RISK FACTORS
1. Important notice
Starblocks (“we”, “us”, “our”, or the “Platform”) operates the website accessible at starblocks.io and provides access to tokenized real-world assets (“RWAs”), including premium real estate, Trophy Assets, hotels, branded residences, and related bond-type instruments. These instruments are structured through Luxembourg securitization vehicles operated by the same leadership team as Foncière Renaissance, and recorded on a public blockchain infrastructure (Etherlink, the EVM-compatible Layer 2 built on Tezos).
This document sets out the principal risk factors associated with using the Platform and subscribing to any instrument or token issued, distributed, or referenced through Starblocks. It is not exhaustive. Additional risks specific to each offering are described in the relevant offering documents, term sheets, subscription bulletins and bond issuance agreements, which prevail over this document in case of inconsistency.
Access to the Platform is strictly reserved for eligible investors, in particular professional clients within the meaning of MiFID II, accredited investors, qualifying high-net-worth (HNWI) and very-high-net-worth (UHNWI) individuals, family offices, institutions, banks, financial advisors, and Owner Operators, in jurisdictions where such offering is lawful. Prospective investors must verify their eligibility and consult their own legal, tax, and financial advisors before making any investment decision.
The minimum subscription per investor is one hundred thousand euros (€100,000) per offering, in accordance with the applicable bond issuance documentation. Nothing on the Platform constitutes investment advice, a personal recommendation, a solicitation, or an offer to buy or sell any financial instrument in any jurisdiction where such activity would be unlawful.
Specific exclusions. The tokenized instruments offered through Starblocks are not available to: (i) U.S. persons (as defined under Regulation S of the U.S. Securities Act of 1933, as amended), or persons located in the United States; (ii) residents of jurisdictions appearing on the list of non-cooperative states and territories established by the OECD; (iii) persons subject to international sanctions or appearing on any asset-freeze list; (iv) politically exposed persons (PEP) who have not pre-disclosed their status to the issuer in writing; and (v) any other category of investor whose participation would breach applicable laws or the offering documents.
2. General investment risks
2.1 Risk of capital loss
All investments offered through Starblocks involve a risk of partial or total loss of the capital invested. Past performance and projected yields, including any indicative coupon rate, are not reliable indicators of future performance and do not constitute any guarantee of return. Indicative yields are provided for illustration purposes only and are not contractually binding until the relevant offering is launched and its definitive financial terms are set out in the bond issuance documentation.
2.2 Indexation mechanism and substantial uncertainty on capital repayment
Investors must understand that the bond instruments accessible through the Platform are indexed bonds within the meaning of Article L.112-3-1 of the French Monetary and Financial Code. The repayment of capital is contractually indexed and may only occur up to the actual cash available to the issuing securitization vehicle at the maturity date. In the event of insufficient cash, all or part of the invested capital may be definitively lost, with no recourse for the investor, even in the absence of any insolvency proceedings against the issuer. This indexation mechanism is the essence of the product and the consideration for the yield offered.
2.3 Illiquidity risk
Tokenized bonds and real-estate-backed instruments are by nature long-term investments. Although Starblocks may, in due course, develop secondary market arrangements to facilitate transfers between eligible investors, no liquidity is guaranteed. Investors may be unable to sell their tokens, or may only be able to do so at a significant discount to their nominal or intrinsic value, particularly in adverse market conditions. The relevant bond issuance documentation may also contain transfer restrictions that further limit liquidity. The instruments are not admitted to trading on any regulated market or multilateral trading facility.
2.4 Long-term commitment
Most instruments offered through the Platform have a defined maturity (typically thirty-six (36) months in fine, calculated from the issue date of each Tranche). Investors should be aware that the issuer may extend the maturity up to two (2) times for successive periods of six (6) months each, subject to the conditions set out in the bond issuance documentation. Accordingly, the effective holding period may extend up to forty-eight (48) months. Investors should be prepared to hold their position until maturity and should only invest funds they do not need for current or short-term liquidity purposes.
2.5 No deposit protection
Tokens and bonds distributed through Starblocks are not bank deposits and are not covered by any deposit guarantee scheme, investor compensation scheme, or central bank backstop.
2.6 Subordination to senior secured bank financing
Investors should be aware that, for most Trophy Assets, the underlying real estate vehicle is financed in part by senior secured bank debt, which ranks ahead of the bond instruments held by tokenholders. In the event of enforcement, restructuring or insolvency of the underlying vehicle, the senior secured lender will have priority claim on the asset proceeds, and the bond instruments may receive only the residual amount, if any. The identity of the senior lender is disclosed in the offering documents of each Trophy Asset.
2.7 Capitalisation of unpaid interest
In accordance with Article 1154 of the Luxembourg Civil Code and as contemplated in the underlying loan agreements, unpaid interest accrued for at least one year may be capitalised at the option of the issuer or the lender, and may itself bear interest. While this mechanism is designed to preserve the economic substance of the instrument, it may result in an increased aggregate amount due at maturity and complicate any recovery scenario.
3. Risks related to the underlying real estate
3.1 Market and valuation risk
The value of each tokenized asset is linked to the value of one or more underlying properties (Trophy Assets, hotels, branded residences, hospitality suites, prime offices). Real estate markets are subject to cycles influenced by macroeconomic conditions, interest rates, inflation, currency movements, geopolitical events, and changes in supply and demand. Property values may decrease, sometimes significantly and over extended periods, and valuations are inherently subjective and based on a number of assumptions that may prove incorrect.
3.2 Operational and tenant risk
Underlying assets are managed by third-party Owner Operators selected by Starblocks. The performance of each asset depends on the quality of operations, occupancy rates, tenant solvency, hospitality demand, and the operator's ability to execute its business plan. Operator default, mismanagement, vacancy, or non-payment by tenants may adversely affect yield, cash flow, and the value of the underlying asset.
3.3 Lifecycle and development risk
Some offerings provide access at early stages of an asset's lifecycle (Early Access, De-risking, Repositioning, Stabilization). Early-stage positions carry higher risk, including risks linked to acquisition, evictions, obtaining building permits, capital expenditure execution, anchor-tenant negotiations, and overall project completion. Delays, cost overruns, or failure to complete the planned works may reduce or eliminate expected returns.
3.4 Concentration and geographical risk
Underlying assets are located in specific cities and jurisdictions, including Paris, Madrid, London, Dubai, Tokyo, Singapore, Rome, and Monaco. Local economic, fiscal, regulatory, environmental, social, or political conditions may have a material adverse effect on the relevant asset and on investor returns. Investors may also be exposed to concentration risk where their portfolio includes a limited number of assets, sectors, or geographies.
3.5 Environmental, climate and ESG risk
Real estate assets are exposed to physical climate risks (extreme weather events, flooding, heatwaves) and transition risks (evolving energy-efficiency standards, ESG regulations, carbon constraints). Such risks may increase operating costs, require additional capital expenditure, reduce attractiveness to tenants and operators, and ultimately affect asset value and yield.
4. Risks related to tokenization and blockchain infrastructure
4.1 Technology risk
Tokens are issued and recorded on a public blockchain (Etherlink, an EVM-compatible Layer 2 built on Tezos) using smart contracts. Blockchain protocols and smart contracts may contain undetected bugs, vulnerabilities, or design flaws. They are also exposed to network congestion, hard forks, protocol changes, validator failures, oracle failures, and other technical incidents that may affect the issuance, transfer, or settlement of tokens.
4.2 Cybersecurity risk
The Platform, custodians, smart contracts, wallets, and related infrastructure may be the target of cyberattacks, including hacking, phishing, denial-of-service attacks, social engineering, or exploitation of private keys. Such incidents could lead to unauthorized transactions, theft of assets, loss of access to tokens, or disruption of services, despite the multi-layer security measures, third-party audits, and proof-of-reserves mechanisms implemented by Starblocks.
4.3 Custody and private-key risk
Where investors elect to hold tokens directly through self-custody, they are solely responsible for the security of their own wallets, devices, and private keys. The loss, theft, or unauthorized use of credentials, seed phrases, or private keys may result in the irreversible loss of tokens. Starblocks cannot recover lost private keys or reverse blockchain transactions. Investors using institutional custody arrangements remain exposed to the risk of failure or default of the relevant custodian.
4.4 Legal qualification of tokens
Each token represents an economic fraction of a bond instrument issued through a Luxembourg securitization vehicle (SPV) and recorded on-chain through a distributed ledger technology (DLT) device used as a securities register, in accordance with Articles L.211-3 et seq. of the French Monetary and Financial Code. The legal characterization of such tokens, the nature of the rights they confer, and the way they interact with traditional securities regimes may evolve over time and may differ from one jurisdiction to another. Future regulatory or judicial developments could affect the validity, transferability, or treatment of existing tokens, including their qualification under MiCA, MiFID II, or local securities laws.
4.5 Proof of reserves and on-chain data
Although the Platform may offer real-time proof-of-reserves, on-chain dashboards, audit trails, and independent third-party verifications through the Clarity module, the accuracy and completeness of on-chain data depend on inputs from off-chain sources, oracles, valuers, auditors, and operators. Errors, delays, or manipulation at any of these layers may affect the reliability of the information displayed.
5. Regulatory and legal risks
5.1 Evolving regulatory framework
Tokenization, digital assets, and crypto-related services are subject to a rapidly evolving regulatory framework, including, in Europe, the Markets in Crypto-Assets Regulation (MiCA), the Prospectus Regulation (EU 2017/1129), the Securitization Regulation, MiFID II, and the French regime applicable to the Shared Electronic Recording System (Dispositif d’Enregistrement Électronique Partagé, DEEP).
In the Kingdom of Bahrain, the Central Bank of Bahrain (CBB) Rulebook applies to the distribution of investment products and to crypto-asset services. New laws or regulations, or changes to existing ones, may impose additional restrictions on the issuance, distribution, transfer, or holding of tokens, may require the Platform to modify its services, or may make certain offerings unavailable in certain jurisdictions.
5.2 Eligibility and jurisdictional restrictions
Access to certain offerings is restricted to eligible investors in specific jurisdictions. Tokens may not be offered, sold, or transferred to persons located in, or resident of, jurisdictions where such offering or transfer would be unlawful, would require additional registration, or would otherwise be subject to restriction. The minimum subscription amount of €100,000 per investor is intended to qualify each offering as a private placement under Article 1(4)(d) of the EU Prospectus Regulation, but investors remain responsible for compliance with the laws of their own jurisdiction.
5.3 KYC, AML and sanctions compliance
All investors are subject to KYC (Know Your Customer), KYB (Know Your Business), AML (Anti-Money-Laundering), counter-terrorism financing, and sanctions screening procedures. Failure to provide accurate and complete information, or being identified as a sanctioned or restricted person, may result in the refusal of access, the suspension of accounts, or the freezing of tokens, in accordance with applicable law and platform policies. Such procedures may be performed directly by Starblocks, by its banking partners, or by specialized service providers.
5.4 Tax treatment
The tax treatment of tokens, distributions, redemptions, and capital gains depends on the personal situation of each investor and on the tax rules applicable in their jurisdiction of residence. Tax laws and their interpretation may change. Investors are solely responsible for the proper declaration and payment of any taxes due in connection with their investments. Starblocks does not provide tax advice and recommends that each investor consults a qualified tax advisor. The issuer may apply any withholding tax legally required and the investor undertakes to provide any information necessary for the issuer to comply with its automatic exchange of tax information obligations.
5.5 No regulatory approval of this document
This Risk Factors document has not been reviewed or approved by any regulatory authority. In particular, the Luxembourg Commission de Surveillance du Secteur Financier (CSSF) has not verified the accuracy or adequacy of the terms and conditions of any offering accessible through the Platform, nor has it approved or authorised the offering of tokens to investors residing in Luxembourg or in any other jurisdiction. The information contained herein does not constitute, and shall not be construed as, a prospectus or an offering document within the meaning of the EU Prospectus Regulation or any equivalent legislation. Investors should rely solely on the offering documents of each specific Trophy Asset for any binding information.
6. Risks related to the issuing structure
6.1 Securitization vehicle and ring-fencing
Each tokenized offering is structured through a dedicated compartment of a Luxembourg securitization vehicle (SPV) governed by the Luxembourg Securitization Law of 22 March 2004, as amended. Although such compartments are designed to be ring-fenced, residual structural, legal, or operational risks may exist, including in cases of insolvency, restructuring, or litigation affecting the SPV, its directors, the custodian, or the service providers.
6.2 Limited recourse
Investors should be aware that the bond instruments issued through the SPV are limited recourse obligations. Their repayment depends exclusively on the assets of the relevant compartment and on the recovery from the underlying real estate vehicle. In the event of insufficiency of such assets, investors will not have recourse against the SPV's other compartments, against the SPV itself, against Starblocks, against Foncière Renaissance, or against any director, officer, employee or representative of those entities. Any residual claim of an investor exceeding the available proceeds of the relevant compartment shall be definitively and irrevocably extinguished.
6.3 Non-petition undertaking
By subscribing to the bond instruments, each investor expressly undertakes not to initiate or support any application or proceeding for the opening of any bankruptcy, liquidation, suspension of payments, judicial reorganisation, administrative dissolution, insolvency or similar proceedings against the issuer, on the basis of any right or claim arising from the bond instruments. This undertaking does not prevent (i) the filing of a claim within proceedings initiated by a third party, nor (ii) the engagement of a declaratory action seeking only a judicial determination on the contractual obligations of the issuer, without seeking the opening of insolvency proceedings.
6.4 Order of payment cascade
Repayment of the bond instruments at maturity is made in accordance with a strict payment cascade set out in the bond issuance documentation. The order of priority is, in summary: (i) payment of all fees, charges, taxes and duties of the relevant compartment, including the remuneration of the Representative of the Bondholders’ Mass and of the service providers; (ii) payment of the yield due in respect of the last interest period; (iii) repayment of the principal amount of the bond instruments, pro rata to the holdings of each bondholder; (iv) payment of any late interest; and (v) the residual balance, if any, paid to the shareholders of the issuing SPV. Investors are therefore structurally subordinated to the operational fees of the compartment and to the senior secured bank financing of the underlying vehicle.
6.5 Bondholders’ Mass and restrictions on individual action
Investors holding the bond instruments are automatically grouped, by operation of law, into a Bondholders’ Mass (the “Mass”) endowed with legal personality and governed by Articles L. 228-46 et seq. of the French Commercial Code. The Mass acts exclusively through a Representative designated by the bondholders’ general meeting and is the sole party entitled to exercise the rights, actions and benefits common to all bondholders. Individual bondholders may not bring legal proceedings against the issuer in respect of common rights; any such action must be brought through, or in defence against, the Representative of the Mass. This collective regime is a substantial restriction on individual investor rights.
6.6 Cases of forfeiture (acceleration)
The Representative of the Mass may declare the forfeiture of the term and accelerate repayment of all bond instruments in the event of (a) non-payment of any sum due under the bond issuance documentation, after a thirty (30) day notice period; (b) opening of insolvency proceedings against the issuer; (c) certain mergers, demergers or contributions affecting the issuer; (d) breach of an undertaking under the bond issuance documentation; or (e) failure by the issuer to disclose any of the above. Acceleration results in the obligation to obtain the sale of the underlying asset within a defined period, and the early repayment of the bond instruments up to the available amount.
6.7 Expert determination procedure for disputes
In the event of a dispute between an investor and the issuer relating exclusively to the calculation of yield or repayment amounts, the bond issuance documentation provides for an expert determination procedure. An expert is jointly appointed by the parties, or by the President of the Tribunal of Commercial Activities of Paris in absence of agreement, with a thirty (30) day mandate. The expert’s decision is final, subject only to manifest error, and the costs of the expertise are borne by the issuer or by the investor depending on the deviation between the expert’s findings and the contested amount.
6.8 Sponsor and counterparty risk
Investors are exposed to the credit and operational risk of various counterparties, including the SPV, the Owner Operator, the property manager, the custodian, the paying agent, the auditor, the tokenization service provider, the senior secured bank lender, and any other counterparty involved in the structuring or distribution of the offering. Default or failure of any of these counterparties may adversely affect the performance, the liquidity, or the value of the tokens.
6.9 Sponsor alignment and conflicts of interest
Sponsors and affiliated entities (in particular entities sharing leadership with Foncière Renaissance) may co-invest alongside investors. While this is intended to align interests, potential conflicts of interest may nonetheless arise between Starblocks, the sponsors, the Owner Operators, the banking distributors, and the investors, in particular regarding fees, pricing, asset selection, asset disposal, valuations, and reporting. Starblocks implements governance arrangements designed to identify, manage, and disclose such conflicts of interest, and maintains a register of identified conflicts available upon request from competent authorities.
7. Market, currency and interest-rate risks
7.1 Currency risk
Tokens may be denominated in a currency that is not the investor's reference currency (typically euros for the initial Trophy Assets). Distributions, redemptions, or secondary-market transactions may be exposed to exchange-rate fluctuations, which can reduce the effective return for investors holding a different reference currency.
7.2 Interest-rate and credit-spread risk
The value of bond-type tokens may be affected by changes in market interest rates and credit spreads. A rise in interest rates may, all else being equal, reduce the present value of fixed-coupon instruments and may affect the appetite of secondary-market participants.
7.3 Crypto-asset volatility
To the extent that investors fund their positions using crypto-assets (such as stablecoins or other digital assets), they are also exposed to the volatility, liquidity, regulatory, and counterparty risks specific to those crypto-assets, including the risk of de-pegging of stablecoins or freezing of accounts by issuers or banking partners.
8. Platform and Operational risks
8.1 Service availability
The Platform, including the Vault, Clarity dashboards, Asset Locator, and access interfaces, may experience interruptions, outages, latency, or degraded performance due to maintenance, technical incidents, third-party failures, or force majeure events. Such events may temporarily prevent investors from accessing their data, executing transactions, or viewing real-time information.
8.2 Reliance on third-party service providers
Starblocks relies on a number of external service providers, including custodians, paying agents, auditors, valuers, blockchain infrastructure providers, identity-verification vendors, banking distributors, and electronic-signature providers (e.g., eIDAS-compliant providers). Any failure, fraud, or default by such providers may adversely affect the operation of the Platform and the performance of investments.
8.3 Information and forward-looking statements
Certain statements on the Platform are forward-looking and based on assumptions regarding future events, market conditions, valuations, yields, and operational performance. Actual results may differ materially from those expressed or implied by such statements. Indicative figures (e.g., yields, coupons, AUM, surfaces, acquisition dates) are provided for information purposes only and are subject to change without notice.
9. Suitability and operational risks
Investments offered through Starblocks are complex and are intended for sophisticated investors who: (i) have the financial capacity and knowledge to assess and bear the risks described herein, including the risk of total loss; (ii) understand the legal, tax, and operational implications of holding tokenized real-world assets, including the specific features of bond instruments issued by Luxembourg securitization vehicles, their indexation mechanism, their subordination to senior secured bank financing, and the restrictions on individual action under the Bondholders’ Mass regime; (iii) have read and understood all relevant offering documents; and (iv) have, where appropriate, consulted independent professional advisors.
Before investing, each investor should carefully assess whether the investment is consistent with their personal situation, their investment objectives, their risk tolerance, and their investment horizon. Each investor remains solely responsible for their investment decisions.
10. No Advice - no guarantee
The information made available through the Platform, including the present Risk Factors, is provided for general information purposes only. It does not constitute investment, legal, accounting, regulatory, or tax advice, and shall not be construed as a personal recommendation. Starblocks does not guarantee the accuracy, completeness, or timeliness of the information published on the Platform and may modify or update it at any time without notice.
11. Compliants
Investors who wish to file a complaint regarding the Platform or any service provided by Starblocks may do so through the official complaints channel indicated on starblocks.io. Starblocks will acknowledge receipt of any complaint within ten (10) business days and will provide a substantive response within a reasonable period, in accordance with applicable regulatory standards. Where the complaint relates to a dispute on the calculation of yield or repayment amounts, the expert determination procedure described in Section 6.7 shall apply. Where the complaint relates to common rights of bondholders, it shall be channelled through the Representative of the Bondholders’ Mass as described in Section 6.5. Where the complaint cannot be resolved amicably, investors may have recourse to the competent regulatory or judicial authorities in accordance with applicable law.
12. Updates to this document
Starblocks may update this Risk Factors document from time to time to reflect changes in its activities, the underlying assets, the technology used, or the regulatory environment. The version available on starblocks.io at any given time shall be the prevailing version. Investors are invited to consult this document regularly.
13. Contact
For any question regarding these Risk Factors, please contact Starblocks through the official contact channels available on starblocks.io.