Investment criteria
& Risk Mitigation

Systemic risks of global or local markets

• Risk: The greatest risk that any type of investment carries has to do with the major crises suf fered by global and local markets. These crises generate volatility in the markets and directly affect asset values.
• Mitigation 1: We only invest in the least volatile markets in the world, in the main cities o f the United States, where systemic risks are reduced to their minimum.
• Mitigation 2: We mainly invest in rental assets already completed, without construction risk and in multifamily and/or logistics projects, with high oc cupancy rates. Where, although the valuation of the property may be temporarily affected, as long as the oc cupancy factor of the building is not
  seriously affected, it will continue to generate rent and therefore profits for its owners. This will allow avoiding negative economic cycles, if any, until a recovery scenario is found.

Vacancia

• Risk: In rental projects one o f the risks has to do with the asset maintaining a high vacancy level. Either during periods of economic crisis or migratory movements, the income level of an asset may be affected if the occupancy
  factor increases.
• Mitigation 1: We primarily invest in completed rental assets, without construction risk, and in multi-family projects with high occupancy rates. Where, although the aluation of the property may be temporarily affected, its annual profitability is almost unchanged. Such is the case, that even during the Covid-19 crisis, the vacancy and income in the assets we acquired did not change. In other w ords, all the tenants kept paying. It is commonly known that the last thing a person stops paying is the cost of their home. For this reason, we believe that this type of asset generates a very high degree of capital protection.
• Mitigation 2: It is important to understand that for a multi-family housing building to be seriously affected, its vacancy level has to be less than approximately 50%. That is, as long as the occupancy factor is greater than 50%, the property will have the capacity to pay both its expenses and any bank interest rate. At the same time, adequate reserves are always established to generate financial support for this type of situations.

Construction

• Construction risks are typical risks of real estate projects of this type. This usually carries an extra degree of risk in developing the business.
• Mitigation 1: To avoid taking this type of risk, we mainly invest in finished, or almost finished assets. Where constructive interventions are partial and the risk of inconvenience during the works is reduced to a minimum.
• Mitigation 2: In the case of investing in real estate projects that involve new construction, these projects will have a higher rate of return, which will compensate for the additional risks taken in the business. Having said this, any project in this category that is approved by our investment committee, will only be approved if it has all the nec essary financing to
  cover all its direct and indirect construction costs, insurance policies, first-rate construction team with proven experience, and with all the additional saf eguards to guarantee 100% completion of tasks.

Legislative / Tax Changes

• Risk: Any real estate project, anywhere in the world, can be affected by legislative or tax changes. They can affect the performance of the business and therefore its valuation.
• Mitigation 1: We invest in several of the most legally secure markets in the world, to minimize the probabilities of occurrence of these changes.

Inefficiency in operations

• Risk: A potential business risk has to do with inefficiencies of our operators, when managing the business. This can be both in the strategy of buying an asset, acquiring it at values higher than those of the market, in operational inefficiencies/imprudence or, to a greater extent, irregularities or fraud.
• Mitigation 1: It is important to understand the framework in which real estate businesses of this kind in the Unit ed States are structured. An operator, by contract and by law, whose role is to be the promoter of the business, has a contractual and legal obligation to, in any case, act for the benefit of the business and its investors. In other words, all his actions must be aimed at looking after the interests of the investor. Any action that contradicts this obligation is considered a crime and will be subject to legal and criminal proceedings against all the people involved and their assets.
• Mitigation 2: At the same time, all the businesses in which Grupo Chomer is involved have a significant capital contribution from one of the main banking and mortgage institutions in the United States. In many cases, government institutions, such as Freddie Mac (Federal Home Loan Mortgage Corporation) and Fannie Mae (Federal National Mortgage Association). So that, any type of malpractice, such as fraud or scam caused to the
  business, would consist of direct fraud against the government of the United States of America, since it affects the capacity of payment of mortgage loans.

• Mitigation 3: All the movements of funds that Grupo Chomer directs to the different businesses are carried out through Escrow accounts. These accounts are authorized only by American banks and fulfill the function of parking accounts. That is, accounts specifically created for the purpose of receiving funds from third parties and that the y are used for a single purpose. In this case, the direct purchase of an asset. In this way, Grupo Chomer ensures that the f unds contributed are used only for the purchase of the specific asset.
• Mitigation 4: We only work with trusted operators, where we have close commercial ties, endorsed by us, by our team in the United States and by our external advisors.
• Mitigation 5: Not only does Grupo Chomer in vest its own capital, side by side with its investors, but our main objective and responsibility is to ensure the interests of our clients and investors. We are the guardians of your investments, and for this reason we are responsible for auditing, verifying and carrying out constant control and monitoring of all the businesses in which we participate. Our guarantee is that we will use all our resources and skills to achieve successful businesses with the least possible risk. We risk our reputation on this.