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The investors should be aware that an investment in the Partnership (whether directly or indirectly through a feeder vehicle) involves a high degree of risk.  There can be no assurance that the Partnership’s investment objectives will be achieved, or that the investor will receive a return of its capital.  In addition, there will be occasions when Peninsula, as the general partner (the “General Partner”) and its affiliates may encounter potential conflicts of interest in connection with the Partnership.  The following considerations, among others, should be carefully evaluated before making an investment in the Partnership.

Risks Related to Real Estate Investments and Business of the Partnership

General Real Estate Risks.  The Partnership’s investments will be subject to the risks associated with the ownership (whether directly or indirectly through different intermediate vehicles) of real estate, and in general and, to the extent the investments are leveraged, the risks incident to borrowing funds, including risks associated with changes in the general economic climate, changes in the overall real estate market, and local real estate conditions.  These types of underlying interests are typically illiquid.  Deterioration of real estate fundamentals may negatively impact the performance of such portfolio investments.  Such changes in fundamentals could involve fluctuations as a result of general and local economic conditions, overbuilding and increased competition, increases in property taxes and operating expenses, changes in environmental and zoning laws, casualty or condemnation losses, environmental liability, regulatory limitations on rents, changes in neighborhood values, changes in the appeal of properties to tenants, the availability of mortgage funds which may render the sale or refinancing of properties difficult or impracticable, the financial condition of tenants, buyers and sellers of properties, supply of or demand for competing properties in an area, technological innovations that dramatically alter space requirements and demand, the availability of financing, changes in interest rates, competition based on rental rates, energy and supply shortages, various uninsured, uninsurable risks and government regulations, potential liability under changing environmental laws, acts of God, natural disasters, increase in interest rates and other factors that are beyond the control of the General Partner.  Investments in real estate are highly illiquid and subject to industry cycles, downturns in demand, market disruptions and the lack of available capital from potential lenders or investors (whether to finance or refinance portfolio properties or for potential purchasers of such properties). 

Economic Risks.  The Partnership is exposed to the general economic conditions and the local, regional and national conditions that affect the markets in which it owns properties.  The Partnership’s operating performance is further impacted by the economic conditions of the particular markets in which it has a concentration of properties.  Any material oversupply of properties similar to those owned by the Partnership or a material reduction of demand for such properties in markets involving similar types of use and/or customer base could adversely affect the Partnership’s financial condition.

Disruption Due to Catastrophic Events.  The success of the Partnership could be significantly impacted by catastrophic events around the world. Catastrophic events, such as fires, earthquakes, explosions, hurricanes, floods, severe storms, acts of God, pandemics (such as COVID-19) or other occurrences including climate change, terrorism or war, widespread power blackouts, as well as other events that are beyond the control of the General Partner and the limited partners of the Partnership (the “Limited Partners”), could interrupt the operations of the Partnership. If a major loss were to occur with respect to an investment, the Partnership could lose the capital invested in such investment and any related anticipated profits.

Risks Related to Real Estate Ownership.  Real property investments are subject to varying degrees of risk.  While the General Partner will attempt to minimize the Partnership’s exposure to these risks through the diversification of its portfolio, market research and the investment manager’s investment management capabilities, these risks cannot be eliminated.  The factors that can affect real estate values include: The attractiveness of the Partnership’s properties to potential buyers or renters; competition from other available properties; the Partnership’s ability to provide adequate maintenance of, and insurance on, its properties; the Partnership’s ability to control variable operating costs; and governmental regulations, including zoning, usage and tax laws, and changes in or potential liability under these and other laws.


Risks Associated with Acquisition of Properties.  The Partnership (through different intermediate vehicles) will acquire real estate properties from time to time.  The acquisition of properties involves risks, including the risk that the acquired property will not perform as anticipated and the risk that any actual costs for rehabilitation, repositioning, renovation and improvements identified in the pre-acquisition due diligence process will exceed estimates.  There is, and it is expected that there will continue to be, significant competition for investment opportunities that meet the Partnership’s investment criteria as well as risks associated with obtaining financing for acquisition activities, if necessary. Although the Partnership will perform a due diligence for each property being acquired, this due diligences may not be conclusive and depend exclusively on information provided by a third-party developer.

Risks Associated with Redevelopment and Repositioning Activities.  The Partnership may acquire direct or indirect (through intermediate vehicles) interests in real property that is underdeveloped or requires repositioning.  To the extent the Partnership invests (whether directly or indirectly through intermediate vehicles) in such assets, it will be subject to the risks normally associated with such assets and development activities, including risks relating to the availability and timely receipt of zoning, planning consents, licensing and other regulatory approvals, the cost and timely completion of construction (including risks beyond the reasonable control of the General Partner, such as weather or labor conditions or material shortages) and the availability of both construction and permanent financing on favorable terms.  These risks could result in substantial unanticipated delays or expenses and, under certain circumstances, could prevent completion of development activities.  Properties acquired for redevelopment may receive little or no cash flow from the date of acquisition through the date of completion of redevelopment and may experience operating deficits after the date of completion.  In addition, market conditions may change during the course of redevelopment, which may make such redevelopment less attractive than at the time it was commenced.

The Partnership May Hold Investments at the Date of its Termination.  The Partnership may directly or indirectly make or hold investments which may not be advantageously realized prior to the date on which the Partnership will be dissolved either by the expiration of the Partnership’s term or otherwise.  For example, the Partnership, whether directly or indirectly, may hold an interest in one or more properties that are still under construction or are otherwise not sold prior to the date on which the Partnership will be dissolved, either by expiration of the Partnership’s term or otherwise, or to the extent of any debt investments, may hold outstanding loans with a maturity date later than such dissolution date.  As a result, the Partnership may have to sell, distribute or otherwise dispose of assets at a disadvantageous time as a result of meeting the timing for dissolution.  Further, investments distributed in‐kind may be illiquid and there can be no assurance that any Limited Partner will be able to dispose of them at the value determined in accordance with the limited partnership agreement.

Non-Controlling Investments; Investments with Third Parties.  The Partnership (whether directly or indirectly through intermediate vehicles) may co-invest with third parties through joint ventures or other entities.  Such investments.  In addition, a third-party co-venturer might become bankrupt or have other financial, legal or regulatory difficulties resulting in a negative impact on such investment, may have economic or business interests or goals that are inconsistent with those of the Partnership or may involve risks in connection with such third-party involvement, including, for example, the risk that the outcomes of collaborative decision-making will vary adversely from those that the General Partner and the investment manager would have reached themselves may be in a position to take (or block) action in a manner contrary to the Partnership’s investment objectives.  If such co-venturer or partner defaults on its funding obligations, it may be difficult for the Partnership to make up the shortfall.  If the Partnership is required to make additional contributions in respect of such shortfall, the diversification of the Partnership’s overall investments could be reduced.  The Partnership may in certain circumstances be liable for the actions of its third-party co-venturers.  In those circumstances where such third parties involve a management group, such third parties may receive compensation arrangements relating to such investments, including incentive compensation arrangements.  In addition, in negotiating an investment through a joint venture or other similar arrangement, the Partnership may have to agree to less favorable terms (e.g., bearing a disproportionate share of expenses) than might be present in a direct investment.

Insufficient Capital for Follow-On Investments.  Following its initial investment in a real estate asset, the Partnership may have the opportunity to increase its investment or may be asked to provide additional funds to such real estate asset.  The amount of additional investment needed will depend upon the circumstances of the particular investment.  There is no assurance that the Partnership will make follow-on investments or that the Partnership will have sufficient resources to, or be permitted to, make such investments.  Any decision not to make follow-on investments or the Partnership’s inability to make them may have a substantial negative impact on a real estate asset in need of such an investment, may result in missed opportunities for the Partnership or may result in dilution of the Partnership’s investment.  Further, there can be no assurance that the General Partner and/or investment manager (as applicable) will be able to predict accurately the future capital requirements necessary for success or that additional funds will be available from any source.

Litigation.  In the ordinary course of its business, the Partnership (directly or indirectly) may be subject to litigation from time to time both as a plaintiff and as a defendant.  The expense of defending against claims made against the Partnership, the General Partner, the investment manager and/or their respective principals and affiliates by third parties and paying any amounts pursuant to settlements or judgments would be borne by the Partnership or its affiliate, as applicable, to the extent that (i) the Partnership or the has not been able to protect itself through indemnification or other rights against the investment entity, (ii) the Partnership is not entitled to such protections or (iii) the investment entity is not solvent.

Litigation may also be commenced with respect to a property acquired by the Partnership or its subsidiaries in relation to activities that took place prior to the Partnership’s acquisition of such property.  The outcome of any proceedings involving the Partnership, or its investments may materially adversely affect the Partnership and may continue without resolution for long periods of time.  Any litigation may consume substantial amounts of the General Partner’s time and attention, and that time and the devotion of these resources to litigation may, at times, be disproportionate to the amounts at stake in the litigation.  Under the limited partnership agreement, the Partnership will generally be responsible for indemnifying the General Partner and related parties for costs they may incur with respect to such litigation not covered by insurance. 

Potential Environmental Liability.  Real property is subject to federal and state environmental laws, regulations and administrative rulings that, among other things, establish standards for the treatment, storage and disposal of solid and hazardous waste.  Real property owners are subject to federal and state environmental laws that impose joint and several liability on past and present owners and users of real property for hazardous substance remediation and removal costs, often without regard to whether the owner or operator knew of, or was responsible for, the release or presence of such hazardous substances.  Accordingly, there may be exposure to substantial risk of loss from environmental claims arising in respect of any property with undisclosed or unknown environmental problems or as to which inadequate reserves have been established.  The Partnership cannot give any assurance that such conditions do not exist or may not arise in the future, and the presence of such substances on the Partnership’s real estate investments could adversely affect its ability to sell such investments or to borrow using such investments as collateral.

Cyber Security Breaches and Identity Theft.  Information and technology systems of the General Partner, the investment manager, the Partnership’s investments and the Partnership’s service providers may be vulnerable to damage or interruption from computer viruses, network failures, computer and telecommunication failures, infiltration by unauthorized persons and security breaches, usage errors by their respective professionals, power outages and catastrophic events such as fires, tornadoes, floods, hurricanes and earthquakes.  If any systems designed to manage such risks are compromised, become inoperable for extended periods of time or cease to function properly, the General Partner, the investment manager, the Partnership, a Partnership investment and/or a service provider may have to make a significant investment to fix or replace them.  The failure of these systems and/or of disaster recovery plans for any reason could cause significant interruptions in the General Partner’s, the investment manager’s, the Partnership’s, an investment’s and/or a service provider’s operations and result in a failure to maintain the security, confidentiality or privacy of sensitive data, including personal information relating to investors (and the beneficial owners of investors).  Such a failure could harm the General Partner’s, the investment manager’s, the Partnership’s, an investment’s or a service provider’s reputation, subject them and their respective affiliates to legal claims and otherwise affect their business and financial performance.

Placement Agents.  The General Partner may engage placement agents in connection with certain general financial advisory services and transaction-specific services for the Partnership.  U.S.-based placement agents are registered broker-dealers under the U.S. Securities Exchange Act of 1934, as amended (the “Exchange Act”) and a member of FINRA.  In consideration for its services to the General Partner, the placement agents will receive certain advisory and placement agent fees (including success fees based on each new equity commitment made to the Partnership sourced by the placement agent) and reimbursement of certain expenses.  Such compensation and reimbursement paid to the placement agents will be borne by the Partnership. Various potential and actual conflicts of interest may exist or arise due to such placement agent’s contractual arrangement with the General Partner and the placement agents’ business activities and relationships with other clients and funds not affiliated with the Partnership.  As a related matter, the General Partner or the Partnership may be required to provide certain information regarding some Limited Partners to regulatory agencies and bodies in order to comply with applicable laws and regulations including the U.S. Foreign Corrupt Practices Act. As a result, there can be no assurance that the use of placement agents will not have an adverse impact on the General Partner or otherwise impede the Partnership’s ability to effectively achieve its investment objectives.

Risks Related to Investment Terms

Limited Operating History.  The Partnership has no operating history upon which prospective investors may evaluate performance.  Businesses such as the Partnership’s (whether directly or through subsidiaries), which are starting up or in their initial stages of development, present substantial business and financial risks and may suffer significant losses.  The success of the Partnership will depend upon the skill and management expertise of the investment manager and/or the General Partner (as applicable) in selecting, managing and disposing of assets.  The performance and investment profile of other funds advised by Peninsula or other affiliates should not be used as an indicator of the likely performance or investment profile of the Partnership.  Furthermore, there can be no assurance that the Partnership, the General Partner or the investment manager will achieve the Partnership’s investment objectives and targeted returns.  Accordingly, prospective investors should not construe the performance of earlier investments made by the General Partner or its affiliates on behalf of other funds or clients as providing any assurances regarding the future performance of the Partnership.

Dependence on Key Personnel.  The employees of the investment manager, including members of the team responsible for managing the day-to-day activities of the General Partner and the Partnership, have substantial experience in developing, acquiring and managing real estate investments.  However, such experience cannot be relied upon as an indicator of the ability of the Partnership to achieve its objectives.  Although many members of the General Partner or investment manager’s management team will play an integral role in overseeing the Partnership’s activities, none will be solely dedicated to the Partnership. In addition, the General Partner has significant discretion as to the implementation of the Partnership’s asset acquisition and operating policies and strategies.  Accordingly, the General Partner believes that its success will depend to a significant extent upon the efforts, experience, diligence, skill and network of business contacts of the executive officers and key personnel of the General Partner or investment manager.  The executive officers and key personnel of the General Partner or investment manager will evaluate, negotiate, structure, close and monitor the Partnership’s real estate acquisitions, and its success will depend on their continued service.  The departure of any of the executive officers or key personnel of the General Partner or investment manager could have a material adverse effect on the Partnership’s performance.  The ability of the General partner or investment manager to retain its management group or to attract suitable replacements should any members of the management group leave the General Partner or investment manager  is dependent on the competitive nature of the employment market.

Due Diligence Risks.  The investment manager and/or the General Partner (as applicable) intends to conduct due diligence with respect to each investment opportunity or other transaction it pursues.  It is possible, however, that the investment manager’s and/or General Partner´s due diligence process will not uncover all relevant facts, particularly with respect to any assets the Partnership or its subsidiaries acquire from third parties.  In such cases, the investment manager and/or General Partner may be given limited access to information about the investment and will rely on information provided by the target of the investment.  In addition, if investment opportunities are scarce, the process for selecting bidders is competitive or the timeframe in which the Partnership is required to complete diligence is short, the Partnership’s ability to conduct a due diligence investigation may be limited, and it would be required to make investment decisions based upon a less thorough diligence process than would otherwise be the case.  Accordingly, investments and other transactions that initially appear to be viable may prove not to be over time, due to the limitations of the due diligence process or other factors.

No Assurance of Profitability and Failure to Meet Targeted Returns.  There can be no assurance that the Partnership will be profitable or, if profitable, that any particular yield or rate of return will be obtained.  The Partnership’s targeted returns are based upon the General Partner’s projections of internal rates of return, which in turn are based upon projections of future growth rates of the Partnership’s investments and the applicable market, development and redevelopment and/or operating costs, and disposition timing and proceeds, all of which are inherently uncertain.  The actual performance of the Partnership’s investments will differ from the projections of the General Partner and may differ materially.  There can be no assurance that the actual internal rates of return achieved by the Partnership will equal or exceed the targeted returns stated in any materials provided to prospective investors.  Prospective investors should not rely on, nor has any prospective investor been provided with, any business or investment projections relating to the Partnership. In addition, although current returns from investments may vary, prior to partial or complete disposition (which may not be until a number of years after the initial investment is made) there may not be a current return on any real estate investment.  There can be no assurance that the Partnership will achieve its investment or performance objectives, including the identification of suitable investment opportunities and the achievement of targeted returns, or that the Partnership will be able to fully invest its capital commitments.  The Partnership may lose some or all of its invested capital, and prospective investors should not subscribe for Interests unless they can readily bear the consequences of such loss. 

Investors’ Limited Rights and Dependence on the General Partner and the Investment Manager.  All investment decisions for the Partnership will be made by the General Partner.  Investors will not be able to make any investment or other decision on behalf of the Partnership and will have no right to take part in the management of, or otherwise control, the business of the Partnership.  Accordingly, no investment should be made in the Partnership unless the investor is willing to entrust substantially all aspects of the administration and management of the Partnership to the General Partner and the investment manager, as applicable.

Risks relating to Partner Drawdowns.  The Partnership is entitled to draw down a Limited Partner’s capital commitment during its investment period.  However, this does not guarantee that a Limited Partner’s capital commitment will be drawn down shortly after its subscription agreement is accepted by the General Partner, or at any point during the investment period.  Nonetheless, each Limited Partner is responsible for maintaining liquid assets sufficient to make capital contributions in the event its capital commitment is called for during the duration of the Partnership.  No partner has a right to receive any distributions from the Partnership until its capital commitment has been drawn down (in whole or in part). 

Failure to Fund Capital Commitments; Consequences of Default.  If an investor fails to pay installments of its capital commitment when due, and the contributions made by non-defaulting investors are inadequate to cover the defaulted capital contribution, the Partnership may be unable to meet its obligations when due.  As a result, the Partnership may be subjected to significant penalties that could have a material adverse effect on the returns of the investors (including non-defaulting investors).  If an investor defaults, it may be subject to various remedies as provided in the limited partnership agreement, including, without limitation, a reduction in its Interests, a forced sale of its Interests at a reduced value and preclusion from further investment in or sharing in the gains of the Partnership.  Unless the General Partner elects to terminate a defaulting Limited Partner’s unused capital commitment, the defaulting Limited Partner will continue to remain obligated to make capital contributions to the Partnership, as required by the General Partner, up to the full amount of such Limited Partner’s unused capital commitment and will be allocated its full pro rata share of all fees or expenses based on its original capital commitment.  A defaulting Limited Partner will not be permitted to participate in any vote or consent required of the Limited Partners.  The General Partner will have the right to cover shortfalls arising from the default of a Limited Partner in any manner the General Partner deems appropriate, including by requiring additional capital contributions from non-defaulting Limited Partners subject to their capital commitment.

New Investors or Increased Investments.  New investors as well as existing investors who decide to increase their investment in the Partnership will be required to fund their pro rata share of the cost of any partnership investments already made and expenses already incurred (including organizational expenses) together with interest on such amounts calculated at an annual rate of 9% or such other rate as the General Partner may determine in its sole and absolute discretion.  The actual value of such investments may not be accurately reflected by the Partnership’s cost and the related interest charge.  Although the General Partner has discretion to use a different valuation for such investments, investors should be aware that any valuation may be inexact and not represent current fair market value.

Target Capitalization.  The Partnership is seeking to raise significant capital.  As a result, the Partnership may never achieve a critical mass that is suitable in light of the investment strategy and objectives.  The ability to diversify the portfolio properties and achieve the investment objectives would be adversely affected if significant capital is not raised.

Risks Related to Leverage.  The Partnership will be subject to risks normally associated with debt financing, including the risk that the Partnership’s cash flow will be insufficient to meet required payments of principal and interest.  There can be no assurance that the Partnership will be able to refinance any maturing indebtedness, that such refinancing would be on terms as favorable as the terms of the maturing indebtedness, or that the Partnership will otherwise be able to obtain funds by selling assets or raising equity to make required payments on maturing indebtedness.  The Partnership’s ability to refinance any debt financing in a timely manner and at favorable terms is dependent on several factors including, but not limited to, general economic conditions, the Partnership’s credit ratings and interest rate levels.  The Partnership’s borrowings also may bear interest at variable rates.  Increases in interest rates would increase the Partnership’s interest expense under these borrowings.

In-Kind Distributions.  Under such circumstances as the General Partner deems appropriate, the Limited Partners may receive in-kind distributions of portfolio positions, if permitted by law and the limited partnership agreement.  The investments distributed in-kind will be valued by the General Partner at what it deems their “fair market value,” and this valuation will be conclusive for various purposes, including for the calculation of any carried interest owed.

Lack of Liquidity of Interests.  No public or private market presently exists for Interests and none is expected to develop.  Transferability of Interests is subject to compliance with applicable securities laws and also will be affected by limitations imposed under the limited partnership documents.  In addition, in connection with any disposition of an investment, the Partnership may be required to make representations about the investment.  The Partnership also may be required to indemnify the purchaser of the investment to the extent that any such representations are inaccurate.  These arrangements may result in the incurrence of contingent liabilities for which the General Partner may establish reserves or escrow accounts. 

No Redemption Rights.  The Partnership is not required to redeem Interests at any time.  The limited partnership agreement does not permit Limited Partners any right to have their Interests redeemed.  Investors should plan to hold their Interests for the full term of the Partnership.

Return of Capital Contributions.  This offering is not registered with the SEC or the respective Canadian authority and is being made pursuant to certain exemptions from state and federal registration requirements.  Although the Partnership will receive representations and warranties from its Limited Partners to ensure compliance with such exemptions from registration and other matters, if it is later determined that this offering did not fully comply with state or federal law, the Partnership may be required to refund to a Limited Partner its capital contributions, which refund would result in a reduction in the amount of operating capital available to the Partnership and could impair the ability of the Partnership to operate as planned.  The Partnership might be required to liquidate, with potential economic loss and tax risks to the remaining Limited Partners.

Dependence on External Sources of Capital.  The Partnership may not be able to fund all future capital needs with equity capital or with cash retained from operations.  In such case, the Partnership will rely on third-party sources of capital.  The Partnership’s ability to access private debt and equity capital on favorable terms or at all is dependent upon a number of factors, including general market conditions, the market’s perception of the Partnership’s growth potential and the Partnership’s current and potential earnings and cash distributions.

Partner Clawback.  Each Limited Partner will be required to contribute to the Partnership its proportionate share of (i) any indemnification obligations incurred by the Partnership or (ii) liabilities of the Partnership incurred in connection with indemnity, purchase price adjustment, tax or other obligations incurred in connection with an investment.  For this purpose, the General Partner may recall distributions previously made to the Limited Partners, subject to the limits set forth in the limited partnership agreement.

Limited Recourse to General Partner or Investment Manager.  The limited partnership documents will include exculpation and indemnification provisions that will limit the circumstances under which the General Partner or investment manager can be held liable to the Partnership and Limited Partners.  As a result, Limited Partners will have a more limited right of action in certain cases than they would in the absence of such limitations.  Such provisions will not constitute a waiver by any Limited Partner of any of its legal rights under applicable federal securities laws or any other laws whose applicability is not permitted to be contractually waived.

Dilution from Additional Investors.  Limited Partners that are admitted or increase their capital commitment subsequent to the initial closing date will participate in existing investments of the Partnership, diluting the interest of existing Limited Partners in the Partnership.

Counterparty Risk.  The Partnership is exposed to the risk that third parties that may owe the Partnership money, securities or other assets will not perform their obligations.  These parties include trading counterparties, clearing agents, exchanges, clearing houses, custodians, prime brokers, administrators and other financial intermediaries.  Although the General Partner intends to enter into transactions with responsible and creditworthy counterparties, failure by a counterparty to fulfill its contractual obligations (due to credit, liquidity or other reasons) could expose the Partnership to unanticipated losses.  Such “counterparty risk” is accentuated for contracts with longer maturities where events may intervene to prevent settlement, or whether the Partnership has concentrated its transactions with a single or small group of counterparties.

Side Letters.  The General Partner may enter into a side letter or similar agreement with any Limited Partner which has the effect of establishing rights under, or altering or supplementing the terms of the limited partnership agreement or any subscription agreement.  If the General Partner enters in to any such side letter or similar agreement with any other Limited Partner, such arrangement could create preferences or priorities for the Limited Partner who is the beneficiary of such arrangement vis-à-vis the other Limited Partners. 

Regulatory Risks

The Partnership May Incur Significant Costs Complying with Regulations.  The operations of the Partnership and tenants in properties owned by the Partnership (directly or indirectly through any of its subsidiaries) are or may be subject to material federal, state and local laws, rules and regulations from different jurisdictions, which could materially adversely affect the Partnership.  Generally, real estate properties are subject to various laws, ordinances, rules and regulations, including regulations relating to lien sale rights and procedures.  In addition, property management activities are often subject to state real estate brokerage laws and regulations as determined by the particular real estate commission for each state. An affiliate of the General Partner is in the process of registering before the SEC as an registered investment advisor, which we could generate additional costs and expenses to the Partnership.

Changes in applicable laws, or noncompliance with applicable laws, could adversely affect the Partnership’s operations or expose the Partnership to liability.  The Partnership must redevelop and operate their investments in compliance with numerous federal, state and local laws and regulations, some of which may conflict with one another or be subject to limited judicial or regulatory interpretations.  These laws and regulations may include zoning laws, building codes, landlord tenant laws and other laws generally applicable to business operations.  Noncompliance with laws could expose the Partnership to liability.  Lower revenue growth or significant unanticipated expenditures may result from the Partnership’s need to comply with changes in (a) laws imposing remediation requirements and the potential liability for environmental conditions existing on properties or the restrictions on discharges or other conditions, or (b) other governmental rules and regulations or enforcement policies affecting the development, use and operation of the Partnership’s investments, including changes to building codes and fire and life-safety codes.

Investment Company Act Status.  The General Partner intends to conduct the Partnership’s activities such that both entities will not be required to register under the Investment Company Act.  However, if the Partnership or its subsidiaries were to become subject to the Investment Company Act as a result of a change in law or otherwise, the various restrictions imposed by the Investment Company Act and the substantial costs and burdens of compliance therewith could adversely affect the operating results and financial performance of the Partnership and the value of the respective Interests.  Moreover, parties to a contract with an entity that has improperly failed to register as an investment company under the Investment Company Act may be entitled to cancel or otherwise void their contracts with the unregistered entity.

Risks Relating to Admission of ERISA Investors to the Partnership.  The General Partner intends to conduct the operations of the Partnership so that the assets of the Partnership will not be deemed to constitute “plan assets” of investors (“Benefit Plan Investors”) that are subject to the fiduciary provisions of ERISA or the prohibited transaction rules of Section 4975 of the Internal Revenue Code of 1986, as amended (the “Code”).  If, however, the Partnership were deemed to hold “plan assets” of Benefit Plan Investors, (a) to the extent that any such Benefit Plan Investors are subject to ERISA, ERISA’s fiduciary standards would apply to the Partnership and might materially affect the operations of the Partnership, and (b) transactions into which the Partnership might enter in the ordinary course of business may constitute prohibited transactions under ERISA and/or Section 4975 of the Code.  In order to avoid having the Partnership’s assets treated as “plan assets,” the investment manager and/or the General Partner (as applicable) may seek to manage the assets and activities of the Partnership so as to qualify as an “operating company,” and that may adversely affect the operations of the Partnership. 

Limitations on Limited Partners´ Limited Liability.  Under the Limited Partnerships Act (Ontario), as amended, which is the statute under which the feeder fund will be formed, limited partners are not liable for the debts or obligations of a limited partnership except to the extent of the value of the money or other property which the limited partner contributes or has agreed to contribute to the partnership.  If, however, a limited partner takes part in the control of the business of the partnership, such limited partner will become liable for the debts or obligations of the partnership as if the limited partner was a general partner of the partnership.  For these purposes, a limited partner will not be presumed to be taking part in the control of the business of the partnership by reason only that the limited partner exercises rights and powers conferred upon the limited partner by the Limited Partnerships Act (Ontario).  Although the provisions of the limited partnership agreement will state that no Limited Partner shall take part in the control of the business of the Partnership, whether a Limited Partner, in exercising its rights under the limited partnership agreement or otherwise, is thereby taking part in the control of the business of the Partnership (albeit not contemplated by the limited partnership agreement) will be a question of fact under the law of Ontario, Canada.  If a Limited Partner has received the return of all or part of its contribution to the Partnership, the Limited Partner is nevertheless liable to the Partnership or, where the Partnership is dissolved, to its creditors, for any amount, not in excess of the amount returned with interest, necessary to discharge the liabilities of the Partnership to all creditors who extended credit or whose claims otherwise arose before the return of the contribution. The estate of a Limited Partner is liable for all of the liabilities of the Limited Partner as a limited partner.

No Canadian Registration.  Neither the investment manager nor General Partner is currently registered as an adviser or investment fund manager under the Securities Act (Ontario) or other Canadian securities laws.  Accordingly, Limited Partners will not have any of the protections otherwise afforded by such registrations.

“Bad Actor” Rules.  In the event that any beneficial owners of Interests in the Partnership would cause the Partnership to be subject to a “Bad Actor” disqualification pursuant to Rule 506(d)(1) of Regulation D under the 1933 Act (any such disqualification, a “Bad Actor Disqualification” and any person described in Rule 506(d)(1) of Regulation D, a “Covered Person”), the General Partner may take any action, in its discretion, to prevent the Partnership from suffering adverse consequences as a result of such Bad Actor Disqualification, including reducing or revoking the voting interests of such Covered Persons and/or requiring the sale of all or a portion of any such Covered Persons’ Interests (with the cost and expense of any such action to be borne solely by such Covered Persons).  In the event of the occurrence of a Bad Actor Disqualification by any Covered Person in respect of the Partnership, the offering of Interests by the Partnership may be terminated which could have a material adverse effect on the ability of the Partnership to achieve its investment objectives.

Tax Risks

Changes in Tax Law. Changes to applicable revenue codes from different jurisdictions, the issuance of administrative rulings or court decisions could impact the tax consequences to the Limited Partners of investing in the Partnership.

Other Tax Risks.  An investment in the Partnership involves complex foreign and U.S. federal, state and local income tax considerations that will differ for each Limited Partner.  Prospective Limited Partners are advised to seek the advice of a qualified expert on matters of U.S. and/or Canadian federal, state and local and foreign taxation of the Partnership and ownership of the Interests.  In judging whether to invest in the Partnership, a prospective Limited Partner should consider the tax consequences thereof which include, but are not limited to: the possibility that the Interests could decline in value with a Limited Partner realizing a capital loss if the Partnership is liquidated or the Limited Partner disposes of its Interests, with the deductibility of any such capital loss limited; the possibility of substantial taxation of the Partnership or Interests, including imposition of state, local and foreign taxes (including withholding taxes), alternative minimum taxes and the net investment income tax (which taxation can and may occur even though funds to pay such tax have not and will not be distributed currently, or at all, as discussed and identified previously herein); and the possibility that the allocations of the Partnership’s income, gain, loss, and deduction to the Limited Partners will not be respected.


The General Partner, the investment manager and their affiliates will be subject to various conflicts of interest in carrying out their responsibilities to the Partnership. 

General.  The General Partner, investment manager, and their affiliates invest in and manage other investment property for their own accounts and for others and provide real estate management and related services for others similar to the services to be performed by the General Partner and the investment manager for the Partnership.  Such third party and proprietary accounts may have investment objectives and policies comparable to those of the Partnership and may be in competition with the Partnership.  Additional funds may be formed in the future with objectives that are the same as or similar to the Partnership’s objectives.

Management of the Partnership.  In addition to the Partnership, the officers and employees of the General Partner and investment manager may devote business time to other entities managed by the General Partner and investment manager or to various other projects for the General Partner, investment manager or their affiliates.  Conflicts of interest may arise in allocating time, services or functions of these officers and employees.

Carried Interest.  The existence of the right of the General Partner to receive carried interest in respect of investments of the Partnership may create an incentive for the General Partner to make riskier or more speculative investments on behalf of the Partnership than would be the case in the absence of this arrangement.  If distributions are made of property other than cash, the amount of any such distribution will be accounted for at the fair market value of such property as determined by the General Partner in accordance with procedures to be set forth in the limited partnership agreement.  An independent appraisal generally will not be required and is not expected to be obtained.  In certain limited circumstances, the amount of carried interest will be calculated based on the fair market value of in-kind distributions, even though a Limited Partner may have elected to receive a distribution of cash in lieu thereof.

Acquisitions or Dispositions of Investments.  A conflict also could arise in connection with the acquisition or disposition of investments, the refinancing of any particular investment or the financing of capital improvements, as it may be beneficial for the General Partner and the investment manager to delay or accelerate an acquisition, disposition, refinancing or investment in capital improvements.

Transactions with Affiliates.  Subject to certain conditions to be set forth in the limited partnership agreement, the General Partner and the investment manager may retain one or more of their affiliates to perform other services for the Partnership, or oversee third-party firms performing such services, including without limitation, property management, due diligence, leasing, financing, construction management, legal, tax and property insurance at market rates and on other terms no less favorable to the Partnership than those available from third parties for a comparable level of quality and service.

Other Accounts.  The General Partner and investment manager and its affiliates advise other clients and accounts (each, an “Other Account”) with respect to the purchase, sale and development of real estate assets.  Such Other Accounts may hold or may have held investments similar to the investments intended to be made by the Partnership, including certain investments that may represent appropriate investment opportunities for the Partnership and may compete with the Partnership for investment opportunities.  The General Partner will continue to advise such Other Accounts after the establishment of the Partnership. 

Indemnification.  The Partnership will be required to indemnify the General Partner, the investment manager and their affiliates against any liabilities (including legal expenses) arising out of their activities or involvement with the Partnership except for acts that constitute fraud, gross negligence, bad faith, reckless disregard of duties, a material breach of the terms of the limited partnership agreement or willful misconduct.  The Partnership may pay the expenses of the indemnified party incurred in settling a claim, or in defending a civil or criminal action prior to its final disposition in the General Partner’s sole discretion and upon the advice of counsel that the party is entitled to indemnification.  The Partnership may purchase insurance, to the extent available at reasonable cost, in the opinion of the General Partner, to cover the indemnification liabilities of the Partnership.



Blended returns were computed based on the aggregated total cash flow of the investments.  These cash flows considered were the ones received by each entity formed to make each investment, the cash flows were aggregated and the XIRR function was applied to these cash flows in Microsoft Excel.

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