Investment strategy

Commercial real estate represents a typical diversification tool for any investment portfolio. Commercial properties in lucrative locations offer attractive value preservation and stable return for a conservative investor. Sub-fund 1 invests only in prime commercial properties. Its focus on quality of tenants, attractive locations with enhancement potential and real estate meeting the highest requirements for quality and technical standards are main aspects of the fund investment policy and its value proposition to investors.

The Sub-fund primarily invests in the Czech republic real estate market, potentially Central Europe.

Expectation yield around 5% p.a.

How to invest?

Investing in the Sub-fund is designed for both private investors and institutional ones who are willing to accept long-term investment horizon. That is why an investor should consider his/her liquidity needs even if investing into the Sub-fund may be liquidated.

The minimum amount, under Section 272 ZISIF1 an investor can invest is 125,000 EUR, or 1,000,000 CZK (equivalent 40,000 EUR) after performing a suitability test under Section 15 ZKPT2.

There is no dividend payments distribution from created earnings however everything is reinvested back.

How to Invest

Individual Investors
The investment in the Sub-fund is exclusively intended for persons matching the definition of a qualified investor in compliance with Act No. 240/2013 Coll., on Investment Companies and Investment Funds, therefore it is necessary to invest at least 125,000 EUR or 1,000,000 CZK (equivalent 40,000 EUR) after performing a suitability test and sign a Declaration of Risk Awareness concerning this type of investment and including investment experience.

Subsequently, the investors wishing to make investments fill out the following documents with the fund manager:
+ Agreement on Subscription/Redemption of Investment Shares
+ Request for Issuance of Investment Shares
+ Declaration of Risk Awareness
+ Anti-Money Laundering (AML) Form
+ FATCA documents

Institutional Investors, asset managers and similar financial institutions

You will need to fill out a few subscription documents:

  • Agreement on Subscription/Redemption of Unit Certificates
  • Request for Issuance of Unit Certificates
  • FATCA documents
  • Official list of authorized persons entitled to sign these documents on behalf of the institution/client
  • A copy of documents (e.g. your licence or similar document) that proves that your institution can be considered the professional investor

We will need hard copies of these documents from you by mail. To accelerate the process, please send us scan copies by e-mail while the hard copies are delivered to us.

Why to invest into the Sub-fund?

  • Carefully chosen assets – investment company selects only among prime assets. Every transaction goes through multiple due diligences with focus to eliminate potential risks. Main aspects for a selection are yield, location and a possibility to generate additional value with active property management.

  • Inflation protection – as a market standard, lease agreements are indexed against inflation. If inflation rise, rent income rise as well.

  • Diversification – investment company selects primarily assets across the whole Czech Republic with mixture of shopping centres, retail markets and office buildings to minimize economic cycle.

  • Value drivers - assets are selected with a focus on 3 main drivers that influence their value - rent income, yield expectation and a possibility for further development of a project.

Issuance/Redemption

An investor can subscribe investment shares for the actual NAV (Net Assets Value). Every investor must fulfil conditions under Section 272 ZISIF1 - qualified investor - minimal invested capital, risk awareness statement etc.

Every investor has a right to Sub-fund´s investment shares for the actual value. This type of open-ended fund structure provides an investor great variability in needs of liquidity. With investment company´s permission an investor can sell the investment shares to a third-party as well.

There is no entry fee. In case of early redemption - during 24 months since investment - the Sub-fund may charge 10% exit fee. After this period passes, there is no exit fee. Fees are set-up in order to ensure the Sub-fund's optimal liquidity management.

Basic Data about Sub-fund

Basic data about NOVA Real Estate - Sub-fund 1 as of October 31, 2017

Fund type Investment fund with variable registered capital
Sub-fund NOVA Real Estate – Sub-fund 1
Investment objective Real estate investments
Investment strategy The Sub-fund is aimed at the premium type of real estate – business centres, office buildings and other investment opportunities related to the real property market.
Equity capital 47,786 thous. EUR, (as of October 31, 2017)
Issued security Registered investment shares
Fund Duration From 20 August 2015 for an indefinite period of time
Currency EUR
Minimum investment Minimum initial investment for every single investor of the Sub-fund amounts to EUR 125,000 or CZK 1,000,000 (equivalent 40,000 EUR) after performing a suitability test under Section 15 ZPKT2
Fund Manager REDSIDE Fund Management
Management fee 1,3 % of sub-fund’s NAV, min. 300,000 CZK/month
Performance fee 30 % of annual yield of sub-fund over 10% IRR of the fund
Depository UniCredit Bank Czech Republic and Slovakia
Auditor PricewaterhouseCoopers Audit, s.r.o.
Supervisory Authority Czech National Bank
Law and accounting system The Czech Republic
Fund taxation 5 % from profit

Risk Profile

Nre%20rizikovost

Information duty

Performance

Since April 2016, there has been first refinanced aquisition of real estate portfolio consisting from three shopping centers located in Czech Republic. The Sub-fund has started generating returns for its investors.

During August 2016, Sub-fund aquired four A class office buildings located in main office areas in Prague. The second aquisition helps portfolio diversification and mitigates econimic cycles.

There will be more aquisitions in teh future.

Performance as of October 2017:

1 month: 0.41 %
6 months: 1.98 %
1 year: 4.55 %
YTD: 4.08 %
Actual value of the Sub-fund´s investment share as of 10/2017: 4,9203 EUR

Audited net yield since 1st aquisition for 2016: 3,6 % p.a.

Date Investment Share value (EUR) NAV (EUR)
31.10.2017 4,9203 47 786 031
30.9.2017 4,9001 47 589 478
31.8..2017 4,8866 47 459 056
31.7.2017 4,8782 47 377 275
30.6.2017 4,8647 47 245 661
31.5.2017 4,8478 47 081 775
30.4.2017 4,8247* 46 656 086*
31.3.2017 4,7581 46 011 407
28.2.2017 4,7477 45 910 902
31.1.2017 4,7385 45 821 857
31.12.2016 4,7276 45 713 571
30.11.2016 4,7154 45 598 610
31.10.2016 4,7060 45 507 329
30.9.2016 4,6933 45 384 675
31.8.2016 4,6810 45 265 807
31.7.2016 4,6731 19 089 572
30.6.2016 4,6584 19 029 578
31.5.2016 4,6452 18 975 579
30.4.2016 4,6149 2 307 467

(*) End-of-year revaluation taken into account.

Fund Management

The fund is managed by REDSIDE Fund Management, which was pursuant to Act 240/2013 Coll., on Investment Companies and Investment Funds granted the licence by the Czech National Bank to perform management and administration of investment funds. REDSIDE focus consists in providing professional management of qualified investors’ funds, including establishment of separate fund structures and their subsequent management and administration. The size of Assets Under Management (AUM) exceeded 200 million EUR in May 2016.

REDSIDE was founded as a result of joint business engagement of two companies i.e. ASB and Arca Capital. ASB Group was established in 2002 and it provides a wide range of services including administration support, accounting, reporting, tax advisory and trust management in Central and Eastern Europe. Its offices with more than 110 employees are located in Prague, Warsaw and Bratislava. Among ASB’s clients belong companies, such as Standard Life Savings, AVIVA fund, Pradera, Pramerica Real Estate Investors etc..)

Arca Capital and REDSIDE created a strong and experienced team providing top quality services in the area of fund management.

Arca Capital is a dynamic group, a type of holding that has been engaged in private equity business and the provision of financial services for more than 15 years in CEE region. The asset volume exceeded 1.4 billion EUR in July 2017. The group has a clearly defined investment strategy targeting investments that generate long-term and sustainable revenues. Its investments mostly involve energy, real estate including development, fast-moving consumer goods (CFMG) and new technologies.

Regulation

The Fund is governed pursuant to Act No. 240/2013 Coll., on Investment Companies and Investment Funds and Act No. 256/2004 Coll., on Business Activities on the Capital Market. The compliance with the legislation and particular statutes is supervised by the Czech National Bank.

All investments are overseen by the Fund’s Investment Committee. In addition, the Fund is regulated by the Czech National Bank and the investments are under constant supervision of the financing banks.

Supervision: Czech National Bank (CNB) Fund manager provides monthly report to the CNB on fund’s asset structure including accounts.
Manager: REDSIDE Fund Management Was granted a licence by the CNB to perform management and administration of investment funds. The size of managed assets exceeded 200 million EUR in 2016.
Depository: UniCredit bank Czech Republic and Slovakia, a.s. Monitors, performs and reports money transaction in compliance with the law and fund’s statute.
Auditor: PricewaterhouseCoopers Audit, s.r.o. Conducts an audit of financial statements and fund’s annual report once a year.
Asset Valuation Officer: from CNB list Revaluation of the fund is carried out by an Asset Valuation Officer from CNB list independent of the investment company at least once a year.

More information on security through legislation/government guarantees

  1. Supervision: The Fund is supervised by the Czech National Bank. The Fund is managed by REDSIDE company, which provides CNB (Czech National Bank) with monthly reports on fund’s asset structure including accounts. In addition, it sends on regular basis quarterly reports to European Securities and Market Authority, which involves, above all, setting of internal control mechanisms and risk management.
  2. Professional management of the Fund: the Fund is managed by REDSIDE, Fund Management, which has been granted the licence by the Czech National Bank to perform management and administration of investments funds pursuant to Act No. 240/2013 Coll., on Investment Companies and Investment Funds.
  3. Depository: The Fund’s manager is unable to carry out any transactions with Fund’s financial means. The property of the Fund is in custody of a depository – a bank with a special licence. Not even the depository is allowed to freely use the Fund’s means (lend, pledge etc.). This property is kept on a special account that does not follow standard performance of bank’s operation. The depository also monitors whether the Fund is managed with professional and in compliance with the law and the Statute of the Fund. The main role of the depository consists in checking whether the unit certificates are issued properly and redeemed (bought back) pursuant to the law and Fund’s Statute, whether the value of the unit certificate is calculated in compliance with the law and statute, the way Fund’s asset valuation is carried out and whether the assets have been acquired in compliance with the law, including checks on incoming and outgoing payments. The depository of the Fund is UniCredit Bank, a.s.
  4. Separation of Fund’s assets from investment company assets (China Wall): The assets of the company are separated from the investment company assets. Provided the investment company would go bankrupt, the assets remains unaffected and are transferred under the management of another company.
  5. Audit: Once a year, an audit of the Fund is carried out by PriceWaterhouseCoopers, which audits financial statements as well as the annual report of the Fund.
  6. Asset revaluation: Pursuant to the effective legislation, Act No. 240/2013 Coll., on Investment Companies and Investment Funds and the Statute of the Fund, the Fund is obliged to revalue its assets. The revaluation takes place at least once a year independent of the investment company and is carried out by a valuation officer from CNB approved list.
  7. Investment limits: The Fund has to adhere to the limits laid down by the law and Fund’s Statute. That is to prevent the risk of loss as a result of investing great volumes of financial means into one asset. The Fund is obliged to follow the legally binding investment limit per asset value of the Fund up to maximum 35 % of total fund capital. Fund manager: The Fund manager REDSIDE, Fund Management cooperates with the investment group Arca Capital in the area of portfolio management.
  8. Fund Manager: REDSIDE Investment Company

Information for Investors

Each investor receives information on the price of unit certificate from the fund manager, REDSIDE company on monthly basis. In addition, the Fund publishes regular monthly reports on its website containing information on the Fund, including its size and performance.

Real Estate portfolio

  • Vv

    Victoria Vyšehrad

    • Rentable area5,633 m
    • Year built2008
    • In fund's assets since2016
    • LocationPrague 4
    • TenantsWAG, Zimmer Czech, Conteg

    This modern property is located in one of the Prague’s most prominent office hubs – Prague 4 with a convenient connection to the public transit via metro line C and the local infrastructure. After the opening in 2008, this class A office building has a proven track record of full occupancy and high demand from tenants. Victoria was awarded with LEED GOLD certification in 2012. Design of the property provides an efficient layout of the premises and especially the upper floor with terraces, in particular, provide a magnificent panoramic view of Prague.

  • Avenir

    Avenir E

    • Rentable area6,864 m
    • Year built2007
    • In fund's assets since2016
    • LocationPrague 5
    • TenantsPorsche, Mitsubishi

    Completed in 2007, the building represents the final addition to the established Avenir Business Park, located in Prague 5. The property offers flexible A class office accommodation rentable by up to 4 tenants per floor with both open-plan and cellular office options. The amenities include a favorite green campus park, a shopping gallery with an extensive food court and fitness facilities. The location benefits from a nearby access to the Czech highway network and the Prague international airport.

  • Sp16

    Anděl 16

    • Rentable area6,751 m
    • Year built2005
    • In fund's assets since2016
    • LocationPrague 5
    • TenantsBNP Paribas

    The Andel 16, a modern class A project, is located in one of the most sought after office locations in Prague - Andel. Most of this seven-floor building is let to BNP Paribas and serves as a headquarters for their successful consumer finance branch – Cetelem. The Andel office hub with its infrastructure and prestige attracts international corporations mainly from IT and pharma industry. The property was designed by D3A architectural studio.

  • Np17

    Anděl 17

    • Rentable area5,414 m
    • Year built2004
    • In fund's assets since2016
    • LocationPrague 5
    • TenantsGoogle, Pfizer

    Andel 17 is an A class office building completed in 2004 to a very high standard, significantly above normal market levels in all areas such as technology, materials and fit-out. Thanks to these features, the property attracted strong international tenants – Pfizer and Google, who lease most of the building. The ground floor accommodates a restaurant with a terrace which contributes to the wide choice of amenities in the surrounding area. The rectangular premises are capable of offering a fully open plan, cellular offices or a combination of both. The Andel office hub with its infrastructure and prestige attracts international corporations mainly from IT and pharma industry. The property was designed by D3A architectural studio.

  • 2b6a9804

    Orlice Park Shopping

    • Rentable area21,881 m
    • Year built2002
    • In fund's assets since2015
    • LocationHradec Králové
    • TenantsAhold, Baumax, Sportisimo, Pepco, Teta Drogerie, Bambule

    Completed in 2002 and modernized and rebranded Orlice Park Shopping represents a well-established neighborhood shopping destination anchored by an Albert Hypermarket and popular DIY operator, Baumax. In 2014 the center underwent substantial refurbishment project improving the attractiveness of the center as a family oriented shopping destination. The asset is 99% let to a well-diversified tenants base featuring a strong customer flow reaching over two million customers per year.

  • Rynovka

    Rýnovka

    • Rentable area15,400 m
    • Year built2009
    • In fund's assets since2015
    • LocationJablonec nad Nissou
    • TenantsAhold

    Opened in 2009, Rýnovka asset is fully leased to a global retail operator – Ahold, where the tenant operates a neighborhood shopping mall with their Hypermarket concept. The income is secured by a long-term lease agreement running until the end of 2027. Rýnovka offers a generous parking provision with a total capacity of 650 parking spaces.

  • Znojmo

    Hypermarket Albert - Znojmo

    • Rentable area7,694 m
    • Year built2004
    • In fund's assets since2015
    • LocationZnojmo
    • TenantsAhold

    Opened in 2004, Znojmo asset is fully leased to global retail operator – Ahold, where the tenant operates their Hypermarket concept with an attached gallery. The income is secured by a long-term lease agreement running until the end of 2025. The building structure is surrounded with a surface level car park with capacity of 411 spaces. The parking area is directly conveniently connected to the local infrastructure.

FAQ (Frequently Asked Questions)

1. Can a bank invest as a nominee?

Yes. You must however make sure and confirm to Redside that the ultimate buyer is aware that Nova Real Estate fund is a fund for qualified investors, i.e. governed by a specific law and with the minimum investment threshold as set out by the law. Investors must in compliance with Czech legislation fill in subscription documentations as follows:

a) Agreement on issuance and redemption of units of qualified investors fund;
b) Request for the issuance of investment certificates;
c) Affidavit of the Investor of the Qualified Investors Fund;
d) AML documentation;
e) Questionnaire regarding investment skills.

The Central Register records all registered securities issued in the Czech Republic, including that of Nova Real Estate Fund. The Central Register is a two-stage register composed of a register kept by the Central Securities Depository and the follow-up records maintained by the so-called CSD Prague participants, i.e. especially securities trading participants.

On the base on above mentioned please take into account that we are able to settle the transaction only if your client has so called asset account with one of the Central Securities Depository Prague participants.

See list of Participants here:

http://www.cdcp.cz/index.php/en/participants-list

2. What's the NAV frequency?

Monthly.

3. What's the Deadline for subscription/redemption?

There is no deadline, really. A subscription order may be submitted in person at the Investment Company, send via mail (info@redsidefunds.com) or via fax (+420 224 931 368). Shares of the Fund are subscribed for the actual value of share announced always for the period, in which the so-called decisive date occurs, that is the day for subscription of financial means remitted by the fund-holder to the account of the Fund.

The actual value of the unit is determined always as of the last day of the calendar month with validity for the following period, i.e. for September 2016 from the first date of September until the last date of the month. The actual value of the unit of the Fund is determined within 10 business days of the following month, in our example October (upon monthly financial review, as prescribed by the regulator). The actual value of the unit of the Fund is announced within next 15 business days thenafter.

As far as redemption goes, it is always handled with regard to the overall investment. Every investment is redeemed in short period, during days. Greater investments than can jeopardize liquidity of the Fund can take up to one year. Once redemption notice is received, the investment is frozen with zero return until redemption.

4. Minimum for subscription?

If a bank/financial institution is the final client, there is a minimum requirement of 125,000 EUR on an investment. If a private individual invests personally, the minimum investment is 40,000 EUR.

5. What's the Settlement period / Do you require Prepayment and for which value date?

The settlement can be without money or versus money. All we need to agree is the volume to notify the Central Securities Depository that ensures a subscription. It should take longer than a few days, max 10 working days according to the Sub-fund Statutes.

6. Are there some redemption penalty fee or lock-up period?

No lock-up period applies. However, if a redemption claim is filed within two years from the investment, 10% of the investment amount can be charged as the exit fee.

7. Do you calculate performance fee?

Yes, it is set up for IRR greater than 10%. The performance fee is calculated annually as 30% from the amount of financial means generated by the Fund after taxation in the excess of IRR 10%. Maximum total expense ratio of the Fund including any other costs shall not exceed 1.95 % of the average annual value of the equity capital of the Fund. The temporary internal rate of return - IRR is annually calculated by the same expert who prepared the expert valuation required by law and is audited by the fund auditor.

8. The fund performance and the return for investors

Performance of the fund and its return are calculated monthly and the respective financial statements are produced to that effect. No less than once a year every asset in the fund is revalued by a valuation expert.

The investment strategy is based on investments in special purpose vehicles (SPV) holding such real estate assets. Therefore the Fund buys various types of assets – retail, offices, industrial – to gradually diversify its portfolio.

As a peripheral type of investments, the Fund will make investments using investment instruments of both domestic financial market and foreign financial markets, i.e. corporate bonds, corporate bills of exchange etc.

9. Number of decimal places allowed for shares

4

10. Switch settlement cycle

In this case there is necessary to apply for Redside’s approval because we as the fund manager must secure that units of the fund are held by the qualified investors only (the Czech law must-have condition).

11. Cut-off to send in orders for subscription, redemption & switch

Subscription /redemption and switch notices can be sent every workday till 5 p.m.

12. Minimum amount for initial individual subscription

40,000 EUR or EUR equivalent of 1,000,000 CKZ if the investor proves awareness of investment skills by fulfilling the investor profile questionnaire. In other cases the minimum is set to 125,000 EUR.

13. Minimum amount for next subscription

Another subscription can be performed at minimum of 10,000 EUR.

14. Trading fax number

+420 224 931 368

15. Is trading via swift allowed for all type of orders (subscription, redemption and switch) . If yes, please provide us the swift code of the trading.

Trading via swift in not allowed

16. Dealing day

From 10th workday in month.

17. Subscription order format method: Amount/Quantity or BOTH

Amount

18. Redemption order format method: Amount/Quantity or BOTH

Quantity

19. Payment details / (Please provide the latest Application Form)

  • Final beneficiary account number:

CZK account: IBAN CZ5727000000002112088894
EUR account: IBAN CZ9427000000002112088907

  • Bank:

UniCredit Bank Czech Republic and Slovakia, a.s.

BACX CZ PP