stable income secured from long-term lease agreements
the fund targets a net yield on the level of initial yield of long lease properties in exchange for the 4th risk category (on a scale of 1 – 7)
high liquidity of invested funds
option of investing already from 300 CZK per one trade
FUND INVESTMENT CRITERIA:
properties with unexpired lease length of at least 10 years
leases are backed by tenants with high credit rating and sufficient income security
tenants are able to demonstrate high stickiness to the property which is critical for their operation
property location has good valuation fundamentals
HOW DOES REICO ČS LONG LEASE WORK? The fund invests mainly in logistic, industrial, manufacturing, retail, office and other types of commercial real estate in the Central European region. The property portfolio provides the fund with stable long lease income secured from credible tenants for whom the property is mission critical. Lease agreements in the portfolio have an above average duration and are initially secured for 10 years or longer. This helps to minimise loss of income connected with the re-leasing of real estate. Also, the fund benefits from annual rental indexation increases contracted for the long term. The share of the fund’s real estate component should account for up to 90% of its net asset value with rest of the funds to be held in cash or cash equivalents. However, during the initial three year period the fund may be fully invested in real estate participations. The fund does not pay out any dividends. Rental income is reinvested. The fund relies on external financing sources with a loan-to-value ratio of ca. 55%.
BENEFITS OF INVESTMENT IN REICO ČS LONG LEASE
The investment offers above average yield from long lease commercial real estate in exchange for low to medium investment risk.
Lease income is contractually secured from credible tenants with good covenant strength.
The unique investment strategy targeting long lease assets enables extensive diversification over sectors, geographies and lease expiry dates.
Quick availability of invested funds. After the initial period of three years the invested funds are generally available within a week.
Hedge against inflation – lease agreements contain inflation clauses which ensure adequate mark-up of rental payment to annual increases of consumer price index.
Fee discount. With regular investment you gain a fee discount for arranging the purchase of unit certificates.
SELECTED RISKS CONNECTED WITH INVESTMENT IN REICO ČS LONG LEASE
Given its focus, the fund is exposed to property market risks such as property valuation and rent collection.
Credit risk arises from long-term rental obligations of tenants and is controlled by various forms of income security.
Concentration risk is a specific risk of a limited number of properties, locations or sectors respectively.
Currency risk arises from holding of buildings leased and therefore valued in foreign currencies. Currency risk is partly hedged.
The fund’s liquidity risk is proportionate to the share of the invested fund capital in low liquid assets.
Therefore the redemption of unit certificates is not permitted in the first 3 years of the fund’s existence in order to protect the investors.