The time is right to reassess portfolios
Lubor Svoboda, co-founder of the ARETE investment group, explains in an interview for Euro magazine why the time is right to reassess portfolios. The financial market has shown an imbalance over the past year. The “old rules” no longer apply, investors are trying to find a safe haven for their capital, while eliminating the losses suffered during the covid crisis. This pressure on demand is causing prices to rise rapidly and US stock markets in particular have experienced meteoric growth over the past year. However, this high growth in share prices has also been accompanied by a significant increase in the P/E ratio, which indicates the ratio of share price to earnings and also the potential return on investment in a given share title. With share prices at their highs while real assets (and commercial real estate among them) have become significantly cheaper, an investment opportunity is opening up. This opportunity is particularly attractive to investors who want to invest for the long term and are looking for long-term stability. When investing in real estate, it is of course important to keep an eye on macroeconomic trends, regulation and the political environment, but also on asset-specific factors. Investors should focus primarily on the long-term performance and stability of the issuer, as well as the value of the LTV, which shows the proportion of equity and external financing and the risk arising from over-indebtedness. “A current view of equities suggests they are highly priced, while real assets appear relatively more affordable, and in some distressed situations, undervalued. One can infer that the time is gradually right to reassess portfolios and buy real assets such as commercial real estate.” The full interview is attached. For more information on the ARETE INDUSTRIAL fund, which focuses exclusively on income-generating industrial real estate in the CEE region and is still open to qualified investors, follow here.
The Era of Interesting Investment Opportunities Approaches
Lubor Svoboda, co-founder of the real estate and investment group ARETE, was a guest on the Ekonomika Plus program of the Slovak television station TA3 on Tuesday, April 23rd. The discussion with the host Lenka Buchláková focused on long-term investments in today’s environment. The current macroeconomic situation brings forth intriguing investment opportunities, particularly in real estate. What will you hear in the interview? The key attributes of a good investment strategy, including the relationship between returns, liquidity, and risk. The ideal ratio of investment instruments for risk diversification, considering stocks, bonds, private equity, and qualified investor funds. The target audience for real estate funds. The impact of interest rates set by the ECB and ČNB on investments in commercial real estate. Expectations regarding the future movement of stock prices. How this year’s super-election year might shake up our investment strategies. Also mentioned in the program: “Given that commercial real estate in Western Europe has already seen significant price reductions, the moment when the value of money further decreases will be the right time to purchase properties. At that point, we can anticipate future appreciation.” You can watch the whole interview in the TA3 archive.
We Have Already Planted A Green Area Larger Than The 17 Football Fields
The ARETE INDUSTRIAL fund is one of the first “light green” real estate investment funds in the Czech Republic. The fund has implemented an ESG strategy according to Article 8 of the European Commission’s SFDR regulation, under which we have committed to, among other things, planting trees around the industrial and logistics parks in the fund’s portfolio. This time, colleagues from ARETE’s development team went to Zdice, where construction work on a new warehouse of over 7,000 m2 is nearing completion. During a sunny spring day, they planted young trees of several native species. The area is now decorated with wild pear trees, wild apple trees, crab apple trees and rowan trees. They will not only contribute to the beautification of the surroundings and the restoration of the original natural environment, but also to the reduction of the overall carbon footprint of the park. Specifically, as part of ARETE Group’s comprehensive ESG strategy, we have committed to planting one tree for every 500 m2 of new leasehold space developed. At first glance, this may not seem like a large number of trees. However, when you consider that the ARETE INDUSTRIAL fund currently has over 200,000 m2 of leasable space and space under construction, that’s quite a nice tree planting. Since the fund opened, we have already planted a green area of more than 126,000 m2, which is equivalent to the size of more than 17 football fields.
Extension of ARETE Park for Zásilkovna was completed and handed over to the tenant for use
A few days ago, the Zásilkovna company, which has been using the premises of the main hall of the Pilsen industrial park since last year, also took over the use of an extension of approximately 2,000 m2. The total lettable area of the Pilsen park thus increased by 12.4% to 17,785 m2. The logistics sector now accounts for 33% of the park, while manufacturing accounts for 67%. The extension of the complex also increased the total lettable area of the ARETE INDUSTRIAL fund to 172,264 m2. The share of logistics by floor area in the total portfolio of the fund in the Czech Republic and Slovakia is now 57%. The overall portfolio exposure between countries is as follows: 65% Czech Republic, 35% Slovakia (lettable area standing + under construction). Zásilkovna, a leading Czech logistics and technology company, was founded in 2010 to provide comprehensive logistics services for online stores. The company’s dense network of drop-off points in the Czech Republic and abroad is essential, with dozens more opening every month. For its operations, it needs premium logistics and storage facilities, such as those in ARETE Park Plzeň Borská pole. The Borská pole location has historically been a hub for manufacturing and logistics in the region and has long been one of the premium locations nationwide. Nowadays, it goes even further and provides facilities for high-tech research and development centers and other highly qualified activities. The industrial park project in Pilsen is also exceptional in that way it is the first complete modernization of a brownfield site.
Expansion of ARETE Park Dunajská Streda received a building permit
The expansion of ARETE Park Dunajská Streda has received a building permit. It will offer an additional 13,000 m2 of modern space for storage, logistics or light manufacturing. The new tenant will get a building meeting the highest technical standards, offices and customized social spaces. Units from 3,000 m2 will be available for rent, and rental spaces will be available within 8 months. The existing nearly 30,000 sqm of the site is already occupied by BSK Transports from the Italian group Bracchi, which has been operating in Slovakia for a long time. This building also meets the high technical standard of class A and has the most modern technical parameters. ARETE Park Dunajská Streda is located within driving distance of three capitals: Bratislava, Budapest and Vienna. The journey to Bratislava takes 20 minutes on the R7 highway.
Jiří Król joins the Supervisory Board of the ARETE Industrial Sicav Fund
Jiří Król, an expert in alternative investments and manager with more than 20 years of experience in international leadership positions in investment institutions, will join the Supervisory Board of its investment fund, ARETE INDUSTRIAL, as of 1st February 2024. Jiří Król, currently Deputy CEO and Global Head of Government Affairs of the London-based ALTERNATIVE INVESTMENT MANAGEMENT ASSOCIATION (AIMA), brings a wealth of experience in strategic investment management, policy making and financial services regulation to ARETE INDUSTRIAL SICAV Supervisory Board. His accomplishments in international negotiations and leadership of strategic asset management initiatives will be a valuable asset in the development and implementation of ARETE INDUSTRIAL’s fund strategies. Lubor Svoboda, co-founder of ARETE Group, said: “I am delighted to welcome Mr. Jiří Król to the Supervisory Board of the Fund. His expertise and broad insight into global investments will provide us with a valuable impulse for the further development of our fund specializing in industrial real estate. We are confident that his presence will be a key factor in achieving our strategic objectives.” ARETE INDUSTRIAL is the third investment product of the ARETE Group. It focuses on investments in completed industrial properties and the construction of new industrial and logistics parks. With the addition of Jiří Król to the Supervisory Board, the fund has secured an additional layer of professional oversight and leadership.
Is real estate still a good way to protect your investments from inflation?
In a recent article for Wealth Magazine, ARETE co-founder Lubor Svoboda discusses strategies for protecting investments from inflationary fluctuations. He estimates how current economic changes will affect traditional portfolios and highlights the benefits of diversification, with an emphasis on real estate. Svoboda explains why real estate can be a key element in times of inflation and how the ARETE INDUSTRIAL fund focuses on industrial real estate in Central Europe, offering stable returns. “In the current macroeconomic environment, it is crucial to adapt investment strategies to new challenges. Diversification, especially real estate investments, can provide stability in periods of inflation and turbulent markets.” Lubor Svoboda also points to changes in monetary policy and recommends monitoring fiscal trends. He mentions that in light of recent events, fiscal authorities play a key role in investment opportunities. Investors should focus on resilient assets, and industrial real estate in particular may offer attractive opportunities in this volatile environment. Read the full article in Czech language can be found below. Jsou nemovitosti stále dobrým způsobem, jak ochránit své investice před inflací? – Wealth Magazín (wmag.cz)
Cooling inflation promises stabilizing markets and interesting purchases
In his text for Wealth Magazine – Premium, ARETE co-founder Lubor Svoboda discusses the current macroeconomic situation affecting investors around the world. Due to the tense situation on the markets and in the world, more and more investors are turning their attention towards alternative investments. These are commonly up to 30% of an investment portfolio. Alternative investments include real estate and real estate funds. “If investors have spare cash for passive investment, they may find it interesting to enter a real estate fund with a medium-term investment horizon. However, currently it will be necessary to differentiate between investment funds. In line with the above, I would prefer funds with a low level of leverage (LTV) and a strategy that focuses on portfolio growth, i.e. new acquisitions. Not on the rehabilitation of existing portfolios. In the European market, the industrial and retail park segments are currently the least structurally challenged,” Lubor explains in the text. Lubor Svoboda’s full text for Wealth Magazine in Czech language can be found below. https://wmag.cz/chladnouci-inflace-slibuje-stabilizaci-trhu-a-zajimave-nakupy/
We Have Completed The Construction Of Arete Park Rokycany Ii
A few days ago, the German logistics company Thomas Duvenbeck Immobilien, which is part of the British investment group Waterland, took over the logistics complex ARETE Park Rokycany II for use. The complex increases the total standing leasable area of the ARETE INDUSTRIAL fund by 21% to a total of 170,354 sqm. This step increases the share of logistics by area to 54% of the standing parks in the total portfolio. The overall exposure of the portfolio in the Czech Republic has increased by 16% to a total of 62%. The exceptionally long lease improves the overall profile of the fund and the new site itself will also significantly increase the WAULT of the portfolio to approximately 9 years as of December this year. The completed state-of-the-art logistics facility complies with the latest technological and environmental standards, including BREEAM certification, which is in the process of being ratified. The tenant will use the hall for logistics purposes and it will become the company’s largest consolidation centre in Europe. ARETE Park Rokycany II is the most modern complex in the portfolio of the company. Duvenbeck, which is an A-rated international tenant, will be the sole tenant of the site. At the same time, Duvenbeck is one of Waterland Group’s strategic investments.
Investing in commercial real estate
Robert Ides, co-founder of the real estate and investment group ARETE, appeared as a guest on the show Investujeme on the Slovak business channel TA3. Host Lenka Buchláková engaged with Robert in a relaxed manner, discussing current topics ranging from Slovakia’s credit rating change to predicting the real estate market’s development for the upcoming year. Among the questions raised was whether it’s better to sell stocks now or, conversely, to buy more. “In today’s environment, it’s crucial to know the underlying assets, the level of debt, and to learn how to interpret annual reports,” said Robert in the interview. The entire interview with Robert can be found here.
