TRXF11

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Risk Factors

Before making an investment decision in the Fund, potential investors should, considering their own financial situation, investment objectives and risk profile, carefully evaluate all the information available in this Prospectus and the Regulations, including, but not limited to, information relating to the Investment Policy, portfolio composition and risk factors described in this section, to which the Fund and investors are subject.


Given the nature of the investments to be made by the Fund, the Unitholders should be aware of the risks to which the Fund's investments and applications will be subject, as described below. Therefore, there are no guarantees that the capital actually paid in will be remunerated as expected by the Unitholders.


The Fund's investments are, by their nature, subject to typical market fluctuations, credit risk, systemic risk, adverse liquidity conditions, and atypical trading in the markets in which they operate. Even though the Administrator and the Manager maintain risk management routines and procedures, there is no guarantee of completely eliminating the possibility of losses for the Fund and its Unitholders.


The following describes the main risks inherent to the Fund, which are not the only risks to which investments in the Fund and in Brazil in general are subject. The Fund's business, financial condition or results may be adversely and materially affected by any of these risks, without prejudice to additional risks that are not currently known to the Administrator or that are considered to be of minor relevance at this time.

I. Market risks.

Macroeconomic factors

The capital market in Brazil is influenced, to varying degrees, by the economic and market conditions of other countries, including emerging economies. Investor reactions to events in these other countries can have an adverse effect on the price of assets and securities issued in Brazil, reducing investor interest in these assets, including Brazilian shares. In the past, the emergence of adverse economic conditions in other emerging market countries generally resulted in capital flight and, consequently, a reduction in foreign investment in Brazil. Recent financial crises have resulted in a global recession, with various repercussions that have directly or indirectly negatively affected the Brazilian financial and capital markets and the Brazilian economy, such as: fluctuations in the financial and capital markets, with oscillations in asset prices (including real estate), credit unavailability, reduced spending, economic slowdown, exchange rate instability, and inflationary pressure. Any new event of a similar nature to those mentioned above, abroad or in Brazil, may negatively affect the Fund's activities, the Fund's assets, the profitability of the Unitholders, and the trading value of the Units. Exogenous variables such as the occurrence, in Brazil or abroad, of extraordinary events or special market situations, or even political, economic, or financial events that modify the current order and significantly influence the Brazilian financial and/or capital markets, including variations in interest rates, currency devaluation events, and relevant legislative changes, may negatively affect the prices of the assets comprising the Fund's portfolio and the value of the Units, as well as result in (a) an extension of the Unit amortization period; and/or the distribution of the Fund's results; or (b) the liquidation of the Fund, which may cause the respective Unitholders to lose the principal amount of their investments.

Additionally, the Fund's financial assets must be marked to market, meaning their values will be updated daily and accounted for at the market trading price, or the best estimate of the value that would be obtained in that transaction. As a consequence, the value of the Fund's issued Units may experience frequent and significant fluctuations, including throughout the day. Consequently, the market value of the Fund's issued Units may not necessarily reflect their net asset value.

No fine or penalty of any kind shall be due by the Fund or by any person, including the institutions responsible for the distribution of the Units, the other Unit Holders of the Fund, the Administrator and the Institutions Participating in the Offering, if, for any reason, (a) the amortization period of the units and/or the distribution of the Fund's results is extended; (b) the Fund is liquidated; or (c) the Unit Holders suffer any damage or loss resulting from such events.

Other macroeconomic risks

The Fund will be subject to, among others, the additional risks associated with:
  • Fluctuating demand for real estate-based assets;
  • competitiveness of the real estate sector;
  • regulation of the real estate sector; and
  • Taxation related to the real estate sector.

The Federal Government can intervene in the country's economy and make significant changes to its policies and regulations, impacting various sectors and segments of the country's economy. The Fund's activities, financial situation, and results may be significantly affected by changes in policies or regulations involving, for example, interest rates, exchange controls and restrictions on remittances abroad; exchange rate fluctuations; inflation; liquidity in domestic financial and capital markets; fiscal policy; social and political instability; regulatory changes; and other political, social, and economic events that may occur in or affect Brazil. In a scenario of rising interest rates, for example, asset prices may be negatively impacted. In this scenario, adverse effects related to the aforementioned factors may negatively impact the Fund's assets, profitability, and the trading value of the units.


Additionally, political instability can adversely affect real estate transactions and their respective results. The Brazilian political environment has historically influenced, and continues to influence, the performance of the country's economy. The political crisis has affected and may continue to affect investor and general public confidence, and has already resulted in an economic slowdown and increased volatility in bonds issued by Brazilian companies.


Brazil recently went through the impeachment process against former President Dilma Rousseff and the government of former President Michel Temer without major changes from an economic standpoint. The government of President Jair Bolsonaro will face the challenge of reversing the country's political and economic crisis, in addition to approving the social reforms necessary for a more stable economic environment. The inability of President Jair Bolsonaro's new government to reverse the country's political and economic crisis, and to approve social reforms, could have effects on the Brazilian economy and may have an adverse effect on the Fund's operational results and financial condition.


The ongoing investigations of "Operation Lava Jato" and "Operation Zelotes" may negatively affect the growth of the Brazilian economy and could have a negative impact on the Fund's business dealings. Brazilian markets have been experiencing increased volatility due to the uncertainties arising from these investigations conducted by the Federal Police, the Attorney General's Office, and other authorities. "Operation Lava Jato" investigates the payment of bribes to high-ranking officials of large state-owned companies in exchange for contracts awarded by the government and state-owned companies in the infrastructure, oil, gas, and energy sectors, among others. The profits from these bribes allegedly financed the political campaigns of political parties, as well as serving to personally enrich the beneficiaries of the scheme. As a result of the ongoing "Operation Lava Jato," a number of politicians and executives from various private and state-owned companies in Brazil are being investigated and, in some cases, have been removed from their positions or arrested. In turn, "Operation Zelotes" investigates improper payments allegedly made by Brazilian companies to officials of the Administrative Council of Tax Appeals ("CARF"). These payments aimed to induce officials to reduce or waive fines related to non-compliance with tax legislation imposed by the Federal Revenue Service, which were under CARF review. Even though the investigations are not yet concluded, they have already had a negative impact on the image and reputation of the companies involved, and on the general perception of the Brazilian economy. We cannot predict whether the investigations will lead to greater political and economic instability or whether new accusations against government officials and state-owned or private companies will emerge in the future within the scope of these or other investigations. Furthermore, we cannot predict the outcome of such allegations, nor their effect on the Brazilian economy. The development of these cases may negatively affect the Brazilian economy and, consequently, the Fund's assets, profitability, and the trading value of its units.

This risk consists of the inability of debtors holding receivables arising from the Assets, lessees of properties owned by the Fund, and issuers of securities that may eventually be included in the Fund's portfolio to meet their payment obligations. Public and/or private debt securities that may comprise the Fund's portfolio are subject to the ability of their issuers or debtors of the underlying assets to honor their commitments to pay interest and principal on their debts. Events affecting the financial conditions of the issuers and debtors of the securities, as well as changes in economic, legal, and political conditions that may compromise their ability to pay, can have significant impacts on the prices and liquidity of these assets. Under these conditions, the Administrator may face difficulties in liquidating or trading such assets at the desired price and time, and consequently, the Fund may face liquidity problems. Additionally, negative variations in the Fund's assets may negatively impact the Fund's net worth, profitability, and the trading value of the Units. Furthermore, changes in the perception of the credit quality of the issuers and debtors of the underlying assets may also affect the Fund. Including tenants of properties owned by the Fund, even if unjustified, could impact the Fund, also compromising its liquidity.

The assets comprising the Fund's portfolio may have low liquidity compared to other investment options. Investors should be aware that real estate investment funds are, by regulation, structured as closed-end funds, not allowing the redemption of their units under any circumstances. As a result, real estate investment funds have low liquidity in the Brazilian market, and unit holders may have difficulty selling their units on the secondary market. Therefore, investors acquiring units in the Fund should be aware that investing in the Fund is a long-term investment. Furthermore, the Regulations establish some circumstances in which the General Meeting may opt for the liquidation of the Fund and other circumstances in which the redemption of units may be carried out by delivering the assets comprising the Fund's portfolio to the unit holders. Unit holders may encounter difficulties selling the assets received in the event of the Fund's liquidation.

Risk of Mark-to-Market.

The assets invested in by the Fund may be medium- and long-term investments (including indefinite-term in some cases), which have low liquidity in the secondary market, and the calculation of their face value for the Fund's accounting purposes is carried out via mark-to-market. Therefore, the mark-to-market valuation of the Fund's portfolio assets for the purpose of calculating its net worth may cause negative fluctuations in the value of the Units, which is calculated by dividing the Fund's net worth by the number of Units issued to date. Thus, the Fund's Units may experience negative price fluctuations, which may negatively impact the trading of Units by the Investor in the secondary market.
The tax rules applicable to real estate investment funds may be modified in the context of a possible tax reform, as well as due to a new understanding of current legislation, subjecting the Fund or its shareholders to new, unforeseen tax payments. Additionally, there is the possibility that the Federal Revenue Service may have a different interpretation from the Administrator regarding the Fund's non-classification as a legal entity for tax purposes or regarding the incidence of taxes on certain operations carried out by the Fund. In these cases, the Fund would be subject to Income Tax, PIS, COFINS, and Social Contribution under the same conditions as other legal entities, resulting in a reduction of the income to be paid to shareholders, or it would have to start paying the applicable taxes on certain operations that it previously considered exempt, and may even be required to pay, with penalties and interest, the taxes levied on operations already completed. Both cases can adversely impact the income to be paid to shareholders or even the value of the shares. Finally, there is the possibility that the Fund may not be able to meet or maintain the characteristics described in Law No. 11,033/04, namely: (i) having at least 50 (fifty) Quota Holders; (ii) not having a Quota Holder who holds Quotas representing 10% (ten percent) or more of the total Quotas issued by the Fund or whose Quotas entitle them to receive income exceeding 10% (ten percent) of the total income earned by the Fund; and (iii) the Fund's Quotas must be admitted for trading exclusively on a stock exchange or in the organized over-the-counter market. Therefore, if this occurs, there will be no tax exemption for income paid to Quota Holders who are individuals.
The accounting practices adopted for recording transactions and preparing the financial statements of real estate investment funds stem from the provisions of CVM Instruction 516. With the enactment of Law No. 11,638/07, which amended the Corporations Law and established the Accounting Pronouncements Committee (CPC), several pronouncements, guidelines, and technical interpretations were issued by the CPC and have already been endorsed by the CVM, aiming to adapt Brazilian legislation to international accounting standards adopted in the main securities markets. CVM Instruction 516 came into effect on January 1, 2012, and results from a process of consolidating all relevant accounting regulations related to real estate investment funds issued in the last four years. This instruction therefore contains the most up-to-date version of the accounting practices issued by the CPC, which are the accounting practices currently adopted in Brazil. Currently, the CPC (Accounting Pronouncements Committee) has been dedicated to revising its pronouncements, guidelines, and technical interpretations in order to improve them. If the CVM (Brazilian Securities and Exchange Commission) determines that new revisions to the pronouncements and interpretations issued by the CPC should be adopted for the accounting of transactions and the preparation of financial statements for real estate investment funds, the adoption of such rules could impact the results currently presented in the fund's financial statements.
The legislation applicable to the Fund, its Unitholders, and the investments made by the Fund, including, without limitation, tax laws, exchange laws, and laws regulating foreign investments in units of investment funds in Brazil, is subject to change. Furthermore, government authorities and regulatory bodies may interfere in the markets, and moratoria and changes in monetary and exchange rate policies may occur. Such events may adversely impact the value of the Units, as well as the conditions for income distribution and Unit redemption, including rules for foreign exchange transactions and remittances to and from abroad. In addition, the application of existing laws and the interpretation of new laws may impact the Fund's results. There is a risk that these rules may be modified in the context of a possible tax reform. Thus, tax risk encompasses the risk of losses arising from the creation of new taxes, a different interpretation of the incidence of any taxes, or the revocation of existing exemptions, subjecting the Fund or its Unitholders to new, unforeseen tax payments. The Fund's tax treatment may be altered at any time, regardless of any measures the Administrator adopts or may adopt, in the event of changes in current tax legislation. Apart from tax legislation, other laws and regulations applicable to the Fund, its Unitholders, and the Fund's investments, including but not limited to matters of foreign exchange and foreign investments in units of investment funds in Brazil, are also subject to change. These events may adversely impact the value of investments, as well as the conditions for the distribution of income and redemption of Units.
The Fund's financial, economic, and legal structure is based on a set of contractual obligations and responsibilities and on current legislation. Due to the Fund's lack of maturity, the scarcity of precedents in similar operations, and the lack of jurisprudence regarding this type of financial transaction, there may be losses for the Unitholders due to the expenditure of time and resources to maintain the established contractual framework.
The Fund may be a defendant in various lawsuits in the civil, tax, and labor courts. There is no guarantee that the Fund will obtain favorable results, or that any judicial or administrative proceedings brought against the Fund will be dismissed, or even that it will have sufficient reserves. If such reserves are insufficient, it is possible that an additional contribution of resources may be made through the subscription and payment of new Units by the Unitholders, who will be responsible for any losses.
When analyzing any information provided in this Prospectus and/or in any Fund disclosure material that may be made available regarding past results of any markets or any investments in which the Administrator and Lead Coordinator have participated in any way, potential Unitholders should consider that any past results are not indicative of possible future results, and there is no guarantee that similar results will be achieved by the Fund in the future. Investments are subject to various risks, including, without limitation, variations in interest rates and inflation indices and exchange rate fluctuations.
The Regulations may be amended whenever such amendment arises exclusively from the need to comply with requirements of the CVM (Brazilian Securities and Exchange Commission) and/or B3 (Brazilian Stock Exchange), as a consequence of legal or regulatory norms, by determination of the CVM and/or B3, or by resolution of the general meeting of Quota Holders. Such amendments may affect the Fund's operating procedures and result in asset losses for the Quota Holders.
In the event of dissolution or liquidation of the Fund, the Fund's assets will be distributed among the Unitholders in proportion to their Units, after the sale of assets and the payment of all debts, obligations, and expenses of the Fund. In the event of liquidation of the Fund, if the aforementioned sale is not possible, the assets themselves will be delivered to the Unitholders in proportion to each of their participations. As described in the Regulations, the assets comprising the Fund's portfolio may be affected by their low market liquidity, and their value may increase or decrease according to price fluctuations, market quotations, and pricing criteria, which may cause eventual losses to the Unitholders.
There is a risk of variation in the value and profitability of the assets comprising the Fund's portfolio, which may increase or decrease according to price fluctuations, market quotations, and asset pricing criteria. Furthermore, there may be negative fluctuations in the Units due to the Fund acquiring securities that, in addition to being remunerated by a price index, are remunerated by an interest rate, and these will be subject to changes according to the level of interest rates practiced by the market for the maturity dates of these securities. In the event of a decrease in the value of the assets comprising the Fund's portfolio, the Fund's net worth may be negatively affected. Therefore, the Administrator may be obliged to sell Real Estate Assets or Securities or liquidate Financial Assets at depreciated prices, which may negatively influence the value of the Units.
Considering that the acquisition of Shares is a long-term investment, there may be some fluctuation in the value of the Share, which may even result in losses of the invested capital or a lack of demand for the sale of Shares in the secondary market.
The Fund may invest in a single property or in a few properties in order to concentrate the portfolio risk among a few tenants. Additionally, if the Fund invests predominantly in securities, the application limits per issuer and per type of financial asset established in the general rules on investment funds must be observed, applying the eligibility and exclusion rules established therein. The risk of investing in the Fund will be closely related to the concentration of the portfolio; the greater the concentration, the greater the chance of the Fund suffering a loss of capital. The risks of portfolio concentration also include, in the event of default by the issuer of the assets in question, the risk of losing a substantial portion or even all of the capital paid in by the shareholders.
In the event of any occurrence that leads to the involuntary passive deregulation of the Fund's portfolio, the CVM (Brazilian Securities and Exchange Commission) may require the Administrator, without prejudice to applicable penalties, to convene a General Meeting to decide on one of the following alternatives, among others: (i) transfer of the administration or management of the Fund, or both; (ii) incorporation into another Fund; or (iii) liquidation of the Fund. The occurrence of the events foreseen in items “i” and “ii” above may negatively affect the value of the Units and the profitability of the Fund. In turn, in the event foreseen in item “iii” above, there is no guarantee that the sale price of the Assets will be favorable to the Unit Holders, nor is there any guarantee that the Unit Holders will be able to reinvest the resources in another investment that has a return equal to or greater than that obtained by the investment in the Fund's Units.
If the Fund does not have sufficient resources to meet its obligations, the Administrator will convene a General Meeting of Unitholders to approve the issuance of new units in order to provide additional capital to the Fund. Unitholders who do not contribute capital will be diluted.
According to the Regulations, there is no restriction on the number of Units that can be held by a single Unitholder. Therefore, a situation may arise where a single Unitholder holds a substantial portion of the Units, resulting in a significantly concentrated position and weakening the position of any minority Unitholders. In this case, decisions may be made by the majority Unitholder based on their exclusive interests to the detriment of the Fund and/or minority Unitholders.

If the Fund has a very dispersed ownership structure, certain matters within the purview of the general meeting that can only be approved by a qualified majority of the Unitholders may be unable to be approved due to the lack of a quorum for the meeting (when applicable) and for deliberation at such meetings. The inability to deliberate on certain matters may lead to, among other consequences, the early liquidation of the Fund.
Investing in the Units is an investment in securities, which implies that the Unitholder's return will depend on the appreciation and income paid by the Assets. In this case, the income to be distributed to Unitholders will depend mainly on the results obtained by the Fund from revenue and/or the trading of the Real Estate Assets in which the Fund invests, as well as on the costs incurred by the Fund. Thus, there is a possibility that the Fund may be required to dedicate a substantial portion of its cash flow to pay its obligations, reducing the money available for distributions to Unitholders, which could adversely affect the market value of the Units.
The assets invested in by the Fund will be administered and managed by the Administrator and the Manager, respectively; therefore, the Fund's results will depend on proper administration/management, which will be subject to potential operational risks that, should they occur, may affect the profitability of the unit holders.
Any actions that constitute a conflict of interest between the Fund and the Administrator, between the Fund and the Manager, between the Fund and Unitholders holding more than 10% (ten percent) of the Fund's Units, and between the Fund and the Unitholder representative(s) require prior, specific, and informed approval at a General Meeting of Unitholders, pursuant to item XII of article 18 of CVM Instruction 472. Therefore, it is not possible to guarantee that any contracts will not constitute situations of actual or potential conflict of interest, which may result in asset losses for the Fund and the Unitholders.
The Fund, the Administrator, the Manager, and the Participating Institutions of the Offering have no obligation to revise and/or update any projections contained in this Prospectus and/or any disclosure material of the Fund and/or the Offering, including the Feasibility Study, including, without limitation, any revisions that reflect changes in economic conditions or other circumstances subsequent to the date of this Prospectus and/or the aforementioned disclosure material and the Feasibility Study, as the case may be, even if the assumptions on which such projections are based are incorrect.
The estimates in the Feasibility Study were prepared by the Manager and have not been subject to audit, review, compilation, or any other procedure by an Independent Auditor or any other valuation firm. The conclusions contained in the Feasibility Study derive from the Manager's opinion and are based on data that have not been submitted to independent verification, as well as market information and reports produced by independent companies. The Feasibility Study is subject to important assumptions and exceptions contained therein. Additionally, the Feasibility Study does not contain a conclusion, opinion, or recommendation related to the investment in the Units; for these reasons, it should not be interpreted as a guarantee or recommendation on such matter. Furthermore, due to the subjectivity and uncertainties inherent in estimates and projections, as well as the fact that estimates and projections are based on various assumptions subject to significant uncertainties and contingencies, there is no guarantee that the estimates in the Feasibility Study will be achieved.

The fund does not have any target, expected, or intended return.

ANY PROFITABILITY PROJECTED IN THE FEASIBILITY STUDY DOES NOT REPRESENT AND SHOULD NOT BE CONSIDERED, AT ANY TIME AND UNDER ANY CIRCUMSTANCES, AS A PROMISE, GUARANTEE, OR SUGGESTION OF MINIMUM OR GUARANTEED FUTURE PROFITABILITY TO INVESTORS.
The following cannot vote in General Meetings of Quota Holders: (a) the Administrator and/or the Manager; (b) the partners, directors and employees of the Administrator and/or the Manager; (c) companies linked to the Administrator and/or the Manager, their partners, directors and employees; (d) the Fund's service providers, their partners, directors and employees; (e) and (e) the Quota Holder whose interest conflicts with that of the Fund, except when they are the only Quota Holders or when there is express consent from the majority of the Quota Holders manifested in the General Meeting of Quota Holders itself, or in a power of attorney that specifically refers to the General Meeting in which the voting permission will be given, or when all subscribers of Quota Holders are co-owners of property with which they contributed to the payment of Quota Holders, being able to approve the report, without prejudice to the liability referred to in paragraph 6 of Article 8 of Law No. 6,404/76, in accordance with paragraph 2 of Article 12 of CVM Instruction 472. Such voting restriction may cause harm to the persons listed in letters “a” to “e”, should they decide to acquire Quota Holders. Additionally, certain matters that are the subject of the General Meeting of Quota Holders will only be deliberated when approved by a qualified majority of the Quota Holders. Given that real estate investment funds tend to have a large number of shareholders, it is possible that certain matters may be unable to be approved due to the lack of a quorum for the establishment (when applicable) and voting of such meetings.
In the event of new unit issuances by the Fund, the exercise of preemptive rights by the Fund's Unitholders in any future issuances of new units depends on the availability of funds on the part of the Unitholder. If a new offering of units occurs and the Unitholder does not have the funds available to exercise the preemptive right, their participation may be diluted, thus reducing their influence on the Fund's policy decisions. In the event of new unit issuances, Unitholders will incur the risk of having their participation in the Fund's capital diluted.
Some of the assets comprising the Fund's portfolio, including government bonds, may be subject to trading restrictions by commodity and futures exchanges or regulatory bodies. These restrictions may relate to trading volume, participation in transactions, and maximum price fluctuations, among other factors. In situations where such restrictions are applied, the conditions for trading the portfolio's assets, as well as the pricing of the assets, may be adversely affected.
During the Fund's term, the Administrator and/or Manager and/or Custodian may be subject to intervention and/or extrajudicial liquidation or bankruptcy at the request of the Central Bank of Brazil (BACEN), as well as be disqualified, removed, or resign from their positions, in which case their replacement must occur in accordance with the deadlines and procedures set forth in the Regulations. If such replacement does not occur, the Fund will be liquidated prematurely, which may result in asset losses for the Fund and its Unitholders.
The Fund does not have pre-defined assets, therefore it is a "generic" fund. Thus, the Fund does not own a specific real estate asset or project, and therefore has a broad investment policy. The Manager may not find attractive properties within the intended profile. Regardless of the possibility of acquiring several properties by the Fund, it may acquire a limited number of properties, which may lead to portfolio concentration. There are no guarantees that the investments intended by the Fund will be available at the time and in the quantity convenient or desirable to satisfy its Investment Policy, which may result in smaller investments or even the non-realization of these investments. In addition, the Fund may not be successful in prospecting tenants and/or lessees for the real estate project(s) in which the Fund invests directly or indirectly, which may reduce the Fund's profitability. Failure to make investments or making investments of a lower value than intended by the Fund, considering the Fund's costs, including the management fee, may negatively affect the Fund's assets, profitability, and the trading value of the Units.
The Fund may not have sufficient or acceptable offers of Real Estate Assets, Securities, and Financial Assets, at the Manager's discretion, that meet the Investment Policy at the time of acquisition, so the Fund may face difficulties in using its cash resources to acquire Assets. The absence of Real Estate Assets, Securities, and Financial Assets for acquisition by the Fund may negatively impact the profitability of the Units.
The Fund's objective is primarily the leasing of real estate. The management of such ventures may be carried out by specialized companies, which may limit the Fund's ability to implement the property management policies it deems appropriate. In addition to real estate, the Fund's resources may be invested in other Real Estate Assets, Securities, and Financial Assets. Therefore, the Unitholder will be subject to the Manager's discretion in selecting the assets to be invested in. There is a risk of an inappropriate asset selection by the Manager, which could potentially cause losses to the Unitholders.
The Fund may, among other securities, acquire CRIs (Real Estate Receivables Certificates), which may be traded based on a provisional registration granted by the CVM (Brazilian Securities and Exchange Commission). If a definitive registration is not granted by the CVM, the issuer of such CRIs must redeem them early. If the issuer has already used the funds resulting from the subscription of the CRIs, it may not have immediate availability of resources to redeem the CRIs early.

Provisional Measure No. 2,158-35, of August 24, 2001, in its article 76, establishes that "the rules that establish the allocation or separation, for any reason, of the assets of a natural or legal person do not produce effects in relation to debts of a fiscal, social security or labor nature, especially regarding the guarantees and privileges attributed to them". Its sole paragraph further provides that "in this way, all the assets and income of the taxpayer, their estate or their bankrupt estate, including those that have been the object of separation or allocation, remain liable for the debts referred to therein".

If the understanding foreseen in the aforementioned provision prevails, creditors of tax, social security, or labor debts of the securitization company may compete with the holders of the CRI (Real Estate Receivables Certificates) in receiving the real estate credits that comprise the collateral of the CRI in case of bankruptcy. Therefore, if the securitization company fails to honor its tax, social security, or labor obligations, the real estate credits that serve as collateral for the issuance of the CRI and other assets comprising the respective segregated patrimonies may be accessed to settle such liabilities, affecting the securitization company's ability to honor its obligations arising from the CRI and, consequently, the respective Real Estate Asset comprising the fund's patrimony.
The assets comprising the Fund's portfolio are subject to the ability of their issuers and/or debtors, as the case may be, to honor their commitments to pay interest and principal on their debts. Events affecting the financial conditions of the issuers and/or debtors of the securities, as well as changes in economic, legal, and political conditions that may compromise their ability to pay, can have significant impacts on the prices and liquidity of these issuers' assets. Changes in the perception of the issuers' credit quality, even if unfounded, may impact the prices of the securities, also compromising their liquidity and, consequently, the value of the Fund's assets and units.
The Fund may invest in Financial Assets, and such Financial Assets, due to their short-term nature and low credit risk, may negatively affect the Fund's profitability. Additionally, income derived from investments in Financial Assets will be taxed similarly to income earned by legal entities (regressive taxation from 22.5% (twenty-two and five-tenths percent) to 15.0% (fifteen percent), depending on the investment term), and this may negatively impact the Fund's profitability.
Investing in units of a Real Estate Investment Fund (FII) represents a risky investment, subjecting investors to potential capital losses and risks, including those related to the liquidity of the units, the volatility of the capital market, and the assets comprising the portfolio. Investments in the Fund are not guaranteed by the Administrator, the Manager, the Lead Coordinator, any insurance mechanism, or the Credit Guarantee Fund (FGC), and may result in the total loss of invested capital. Considering that investing in the Fund is a long-term investment, it is subject to losses exceeding the capital invested. In the event of losses and damages in the portfolio resulting in negative equity for the Fund, unit holders may be called upon to decide on the need to contribute additional resources to the Fund.
Investing in units of a Real Estate Investment Fund (FII) represents a risky investment, subjecting investors to potential capital losses and risks, including those related to the liquidity of the units, the volatility of the capital market, and the assets comprising the portfolio. Investments in the Fund are not guaranteed by the Administrator, the Manager, the Lead Coordinator, any insurance mechanism, or the Credit Guarantee Fund (FGC), and may result in the total loss of invested capital. Considering that investing in the Fund is a long-term investment, it is subject to losses exceeding the capital invested. In the event of losses and damages in the portfolio resulting in negative equity for the Fund, unit holders may be called upon to decide on the need to contribute additional resources to the Fund.
The Fund may invest in any real rights over real estate, as well as in shares or quotas of companies whose sole purpose falls within the activities permitted to real estate investment funds. Such assets are subject to the following risks which, if realized, will affect the income of the Quotas:

(i) Real estate risk

This refers to the eventual devaluation of the development(s) caused by, but not limited to, factors such as: (i) macroeconomic factors affecting the entire economy, (ii) zoning or regulatory changes that directly impact the location of the development(s), either by enabling a greater supply of properties (and consequently depressing rental prices in the future) or by potentially restricting the possible uses of the development(s), limiting its appreciation or resale potential, (iii) socioeconomic changes that exclusively impact the region(s) where the development(s) are located, such as the emergence of slums or potentially inconvenient locations, such as nightclubs, bars, etc., resulting in changes in the neighborhood and worsening the area of influence for commercial use, (iv) unfavorable traffic changes that limit, hinder, or prevent access to the development(s), and (v) restrictions on infrastructure/public services in the future, such as electricity capacity, telecommunications, public transport, among others, (vi) the expropriation (dispossession) of the undertaking(s) in which the compensatory payment does not reflect the premium and/or historical appreciation.

(ii) Risk of irregularity of the properties

The Fund may acquire real estate developments that are not yet completed and, therefore, have not obtained all applicable licenses. These real estate developments may only be used and leased once they are duly registered with the competent public authorities. Therefore, delays in obtaining the registration of these real estate developments may make it impossible to rent them, thus causing losses to the vehicles invested in by the Fund and, consequently, to the Fund and its shareholders.

(iii) Risk of loss

In the event of a claim involving the physical integrity of the properties invested in by the Fund, directly or indirectly, the resources obtained from the insurance coverage will depend on the payment capacity of the contracted insurance company, according to the terms of the required policy, and the indemnities to be paid by the insurers may be insufficient to repair the damage suffered, subject to the general conditions of the policies. If the amounts paid by the insurer are not sufficient to repair the damage suffered, a general meeting of unit holders must be convened so that the unit holders can decide on the procedure to be adopted. There are also certain types of losses that will not be covered by the policies, such as acts of terrorism, wars and/or civil revolutions. If any of the events not covered under the insurance contracts occur, the Fund may suffer significant losses and may be required to incur additional costs, which may affect its operational performance. Furthermore, the Fund may be held legally liable for paying compensation to any victims of the incident, which could have adverse effects on its financial condition and, consequently, on the income to be distributed to shareholders.

(iv) Risk of expropriation

According to the Brazilian legal system, the properties comprising the Fund's portfolio may be expropriated, directly or indirectly, for necessity, public utility, or social interest, in whole or in part. In the event of expropriation, there is no way to guarantee in advance that the price paid by the Public Authority will be fair, equivalent to the market value, or that it will effectively remunerate the invested amounts adequately. Therefore, if the property(ies) is/are expropriated, this fact may adversely and significantly affect the Fund's activities, its financial situation, and results. Other restrictions on the property(ies) may also be applied by the Public Authority, thus restricting the use to be given to the property(ies), such as the listing of the property or its surrounding area as a protected historical site, the application of preemption rights, and/or the creation of special zones for cultural preservation, among others.

(v) Developer/builder risk

The entrepreneur, construction company, or real estate developer whose assets are linked to the Fund's investments may experience financial, corporate, operational, and commercial performance problems related to their business in general or to other projects within their commercial and construction portfolio. These difficulties may cause the interruption and/or delay of construction projects related to real estate developments, leading to extended deadlines and increased project costs. There are no guarantees of full compliance with deadlines, which may result in a decrease in the Fund's results.

(vi) Risk of vacancy

The Fund may not be successful in finding tenants for the real estate development(s) in which the Fund invests directly or indirectly, which could reduce the Fund's profitability, given the potential receipt of a lower amount of rental income from the development(s). Additionally, the costs to be incurred for the payment of condominium fees and taxes, among other expenses related to the development(s) (which are attributed to the tenants of the properties) may compromise the Fund's profitability.

(vii) Risk of property devaluation

One factor that must be given paramount consideration is the economic potential, including in the medium and long term, of the regions where the properties targeted for investment by the Fund will be located. The analysis of the region's economic potential should not only consider the current economic potential, but also take into account the evolution of this economic potential in the future, considering the possibility of eventual economic decline in the region, with a direct impact on the value of the property invested in by the Fund.

(viii) Risks related to the occurrence of unforeseen events and force majeure events

The Fund's income derived from the operation of real estate is subject to the risk of potential losses arising from unforeseen events and force majeure, which consist of unavoidable and involuntary events related to the properties. Therefore, the Fund's results are subject to atypical situations that, even with risk management systems and mechanisms, may generate losses for the Fund and its shareholders.

(ix) Environmental risks

The properties that may be acquired by the Fund are subject to inherent risks related to: (i) legislation, regulations and other environmental issues, such as lack of environmental licensing and/or environmental authorization for the operation of its activities and other related activities (such as, for example, wastewater treatment plants, telecommunications antennas, power generation, among others), use of water resources through artesian wells, sanitation, handling of controlled chemical products (issued by the Civil Police, Federal Police and Army), vegetation suppression and solid waste disposal; (ii) environmental liabilities arising from soil and groundwater contamination, as well as any administrative, civil and criminal liabilities arising therefrom, with possible risks to the image of the Fund and the properties that make up the Fund's portfolio; (iii) occurrence of environmental problems, prior to or subsequent to the acquisition of the properties, which may lead to a loss of value of the properties and/or the imposition of administrative, civil and criminal penalties on the Fund; (iv) Indirect consequences of regulation or business trends, including submission to legislative restrictions relating to urban planning issues, such as land and building sizes, restrictions on the size and details of the built area, and their potential consequences. The occurrence of these events may negatively affect the Fund's assets, profitability, and the trading value of the Units.

In the event of violation or non-compliance with such laws, regulations, licenses, grants, and authorizations, companies and, eventually, the Fund or tenants may suffer administrative sanctions, such as fines, indemnities, prohibition and/or total or partial embargo of activities, cancellation of licenses and revocation of authorizations, without prejudice to civil liability and criminal sanctions (including its administrators), negatively affecting the Fund's assets, profitability, and the trading value of the Units. The operation of potentially polluting activities without the proper environmental license is considered an administrative infraction and an environmental crime, subject to applicable penalties, regardless of the obligation to repair any environmental damage. The administrative sanctions applicable under federal law include the immediate suspension of activities and fines.

Additionally, government agencies or other authorities may also issue new, stricter rules or seek more restrictive interpretations of existing laws and regulations, which may require tenants or property owners to spend additional resources on environmental compliance, including obtaining environmental permits for facilities and equipment that were not previously required. Government agencies or other authorities may also significantly delay the issuance or renewal of licenses and permits necessary for the development of the owners' and tenants' businesses, consequently generating adverse effects on their businesses. Any of the above events may cause tenants to have difficulty paying rent on the properties. Furthermore, due to requirements from the competent bodies, there may be a need to carry out renovations or alterations to such properties, the cost of which may be charged to the Fund. The occurrence of the above events may negatively affect the Fund's assets, profitability, and the trading value of the Units.

(x) Risk of review or termination of lease or rental agreements

The Fund may hold in its investment portfolio leased properties whose rental income constitutes the source of remuneration for the unit holders/shareholders of the vehicles invested in by the Fund. These lease agreements may be terminated or revised, which could totally or partially compromise the income distributed to the unit holders/shareholders of the vehicles invested in by the Fund and, consequently, to the Fund and its unit holders.

(xi) Risks related to the profitability of the Fund

Investing in units of a real estate investment fund is an investment in variable income securities, which implies that the unit holder's return will depend on the performance of the fund's asset management. In this case, the amounts to be distributed to unit holders will depend on the fund's performance, which in turn will depend primarily on the real estate assets invested in by the fund, excluding expenses stipulated in the regulations for the fund's maintenance. Additionally, it is worth noting that between the date of subscription for the units subject to the offering and the effective date of acquisition of the real estate assets, the resources obtained from the offering will be invested in securities or financial assets, which may negatively impact the fund's profitability.

(xii) Risk related to the acquisition of real estate

The Fund may hold real estate or rights related to real estate, as well as shares in real estate companies. Investments in the real estate market may be illiquid, making the purchase and sale of real estate difficult and adversely impacting property prices. Furthermore, acquisitions may expose the acquirer to liabilities and contingencies incurred prior to the acquisition of the property, even if in payment in kind. There may also be questions about the ownership of the land on which the acquired properties are located or even about the ownership of the properties themselves, problems not covered by insurance in Brazil. The due diligence process carried out by the Fund on the properties, as well as any contractual guarantees or indemnities that the Fund may receive from the sellers, may not be sufficient to protect or compensate it for any contingencies that may arise after the effective acquisition of the respective property. For this reason, considering this limitation of the scope of due diligence, there may be debts of the predecessors in ownership of the property that may affect the property itself, or there may be outstanding issues regarding the regularity of the property that have not been identified or resolved, which could (a) impose burdens on the Fund, as the owner or holder of the acquisition rights to the property; (b) imply possible restrictions or prohibitions on the use and exploitation of the property by the Fund; or (c) trigger discussions regarding the legitimacy of the acquisition of the property by the Fund, including the possibility of characterizing fraud against creditors and/or fraud against execution, and these three hypotheses could affect the results obtained by the Fund and, consequently, the income of the unit holders and the value of the units.

(xiii) Risk of exposure associated with the rental and sale of real estate

The Fund's involvement in real estate market activities may influence the supply and demand for real estate in certain regions, the demand for property rentals, and the level of interest from tenants and potential buyers of the Fund's real estate assets, potentially causing the Fund's profitability expectations to be frustrated. In this case, any expected returns and revenue sources may become less profitable, with rental values experiencing a significantly different reduction than anticipated. A lack of liquidity in the real estate market may also hinder the Fund's eventual need to sell real estate assets that comprise its portfolio.

Furthermore, real estate may be affected by local or regional real estate market conditions, such as an oversupply of space for residential properties, offices, shopping centers, warehouses, and distribution centers in a certain region, and their profit margins may be affected (i) due to taxes and public fees and (ii) the interruption or irregular provision of public services, especially the supply of water and electricity.

In these cases, the Fund may suffer a material adverse effect on its financial condition, and the Units may have their profitability reduced.

(xiv) Risk of adverse economic conditions in the locations where the properties are located

Adverse economic conditions in certain regions may reduce rental or sales levels of real estate, as well as restrict the possibility of increasing these values. If the real estate assets in the Fund's portfolio do not generate the revenue expected by the Administrator, the profitability of the Units may be negatively affected.

Additionally, the market value of the real estate assets in the Fund's portfolio is subject to fluctuations depending on economic or market conditions, so a change in these conditions could cause a significant decrease in their value. A significant drop in the market value of the real estate assets in the Fund's portfolio could negatively impact the Fund's financial situation, as well as the return on the Units.

(xv) Risk of launching new commercial real estate developments near properties whose operation is linked to securities invested by the Fund, which may hinder the ability to sell, renew leases or lease spaces to new tenants.

The launch of new commercial real estate developments in areas close to where the properties are located may impact the Fund's ability to lease or renew leases of spaces in the properties under favorable conditions, which could lead to a reduction in the Fund's revenue and the profitability of the Units.

(xvi) Risk of the properties being subject to specific conditions that may affect the profitability of the real estate market

Some commercial lease agreements are governed by the Lease Law, which, in some situations, guarantees certain rights to the lessee, such as, for example, the renewal action, and for this action to be brought, it is necessary that (i) the contract is in writing and has a fixed term of five years or more (or the previous lease agreements have been uninterrupted and, together, result in a term equal to or greater than five years), (ii) the lessee has been operating their business, in the same sector, for a minimum and uninterrupted period of three years, (iii) the rent is proposed according to the market value, and (iv) the action is filed no later than one year and no later than six months before the expiration of the term of the current lease agreement.

In this sense, renewal actions present two main risks that, if materialized, could adversely affect the conduct of business in the real estate market: (i) if the owner decides to vacate the space occupied by a particular tenant in order to renew it, the tenant may, by filing a renewal action, be able to remain in the property; and (ii) in the renewal action, the parties may request a review of the lease agreement value, with the final contract value being determined by the Judiciary. Therefore, the Fund is subject to the interpretation and decision of the Judiciary and may potentially receive a lower rental value from the tenants of the properties.

(xvii) Risk of Other Restrictions on Use of the Property by Public Authorities

Other restrictions on properties may also be applied by the Public Authorities, thus restricting their use, such as the listing of the property itself or its surrounding area as a protected heritage site, the application of preemption rights, and/or the creation of special zones for cultural preservation, among others. This may compromise the exploitation of such properties and, therefore, the profitability or value of the securities held by the Fund that are linked to this exploitation, a situation that could negatively affect the Fund's assets, profitability, and the trading value of the Units.

(xviii) Risk of natural disasters and accidents

The occurrence of natural disasters such as gales, floods, storms, or earthquakes can cause damage to the real estate assets in the Fund's portfolio, negatively affecting the Fund's net worth, profitability, and the trading value of its units. It cannot be guaranteed that the value of the insurance policies contracted for the properties will be sufficient to protect them from losses. There are even certain types of losses that are not usually covered by the policies, such as acts of terrorism, wars, and/or civil unrest. If any of the events not covered under the insurance contracts occur, the Fund may suffer losses and be forced to incur additional costs, which could affect the Fund's operational performance. Furthermore, the Fund may be held legally liable for paying compensation to any victims of the incident, which could have adverse effects on the Fund's financial condition and, consequently, on the income to be distributed to the unit holders. Additionally, in the event of a claim involving the integrity of the Fund's assets, the resources obtained from insurance may be insufficient to repair the damages suffered and may negatively impact the Fund's net worth, the Fund's profitability, and the trading price of the Units.

(xix) Risk of not taking out property and liability insurance

If tenants of properties in the Fund's portfolio fail to take out insurance, no compensation will be paid in the event of claims, and the Fund may be required to cover any damages inherent to the activities carried out on such properties, by virtue of court decisions. In this case, the Fund, its profitability, and the trading value of its units may be adversely affected.

(xx) Risks related to the regularity of the built area

The existence of a constructed area built without prior authorization from the competent Municipal Authority, or in disagreement with the approved project, may entail risks and liabilities for the properties and for the Fund, if said area is not eligible for regularization and is subject to inspection by the responsible bodies. Among such risks, the following stand out: (i) the application of fines by the public administration; (ii) the impossibility of registering the construction; (iii) the refusal to issue an operating license; (iv) the refusal to contract or renew property insurance; and (v) the closure of the properties, which may even culminate in the Fund's obligation to demolish the unregulated areas, which may adversely affect the activities and operational results of the properties and, consequently, the assets, profitability of the Fund and the trading value of the Units.

(xxi) Risk of non-renewal of licenses necessary for the operation of properties and related to the regularity of the Fire Department Inspection Certificate (“AVCB”)

The existence of a constructed area built without prior authorization from the competent Municipal Authority, or in disagreement with the approved project, may entail risks and liabilities for the properties and for the Fund, if said area is not eligible for regularization and is subject to inspection by the responsible bodies. Among such risks, the following stand out: (i) the application of fines by the public administration; (ii) the impossibility of registering the construction; (iii) the refusal to issue an operating license; (iv) the refusal to contract or renew property insurance; and (v) the closure of the properties, which may even culminate in the Fund's obligation to demolish the unregulated areas, which may adversely affect the activities and operational results of the properties and, consequently, the assets, profitability of the Fund and the trading value of the Units.


Furthermore, failure to obtain or renew such licenses may result in penalties that vary, depending on the type of irregularity and the time it takes to rectify the situation, from warnings and fines to the closure of the respective properties.


Under these circumstances, the Fund, its profitability, and the trading value of its Units may be adversely affected.

(xxii) Risk of Delays and/or Non-Completion of Real Estate Development Works

Should there be delays or non-completion of real estate development projects, whether due to weather conditions or any other factors that may directly or indirectly affect the established deadlines, the estimated timeframe for the commencement of receiving rental payments, installments of the price, or financing transfers, and consequently the profitability of securities in which the Fund has invested, may be affected. Furthermore, the Unitholders may have to contribute additional resources to said real estate developments for their completion. The developer of said real estate developments may face financial, administrative, or operational problems that cause the interruption and/or delay of the works and projects related to the construction of said real estate developments. Such situations may cause losses to the Fund and, consequently, to the Unitholders.

(xxiii) Risk of administration of Real Estate Assets by third parties

Considering that the Fund's objective is primarily the leasing of Real Estate Assets, and that the management of such ventures may be carried out by specialized companies without direct interference from the Fund, this fact may represent a limiting factor for the Fund in implementing the Real Estate Asset management policies that the Manager deems appropriate.

(xxiv) Risk related to the possibility of the Fund acquiring encumbered Real Estate Assets

Considering that the Fund may acquire Real Estate Assets encumbered with liens or other types of encumbrances, investing in encumbered Real Estate Assets includes a series of risks, among them the risk of default and consequent enforcement of the guarantees granted within the scope of the respective transaction. In the event of enforcement of the guarantees, there may be a need to hire consultants, among other costs, which must be borne by the Fund. If the guarantee established on a Real Estate Asset is enforced, the Fund may lose ownership of the asset, resulting in losses to the Fund and its shareholders. The Caucaia and Sodimac properties are, as of the date of this Prospectus, subject to fiduciary alienation in favor of third parties, so that in the event of enforcement of such guarantee, the assets and profitability of the Fund's shares may be affected.
Ownership of the Units does not grant Unitholders direct ownership of the Assets. Unitholders' rights are exercised over all assets in the portfolio in a non-individualized manner, proportionally to the number of Units held.
The Fund, as the owner of the Real Estate Assets, will eventually be subject to payments of extraordinary expenses, such as prorated costs for construction and renovations, painting, furniture, maintenance, installation of security equipment, severance payments, as well as any other expenses that are not routine in the maintenance of the properties and the condominiums in which they are located. The payment of such expenses would result in a reduction in the profitability of the Units.

Nevertheless, the Fund will be subject to expenses and costs arising from legal actions necessary for the collection of unpaid rents, legal actions (eviction, renewal, revision, among others), as well as any other expenses not paid by the tenants of the properties, such as taxes, condominium fees, as well as costs for the renovation or recovery of properties unsuitable for rental after eviction or amicable departure of the tenant.
Investing in the Fund subjects the Investor to the risks inherent in the Fund and its portfolio, which may result in losses of the capital invested by the Unitholders in the Fund. The Fund does not have guarantees from the Administrator, the Manager, or third parties, any insurance mechanism, or the Credit Guarantee Fund (FGC) to reduce or eliminate the risks to which it is subject and, consequently, to which the Unitholders may also be subject. In adverse market conditions, the risk management system applied by the Administrator to the Fund may have its efficiency reduced. Any potential losses of the Fund's assets are not limited to the value of the subscribed capital, so Unitholders may be called upon in the future to deliberate on the necessary measures to fulfill the obligations assumed by the Fund.
The costs incurred in the procedures necessary for the collection of assets comprising the Fund's portfolio and for safeguarding the Fund's rights, interests, and prerogatives are the responsibility of the Fund and must be borne up to the total limit of its net worth, always observing what is decided by the Unitholders at a General Meeting. The Fund may only adopt and/or maintain judicial or extrajudicial procedures for the collection of such assets, once the limit of its net worth has been exceeded, if the Unitholders contribute the additional amounts necessary for their adoption and/or maintenance. Thus, if there is a need for judicial or extrajudicial collection of assets, Unitholders may be requested to contribute resources to the Fund to ensure the adoption and maintenance of the appropriate measures to safeguard their interests. No judicial or extrajudicial measure will be initiated or maintained by the Administrator before the full receipt of the aforementioned contribution and the Unitholders' commitment to provide the resources necessary to pay the costs of the proceedings, should the Fund be condemned. The Administrator, Manager, Registrar, Custodian and/or any of their affiliates are not jointly or severally liable for the adoption or maintenance of said procedures and for any damages or losses of any kind suffered by the Fund and the Unitholders as a result of the failure to initiate (or pursue) judicial or extrajudicial measures necessary to safeguard their rights, guarantees and prerogatives, should the Unitholders fail to contribute the necessary resources for this purpose, in accordance with the Regulations. Therefore, the Fund may not have sufficient resources to amortize and, as the case may be, redeem its Units in Brazilian currency, thus creating the possibility that Unitholders may even lose, in whole or in part, their invested capital.
During the Fund's term, there is a risk that the Fund may have negative net worth, which will necessitate a decision by the Unitholders regarding capital contributions to the Fund. It is certain that some Unitholders may refuse to contribute new capital to the Fund. It is impossible to measure the amount of capital that Unitholders may be called upon to contribute, and there is no guarantee that after such a contribution the Fund will generate any return for the Unitholders.
Considering that the Fund may invest in Securities, investing in CRIs (Real Estate Receivables Certificates) includes a series of risks, among them the risk of default and consequent execution of the guarantees granted to the respective operation, and the risks inherent in the possible existence of real estate assets in the Fund's portfolio, which could, in this case, affect the Fund's profitability.

In the event of an enforcement proceeding on the CRI guarantees, there may be a need to hire consultants, among other costs, which must be borne by the Fund, in its capacity as an investor in the CRIs. Additionally, the guarantee granted in favor of the CRIs may not be sufficient to cover the financial obligations associated with said CRIs.

Therefore, a series of events related to the enforcement of CRI guarantees could negatively affect the value of the units and the profitability of the investment in the Fund.
The Fund's involvement in real estate market activities may influence the supply and demand for real estate in certain regions, the demand for property rentals, and the level of interest from tenants and potential buyers of the Fund's real estate assets, potentially causing the Fund's profitability expectations to be frustrated. In this case, any expected returns and revenue sources may become less profitable, with rental values experiencing a significantly different reduction than expected. A lack of liquidity in the real estate market may also hinder the Fund's potential need to sell real estate assets that comprise its portfolio. Furthermore, real estate assets may be affected by local or regional real estate market conditions, such as an oversupply of space for warehouses and distribution centers in a certain region, and their profit margins may be affected (i) due to taxes and public fees and (ii) the interruption or irregular provision of public services, especially water and electricity supply. In these cases, the Fund may suffer a material adverse effect on its financial condition, and the Units may have their profitability reduced.
During the period between the negotiation of the acquisition of real estate and its registration in the Fund's name, there is a risk that the property may be encumbered to satisfy debts of the former owners in a potential enforcement action, which could hinder the transfer of ownership to the Fund. Additionally, the Fund may acquire assets that will become part of its portfolio in installments, so that, during the period between the payment of the first and last installment for the real estate, there is a risk that the Fund, due to various unforeseen factors, may have its cash flow altered and, consequently, may not have sufficient resources to meet its obligations. Furthermore, since there is the possibility of acquiring real estate with encumbrances already established by the former owners as part of the investment strategy, if creditors of the former owners initiate enforcement proceedings and they do not possess other assets to guarantee the payment of such debts, there may be difficulties in transferring ownership of the real estate to the Fund, as well as in the Fund obtaining income related to the real estate. These measures may negatively impact the Fund's assets, profitability, and the trading value of its Units.
The legislation applicable to the Fund, its Unitholders, and the investments made by the Fund, including, without limitation, tax laws, exchange rate laws, and laws regulating foreign investments in units of investment funds in Brazil, is subject to change. Furthermore, government authorities and regulatory bodies may interfere in the markets, and moratoria and changes in monetary and exchange rate policies may occur. Such events may adversely impact the value of the Fund's Units, as well as the conditions for income distribution and Unit redemption, including rules for foreign exchange transactions and remittances to and from abroad. Moreover, the application of existing laws and the interpretation of new laws may impact the Fund's results.
The Federal Government frequently amends tax legislation regarding financial investments. Currently, for example, individuals are exempt from paying income tax on income derived from investments in CRIs (Real Estate Receivables Certificates), LCIs (Real Estate Credit Bills), and LHs (Mortgage Bonds), as well as capital gains from their sale, as provided for in Article 55 of Normative Instruction 1,585, of August 31, 2015. Future changes in tax legislation may eventually reduce the profitability of CRIs, LCIs, and LHs for their holders. By virtue of Law No. 12,024, of August 27, 2009, income from CRIs, LCIs, and LHs earned by FIIs (Real Estate Investment Funds) that meet certain requirements is also exempt from income tax. Any changes to tax legislation, eliminating the aforementioned exemption, as well as creating or increasing income tax rates applicable to CRIs, LCIs and LHs, or even creating new taxes applicable to CRIs, LCIs and LHs, may negatively affect the fund's profitability.
The Assets may contain clauses for prepayment or extraordinary amortization in their constitutive documents. This situation may lead to the Fund's portfolio becoming misaligned. In this case, the Asset Manager may have difficulty identifying Assets that comply with the Investment Policy. Therefore, the Manager may not be able to reinvest the received funds with the same target return sought by the Fund, which may negatively affect the Fund's net worth and the profitability of the Fund's Units. However, no fine or penalty of any kind will be due from the Fund, the Administrator, the Manager, or the Custodian as a result of this fact.
Under Law 9.779, for a Real Estate Investment Fund (FII) to be exempt from taxation, it is necessary that (i) it distributes at least 95% (ninety-five percent) of the profits earned, calculated on a cash basis based on a semi-annual balance sheet or statement ending on June 30 and December 31 of each year, and (ii) it does not invest resources in real estate ventures that have as builder, developer or partner, a Quota Holder who holds, individually or jointly with related persons, a percentage greater than 25% (twenty-five percent) of the Quotas issued by the Fund. If these conditions are not met, the Fund may be treated as a legal entity for tax purposes, in which case the profits and revenues earned by it will be taxed by Corporate Income Tax (IRPJ), Social Contribution on Net Profit (CSLL), Social Security Financing Contribution (COFINS) and Social Integration Program (PIS), which may adversely affect the Fund's results.

Furthermore, the income and net gains earned by the Fund in Financial Assets are subject to withholding income tax, in accordance with the same rules applicable to legal entities.
Considering that the Fund is constituted as a closed-end fund, redemption of the Units is not permitted. Without prejudice to the possibility of liquidation of the Fund, should the Unitholders decide to divest from the Fund, they must sell their Units on the secondary market, noting that Unitholders may face low liquidity in trading Units on the secondary market or obtain reduced prices when selling their Units.
Replacing the Manager could have a significant adverse effect on the Fund, its financial situation, and its operating results. The Fund's gains largely derive from the quality of services provided by the Manager and its specialized team in origination, structuring, distribution, and management, with extensive technical, operational, and market knowledge of the Assets. Thus, the eventual replacement of the Manager could affect the Fund's ability to generate results.
The Manager, the institution responsible for managing the assets comprising the Fund's portfolio, provides or may provide portfolio management services for other investment funds with the same or similar objectives as the Fund. Therefore, within the scope of its role as manager of the Fund and such investment funds, the Manager may decide to allocate certain assets to other investment funds that may even outperform the assets allocated to the Fund, meaning that it is not possible to guarantee that the Fund will have exclusivity or preference in acquiring such assets.
This Definitive Prospectus contains information about the Fund, as well as performance prospects for the Fund, which involve risks and uncertainties.

There is no guarantee that the Fund's future performance will be consistent with these prospects. Future events could differ significantly from the trends indicated here.

Additionally, the information contained in this Prospectus regarding Brazil and the Brazilian economy is based on data published by the Central Bank of Brazil (BACEN), public agencies, and other independent sources. The information on the real estate market presented throughout this Prospectus was obtained through internal research, market research, public information, and industry publications.
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