mortgage funds), local conditions (such as an oversupply of space or a reduction in demand for real estate in the markets in which  we operate), the attractiveness of the properties to tenants, competition from other landlords and our ability to provide adequate  maintenance at an economical cost. Certain significant expenditures, including property taxes, maintenance costs, mortgage payments, insurance costs and related  charges, must be made whether or not a property is producing sufficient income to service these expenses. Our commercial office  properties are typically subject to mortgages which require substantial debt service payments. If we become unable or unwilling  to meet mortgage payments on any property, losses could be sustained as a result of the mortgagee’s exercise of its rights of  foreclosure or of sale. Growth of rental income is dependent on strong leasing markets to ensure expiring leases are renewed and new tenants are  found promptly to fill vacancies. It is possible that we may face a disproportionate amount of space expiring in any one year.  Additionally, rental rates could decline, tenant bankruptcies could increase and tenant renewals may not be achieved, particularly  in the event of a protracted disruption in the economy such as a recession.  Our retail property operations are subject to risks that affect the retail environment, including unemployment, weak income  growth, lack of available consumer credit, industry slowdowns and plant closures, consumer confidence, increased consumer  debt, poor housing market conditions, adverse weather conditions, natural disasters, competition and other factors. All of these  factors could negatively affect consumer spending, and adversely affect the sales of our retail tenants. This could have an  unfavourable effect on our retail property operations and our ability to attract new retail tenants. If sales at stores operating in our malls are poor, existing tenants might be unable or unwilling to pay their minimum rents or  expense recovery charges and new tenants might be willing to pay lower minimum rents than they otherwise would. Significant  expenditures associated with each equity investment in real estate assets, such as mortgage payments, property taxes and  maintenance costs, are generally not reduced when there is a reduction in income from the investment, so our income and cash  flow would be adversely affected by a decline in income from a retail property. In addition, our retail property leases generally  do not contain provisions designed to ensure the creditworthiness of the tenant, and are therefore negatively impacted by tenant  bankruptcies or the voluntary or involuntary closure of stores in our properties. We may be unable to re-lease space vacated by  such events on favourable terms or at all. As a result, the bankruptcy or closure of a national tenant may adversely affect our  revenues. Some of our retail lease agreements include a co-tenancy provision which allows the mall tenant to pay a reduced rent amount  and, in certain instances, terminate the lease, if we fail to maintain certain occupancy levels at the mall. In addition, certain  of our tenants have the ability to terminate their leases prior to the lease expiration date if their sales do not meet agreed upon  thresholds. Therefore, if occupancy, tenancy or sales fall below certain thresholds, rents we are entitled to receive from our retail  tenants could be reduced and our ability to attract new tenants may be limited. Our retail tenants face competition from retailers at other regional malls, outlet malls, discount shopping centres, discount  shopping clubs, catalogue companies, and through internet sales and telemarketing. Competition of these types could reduce the  percentage rent payable by certain retail tenants and adversely affect our revenues and cash flows. Additionally, our retail tenants  are dependent on perceptions by retailers and shoppers of the safety, convenience and attractiveness of our retail properties. If  retailers and shoppers perceive competing properties and other retailing options such as the internet to be more convenient or of  a higher quality, our retail property revenues may be adversely affected. Our renewable energy operations, which are primarily hydroelectric generating facilities, are subject to changes in hydrology  and price, but also include risks related to equipment and dam failure, counterparty performance, water rental costs, changes in  regulatory requirements and other material disruptions. The revenues generated by our power facilities are correlated to the amount of electricity generated, which in turn is dependent  upon available water flows. Hydrology varies naturally from year to year and may also change permanently because of climate  change or other factors, and a natural disaster could impact water flows within the watersheds in which we operate. It is therefore  possible that low water levels at our North American power generating operations could result at any time and potentially  continue for indefinite periods. A significant portion of our renewable energy operation revenues are tied, either directly or indirectly, to the wholesale market  price for electricity in the markets in which we operate. Wholesale market electricity prices are impacted by a number of external  factors. As a result, we cannot accurately predict future electricity prices. A significant portion of the power we generate is sold under long-term power purchase agreements, shorter-term financial  instruments and physical electricity and natural gas contracts, some or all of which may be above market. These contracts  are intended to mitigate the impact of fluctuations in wholesale electricity prices. If, however, for any reason, any of our  counterparties in these contracts are unable or unwilling to fulfill their contractual obligations, we may not be able to replace  an existing contract with an agreement on equivalent terms and conditions. In this event, and potentially others, we may not be  successful in mitigating the impact of fluctuations in wholesale electricity prices. Renewable Energy 68 BROOKFIELD ASSET MANAGEMENT 