Fund Strategy

The already successful strategy is based upon acquiring off-market small to medium sized residential portfolios of, on average, 30 properties in one building. Propfund Germany is governed by strict acquisition criteria, each portfolio has to be approved by more than 50% of the investors before it can be acquired.

The properties that are acquired are always of high build quality with no renovation requirements. Before a portfolio can be presented to investors that portfolio must deliver rental yields of above 8% and the occupancy has to be a minimum of 80%. Properties are valued as a multiple of the annual rental yield, typically on the open market an investor would purchase a similar individual property for more than 16 times the rental yield, Propfund Germany only acquires property if the price is below 12.5 times the rental yield. This strategy ensures strong rental performance from the outset and in-built discount of at least 30% for its investors.

Propfund Germany are raising approximately €10,000,000 from investors with a further €20,000,000 borrowed from a German bank on pre-approved and fixed terms. The interest rate of the mortgage is fixed, meaning there is no fluctuation throughout the term of the investment, and capital repayments will be made throughout that term reducing the overall borrowing. At no point will investors will be liable for this mortgage debt as these loans are on a 'non-recourse' basis to investors.

Propfund Germany will manage the property portfolios for a period of 10 years, focusing on increasing the rental income and value of the portfolios. Upon reaching the 10 year exit point the intention of the fund is to sell all the properties either individually or as small portfolios, pay off the balance of the mortgage loans and distribute the profits between the investors. Propfund Germany shares in the profits at the end of the term and so are fully aligned with investor interests.

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