1261159--3/14/2006--CNL_INCOME_PROPERTIES

related topics

{investment, property, distribution}

{loan, real, estate}

{tax, income, asset}

{interest, director, officer}

{loss, insurance, financial}

{debt, indebtedness, cash}

{control, financial, internal}

{capital, credit, financial}

{stock, price, operating}

We have a limited operating history. Our management has limited or no experience with investments in certain of the properties in which we may invest making loans which may impact our ability to successfully make acquisitions or loans in those sectors. We will experience competition for allocation of properties, loans and other permitted investments. There will be competing demands on our officers and directors. The timing of sales and acquisitions may favor our advisor and not us. Our advisor s fee structure may encourage our advisor to recommend speculative investments and a high amount of leverage. The agreement between our advisor and us was not the result of arm s-length negotiations. We may be unable to invest the proceeds we receive from our common stock offerings in a timely manner. Real Estate and Other Investment Risks Multiple property leases or loans with individual tenants or borrowers increase our risks in the event such tenants or borrowers are financially impaired and are unable to make rent or debt service payments to us. Our exposure to typical real estate investment risks could reduce our income. A concentration of our investments in only a few property classes may leave our profitability vulnerable to a downturn in such sectors. Your investment may be subject to additional risks if we make international investments. We may rely on various cash flow or income security provisions to our leases for minimum rent payments. We will not control the management of our properties. We have no residual interest in ground lease properties or properties that reside on permitted land. It may be difficult to re-lease our properties. Our loans may be affected by unfavorable real estate market conditions. We may make loans on a subordinated and unsecured basis and may not be able to collect outstanding principal and interest. Borrowings may reduce the funds available for distribution and increase the risk of loss since defaults may cause us to lose the properties securing the loans. Defaults on loans secured by a property we own may result in foreclosure actions initiated by lenders and our loss of the property or properties securing the loan that is in default. Portfolio acquisitions are more difficult to complete than single asset acquisitions. We will compete with other companies for investments. Increased competition for customers may reduce the ability of certain of our operators to make scheduled rent payments to us. Seasonal revenue variations in certain asset classes will require our operators of such asset classes to manage cash flow properly over time so as to meet their non-seasonal scheduled rent payments to us. Because our revenues are highly dependent on lease payments for our properties and interest payment from loans that we make, defaults by our tenants or borrowers would reduce our cash available for the repayment of our outstanding debt and for distribution. We may not be able to obtain adequate financing. We may borrow money to make distributions and distributions may not come from funds from operations We will be subject to increased taxation if we fail to qualify as a REIT for federal income tax purposes. Excessive non-real estate asset values may jeopardize our REIT status. Our board of directors can take many actions without stockholder approval.

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1261159--3/14/2006--CNL_INCOME_PROPERTIES_INC