Risk Disclosure

Last updated: May 2025

Risk Summary

1. Capital Risk

Fractional real estate investments are not capital-protected. You may receive back less than you invested, or in adverse scenarios, lose your entire investment. Key contributors to capital loss include:

• Property value decline due to market downturns, oversupply, or deteriorating location fundamentals.
• Developer insolvency or project abandonment during construction phase.
• Forced sale of assets at unfavourable prices during economic distress.
• Structural or legal issues with SPV holding vehicles.

We strongly recommend that your investment in any single fractional property does not exceed 10–15% of your investable assets, and that you maintain adequate liquid reserves outside this investment.

2. Liquidity Risk

Real estate, including fractional real estate, is an inherently illiquid asset class. You should be prepared to hold your investment for the full agreed holding period, which is typically 3–7 years. Specific liquidity risks include:

• Lock-in periods: Most SPV structures require investors to hold units for a defined period before exit is possible.
• Secondary market limitations: Secondary resale mechanisms may be limited, unavailable, or may result in below-NAV pricing.
• Exit delays: Asset sales can take 6–24 months to complete, during which your capital remains locked.
• Forced holding: In adverse market conditions, SPV managers may delay exit to protect investor value — this is within their discretion under the investment documents.

Do not invest funds that you may need access to at short notice. This investment class is unsuitable as an emergency reserve.

3. Regulatory Risk

Investment regulations across all markets in which Terra Verde operates are subject to change. Regulatory changes that could adversely affect your investment include:

• Changes to foreign investment rules in the UAE, Bahrain, Georgia, or India that restrict ownership transfer or repatriation of capital.
• New SEBI or RBI regulations in India that alter how Indian residents may invest in offshore real estate.
• Changes to SPV tax treatment in Singapore or investment jurisdictions.
• New property transfer taxes, registration levies, or withholding taxes in investment markets.
• FEMA (Foreign Exchange Management Act) amendments that affect cross-border investment structures for Indian nationals.

For Indian Investors: Under FEMA's Liberalised Remittance Scheme (LRS), Indian residents may invest up to USD 250,000 per financial year in overseas assets. Compliance with LRS limits, reporting requirements (Form A2, Schedule III), and RBI guidelines is entirely your responsibility. Terra Verde does not provide FEMA compliance advice — please consult a qualified CA or FEMA practitioner before investing.

4. Currency & Exchange Rate Risk

Investments in foreign markets involve exposure to exchange rate movements between your home currency and the investment currency. This risk applies in both directions:

• If the investment currency depreciates against INR or your home currency, your effective returns when repatriated will be lower than projected.
• Conversely, favourable currency movements can enhance effective returns beyond the projected range.
• Currency conversion fees and transfer charges also reduce net returns.

The INR/USD conversions shown on the Terra Verde website are indicative approximations only and do not represent guaranteed exchange rates at the time of investment or exit. Terra Verde does not provide or arrange currency hedging unless expressly agreed in writing.

5. Developer & Asset Performance Risk

While Terra Verde evaluates and selects developers and assets with care, we cannot guarantee their performance. Risks include:

• Developer insolvency: A developer may face financial difficulties, delaying or halting construction or preventing asset transfer.
• Construction delays: Regulatory delays, material shortages, or contractor issues may extend timelines significantly.
• Occupancy risk: Rental income projections assume a level of occupancy that may not be achieved in practice.
• Asset quality deterioration: Properties may require significant capital expenditure for maintenance, refurbishment, or legal compliance.
• Title and legal risk: Despite due diligence, title disputes, encumbrances, or zoning restrictions may emerge post-acquisition.

The SPV structure limits (but does not eliminate) your exposure to developer risk by ring-fencing each asset. However, if the underlying asset fails, the SPV unit value will be impaired accordingly.

6. Geopolitical & Macroeconomic Risk

Terra Verde's investment markets include the UAE (Dubai, Abu Dhabi), Bahrain, Georgia (Tbilisi), various European markets, and India. These markets carry varying levels of:

• Political instability or governance changes that affect property rights and foreign ownership laws.
• Economic cycles, recessions, or sector-specific downturns that reduce property values and rental demand.
• Sanctions or international trade restrictions that may affect the repatriation of capital from certain markets.
• Natural disaster, pandemic, or other force majeure events that affect occupancy and asset values.

7. Platform & Operational Risk

Terra Verde is an advisory platform at an early stage of its development. Operational risks include:

• Business continuity: If Terra Verde ceases operations, ongoing SPV management and investor communications may be disrupted.
• Key person risk: The quality of deal sourcing and advisory services depends on the continued availability of key team members.
• Technology risk: Technical failures, data breaches, or communication disruptions could delay investor communications or reporting.
• Third-party dependency: Terra Verde relies on external lawyers, SPV managers, auditors, and escrow agents whose quality and reliability cannot be guaranteed.

8. Tax Risk

The tax treatment of returns from fractional real estate investments varies depending on:

• Your country of tax residence.
• The jurisdiction in which the property is located.
• The structure of the SPV and the nature of distributions (income vs. capital gain).
• Any applicable double taxation treaties between your country of residence and the investment jurisdiction.

You are solely responsible for all taxes arising from your investment, including income tax, capital gains tax, and reporting obligations. Terra Verde does not provide tax advice. Please consult a qualified tax adviser in your jurisdiction before investing.

9. Conflict of Interest

Terra Verde may receive fees, commissions, or introductory payments from developers or SPV sponsors in connection with deals presented to investors. Where such arrangements exist, they will be disclosed in the relevant investment materials. You should be aware that such arrangements may influence which investment opportunities are presented or prioritised.

10. No Investor Protection Scheme

Investments made through Terra Verde are not covered by:

• The Financial Claims Scheme (Singapore).
• Any SEBI-administered investor protection fund (India).
• FSCS (UK) or equivalent EU investor protection schemes.
• Any government-backed deposit or investment guarantee in the UAE, Bahrain, or Georgia.

If Terra Verde or an SPV manager fails, there is no government protection mechanism to recover your invested capital.

11. Seek Independent Advice

We strongly recommend that all investors obtain independent professional advice before making any investment decision. This should include:

• A financial adviser to assess suitability relative to your personal financial situation and risk tolerance.
• A legal adviser to review SPV documentation, investment agreements, and applicable law in your jurisdiction.
• A tax consultant or CA to advise on tax implications and FEMA/RBI compliance for Indian investors.

The information on this website should not be the sole basis for any investment decision. Terra Verde is available to answer questions, but cannot substitute for independent professional advice.

12. Contact

For queries regarding this Risk Disclosure: support@terraverdeinfra.com · +44 7460375858