Risk Disclosure
Please read this document carefully before investing. Understanding the risks involved is essential to making informed investment decisions.
Investment Risk Warning
Investment in tokenized real estate involves significant risk. You may lose some or all of your invested capital. Past performance is not indicative of future results. Returns are not guaranteed.
Market & Property Risks
Property Value Fluctuation: Real estate values can decline due to economic conditions, local market factors, property-specific issues, or changes in demand. This may affect both rental income and the value of underlying property tokens.
Rental Income Variability: Rental income is not guaranteed. Vacancies, tenant defaults, rent reductions, or increased operating costs may reduce distributions below projected levels.
Geographic Concentration: Properties are concentrated in specific markets (East Africa, Dubai). Regional economic downturns, political instability, or regulatory changes could disproportionately impact returns.
Currency Risk: Properties generate income in local currencies which is converted to USD-denominated stablecoins. Currency fluctuations may affect actual returns.
Protocol & Technology Risks
Smart Contract Risk: Despite security audits, smart contracts may contain vulnerabilities that could result in loss of funds. New attack vectors may emerge that were not anticipated during audits.
Protocol Risk: The Estate Royalty protocol may experience technical failures, governance disputes, or operational issues that could affect distributions or access to funds.
Blockchain Risk: Underlying blockchain networks may experience congestion, forks, or other issues that could affect transaction processing and access to your position.
Stablecoin Risk: USD-denominated distributions rely on stablecoins which carry their own risks including de-pegging, regulatory action, or issuer insolvency.
Regulatory & Legal Risks
Regulatory Changes: Laws and regulations governing tokenized securities and real estate may change. Such changes could affect the protocol's operations, your ability to access funds, or the tax treatment of your investment.
Jurisdictional Restrictions: The protocol may become unavailable in certain jurisdictions due to regulatory requirements. You are responsible for compliance with laws in your jurisdiction.
Legal Structure Risk: The SPV structures holding property may be subject to legal challenges, tax disputes, or enforcement actions that could affect your rights to underlying assets.
Vault-Specific Risks
Senior Vault
While Senior vault holders have priority on distributions, this does not eliminate risk. In severe downturns, even Senior distributions may be reduced or suspended. Lower returns mean longer time to recover any losses.
Junior Vault
Junior vault holders face higher variability in returns. In periods of reduced rental income, Junior distributions may be significantly reduced or eliminated while Senior obligations are serviced first.
Reserve Vault
Reserve vault holders bear the highest risk. Distributions occur only after Senior and Junior obligations. In difficult periods, Reserve holders may receive no distributions. Direct exposure to property token values means full participation in both upside and downside.
Liquidity & Withdrawal Risks
Lock Periods: Deposits are subject to lock periods during which withdrawals are not permitted. Plan your liquidity needs accordingly.
Withdrawal Delays: Even after lock periods, withdrawals may be subject to processing times or queuing depending on protocol liquidity.
Secondary Market: There may be limited secondary market liquidity for vault positions. You may not be able to sell your position at desired prices.
Investor Acknowledgment
By investing in Estate Royalty vaults, you acknowledge and accept that:
- You have read and understood this risk disclosure
- You understand that investment returns are not guaranteed
- You have sufficient financial resources to bear a total loss of your investment
- You have sought independent financial and legal advice as appropriate
- You are investing in accordance with all applicable laws in your jurisdiction
- You understand the specific risks associated with your chosen vault tier
- You accept responsibility for your own investment decisions
Last updated: January 13, 2026