Risk Disclosures

Investment Risks

Real Estate Market Risk

Real estate investments are subject to market risk, including potential loss of principal. Real estate markets are affected by many factors, including:

• Economic conditions (local, national, and global)
• Interest rate fluctuations
• Property tax changes
• Demographic trends
• Supply and demand imbalances
• Changes in laws and regulations
• Natural disasters and climate change impacts

Any of these factors could negatively impact property values and rental income, potentially causing investment losses.

Illiquidity Risk

Real estate investments, including fractional ownership interests, are generally illiquid compared to publicly traded securities. While Nordsides offers a secondary marketplace to provide potential liquidity, there is no guarantee that you will be able to sell your investment when desired, at a preferred price, or at all. The secondary market may experience:

• Limited buyer demand
• Price fluctuations
• Extended selling periods
• Potential transaction fees

You should be prepared to hold your investment for the full anticipated term, which may range from 3-10 years depending on the specific property.

Income Risk

Rental income is not guaranteed and may fluctuate due to:

• Tenant defaults or delayed payments
• Property vacancies
• Increased operating expenses
• Repairs and maintenance requirements
• Economic downturns affecting rental rates
• Changes in property management

All of these factors can reduce or eliminate expected dividend distributions to investors.

Leverage Risk

Many properties on our platform utilize mortgage financing (leverage). While leverage can enhance returns when property values appreciate, it also increases risk during market downturns. Risks of leveraged investments include:

• Magnified losses during property value declines
• Interest rate risk if rates increase on adjustable mortgages
• Refinancing risk at maturity of mortgage terms
• Risk of foreclosure if mortgage payments cannot be met

The use of leverage could result in the complete loss of your investment.

Concentration Risk

Investing in a limited number of properties or in a specific geographic region increases concentration risk. Your investment may be exposed to:

• Regional economic downturns
• Local regulatory changes
• Property-specific issues
• Natural disasters affecting specific areas

To mitigate concentration risk, consider diversifying your investments across multiple properties, geographic locations, and property types.

Platform-Specific Risks

Fractional Ownership Structure Risks

Fractional real estate investing involves unique risks, including:

• Lack of direct control over property management and disposition decisions
• Dependency on the platform for property oversight and administration
• Potential conflicts of interest between different investor groups
• Limited voting rights on major property decisions
• Legal and regulatory uncertainties related to fractional ownership models

The fractional ownership structure may limit your rights compared to owning property directly.

Technology and Operational Risks

Our platform relies on technology infrastructure, which creates additional risks:

• Potential disruptions in platform availability or functionality
• Cybersecurity threats and potential data breaches
• Blockchain technology risks, including smart contract vulnerabilities
• Operational errors in property management or financial distributions
• Dependency on third-party service providers

While we implement robust security measures, no system is completely immune to technical failures or security breaches.

Regulatory and Compliance Risks

The regulatory environment for real estate investments and fractional ownership is evolving:

• Changes in securities regulations may impact our offerings
• Real estate regulations vary by jurisdiction and may change
• Tax law changes could affect investment returns
• Blockchain and tokenization regulations are still developing
• Future regulatory changes could restrict platform operations

Adverse regulatory developments could materially impact investment structures, returns, or liquidity.

Valuation and Performance Risks

Valuation Uncertainty

Real estate valuation involves subjective judgments and may not accurately reflect the price at which a property could be sold:

• Limited comparable sales data may affect accuracy
• Different valuation methodologies may yield varying results
• Market conditions can change rapidly between valuations
• AI-based valuation tools have inherent limitations
• Property-specific factors may not be fully captured

The value of your investment may differ from reported valuations, especially in volatile market conditions.

Past Performance Limitations

Past performance information provided on our platform:

• Is not indicative of future results
• May reflect different market conditions than those current or future
• May be based on assumptions that prove incorrect
• Often represents selected properties rather than all investments
• May not account for all fees and expenses in the same manner

Investment returns will vary based on numerous factors, and may be lower than historical returns or projected targets.

Tax and Legal Considerations

Tax Risks

Real estate investments have complex tax implications:

• Tax laws and regulations may change
• Tax benefits may be reduced or eliminated by future legislation
• Individual tax situations vary significantly
• International investors face additional tax complexities
• Fractional ownership may have different tax treatment than direct ownership

We recommend consulting with a qualified tax professional regarding the specific tax implications of your investments.

Legal Structure Risks

The legal structures used for investments on our platform involve risks:

• Limited liability company (LLC) and other entity structures may not provide expected protections
• Operating agreements may limit investor rights
• Legal disputes could impact investment performance
• Bankruptcy or financial distress of the platform could affect investments
• Smart contracts and blockchain-based ownership records face legal uncertainties

You should review all legal documents thoroughly before investing.

Investor Suitability

Fractional real estate investing is not suitable for all investors. Consider these factors before investing:

• Your investment time horizon should match the expected hold period of the properties
• You should not invest emergency funds or money needed for short-term expenses
• Investment diversification is important—don't allocate excessive portions of your portfolio to any single asset class
• Your risk tolerance should align with the speculative nature of real estate investments
• Financial stability is important, as these investments should be considered illiquid

If you are unsure about the suitability of these investments for your financial situation, consult with a financial advisor.

Additional Information

For more detailed information about specific risks related to individual property investments, please review the offering documents for each property. These documents provide property-specific risk factors and financial projections.

For questions about risk disclosures or any other investment matters, please contact our investor relations team at invest@nordsides.com or call (732) 423-7112.