Rithm Property Trust (RPT) Risk Analysis

Our Operating Partnership indirectly owns common shares of numerous subsidiary REITs some of which intend to elect to be taxed as REITs under the U.S. federal income tax law for their short taxable year ended December 31, 2022. Our subsidiary REITs are subject to the various REIT qualification requirements and other limitations described herein that are applicable to us. If any of our subsidiary REITs were to fail to qualify as a REIT, then (i) such subsidiary REITs would become subject to U.S. federal income tax and (ii) our ownership of shares in such subsidiary REITs would cease to be a qualifying asset for purposes of the asset tests applicable to REITs. If our subsidiary REITs were to fail to qualify as a REIT, it is possible that we would fail certain of the asset tests applicable to REITs, in which event we would fail to qualify as a REIT unless we could avail ourselves of certain relief provisions. We intend to implement certain protective arrangements intended to avoid such an outcome if our subsidiary REITs were not to qualify as a REIT, but there can be no assurance that such arrangements will be effective to avoid the resulting adverse consequences to us.

We intend to operate in a manner so as to qualify as a REIT for federal income tax purposes.  Our continued qualification as a REIT will depend on our satisfaction of certain asset, income, investment, organizational, distribution, shareholder ownership and other requirements on a continuing basis.  Our ability to satisfy the asset requirements depends upon our analysis of the fair market values of our assets, some of which are not susceptible to a precise determination and for which we will not obtain independent appraisals.  In addition, our compliance with the REIT income and asset requirements depends upon our ability to manage successfully the composition of our income and assets on an ongoing basis.  Moreover, the proper classification of an instrument as debt or equity for federal income tax purposes may be uncertain in some circumstances, which could affect the application of the REIT qualification requirements.  Accordingly, there can be no assurance that the Internal Revenue Service ("IRS") will not contend that our interests in subsidiaries or other issuers constitute a violation of the REIT requirements.  Moreover, future economic, market, legal, tax or other considerations may cause us to fail to qualify as a REIT. If we were to fail to qualify as a REIT in any taxable year, we would be subject to federal income tax, including any applicable alternative minimum tax, on our taxable income at regular corporate rates and distributions to shareholders would not be deductible by us in computing our taxable income.  Any such corporate tax liability could be substantial and would reduce the amount of cash available for distribution to our shareholders, which in turn could have an adverse impact on the value of and trading prices for, our common shares.  Unless entitled to relief under certain Code provisions, we also would be disqualified from taxation as a REIT for the four taxable years following the year during which we ceased to qualify as a REIT.

The rules dealing with U.S. federal, state and local income taxation are constantly under review by persons involved in the legislative process and by the IRS and the U.S. Treasury Department. Changes to tax laws (which changes may have retroactive application) could adversely affect our stockholders or us. In recent years, many such changes that have been made, which introduced major changes to the Code, including a number of provisions of the Code that affect the taxation of REITs and their stockholders, and changes are likely to continue to occur in the future. We cannot predict whether, when, in what form, or with what effective dates, tax laws, regulations and rulings may be enacted, promulgated or decided, or technical corrections made, which could result in an increase in our or our stockholders' tax liability, or create other adverse effects on us or our stockholders, including requiring changes in the manner in which we operate in order to minimize increases in our tax liability. A shortfall in tax revenues for states and municipalities in which we operate may lead to an increase in the frequency and size of such changes. If such changes occur, we may be required to pay additional taxes on our assets or income and/or be subject to additional restrictions. These increased tax costs could, among other things, adversely affect our financial condition, the results of operations and the amount of cash available for the payment of dividends.

The maximum federal income tax rate applicable to "qualified dividend income" payable by non-REIT corporations to certain non-corporate U.S. stockholders is generally 20%, and a 3.8% Medicare tax may also apply. Dividends paid by REITs, however, generally are not eligible for the reduced rates applicable to qualified dividend income. However, current law provides a deduction of up to 20% of a non-corporate taxpayer's ordinary REIT dividends, with such deduction scheduled to expire for taxable years beginning after December 31, 2025. The more favorable rates applicable to regular corporate distributions could cause investors who are individuals to perceive investments in REITs to be relatively less attractive than investments in the stocks of non-REIT corporations that pay distributions. This could materially and adversely affect the value of the stock of REITs, including our common stock.

Each of RPT and Kimco has operated in a manner that it believes has allowed it to qualify as a REIT for U.S. federal income tax purposes under the Code and intends to continue to do so through the closing date or through the taxable year ending with the Company Merger, respectively. Additionally, we and Kimco intend that Kimco will continue to operate in such a manner after the Company Merger. It is a condition to the obligation of Kimco to complete the Mergers that (i) Kimco receive an opinion from our REIT counsel to the effect that, (A) commencing with its taxable year ended December 31, 2015 through its taxable year ending with the Company Merger, we have been organized and operated in conformity with the requirements for qualification and taxation as a REIT under the Code and (B) our prior, current and proposed ownership, organization and method of operations as described in a representation letter provided by us have allowed and will continue to allow us to satisfy the requirements for qualification and taxation as a REIT under the Code commencing with its taxable year ended December 31, 2015 through its taxable year ending with the Company Merger and (ii) we receive an opinion from Kimco's REIT counsel to the effect that, (A) commencing with its taxable year ended December 31, 2015 through its taxable year ended December 31, 2022, Kimco's predecessor entity was organized and operated in conformity with the requirements for qualification and taxation as a REIT under the Code and (B) commencing with Kimco's taxable year ending December 31, 2023, Kimco has been organized and operated in conformity with the requirements for qualification and taxation as a REIT under the Code and Kimco's proposed method of operation will enable Kimco to continue to meet the requirements for qualification and taxation as a REIT under the Code. The opinions will be subject to customary exceptions, assumptions and qualifications and will be based on customary representations made by us and Kimco. If any such representations are or become inaccurate or incomplete, such opinions may be invalid and the conclusions reached therein could be jeopardized. In addition, the opinions will not be binding on the IRS or any court, and there can be no assurance that the IRS will not take a contrary position or that such position would not be sustained. Moreover, neither us nor Kimco has requested or plans to request a ruling from the IRS that it qualifies as a REIT. Qualification as a REIT involves the application of highly technical and complex Code provisions for which there are only limited judicial and administrative interpretations. The complexity of these provisions and of the applicable U.S. Treasury regulations is greater in the case of a REIT that holds assets through a partnership, like we do and Kimco will following the Mergers and the contribution. The determination of various factual matters and circumstances not entirely within our and Kimco's control may affect their ability to qualify as REITs. If Kimco failed or fails to qualify as a REIT for U.S. federal income tax purposes, it could face serious tax consequences that would substantially reduce its cash available for distribution, including cash available to pay dividends to its stockholders, because: - it would be subject to U.S. federal income tax on its net income at regular corporate rates for the years it did not qualify for taxation as a REIT (and, for such years, would not be allowed a deduction for dividends paid to stockholders in computing its taxable income);- it could be subject to any applicable corporate alternative minimum tax, stock buyback excise tax, and possibly increased state and local taxes for such periods;- unless it is entitled to relief under applicable statutory provisions, neither it nor any "successor" company could elect to be taxed as a REIT until the fifth taxable year following the year during which it was disqualified;- if it were to re-elect REIT status, it would have to distribute all earning and profits from non-REIT years before the end of the first new REIT taxable year; and - for the five year period following re-election of REIT status, upon a taxable disposition of any asset owned as of such re-election, it could be subject to corporate-level tax with respect to all or a portion of the gain so recognized. Even if Kimco retains its REIT status, if we lose our REIT status for a taxable year ending on or before the Company Merger, Kimco could be subject to adverse tax consequences that would substantially reduce its cash available for distribution, including cash available to pay dividends to its stockholders, because: - Kimco, as the successor by merger to us for U.S. federal income tax purposes, would be subject to any of our corporate income tax liabilities, including penalties and interest;- Kimco would be subject to corporate level tax on the built-in gain on each asset of ours existing at the time of the Company Merger if Kimco were to dispose of the such asset during the five-year period following the Company Merger; and - Kimco would succeed to any earnings and profits accumulated by us for taxable periods that it did not qualify as a REIT, and Kimco would have to pay a special dividend and/or employ applicable deficiency dividend procedures (including interest payments to the IRS) to eliminate any such earnings and profits (if Kimco does not timely distribute those earnings and profits, it could fail to qualify as a REIT). In addition, if there is an adjustment to our taxable income or dividends paid deductions, Kimco could elect to use the deficiency dividend procedure in order to maintain our REIT status. That deficiency dividend procedure could require Kimco to make significant distributions to its stockholders and to pay significant interest to the IRS. As a result of all these factors, the failure of any of Kimco (before or after the Company Merger) or us (before the Company Merger) to qualify as a REIT could impair Kimco's ability to expand its business and raise capital, and would materially adversely affect the value of its capital stock.

In a number of cases, our leases give a tenant the exclusive right to sell clearly identified types of merchandise or provide specific types of services at a particular shopping center.  In other cases, leases with a tenant may limit the ability of other tenants to sell similar merchandise or provide similar services to that tenant. When leasing a vacant space, these restrictions may limit the number and types of prospective tenants suitable for that space.  If we are unable to lease space on satisfactory terms, our operating results would be adversely impacted.