An investment in securities involves a high degree of risk. All investors should carefully consider the following factors in addition to the other information in this investor relations website before investing in Trisul’s securities. In general, investing in the securities of issuers in emerging market countries, such as Brazil, involves a higher degree of risk than investing in the securities of U.S. issuers or issuers in other countries with highly developed capital markets. Trisul’s business, financial condition, results of operations and prospects may be materially adversely affected by any of these risks.

The risks briefly described below are those that the Company currently believes most likely may materially affect its performance.

1) Risks Relating to Brazil
  • The Brazilian government has exercised, and continues to exercise, significant influence over the Brazilian economy. This influence, as well as Brazilian political and economic conditions, could adversely affect the Company.
  • Inflation and government efforts to combat inflation may contribute significantly to economic uncertainty in Brazil and could harm Trisul’s business and the market value of its common shares.
  • Political, economic and social developments, and the perception of risk in other countries, especially emerging market countries, may adversely affect the Brazilian economy, the Company’s business, and the market price of Brazilian securities, including Trisul’s common shares.
  • Exchange rate instability may adversely affect the market price of the Company’s common shares.
  • High interest rates have adversely affected the Brazilian economy and may have an adverse effect on Trisul’s business.

 


2) Risks Relating to the Brazilian Real Estate Industry
  • The Company is exposed to risks normally associated with acquisition, development, construction, sale and financing activities.
  • Economic downturns in Brazil may adversely affect the growth of the real estate business as a whole through, among other factors, increases in interest rates, exchange rate fluctuations and political instability.
  • Trisul could be prohibited, as a result of new regulations or market conditions, from contractually adjusting the sales price for its unit sales to reflect increases in inflation, or from adjusting the balance due on most of its trade accounts receivable to reflect increases in inflation as currently permitted, which could make a real estate project economically unfeasible.
  • The level of purchaser interest in a newly launched project or the sales price per unit necessary to sell the units in the project may be lower than expected, resulting in the project not achieving its projected profitability.
  • In the event of bankruptcy or significant financial difficulties of any major company operating in the Brazilian real estate industry, clients may lose confidence in companies operating in this sector, which could affect the real estate industry as whole.
  • Local or regional real estate market conditions, such as an oversupply of developed real estate in a particular area or for a particular market segment, may dampen demand for Trisul’ developments.
  • Prospective purchasers may have a negative perception of the security, convenience and attractiveness of units offered and the areas in which they are located.
  • Increases in operating costs, including the cost of necessary capital improvements, insurance premiums, real estate taxes and utilities may adversely affect the Company’s profit margins.
  • Suitable land for new development may not be available, negatively affecting Trisul’s ability to carry out its business strategies.
  • The Company may be unable to successfully implement its strategy to discount or sell its trade accounts receivable on attractive terms to financial institutions and securitization companies, increasing the level of working capital that the Company needs to maintain its operations.
  • Construction and sales of the Company’s projects may not be completed within the time initially projected, resulting in increased construction costs or termination of sales contracts.
  • Changes in the policies of the CMN regarding the availability of funds from the Brazilian government’s Sistema Financeiro Habitacional, or SFH, may reduce the ability of Trisul’s clients to obtain mortgages to finance their units.
  • Changes in legislation and regulations in the municipalities in which the Company operates may alter the number of units Trisul plans to launch.
  • Delays in the approval or licensing of the Company’s projects by governmental authorities may adversely affect the results of its development activities.
  • The real estate industry in Brazil is highly competitive and Trisul may lose market share under certain circumstances.
  • The Company’s real estate development and construction activities are currently concentrated in the São Paulo metropolitan area. The real estate market in this area is characterized by a scarcity of available properties for development and a large number of competitors.
  • Trisul may not be successful in the development of projects outside the metropolitan area of São Paulo.
  • A scarcity of financing and/or increased interest rates may cause a decrease in the demand for real estate properties, which can negatively affect the real estate market and consequently the Company’s results of operations.
  • The Brazilian real estate industry is subject to extensive regulation, which could increase Trisul’s expenses and costs and cause difficulties for the development of certain projects, thereby negatively affecting its business.
  • An increase in tax rates or the creation of new taxes during the period when Trisul’s sales contracts are in force could materially adversely affect its financial condition and results of operations.
  • Trisul’s future growth may require additional capital, which may not be available or, if available, may not be on terms acceptable to the Company.

The occurrence of any of the above may have a material adverse effect on Trisul’s business.


3) Risks Related to the Company

 

  • Real estate projects carry risks normally associated with providing financing.
  • Problems with Trisul’s real estate projects that are beyond its control may damage the Company’s reputation and expose it to civil liability.
  • The Company’s participation in special purpose entities with joint venture partners creates additional risks, including potential problems in its financial and business relationships with its partners.
  • Trisul may not be able to implement its growth strategy or manage its growth.
  • The Company may have difficulties integrating its operations.
  • The loss of Trisul’s senior management, or its inability to attract and retain additional qualified personnel, could have a material adverse effect on its business.
  • If Trisul’s partnerships do not succeed, or if the Company is not able to maintain good relationships with its partners, its business and operations may be materially adversely affected.
  • The Company’s financial results depend upon funds distributed by its subsidiaries and Trisul can give no assurance that such funds will be distributed to them.

 


4) Risks Related to Trisul’s Common Shares
  • An active and liquid market for the Company’s common shares may not develop, thus limiting the possibility of selling Trisul’s common shares.
  • The Company cannot assure that the price per common share will be maintained after this offering.
  • The interests of Trisul’s controlling shareholder may conflict with those of its non-controlling shareholders.
  • Trisul may need additional funding in the future and may issue additional common shares in lieu of incurring indebtedness, which may result in a dilution of your interest in its common shares.
  • In acquiring the Company’s common shares, an investor will bear an immediate dilution in the book value of his investment.
  • Holders of Trisul’s common shares may not receive any dividends or interest on shareholders’ equity.
  • The protections afforded to minority shareholders in Brazil are different from those in the United States and may be more difficult to enforce.

 

Last update: December 5, 2018