sell properties in some situations when it may be economically advantageous to do so, thereby adversely affecting returns to shareholders and adversely impacting our ability to meet our obligations to the holders of other securities |
| We may experience economic harm if any damage to our Properties is not covered by insurance |
| We believe all of our Properties are adequately insured |
| However, we cannot guarantee that the limits of our current policies will be sufficient in the event of a catastrophe to our Properties |
| Our existing property and liability policies expire during 2006 |
| We cannot guarantee that we will be able to renew or duplicate our current coverages in adequate amounts or at reasonable prices |
| We may suffer losses that are not covered under our comprehensive liability, fire, extended coverage and rental loss insurance policies |
| For example, we may not be insured for losses resulting from acts of war, certain acts of terrorism, or from environmental liabilities |
| If an uninsured loss or a loss in excess of insured limits should occur, we would nevertheless remain liable for the loss which could adversely affect cash flow from operations |
| Potential liability for environmental contamination could result in substantial costs |
| Under federal, state and local environmental laws, ordinances and regulations, we may be required to investigate and clean up the effects of releases of hazardous or toxic substances or petroleum products at our Properties simply because of our current or past ownership or operation of the real estate |
| If unidentified environmental problems arise, 11 _________________________________________________________________ [53]Table of Contents we may have to make substantial payments which could adversely affect our cash flow and our ability to make distributions to our shareholders because: • as owner or operator, we may have to pay for property damage and for investigation and clean-up costs incurred in connection with the contamination • the law typically imposes clean-up responsibility and liability regardless of whether the owner or operator knew of or caused the contamination • even if more than one person may be responsible for the contamination, each person who shares legal liability under the environmental laws may be held responsible for all of the clean-up costs • governmental entities and third parties may sue the owner or operator of a contaminated site for damages and costs These costs could be substantial |
| The presence of hazardous or toxic substances or petroleum products or the failure to properly remediate contamination may materially and adversely affect our ability to borrow against, sell or rent an affected property |
| In addition, applicable environmental laws create liens on contaminated sites in favor of the government for damages and costs it incurs in connection with a contamination |
| Changes in laws increasing the potential liability for environmental conditions existing at our Properties may result in significant unanticipated expenditures |
| It is our policy to retain independent environmental consultants to conduct Phase I environmental site assessments and asbestos surveys with respect to our acquisition of properties |
| These assessments generally include a visual inspection of the properties and the surrounding areas, an examination of current and historical uses of the properties and the surrounding areas and a review of relevant state, federal and historical documents, but do not involve invasive techniques such as soil and ground water sampling |
| Where appropriate, on a property-by-property basis, our practice is to have these consultants conduct additional testing, including sampling for asbestos, for lead in drinking water, for soil contamination where underground storage tanks are or were located or where other past site usages create a potential environmental problem, and for contamination in groundwater |
| Even though these environmental assessments are conducted, there is still the risk that: • the environmental assessments and updates will not identify all potential environmental liabilities • a prior owner created a material environmental condition that is not known to us or the independent consultants preparing the assessments • new environmental liabilities have developed since the environmental assessments were conducted • future uses or conditions such as changes in applicable environmental laws and regulations could result in environmental liability for us While we test indoor air quality on a regular basis and have an ongoing maintenance program in place to address this aspect of property operations, inquiries about indoor air quality may necessitate special investigation and, depending on the results, remediation |
| Indoor air quality issues can stem from inadequate ventilation, chemical contaminants from indoor or outdoor sources, pollen, viruses and bacteria |
| Indoor exposure to chemical or biological contaminants above certain levels can be alleged to be connected to allergic reactions or other health effects and symptoms in susceptible individuals |
| If these conditions were to occur at one of our Properties, we may need to undertake a targeted remediation program, including without limitation, steps to increase indoor ventilation rates and eliminate sources of contaminants |
| Such remediation programs could be costly, necessitate the temporary relocation of some or all of the property’s tenants or require rehabilitation of the affected property |
| 12 _________________________________________________________________ [54]Table of Contents Our Properties may contain or develop harmful mold, which could lead to liability for adverse health effects and costs of remediating the problem |
| When excessive moisture accumulates in buildings or on building materials, mold growth may occur, particularly if the moisture problem remains undiscovered or is not addressed over a period of time |
| Some molds may produce airborne toxins or irritants |
| Concern about indoor exposure to mold has been increasing as exposure to mold may cause a variety of adverse health effects and symptoms, including allergic or other reactions |
| As a result, the presence of significant mold at any of our Properties could require us to undertake a costly remediation program to contain or remove the mold from the affected property |
| In addition, the presence of significant mold could expose us to liability from our tenants, employees of our tenants and others if property damage or health concerns arise |
| Compliance with the Americans with Disabilities Act and fire, safety and other regulations may require us to make expenditures that adversely impact our operating results |
| All of our Properties are required to comply with the Americans with Disabilities Act (“ADA”) |
| The ADA generally requires that buildings be made accessible to people with disabilities |
| Compliance with the ADA requirements could require removal of access barriers, and non-compliance could result in imposition of fines by the United States government or an award of damages to private litigants, or both |
| Expenditures related to complying with the provisions of the ADA could adversely affect our results of operations and financial condition and our ability to make distributions to shareholders |
| In addition, we are required to operate our Properties in compliance with fire and safety regulations, building codes and other land use regulations, as they may be adopted by governmental agencies and bodies and become applicable to our Properties |
| We may be required to make substantial capital expenditures to comply with those requirements and these expenditures could have a material adverse effect on our operating results and financial condition, as well as our ability to make distributions to shareholders |
| Terrorist attacks and other acts of violence or war may adversely impact our operating results and may affect markets on which our securities are traded |
| Terrorist attacks against our Properties, or against the United States or United States interests generally, may negatively affect our operations and your investment in our securities |
| Attacks or armed conflicts could have a direct adverse impact on our Properties or operations through damage, destruction, loss or increased security costs |
| Any terrorism insurance that we obtain may be insufficient to cover the loss for damages to our Properties as a result of terrorist attacks |
| Furthermore, any terrorist attacks or armed conflicts could result in increased volatility in or damage to the United States and worldwide financial markets and economy |
| Adverse economic conditions could affect the ability of our tenants to pay rent, which could have an adverse impact on our operating results |
| Risks Related to Our Organization and Structure We have elected REIT status under the federal tax laws, and could suffer adverse consequences if we fail to qualify as a REIT We have elected REIT status under federal tax laws and have taken the steps known to us to perfect that status, but we cannot be certain that we qualify, or that we will remain qualified |
| Qualification as a REIT involves the application of highly technical and complex provisions of the Code, as to which there are only limited judicial or administrative interpretations |
| The complexity of these provisions and of the related income tax regulations is greater in the case of a REIT that holds its assets in partnership form, as we do |
| Moreover, no assurance can be given that new tax laws will not significantly affect our qualification as a REIT or the federal income tax consequences of such qualification |
| New laws could be applied retroactively, which means that past operations could be found to be in violation, which would have a negative effect on the business |
| If we fail to qualify as a REIT in any taxable year, the distributions to shareholders would not be deductible when computing taxable income |
| If this happened, we would be subject to federal income tax on our taxable income at regular corporate rates |
| Also, we could be prevented from qualifying as a REIT for the four years following the year in which we were disqualified |
| Further, if we requalified as a REIT after failing to qualify, we might have to pay the full corporate-level tax on any unrealized gain in our assets during the period we were not qualified as a REIT We would then have to distribute to our shareholders the earnings we accumulated while we were not qualified as a REIT These additional taxes would reduce our funds available for distribution to our shareholders |
| In addition, while we were disqualified as a REIT, we would not be required by the Code to make distributions to our shareholders |
| A failure by the Company to qualify as a REIT and the resulting requirement to pay taxes and interest (and perhaps penalties) would cause us to default under various agreements to which we are a party, including under our credit facility, and would have a material adverse effect on our business, prospects, results of operations, earnings, financial condition and our ability to make distributions to shareholders |
| 13 _________________________________________________________________ [55]Table of Contents Future economic, market, legal, tax or other considerations may lend our Board of Trustees to authorize the revocation of our election to qualify as a REIT A revocation of our REIT status would require the consent of the holders of a majority of the voting interests of all of our outstanding Common Shares |
| Risks associated with potential borrowings necessary to make distributions to qualify as a REIT We intend to make distributions to shareholders to comply with the distribution provisions of the Code necessary to maintain qualification as a REIT and to avoid income taxes and the non-deductible excise tax |
| Under certain circumstances, we may be required to borrow funds to meet the distribution requirements necessary to achieve the tax benefits associated with qualifying as a REIT In such circumstances, we might need to borrow funds to avoid adverse tax consequences, even if our management believes that the prevailing market conditions are not generally favorable for such borrowings or that such borrowings would not be advisable in the absence of such tax considerations |
| Certain officers of the Trust may not have the same interests as shareholders as to certain tax laws |
| Certain officers of the Trust own Common Units |
| These units may be exchanged for our Common Shares |
| The officers who own those units and have not yet exchanged them for our Common Shares may suffer different and more adverse tax consequences than holders of our Common Shares suffer in certain situations: • when certain of our Properties are sold • when debt on those Properties is refinanced • if we are involved in a tender offer or merger Because these officers own units and face different consequences than shareholders do, the Trust and those officers may have different objectives as to these transactions than shareholders do |
| Certain aspects of our organization could have the effect of restricting or preventing a change of control of our Company, which could have an adverse effect on the price of our shares |
| Our charter contains an ownership limit on shares |
| To qualify as a REIT, five or fewer individuals cannot own, directly or indirectly, more than 50prca in value of the outstanding shares of beneficial interest |
| To this end, our Declaration of Trust, among other things, generally prohibits any holder of the Trust’s shares from owning more than 5prca of the Trust’s outstanding shares of beneficial interest, unless that holder gets the consent from the Board of Trustees |
| This limitation could prevent the acquisition of control of the Company by a third party without the consent from the Board of Trustees |
| We have a staggered board and certain restrictive nominating procedures |
| The Board of Trustees has three classes of trustees |
| The term of office of one class expires each year |
| The terms of the Class III, Class I, and Class II trustees expire in 2006, 2007, and 2008, respectively |
| Any nominee for trustee must be selected under the nominating provisions contained in our Declaration of Trust and By-Laws |
| The staggered terms for trustees and the nominating procedures may affect shareholders’ ability to take control of the Company, even if a change in control were in the shareholders’ interest |
| We can issue preferred shares |
| Our Declaration of Trust authorizes the Board of Trustees to establish the preferences and rights of any shares issued |
| The issuance of preferred shares could have the effect of delaying, making more difficult or preventing a change of control of the Company, even if a change in control were in the shareholder’s interest |
| We have a poison pill |
| Under the shareholder rights plan, rights are issued along with each of the Trust’s Common Shares |
| Holders of these rights can purchase, under certain conditions, a portion of a preferred share of beneficial interest, or receive Common Shares, or common shares of an entity acquiring us, or other consideration, having a value equal to twice the exercise price of the right |
| The exercise price of the right is dlra200 |
| This arrangement is often called a “poison pill |
| ” Our poison pill could have the effect of delaying or preventing a change of control of the Company, even if a change in control were in the shareholders’ interest |
| There are limitations on acquisition of and changes in control pursuant to, and fiduciary protections of The Board under Maryland law |
| The Maryland General Corporation Law (“MGCL”) contains provisions which are applicable to the Trust as if the Trust were a corporation |
| Among these provisions is a section, referred to as the “control share acquisition statute,” which eliminates the voting rights of shares acquired in quantities so as to constitute “control shares,” as defined under the MGCL The MGCL also contains provisions applicable to us that are referred to as the “business combination statute,” which would generally limit business combinations between the Company and any 10prca owners of the Trust’s shares or any affiliate thereof |
| Further, Maryland law provides broad discretion to the Board with respect to its fiduciary duties in considering a change in control of our Company, including that the Board 14 _________________________________________________________________ [56]Table of Contents is subject to no greater level of scrutiny in considering a change in control transaction than with respect to any other act by the Board |
| Finally, the “unsolicited takeovers” provisions of the MGCL permit the Board, without shareholder approval and regardless of what is currently provided in our Declaration of Trust or By-Laws, to implement takeover defenses that our Company does not yet have, including: permitting only the Board to fix the size of the Board and permitting only the Board to fill a vacancy on the Board |
| All of these provisions may have the effect of inhibiting a third party from making an acquisition proposal for our Company or of delaying, deferring or preventing a change in control of the Company under circumstances that otherwise could provide the holders of Common Shares with the opportunity to realize a premium over the then current market price |
| Various factors out of our control could hurt the market value of our publicly traded securities |
| General market conditions could worsen |
| The value of our publicly traded securities depends on various market conditions, which may change from time to time |
| In addition to general economic and market conditions and our particular financial condition and performance, the value of our publicly traded securities could be affected by, among other things, the extent of institutional investor interest in us and the market’s opinion of REITs in general and, in particular, REITs that own and operate properties similar to ours |
| The market value of the equity securities of a REIT may be based primarily upon the market’s perception of the REIT’s growth potential and its current and future cash distributions, and may be secondarily based upon the real estate market value of the underlying assets |
| The failure to meet the market’s expectations with regard to future earnings and cash distributions likely would adversely affect the market price of publicly traded securities |
| Rising market interest rates could make an investment in publicly traded securities less attractive |
| If market interest rates increase, purchasers of publicly traded securities may demand a higher annual yield on the price they pay for their securities |
| This could adversely affect the market price of publicly traded securities |
| Transactions by the Trust or the Operating Partnership could adversely affect debt holders |
| Except with respect to several covenants limiting the incurrence of indebtedness and a covenant requiring the Operating Partnership to maintain a certain unencumbered total asset value, our indentures do not contain any additional provisions that would protect holders of the Operating Partnership’s debt securities in the event of (i) a highly leveraged transaction involving the Operating Partnership, (ii) a change of control, or (iii) certain reorganizations, restructurings, mergers or similar transactions involving the Operating Partnership or the Trust |