Risk Disclosures

1. General Investment Risks

1.1 Loss of Capital

There is no assurance that you will receive any return on your investment or even a return of your original investment. Real estate values fluctuate, and properties may decline in value or become difficult to sell. You should be prepared to lose your entire investment.

1.2 No Guaranteed Returns

All projected returns, target IRRs, and distribution forecasts are based on assumptions and estimates. There is no guarantee that these targets will be achieved. Actual returns may be significantly lower than projected, or you may experience a complete loss.

1.3 Illiquidity

Limited partnership interests are illiquid investments with no public market. You should expect to hold your investment for 5-7 years or longer. There are significant restrictions on transferring your interests, and early withdrawal is typically not permitted. You may not be able to access your capital when needed.

2. Real Estate Risks

2.1 Market Risks

Real estate markets are cyclical and subject to economic conditions. Property values may decline due to economic recessions, changes in supply and demand, interest rate increases, or local market conditions. An economic downturn could materially impact property performance and valuations.

2.2 Occupancy Risk

Income from senior housing properties depends on maintaining high occupancy levels. Failure to lease units, tenant defaults, or increased competition could reduce income and property value. Marketing costs for vacant units and concessions to attract residents could further reduce returns.

2.3 Operating Expenses

Operating costs including utilities, maintenance, insurance, property taxes, and staffing may increase faster than anticipated. Unexpected capital expenditures for repairs or improvements may be required. These increased costs could reduce or eliminate distributions to investors.

2.4 Property-Specific Risks

Properties may have physical defects, environmental issues, or structural problems that were not discovered during due diligence. Natural disasters, fires, or other casualties could damage properties. While insurance provides some protection, coverage may be inadequate or unavailable.

3. Senior Housing Industry Risks

3.1 Regulatory Risks

Senior housing facilities are subject to extensive federal, state, and local regulations including licensing, safety codes, and healthcare regulations. Changes in regulations or failure to maintain compliance could result in fines, license revocation, or operational restrictions.

3.2 Healthcare Reimbursement

For properties with Medicare or Medicaid residents, changes to reimbursement rates or policies could materially impact revenues. Healthcare reform or government budget constraints may reduce reimbursements.

3.3 Liability and Litigation

Senior housing operators face potential liability claims related to resident care, including falls, medication errors, abuse allegations, and wrongful death claims. Litigation can be costly and damage reputation, even if claims are ultimately unsuccessful.

3.4 Labor and Staffing

Senior housing facilities require qualified staff to provide care services. Labor shortages, wage inflation, or unionization efforts could increase costs. Quality of care depends on staff retention and training.

4. Financing and Leverage Risks

4.1 Leverage Risk

Properties are typically financed with debt, which amplifies both gains and losses. If property performance deteriorates, debt service obligations could consume all cash flow, leaving nothing for equity distributions. In severe cases, lenders could foreclose, resulting in total loss of equity.

4.2 Refinancing Risk

Most loans require refinancing before the anticipated exit. If credit markets tighten or property performance declines, refinancing may be unavailable or only available on unfavorable terms. This could force a sale at an inopportune time.

4.3 Interest Rate Risk

Rising interest rates increase borrowing costs and reduce property valuations. Higher rates also make properties less attractive to buyers, potentially reducing exit values. While interest rate hedges may provide some protection, they are not a complete safeguard.

5. Sponsor and Management Risks

5.1 Dependence on Sponsor

Success depends heavily on KianaCoby's ability to execute the business plan. The loss of key personnel, poor decision-making, or sponsor financial difficulties could materially impact performance. There is no assurance that KianaCoby will successfully manage the investment.

5.2 Limited Operating History

While KianaCoby's team has relevant experience, the entity itself may have limited operating history. Past performance of team members does not guarantee future success. Prior successes may not be replicable.

5.3 Conflicts of Interest

KianaCoby serves as general partner and receives fees and promote payments that may create conflicts with limited partner interests. The sponsor may prioritize its own economic interests over those of investors in certain circumstances.

6. Limited Partnership Structure Risks

6.1 No Control

As a limited partner, you have no control over property management, financing decisions, timing of sale, or other material decisions. All control rests with KianaCoby as general partner. You cannot force a distribution or exit.

6.2 Capital Calls

The partnership agreement may permit capital calls requiring you to contribute additional funds. Failure to meet capital calls could result in dilution of your ownership interest or forfeiture of your investment.

6.3 Transfer Restrictions

Partnership interests cannot be transferred without general partner consent. Even with consent, finding a buyer is difficult as there is no secondary market. Forced sales would likely be at significant discounts.

7. Tax Risks

7.1 Tax Complexity

Partnership taxation is complex. You will receive K-1 tax forms and may have taxable income without corresponding cash distributions ("phantom income"). State and local tax obligations may apply even if you reside in a different state than the property.

7.2 Changes in Tax Law

Tax laws change and could materially impact the economics of your investment. Elimination of depreciation deductions, changes to capital gains treatment, or other tax law changes could reduce after-tax returns.

8. Exit and Disposition Risks

8.1 Exit Timing

The timing of property sale is uncertain and may be delayed due to market conditions. Holding periods could extend beyond initial projections, tying up capital for longer than anticipated.

8.2 Sale Proceeds Risk

There is no assurance properties can be sold at favorable prices. Exit values may be lower than projections due to market conditions, property performance, or buyer perception. Transaction costs reduce net proceeds.

9. Economic and Market Risks

9.1 Economic Recession

Economic downturns reduce demand for senior housing and can impact occupancy and pricing. Family members may move seniors into their homes or choose lower-cost alternatives during recessions.

9.2 Inflation Risk

Inflation increases operating costs and construction expenses. While rents may increase with inflation, there is often a lag, and senior housing residents on fixed incomes may be unable to afford increases.