Some of the risks related to investing in commercial real estate include, but are not limited to: market risks such as local property supply and demand conditions; tenants’ inability to pay rent; tenant turnover; inflation and other increases in operating costs; adverse changes in laws and regulations; relative illiquidity of real estate investments; changing market demographics; acts of God such as earthquakes, floods or other uninsured losses; interest rate fluctuations; and availability of financing.
An investment in Inland Residential Properties Trust, Inc.’s (Inland Residential Trust) shares involves significant risks. If Inland Residential Trust is unable to effectively manage these risks, it may not meet its investment objectives and investors may lose some or all of their investment. Please consult the “Risk Factors” and “Conflicts of Interest” sections of the prospectus for a more detailed discussion. Material risks of an investment in Inland Residential Trust’s common stock include, but are not limited to, the following:
- No public market currently exists, and one may never exist, for our shares. Our board does not have any current plans to list our shares or pursue any other liquidity event, and we cannot guarantee that a liquidity event will occur.
- The offering prices are not indicative of the prices at which investors may be able to sell shares, and are not based on the book value or net asset value of our current or expected investments or our current or expected cash flow.
- We cannot guarantee that we will continue to pay distributions.
- We have paid and may continue to pay distributions from sources other than cash flow from operations, including borrowings and net offering proceeds. We have not limited our use of any of these other sources. Payments of distributions using offering or financing proceeds will reduce the amount of capital we ultimately invest in real estate assets.
- The number of real estate assets we acquire will depend, in part, on the net proceeds raised in this offering.
- We do not have employees and will rely on our business manager and real estate manager to manage our business and assets.
- Persons performing services for our business manager and our real estate manager are employed by Inland Real Estate Investment Corporation (“Inland Investments”) or its affiliates and will face competing demands for their time and service.
- We do not have arm’s-length agreements with our business manager, real estate manager or other affiliates of our sponsor.
- We will pay fees, which may be significant, to our business manager, real estate manager and other affiliates of Inland Investments.
- We have not identified all of the specific real estate assets that we will acquire with the net proceeds raised in this offering, thus this is a “blind pool” offering.
- On acquiring shares, investors will experience dilution in the net tangible book value of their investment.
- Principal and interest payments on any borrowings will reduce the funds available for distribution or investment in additional real estate assets.
- There are limits on the ownership and transferability of our shares.
- We may fail to continue to qualify as a real estate investment trust (“REIT”) and thus be required to pay federal, state and local taxes, which may reduce the amount of cash available for distributions to stockholders.