Attentus CDO I Offering Circular - Irish Stock Exchange

Considerations Regarding Real Estate Entities
General. Real Estate Entities are financial vehicles that seek to pool capital from a number of
investors in order to participate directly in real estate ownership, financing or homebuilding. Since the
Collateral will consist in part of Trust Preferred Securities issued by trust subsidiaries of Real Estate
Entities, which trust subsidiaries are entirely dependent upon the Real Estate Entity to provide payment
on the Corresponding Debentures issued by the Real Estate Entity to such subsidiary or the Real Estate
Entity Securities issued directly by a Real Estate Entity, an investment in the Issuer will be subject to
varying degrees of risk generally incident to the ownership, financing and building of real property. The
underlying value of the Collateral Debt Securities and the Issuer’s ability to make payments to the
Holders of the Offered Notes may be adversely affected by the following factors which may adversely
affect the performance of the Real Estate Entities: adverse changes in national economic conditions,
adverse changes in local market conditions due to changes in general or local economic conditions and
neighborhood characteristics, increased competition from other properties, obsolescence of property,
changes in the availability, cost and terms of mortgage funds, the impact of present or future
environmental legislation and compliance with environmental laws, the ongoing need for capital
improvements, particularly in older properties, changes in real estate tax rates and other operating
expenses, regulatory and economic impediments to raising rents, adverse changes in governmental rules
and fiscal policies, dependency on management skills, civil unrest, acts of God, including earthquakes and
other natural disasters (which may result in uninsured losses), acts of war, adverse changes in zoning
laws, and other factors which may be beyond the control of the Real Estate Entities issuing
Corresponding Debentures, Senior Securities or Subordinated Securities.
Equity Real Estate Entities may concentrate investments in specific geographic areas or in
specific property types, i.e., hotels, shopping malls, residential complexes, and office buildings potentially
increasing the negative impact of economic conditions on Real Estate Entities. Variations in rental
income and space availability and vacancy rates in terms of supply and demand are additional factors
affecting real estate generally and Real Estate Entities in particular. In addition, investors should be
aware that Real Estate Entities are subject to the risks of financing projects including refinancing risks
associated with variations in interest rates. Real Estate Entities are also subject to defaults by borrowers,
self-liquidation, the market’s perception of the Real Estate Entity industry generally, and the possibility of
REITs failing to qualify for tax-free pass through of income under the Code, and the requirement for Real
Estate Entities to maintain exemption from the Investment Company Act. A default by a borrower or
lessee may cause the Real Estate Entity to experience delays in enforcing its rights as mortgagee or lessor,
incur significant costs related to protecting its investments and potentially to realize significant losses.
Mortgage Real Estate Entities will be subject to risks of borrower defaults, bankruptcies, fraud
and losses and special hazard losses that are not covered by standard hazard insurance. Also, the costs of
financing the mortgage loans could exceed the return on the mortgage loans. In the event of any default
under mortgage loans held by a Real Estate Entity, it would bear the risk of loss of principal and nonpayment
of interest and fees to the extent of any deficiency between the value of the mortgage collateral
and the principal balance of the mortgage loan.
Commercial real estate loans are generally non-recourse, except for mezzanine loans, which
typically have limited recourse provisions. In addition, limited recourse against the borrower may be
further limited by applicable provisions of the laws of the jurisdiction in which the mortgaged properties
are located or by the selection of remedies and the impact of those laws on that selection. With respect to
non-recourse mortgage loans, in the event of a borrower default, the specific mortgaged property and
other assets, if any, pledged to secure the relevant mortgage loan, may be less than the amount owed
under the mortgage loan. As to those mortgage loans that provide for recourse against the borrower and
its assets generally, such recourse may not provide a recovery in respect of a defaulted mortgage loan
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