Real Estate Operations Generally.
Investments in real estate generally are subject to various risks including: adverse changes in
economic conditions; adverse local market conditions (such as an oversupply of space or a reduction in
demand for space); zoning laws and other governmental rules; environmental claims; lack of marketability;
and other factors beyond the control of the Manager.
Property-Related Regulatory Risks.
An investment in a Property is subject to various federal, state, and local laws and regulations,
including building codes, regulations pertaining to fire safety, and handicapped access and other regulations
which may be enacted from time to time. The Company’s performance may be adversely affected by
significant costs required to comply with any future changes in such regulations.
Competition from Other Properties.
The Property will compete with comparable commercial office properties. Competition in the
identified target markets areas is significant and likely to increase during the anticipated investment term,
and may affect the Property’s vacancy levels, rental rates and operating expenses. Moreover, if
development of properties similar to the Property by other operators were to increase, competition with the
Property could intensify. Competition in the local market could decrease the Company’s ability to rent
office space or increase rents, cause an increase in operating expenses, make refinancing the bank loan
more difficult or impossible, make a sale of the Property more difficult or less profitable, or otherwise make
it difficult or impossible to operate the Property profitably.
Risks of Distributions in Availability of Commercial Office Space at the Property.
The Company’s business will be dependent on the availability of commercial office space at the
Property. Any disruptions in the availability of office space at the Property, including, without limitation,
as a result of adverse weather conditions, floods, earthquakes, other natural disasters, strikes, wars,
terrorism, human error or malfeasance or other reasons, could have a material adverse effect on Property
business, results of operations or financial condition.
The Property will be leveraged and subject to substantial mortgage indebtedness. As a result of
such leveraged position, an increase in the value of the investments could result in substantial benefits to
the Company, upon resale of the investments. Conversely, a decrease in the value of the Property could
result in the Company being unable to sell the Property for a price sufficient to return to the Members their
investment in the Company.
Access to Necessary Debt Funding.
Debt financing will be needed in addition to equity in this project. There is risk to not being able to
obtain the necessary bank capital or receiving terms that are not favorable for the project. Risks include but
are not limited to the interest rate, loan-to-cost requirements, guarantee requirements of Kurt Wallenborn
and potentially other guarantors, the amortization schedule, and the term.
**This is not an exhaustive list of risks. Please read the Form C for additional important risks and disclosures.**