Offering Risk

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---
schema: foundry-doc-v1
title: "Offering Risk"
slug: offering-risk
category: risks
type: topic
content_type: topic
quality: complete
short_description: "Risk factors specific to the investment mechanism itself: illiquidity by design, no guaranteed buyer for units, and asset concentration exposure."
status: active
audience: public
bcsc_class: public-disclosure-safe
language_protocol: PROSE-TOPIC
last_edited: 2026-07-03
editor: pointsav-engineering
paired_with: offering-risk.es.md
---

The risks described elsewhere in this category apply to the underlying real estate. Offering
risk is different: it concerns the mechanics of the [[investment-units|investment unit]] itself — how it can
be held, transferred, and exited — independent of how well the underlying property performs. A
well-performing property can still leave a unit holder facing the risks described below, because
these risks arise from the structure of the offering, not from the condition of the asset.

## Illiquidity is a design feature, and a risk

The [[perpetual-equity-model|Perpetual Equity Model]] is deliberately structured with no redemption window, no
manager-initiated buyback facility, and no fixed exit date. This is presented elsewhere in this
wiki as a structural benefit for long-term stewardship of an asset, because it removes the
pressure to prepare a property for a forced sale at a predetermined date. The same design
choice is, for an individual unit holder, a liquidity risk: an investor who needs to convert a
unit into cash has no contractual mechanism to require the issuing entity to repurchase the
unit, and no redemption queue to join. Both descriptions are accurate. The absence of a
redemption mechanism is not a temporary limitation the company plans to remove — it is a
permanent structural feature of the units being offered, and it should be evaluated as a risk
by anyone considering whether the units are a suitable holding for their own liquidity needs.

## No guarantee of finding a buyer

Because units are transferred through a private, bilateral secondary market rather than through
an exchange or a company-operated facility, a unit holder seeking to sell is responsible for
identifying a willing counterparty independently. There is no market maker, no listing on a
public exchange for the equity units, and no assurance that a buyer will be available at any
particular time or at any particular price. The secondary market for units in a specific,
named asset is narrow by design — the number of potential counterparties for any single
asset's units is inherently smaller than the market for a listed, exchange-traded security. A
unit holder may be unable to sell within a desired timeframe, or may be able to sell only at a
discount to the unit's most recent appraised or book value, particularly if the asset's
performance has declined or if general market conditions for private real estate transactions
have deteriorated.

## Concentration risk

Because [[investment-units|investment units]] are asset-specific rather than pooled across a diversified
portfolio, a unit holder whose position is concentrated in a single named asset carries the
full exposure of that one property's market, property, financing, and construction risk,
without the diversification benefit that a pooled or multi-asset vehicle would provide. An
investor who holds units in only one or a small number of assets is more exposed to a decline
in the performance of any single property than an investor whose holdings are spread across
many properties or many asset classes. Diversification across multiple named assets, where
available, reduces — but does not eliminate — this concentration exposure, and diversification
decisions are made by the investor, not by the issuing entity, because each investment unit is
a separate holding rather than a share in a diversified fund.

## No guarantee of return or capital preservation

Nothing in the structure of an investment unit — including the [[interest-coverage-ratio|Interest Coverage Ratio]]
distribution gate, the [[narrow-bank-financial-model|Narrow Banking Model]]'s financing discipline, or the
ring-fencing of asset-level debt — guarantees that distributions will be declared, that a unit
will retain or increase its value, or that an investor will recover the capital invested.
Distributions are paid only when declared from Distributable Income and are never guaranteed.
Structural features described elsewhere in this wiki are risk-mitigants, not risk eliminators,
and none of them should be read as a representation about future investment performance.

## See also

- [[about-risks]] — how risk categories are organized across this wiki
- [[perpetual-equity-model|Perpetual Equity Model]] — the holding structure underlying this risk factor
- [[investment-units|Investment Units]] — the instrument these risks apply to
- [[structure-and-regulatory-risk]] — jurisdiction-level structural risk