Our earnings will not be threatened by rising European interest rates
You can read about the exceptionally high appreciation of the ARETE INDUSTRIAL fund at the end of 2021, the low share of bank loans to the value of the fund’s assets (LTV) and the fact that any increase in EUR interest rates will not significantly negatively affect the fund’s performance objectives, in the comment of our colleague Dr. Josef Vojta for Hospodářské noviny.
Alternative investments in the Ekonomika+ programme on Slovak TV TA3
According to the OECD, Transportation and Storage are among the essential branches of national economies (besides e.g. healthcare, defense or social care). Industrial and logistics parks, which are the focus of our third fund, currently bring some of the highest returns in the field of alternative investments. Which investments are worth having in times of crisis and what return is our fund currently showing? Our colleague Josef Vojta was Lenka Buchláková’s guest on the program Ekonomika+ on Televízia TA3.
TA3 Television Interview On Alternative Investments
As part of the „Investujeme“ in Slovak Television TA3 session, an interview with our colleague Josef Vojta with Lenka Buchláková on alternative investments and investments in industrial real estate.
The third fund of the ARETE Group starts development in a brand-new industrial zone in Rokycany, right next to the D5 highway
The third fund of the ARETE Group starts development in a brand-new industrial zone in Rokycany, right next to the D5 highway. Once completed, it will offer 25,000 sqm of premium rental space in a modern industrial park. The investment will reach almost EUR 30 million. The third fund of the ARETE Group focused on quality industrial and logistics assets in the region of Central and Eastern Europe has started the first construction of two halls of a new industrial park after acquiring land with a building permit in the industrial zone of Rokycany, just off exit 62 of the D5 highway. Upon completion, nearly 25,000 sqm of lease space will be ready for tenants, with an above-standard storage height of 15 meters. “The development in a premium location near the D5 motorway is our third fund’s response to the growing demand for rental space in modern industrial parks. In parallel to the start of construction, we are completing negotiations with the park’s key tenants. The unique combination of an investment fund with our own development team enables us to deliver the fund’s new development projects on time and within approved budgets. We are thus able to provide the fund’s investors with one of the best long-term investment returns on the market,” said Lubor Svoboda, co-founder of ARETE Group. “The logistics park will offer a total of 25,000 sqm of premium space with an above-standard storage height of 15 meters. The location right next to the D5 highway has long been one of the most sought-after in the Czech Republic. As the new park is located right on the outskirts of Rokycany, it also provides future tenants with good access to the local labor market. BREEAM certification and the installation of renewable energy equipment will also be a matter of course. We consider these activities essential to achieving long-term sustainability and meeting environmental standards. We plan to have the park fully completed by the end of the first half of 2023,” concludes Robert Ides, the second co-founder of ARETE Group.
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.
