We Bet On Achieving The Best Possible Yield
Industrial properties have a readable prospectus, thanks to which ARETE Investment Group manages to collect regular income. Robert Ides, co-founder of ARETE Group, explains why it pays to invest in these properties. Where and when did the ARETE story begin? How did this investment group come into being? My partner and I had our first discussions about setting up an investment group in 2013. ARETE Group was established in 2014 in Singapore, where we were able to raise our first large investors while defining our core strategy and corporate values. Along with that, the SICAV investment fund structure was legislated in the Czech Republic that year, which international investors understood and required for their investment. What all are you currently involved in within the Group? The ARETE Group comprises investment funds and service companies that provide specific services to the funds. Our strategy is to ensure maximum activities for the efficient management and development of our funds in-house. We do not want to be dependent on external suppliers. We consider this approach to be our competitive advantage and we are able to react immediately and flexibly in the event of any problem. The coronavirus pandemic has absolutely proved the correctness of our approach. In what areas can a client invest with you? We currently have one investment fund open, which is focused exclusively on investments in industrial real estate in the Czech Republic and Slovakia. We are now focusing as much as possible on the development of this fund, and the investment cycle should be reached by the end of 2027 at the latest. What are you doing to mitigate the risk that may be associated with investing in the funds? First and foremost, it’s about the right form of underlying asset and investment strategy. Our fund buys and builds exclusively industrial real estate, which is mainly leased by logistics, manufacturing and trading companies. They use them on the basis of long-term lease agreements for the performance of their core business. This makes our properties an essential part of the landlords’ business. Secondly, we build our portfolio in such a way that geographical or sectoral dependencies do not arise. The third component is maintaining a conservative level of bank financing at up to 50 percent LTV. Our competition, for example, is more than 10 percent higher. We recognise that we are losing some percentage yield, but in this way we are better able to protect investors and have a more stable portfolio even in more turbulent times. At the end of 2021, we had an LTV of 14 per cent, which is very conservative. The last point is the significant tightening of investment criteria in the acquisition appraisal of properties and tenants in terms of long-term perspective and sustainability. What is the focus of the ARETE Industrial Sicav investment fund? The fund’s portfolio consists exclusively of premium industrial properties, and we would like to reach an asset under management of €400 million at the end of the investment cycle. This is a more than realistic target for us. We are focused on achieving the best possible return for investors. For this reason, we are building new industrial parks directly in the fund. What are the advantages of investing in manufacturing and logistics real estate in particular? First and foremost, it’s a readable economic and financial prospectus. Contracts with tenants are concluded for a very long period of time, so there is a future cash flow that gradually flows into the fund from reputable, international companies with good ratings and is secured by a guarantee. Unlike other investments, such as in precious metals or cryptocurrencies, we do not rely on the appreciation of assets over time, but we have a very readable prospectus and collect regular income over the investment period. How can someone become an investor in your fund? The investment shares of our fund are distributed by the securities dealer PARTNERS INVESTMENTS and can also be subscribed by Tatra banka private banking clients. We also cooperate with some family office companies and asset managers. Potential investors can find further information on our website arete.eu. Controlling your investment is clearly important. How does it work at ARETE? Each investor receives a regular report once a month on the development of the value of the investment share, the values are also available on Bloomberg. A more extensive report is issued every quarter, where the investor can find all the important data on the development of the value of his investment. We regularly meet with our investors at more or less formal events that we organise. We always strive for the most transparent, open and individual approach. What are your visions for the future? We want to become an established European fund manager with more than one billion euros in assets under management. At the same time, we would like to continue to develop our competencies, bring innovative products and strengthen our team. https://www.forbes.sk/stavili-sme-na-dosiahnutie-co-najlepsieho-vynosu/
Real estate funds of the ARETE Group rank at the top of the market in terms of returns
ARETE INDUSTRIAL announced the purchase of a second industrial hall in Slovakia. The Belushi site, like the previous acquisition in Kežmarok, also boasts a long-term tenant with highly specialised production. The fund’s ability to capitalise on its own investments is among the highest in the region. The next strategy will be to look for purchasing opportunities in new markets, says Lubor Svoboda, founding partner of ARETE Group. The target value of ARETE INDUSTRIAL has been communicated at EUR 400 million. Where are you currently on the road to this goal? You are right, we are targeting our fund to have a value of assets under management of EUR 400 million. We are currently about a quarter of the way there. The momentum in terms of capital raising and investment opportunities gives me a clear signal that we should reach our target within the set timeframe. In any case, we always pay attention to the quality of the assets we buy, the tenants and, of course, the return on the fund that we communicate to our investors. And because ARETA’s key managers are also investors in the fund, we want to achieve an appreciation of over 10% p.a. That is our main objective. The demand for industrial real estate is growing and so is the yield on it. Does this complicate the search for acquisition opportunities? Liquidity in the industrial property market is good. The positive mood is also reflected in the massive year-on-year increase in the number of transactions. Objectively, there are fewer buying opportunities on the market. On the other hand, we are recording the highest volume of acquisition opportunities for our fund in recent years. This is due to the fact that we are able to find investment opportunities outside the open market and that we are able to develop new industrial parks ourselves. Our comprehensive approach has benefited greatly from the very strong demand for rental space in industrial properties. What are your fund’s immediate acquisition plans? Unfortunately, I can’t be too specific. In any case, we would like to double the value of the assets in the fund in 2022 compared to the end of 2021. I can also reveal that the Czech Republic and Slovakia will continue to be our key markets. We would also like to add one or two industrial parks in Germany or Austria. How is investor interest in putting money into your funds changing? ARETE funds are among the most profitable in their segment in Central Europe. I am pleased that the interest in investing in our current fund is continuously very good, even after the beginning of the Ukrainian crisis. Investors are looking for products that target above inflation, which our product fulfils. At the same time, it comes with very low volatility and a readable economic prospectus. The combination of the above is attractive to investors. This applies to private and institutional investors at the same time. Has the war in Ukraine affected the perception of Slovakia by foreign investors? We are dealing with various partners and investors from practically all over the EU and so far we have not encountered any of the entities changing their view of the stability and prospects of Central Europe, especially the Czech Republic and Slovakia, in a negative way. What was the Fund’s appreciation in 2021 and what is your forecast for this year? Thanks to the excellent work of the entire portfolio management team, we achieved a high appreciation of more than 24% last year alone. Given the above, it is difficult for me to predict the appreciation for this year, however, all the newly executed transactions and the portfolio as a whole meet the investment parameters and strategy of the fund. Thus, I believe that 2022 will once again be an above-average year in terms of asset appreciation. At the end of last year you established cooperation with Partner Asset Management. Why are institutional investors and distributors important to you? The fund targets both institutional and private investors. The cooperation with Partners Asset Management, which we value very highly, is a logical outcome of our activities aimed at increasing the involvement of institutions both in direct investments in the fund and in the distribution of the fund’s investment shares. In my opinion, we are making the most of the potential of the combination of private and institutional money. Increasingly, we are turning our attention to investors from German-speaking countries. The postcovid time war period and the current crisis in Ukraine have greatly destabilised supply chains. Do you see an increased need to build up safety stocks? Definitely yes. To give an example. Prior to the development of one of our industrial parks, we agreed with the tenant that only the first phase of the project would be implemented and that the second phase would be implemented within approximately two years. Just before signing the contract documents, the tenant’s representatives informed us that they needed to expand the warehouse space immediately. As a result, both phases were implemented at the same time. We have several analogous examples. At the same time, in certain regions, we register a really significant excess of demand for storage space over supply. The consequence is that rents are rising. Do you see the high prices of building materials or the lack of them as a bigger problem? We currently have several industrial parks under construction, and so far the supply companies have managed to secure materials in sufficient quantities. Although we believe that the problems in the materials and raw materials market are short-lived, higher prices are likely to persist. We have already reflected this in our capital budgets. Given the size of our portfolio and the fact that only a portion of our properties are newly developed, higher prices for certain materials will not have a material impact on the performance of the Fund’s portfolio as a whole. How do you implement sustainability principles into your investment strategy? We are preparing a comprehensive ESG
The third fund of the ARETE group has completed the acquisition of the production site in Beluša, Slovakia, which is leased by Booster Precision Components. The value of the transaction exceeded EUR 10 million
The third fund of the ARETE Group focused on quality industrial and logistics assets in the region of Central and Eastern Europe has completed the acquisition of the Booster Precision Components production site in the form of a sale-and-leaseback. Booster Precision Components, a company belonging to the German Booster Group, which operates on 3 continents and is primarily engaged in precision machining, remains the long-term tenant of the complex. There is a modern Center of Excellence for Variable Turbine Geometry in Beluša, Slovakia. “Completion of the acquisition of the production plant in Beluša, 40 km from Žilina, strengthens our third fund’s position on the Slovak market. A tenant with state-of-the-art technology represents a long-term and stable partner for our fund. Since 1986, the Booster group has focused on precision machining, complex assembly and provides top production solutions worldwide not only for automotive. The Center of Excellence of the Group for Variable Turbine Geometry, which specializes in precision machining of special alloys and complex assemblies, will continue in our premises. Welcome to Booster Precision Components in our portfolio of premium tenants. We would also like to appreciate the constructive and openness of the Booster representatives,” said Lubor Svoboda, co-founder of the ARETE group. Roland Grijpma, CEO of Booster Precision Components, adds: “With the ARETE Group we have found a top player in industrial real estate management that allows us to focus on our operational activities. Booster Beluša is on the brink of significant changes and enlarging its footprint inside the automotive industry by focusing on electrical mobility but also in Hydraulics, Medical and other strong markets where high precision machining of special alloys and complex assemblies are key.” “The modern production area with almost 12,000 m2 of leasable area is fully in line with our diversified real estate portfolio strategy. Manufacturing companies with a long-term lease represent a stabilizing element. We are planning the gradual introduction of renewable energy sources and BREEAM certification will be a matter of course. We already consider these activities to be essential for achieving long-term sustainability and meeting environmental standards,” concludes Robert Ides, the second co-founder of the ARETE Group.
We have started the development of a new logistics park in Valašské Meziříčí
We have started the development of a new logistics park in Valašské Meziříčí. The modern facility will provide a total of 21,000 sqm of premium rental space and investments shall exceed EUR 15 million. The first two phases of development, which are already being prepared for the logistics company DB Schenker, are scheduled for completion till the end of 2022. Full article https://lnkd.in/dqHC2qfA
The Czechs went to invest. In inflation, they face the risk of hasty decisions
To diversify, not to gamble under the pressure of inflation and to include real estate or real estate funds in the investment portfolio, such were the conclusions of the January Round Table of the Investment Academy of the weekly Týdeník Ekonom, which was also attended by our colleague Dr. Josef Vojta. What to invest in, if real estate still has good potential and why it is important for every investor to distinguish between investment, trading and pure speculation, you can listen to all this in the podcast at this link: https://lnkd.in/eUgRt59c
BREEAM certification for our Slovak asset ARETE Park Kežmarok
Sustainability is currently a big topic in the world of real estate, so we are very pleased to have obtained BREEAM certification for our Slovak asset ARETE Park Kežmarok. And we definitely do not end there! The certification of our other parks is already underway. BREEAM (Building Research Establishment Environmental Assessment Method) is a standard of sustainable building design practices that has become a practical measure of the environmental impact of a building. The BREEAM assessment uses performance measures that are determined according to established criteria. The assessment concerns the specification of the building, its design, construction and use. The scales used represent a wide range of criteria and categories from energy to ecology. They include aspects related to energy and water use, the indoor environment (health and quality of life), pollution, transport, materials, waste, ecology and management processes. BREEAM has its roots in the United Kingdom since 1921, when the Building Research Establishment (BRE) was the first group in the world to systematically study buildings.
Just before the end of the year, the third fund of the ARETE Group completed the acquisition of the production area in Vráble, which is leased by Nanogate
The third fund of the ARETE Group focused on quality industrial and logistics assets in the region of Central and Eastern Europe has completed just before the end of 2021 the acquisition of the Nanogate Slovakia production plant belonging to the American Techniplas Group. The Techniplas Group is the world’s leading manufacturer of technologically precise and technically complex plastic components. The modern production plant with almost 15,000 sqm of production, storage and office space is the second completed transaction of the third ARETE fund in Slovakia this year, with the value of the transaction exceeding EUR 11 million. “With the Nanogate Slovakia production plant in Vráble, West Slovakia, 20 kilometres from Nitra, our third fund is primarily gaining a long-term and stable tenant who is one of the leaders in its field. Nanogate provides a complete plastic injection solution. Its customers are companies from the electronics, automotive and aerospace industries, as well as companies from the field of medical and packaging technology. Since this year, Nanogate’s European production plants have belonged to the American Techniplas group. In addition to an excellent international rating, the production plant in Vráble gained access to the parent company’s top know-how and new global markets. The tenant’s intentions in the locality are long-term, as evidenced by the prepared investments in technologies in the order of millions of EUR. The acquisition of the production plant took place in a sale-and-leaseback structure, and we would like to appreciate the very constructive and open negotiations on the part of Nanogate’s representatives,” said Lubor Svoboda, co-founder of the ARETE Group. Igor Mlynarčík, CEO and Managing Director of Nanogate Slovakia, adds: “The ARETE Group has been able to offer us a package of services that will enable us to focus on our core business and provide customers with better services and products in the future. At the same time, we are gaining a strong and professional partner in the field of real estate, which will ensure greater user comfort and a professional approach to solving open points. The process of the whole transaction and the time course represented a great challenge, which was realized thanks to the very pragmatic approach of the teams of both companies, the high level of professionalism and the proactive approach. We are already looking forward to cooperating on future projects.” “We are pleased to welcome Nanogate Slovakia to our portfolio of premium tenants. From the point of view of the entire portfolio of our third fund, we acquire a quality tenant who, with its business focus and business profile, perfectly contributes to the fulfilment of our diversified real estate portfolio strategy. We have a very strong perception that, in addition to tenants from the logistics and e-commerce segments, it is necessary to stabilize the portfolio through long-term leases, especially with manufacturing companies. In line with our business strategy, industrial real estate in Slovakia will represent a significant part of our portfolio in the long run. We are therefore very pleased that we have managed to complete the transaction this year. From the point of view of the long-term sustainability of the entire project, we plan the gradual introduction of renewable energy sources and BREEAM certification will also be a matter of course. We already consider these activities to be the standard for building industrial portfolios today,” concludes Robert Ides, the second co-founder of the ARETE Group. https://tiskovezpravy.hn.cz/c1-67018390-tesne-pred-koncem-roku-dokoncil-treti-fond-skupiny-arete-akvizici-vyrobniho-arealu-ve-vrablich-ktery-ma-v-najmu-spolecnost-nanogate-hodnota-transakce
“českých 100 Nejlepších”
“ČESKÝCH 100 NEJLEPŠÍCH” We received awards in the “Dynamic Growth and Stability” category, which, as words, accurately describe the key attributes of investing in our ARETE funds. Our colleague Josef Vojta received the award from the Rector of Charles University, Professor Tomáš Zima.
Fund Partners Fond Realitných Investícií From The Management Company Partners Asset Management Has Decided For A Major Investment In The Third Arete Fund
PARTNERS Fond realitných investícií from the management company PARTNERS ASSET MANAGEMENT has decided to invest a significant part of its fund capital in the ARETE Industrial fund. This investment brings undeniable benefits to both funds. The third fund of the ARETE group acquires another strong institutional investor who fundamentally appreciates the fund’s strategy based on closed investment cycles. PARTNERS Fond realitných investícií brings to the market a unique product that enables participation in the income from large real estate projects that have so far been unavailable to most retail investors. The volume of assets under management by the PARTNERS Fond realitných investícií fund should reach EUR 250 million within five years. “The third fund of our group is focused not only on qualified investors, but especially on institutional investors. For this year, we have set ourselves the goal of completing the entry of at least one major institutional investor. We have now succeeded and we are very pleased that the management company PARTNERS ASSET MANAGEMENT has decided to allocate up to a third of the total assets under management of the open-end mutual fund PARTNERS Fond realitných investícií for investments in our ARETE Industrial fund. Our fund thus becomes practically an anchor investment of this new fund of the company PARTNERS ASSET MANAGEMENT. Their decision, which was preceded by a very thorough analysis of our fund’s strategy and investment parameters, is proof that our results so far, returns actually paid to investors, emphasis on strict adherence to the investment horizon, but especially our responsible approach to fund administration and management bring investors far more transparent and a more credible investment model than the competition. At the same time, it is a new experience for us that through the fund PARTNERS Fond realitných investícií, retail investors in Slovakia can participate in the income of our fund for the first time,” said Lubor Svoboda, co-founder of the ARETE Group. Jakub Rosa, Investment Director of the management company PARTNERS ASSET MANAGEMENT, continues in the same spirit: “The goal of the fund PARTNERS Fond realitných investícií is to bring PARTNERS GROUP SK clients diversification of stock-bond portfolios by the inevitable alternative part in the form of real estate. The fund’s investment strategy is unique in Slovakia. In cooperation with established players in the regional real estate market, we present the most effective solutions, through which we will allow ordinary investors access to another league. For us, the inclusion of the ARETE Industrial fund represents a long-term strategic cooperation based on mutual partnership. We especially appreciate the unique strategy, professional approach and long-term experience of the fund’s representatives, confirmed by results. The combination of these factors allows investors of the fund PARTNERS Fond realitných investícií to participate in a first-class product that they would not normally be able to touch. In terms of our fund allocation, ARETE Industrial diversifies portfolio by logistics and light industry, which has become the most sought-after asset in the commercial real estate market since the pandemic. Our investors also perceive the aspect of local patriotism positively, through the development of the regional economy and participation in the development of local projects, often at an accessible distance from their place of residence.” About PARTNERS ASSET MANAGEMENT The management company PARTNERS ASSET MANAGEMENT entered the Slovak financial market in 2021 with the ambition to increase the availability of quality investment opportunities for investors. The flagship and at the same time the first fund managed by the management company is the real estate fund PARTNERS Fond realitných investícií. PARTNERS ASSET MANAGEMENT is part of the financial group PARTNERS GROUP HOLDING SK. It uses the synergies and know-how of the holding’s sister company with many years of experience in the field of financial intermediation, capital market and insurance. More information at www.partnersasset.sk. More in the press release published on https://lnkd.in/dJHxiH-i. Only in Czech.
Industrial real estate expects further growth
One of the co-founders of the ARETE Group, Lubor Svoboda, gave an exclusive interview to the weekly EKONOM. Among other things, the topic of the future of real estate investment was discussed, and according to Lubor, the figures show that the industrial real estate market in Central Europe will not be “mined” for another five to seven years. “There are also promising residential properties in the Czech Republic, because the last ten years have not been able to meet demand at all. When the situation stabilizes a little in two years, some office centers will also be attractive. Conversions of hotels to residential properties can also be interesting.” An extensive interview with Lubor Svoboda and a number of interesting ideas can be found at (in Czech): https://ekonom.cz/c7-67000970-1424ja-1aef09a2d0450d6
