The German real estate market is attractive to investors because it has been more predictable in its yield, prices and regulation than other similar assets across the Western asset markets. This stability comes from the attitudes of Germans to real estate and Government laws to avoid property speculation and rent spike pressures.
Investix, through one of its products Propbond, offers a unique way to access this market. Colin O’Regan and the marketing team at Investix have answered my questions about Propbond.
What is PropBond?
PropBond is an easy to understand investment product. It is a loan from a suitable investor (the lender) to our property development company, Immorendix (the issuer/borrower) and which pays a fixed return each year for three years after which the initial funds are then repaid.
Our recently launched version of our Bond is Issue 6 which pays a fixed interest of 6% per year for 3 years with a bonus of 6% paid at the end of the term. This is a total return of 24% over the three-year period, or 8% per year blended return.
It is ideal for investors looking to secure a regular, fixed return in a secure market such as the German residential property market. Issue 6 closes on 30th June 2017 or sooner if fully subscribed. All previous five issuances were fully subscribed and interest payments to investors are all on schedule.
What is the Investment Strategy of PropBond?
The investments are classified into three main strategies:
- Tenanted apartment buildings with the aim to split into individual apartments for re-sale to German investors
- New residential developments on greenfield sites
- Tenanted apartment buildings in need to minor refurbishment with the aim to resale to higher price
What are the main risk areas for investors when investing in PropBond?
The main risk for any investor is the risk of default relating to a project. We mitigate against this risk we spreading the investors funds across our three investment strategies. All property investments are held within separate Special Purpose Vehicles (SPVs) so are segregated and ring-fenced from each other. This means that there is a reduced risk of an investor being solely over-invested in a single project. ImmoRendix has not defaulted on any interest payments or capital repayments to date. For non-Eurozone investors, there is also the currency exchange risk as this is EURO only investment.
Is there a third party which acts as an independent trustee on behalf of the bond holders of Propbond?
All the securities for the Bond are managed by a German regulated security trustee – CorpSec Trustee GmbH – whose role is to ensure all investors funds are, always, secured through a combination of land charges and share pledges within the investment structure whilst safeguarding that bondholders are prioritised over company shareholders.
Does Propbond operate in specific geographic areas of Germany?
As there are differing opportunities in residential property across various areas of Germany we do not limit ourselves by location. However, we conduct rigorous market research and due diligence on both macro and micro-locations prior to each investment to ensure it is suitable for the specific investment strategy. Is Propbond available to all investors?
Applications are acceptable from investors in all locations except the United States, Canada, Australia and Japan.
What is the minimum investment in Propbond?
We accept a minimum of €100,000 and €50,000 for additional investments.
When are interest payments paid?
We pay interest payments half yearly, every January and July.
Can you share with us details about the members of the management team and board of directors and their experience in this sector?
Immorendix GmbH was founded 12 years ago, and is led by its founder Marco Knoblauch and his experienced team from our headquarters in Berlin. The combined German property experience of the senior team is more than 70 years. Each of the key executives in the team is responsible for specific functions to ensure each investment is executed in a successful and timely manner.
Are the directors of Propbond also shareholders?
Yes, as the directors are also the shareholders, we spend significant time and resources in completing Due Diligence is advance of every investment opportunity. Because of this, we invest in less than 1/3 of all opportunities.
What are the trends working in favour and against the property prices and the rents in Germany?
The unique benefit of the German residential property market is its resilience to global market conditions. This is based on a culture and affordability of long-term renting, with protections in place for both tenants and landlords. Property valuations are largely based on a multiple of a buildings rental income and when combined with the availability of local council rent databases providing guidance on rents, there is the opportunity to increase property valuations in line with rent increases.
For request a PropBond 6 Brochure, Prospectus or Application Form, please email Colin O’Regan now at email@example.com as we expect to reach our fund-raising target prior to the closing date.
To learn more about Investix visit: Investix.de
We thank Colin O’Regan and the marketing team for the interview.