Final CNS AR 2020 - Flipbook - Page 23
Item 1A. Risk Factors
Risks Related to our Business
Our business, operations, and investments are subject to risks associated with and arising from epidemic
diseases, such as the ongoing global outbreak of the novel coronavirus, or COVID-19.
Capital, equity, and credit markets, as well as the real estate and real property markets, have experienced and may
continue to experience ongoing volatility and dislocations as a result of the COVID-19 pandemic. The full scope and duration
of the social, market, and economic fallout from the COVID-19 pandemic remains difficult to predict, and these conditions
could worsen dramatically from those already experienced, including the possibility of a steep and prolonged economic
downturn or global recession. Various parts of the globe experienced a resurgence in COVID-19 cases during the fourth
quarter of 2020 which continued into 2021, a period during which newly detected variants of the disease also spread to
several countries, leading to the re-implementation of lockdowns and other restrictions. A further resurgence of COVID-19,
or an outbreak of any new, more virulent or more transmissible variants or mutations of the disease or other viral pathogens
or epidemic diseases in any region could trigger broader and more severe health crises, market and economic turbulence, and
governmental restrictions for a sustained period of time.
If we were to experience a sustained decline in the performance of the portfolios and strategies we manage as a result of
negative market, financial, and economic conditions caused by the COVID-19 pandemic, our assets under management and
the fees we earn in future periods could be adversely impacted. In addition, these market declines and disruptions could
significantly reduce the demand for, and availability of, our investment products and services, and contribute to redemptions
and withdrawals from our funds and the loss of institutional separate account clients, which could have a material adverse
effect on our revenue and net income. Any actual or anticipated reduction in our profitability could impair our future dividend
capacity and cash management policies and have a significant negative impact on the market price of our common stock.
Epidemic diseases such as the COVID-19 pandemic also pose continuing risk that we and our third-party
intermediaries, service providers, and key vendors may be unable to provide services or conduct business activities or critical
operations at full capacity for a period of time, including due to the spread of a disease or virus or restrictions or shutdowns
that are requested or mandated by governmental authorities. These conditions could lead to operational issues and
interruptions for the Company and certain of our products, require us to incur significant additional costs, and negatively
impact our business. Both we and our third-party intermediaries, service providers, and key vendors are also subject to a
heightened risk of cyberattacks or other privacy or data security incidents due to the ongoing remote working environment
and prevalent use of virtual communication platforms.
Epidemic diseases such as the COVID-19 pandemic also present a significant threat to our employees’ safety and
welfare. Our key employees or executive officers may become sick or otherwise unable to perform their duties for an
extended period of time. Precautionary measures we have taken to help minimize these risks during the COVID-19
pandemic, including our general implementation of a “work-from-home” operating environment, could negatively affect our
business, particularly our “client-facing” operations, as well as employee productivity and human capital resources generally.
In addition, continuing to carry out these precautionary measures, or implementing and carrying out additional precautionary
or protective measures to respond to conditions or comply with regulations that have resulted or may result from the
COVID-19 pandemic or other epidemic diseases, including rules and regulations applicable to any reopening or reuse of our
offices, may result in the incurrence of significant additional costs and expenses by us and reduce our profitability.
Further, any re-entry of employees to the workplace or other use of our offices under pandemic or similar conditions, or
resumption of other “in-person” business activities such as client meetings and business travel, may expose us to heightened
risk of litigation. Such litigation may include claims of contraction of COVID-19 or other illnesses in the workplace or claims
related to workplace safety, privacy, employment, or anti-discrimination laws and regulations. The threat or occurrence of
any such litigation, or the circumstances giving rise to any such litigation, may consume significant amounts of our
management’s time and resources, result in regulatory investigation or sanction, increase our costs and expenses and reduce
our profitability, as well as cause reputational harm.
A decline in the absolute or relative performance or value of real estate securities, or the attractiveness of real
estate portfolios or investment strategies, would have an adverse effect on the assets we manage and our revenue.
As of December 31, 2020, approximately 60.1% of the assets we managed were concentrated in real estate securities.
Real estate securities and real property investments owned by the issuers of real estate securities are subject to varying
degrees of risk that could affect investment performance. Returns on investments in real estate securities depend on the
amount of income and capital appreciation or loss realized by the underlying real property. Income and real estate values may