Company leases 66 facilities to tenants affiliated with key executives, constituting a significant portion of annual rent
Leases with related parties lack arm's-length negotiation, potentially impacting terms and conditions
Concentration on related-party tenants poses risk of revenue interruptions and property value decrease
Concentration Risk
Approximately 48.6% of annualized base rent tied to related-party tenants, emphasizing revenue vulnerability
Contractual Obligations
Master lease agreements with tenants jointly liable, posing significant financial risks if obligations are not met
Interconnected Tenants
Affiliation of tenants under master lease agreements increases risk of defaults among multiple tenants
- Failure of related-party tenants to perform obligations could lead to revenue interruptions
- Lack of arm's-length negotiations may result in unfavorable terms for the Company
- Potential conflicts of interest with key executives may impact decision-making processes and enforcement of rights
The high reliance on related-party tenants for revenue poses significant risks to Company's financial stability and operations. It is crucial for the Company to mitigate these risks and ensure proper governance in its dealings with affiliates.