How Inflation, Rates and Recession Present New Risks and Opportunities (2024)

¹Refinitiv, May 21, 2022.

²Prologis Q1 2022 earnings call.

Risk Considerations

Real estate investments are speculative and illiquid, involve a high degree of risk and have high fees and expenses that could reduce returns. These risks include, but are not limited to, fluctuations in the real estate markets, the financial conditions of tenants, changes in building, environmental, zoning and other laws, changes in real property tax rates or the assessed values of Partnership Investments, changes in interest rates and the availability or terms of debt financing, changes in operating costs, risks due to dependence on cash flow, environmental liabilities, uninsured casualties, unavailability of or increased cost of certain types of insurance coverage, fluctuations in energy prices, and other factors, such as an outbreak or escalation of major hostilities, declarations of war, terrorist actions or other substantial national or international calamities or emergencies. The possibility of partial or total loss of an investment vehicle’s capital exists, and prospective investors should not invest unless they can readily bear the consequences of such loss.

Further, some real estate investments may require development or redevelopment, which carries additional risks relating to the availability and timely receipt of zoning and other regulatory approvals, the cost and timely completion of construction, and the availability of permanent financing on favorable terms. Real estate investments will be highly illiquid and will not have market quotations. As a result, the valuation of real estate investments involves uncertainty and may be based on assumptions. Accordingly, there can be no assurance that the appraised value of a real estate investment will be accurate or further, that the appraised value would in fact be realized on the eventual disposition of such investment. In addition, real estate assets may be highly leveraged, which leverage could have significant adverse consequences to the assets and therefore an investment vehicle. In particular, an investment vehicle will lose its investment in a leveraged asset more quickly than a non-leveraged asset if the asset declines in value. You should understand fully the risks associated with the use of leverage before making an investment in a real estate investment vehicle.

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Investments in real estate companies, including REITs or similar structures are subject to volatility and additional risk, including loss in value due to poor management, lowered credit ratings and other factors.

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Date of First Use August 4, 2022. 282492-OTU-1626330