Sub-fund investment strategy

Commercial real estate assets are considered to be a suitable instrument for a portfolio diversification. Properties are resistant store of value generating stable yield for an investor. NOVA Real Estate - Sub-fund 1 acquires only well chosen prime assets. Considering transactions the main focus is on lease agreements period, place and buildings technical conditions. These aspects are main drivers that influence value of a property and it market liquidity in the future.

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

Expectation yield around 5% p.a.

Who is the Sub-fund designed for?

Investing in the Sub-fund is designed for both privat 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 investor 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 subcription documents:

  • Agreement on Subscription/Redemption of Unit Certificates
  • Request for Issuance of Unit Certificates
  • FATCA documents
  • Offical 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.

Reasons why to invest into the Sub-fund

  • Carefully chosen assets – investmet company selects only among prime assets. Every transaction goes through multiple due diligences with focus to eliminate potencial risks. Main aspects for a selection are yield, location and a possibillity 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 primarly assets across the whole Czech Republic with mixture of shopping centers, 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 possibillity for further development of a project.

Issuance/Redemption of Investment shares

An investor can subscribe investment shares for the actual NAV (Net Assets Value). Every investor must fulfill conditions under Section 272 ZISIF1 - qualified investor - minimal invested capital, risk awarness 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 or during 36 month since the Sub-fund inception - the Sub-fund may charge 10% exit fee. After these periods pass there is no exit fee. Fees are set-up for the Sub-fund optimal liquidity management.

Basic Data about Sub-fund

Basic data about NOVA Real Estate - Sub-fund 1 as of 31st October 2016

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 45,507 thous. EUR, (as of 31st October 2016
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

Information duty

Performance of Investment shares

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.

Date Investment Share value (EUR) NAV (EUR)
28.2.2017 4,7477 45 910 902
31.1.2017 4,7385 45 821 857
31.12.2016 4,7273 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

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