Residential Investment German Property Fund 1
Potsdamer Platz, Berlin
“ In life you can take
“ But when it comes to my money, a safe German property fund suits me down to the ground!
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CONTENTS
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5. 7. 9. 11. 13. 15. 17. 20. 21. 22. 25. 27. 28.
Introduction Investment summary Return on investment Investment portfolio Investing through SIPP Secure & convenient investment Germany - No.1 location for investment Germany’s housing market Is this investment for you? The EURIX Group The Management Team Getting Started Frequently Asked Questions
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as many risks as you like…
“ With Propfund I can
“ Why should you put all your
money into one property, when you can invest in the whole city?
”
spread my investment across hundreds of properties in Berlin
”
The idea is very simple…
Mainstream and institutional funds are restricted in terms of the minimum size of portfolio they can acquire and are often unable to move quickly on some off-market opportunities; Propfund Germany has put together a more tailored fund that can source and quickly acquire smaller high yielding portfolios delivering greater value to its investors.
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Either through a SIPP or as a cash investor, there is an opportunity to share in a highly profitable self-financing portfolio of up to 500 properties worth over €30,000,000. An investment spread across so many different properties minimises investor exposure to the performance of an individual property thus significantly reducing the overall risk. An investment into Propfund Germany starts from €15,000. Returns from the fund will be paid to investors each year as an annual dividend payment. As a shareholder in Propfund Germany you will benefit from a forecasted dividend of Apartments in Prenzlauer Berg, Berlin
7-10% per year. Over a period of 10 years, investors can expect to earn up to 170% return over and above their initial investment. This return is quite simply achieved through the renting out and resale of the properties within the portfolio. Creating wealth for shareholders
Invest €15,000 Earn an average dividend of €1,050 per year for 10 years. (Assumes 7% per annum) PLUS €15,000 lump sum after 10 years PLUS your initial investment back.
That’s a total of €40,500! Please note: Propfund Germany 1 GmbH & Co. KG is fully regulated by the German Federal Financial Authority (Bafin). Past performance is not a reliable guide to future performance. The value of your investment may go down as well as up.
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Propfund Germany is taking advantage of global economic conditions by acquiring tenanted residential property at record low-prices. We are inviting approximately 200 individual investors to share in the returns of approximately 500 properties, benefiting from economies of scale through buying property portfolios in Berlin and neighbouring cities.
Investment Summary Maximise your returns by investing in a German company which specialises in acquiring and managing portfolios of high yielding property in Berlin and neighbouring cities. The Investment Investors can share in a profitable self-financing portfolio of over 500 properties worth over €30,000,000. Propfund is taking advantage of global economic conditions by acquiring fully rented, residential property portfolios at record low prices. Our fund managers will manage the portfolios for a period of 10 years, focusing on increasing the rental income and value of the portfolio. Once the holding strategy of 10 years has been completed, the intention of the fund is to sell all the properties, pay off the balance of the mortgage loans and distribute the profits between the shareholders.
Reasons to Invest
Typical Annual Rental Yields
3% Ireland
4%
5%
9%
UK
Germany
Propfund
Propfund- Maximising your investment returns in Germany
Page 6 Berlin Christmas Market at night
• • • • • •
Invest in German Real estate via SIPP or private investor Invest from €15,000 in a tailor-made Property Fund German Federal Financial Authority regulated– BaFin Returns paid to shareholders yearly – forecast 7% pa Investors can expect to earn 170% ROI over 10 years. Portfolio includes prime residential properties: Minimum 8% rental yields • €10m Private equity & min of €20m bank financing. • Trustee structure in place for investor safety
Propfund Portfolio’s • • • • • •
Residential apartment blocks in Germany Minimum 8% rental yields Purchase price: maximum 12.5 times the annual rent Minimum 80% rental occupancy Minimum 70% bank financing Projected annual cash surplus - 7%-10%pa
Exit and Returns 1. Annual profit dividends: minimum 7% pa for 10 years The cash surplus (or profit) generated each year from the rental income after paying the mortgage, property management expenses and the cost of managing the fund, will be distributed to shareholders. This profit will be paid to shareholders each year as a % of their equity invested. Eg: Investors who purchase €50,000 of shares can expect to receive an annual dividend of €3,500 pa. 2. Profit from the sale of the portfolio: 100% plus your initial equity back Once the holding strategy of 10 years has been completed, the intention of the fund is to sell all the properties, pay off the balance of the mortgage loans and distribute the profits between the shareholders. With a projected sale price of the property portfolio in the region of €36 million, cash reserves of €1.6 million and a loan mortgage book of €17.5 million we expect to return €18 million to shareholders in 10 years. This would represent a 180% return on equity invested. Combined with an average annual return of €880,000 shareholders can expect to share in a return of €27 million based on an initial equity investment of €10 million representing a 170% ROI. Investors can exit the fund by selling their shares at anytime. If you sell your shares privately yourself then there is no penalty or charge for transfer of ownership. Propfund will provide an internal resale service to all shareholders including valuation, resales and transfer of ownership.
Price Invest from as little as €15,000 up to €3,000,000 in increments of €1,000. Total private equity required for Propfund Residential 1 is €10,000,000.
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Propfund Germany gives you the opportunity to invest in prime German real estate via a SIPP or as a private investor
Return on Investment Creating wealth for shareholders
Invest €15,000 Earn an average dividend of €1,050 per year for 10 years. (Assumes 7% per annum) PLUS €15,000 lump sum after 10 years PLUS your initial investment back.
That’s a total of €40,500! See examples below.
Equity Invested
€15,000
€30,000
€50,000
€100,000 €250,000
Investment Period
10 years
10 years
10 years
10 years
10 years
Total Annual Payments (70%) (Assumes 7% per annum)
€10,500
€21,000
€35,000
€70,000
€175,000
Profit from the property sales (100%)
€15,000
€30,000
€50,000
€100,000 €250,000
profit over 10 years (170%) Total
€25,500
€51,600
€85,000
€170,000 €425,000
(€1,050 pa) (€2,100 pa) (€3,500 pa) (€7,000 pa) (€17,500 pa)
(Excluding initial equity)
returns over 11 years (270%) €40,500 Total
€81,000 €135,000 €270,000 €675,000
Page 8 Subway and Train Station Sign Potsdamer Place in Berlin in the evening
Please note: Propfund Germany 1 GmbH & Co. KG is fully regulated by the German Federal Financial Authority (Bafin). Past performance is not a reliable guide to future performance. The value of your investment may go down as well as up.
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(Including initial equity)
Fund Acquisition Criteria - High yielding and profitable residential portfolios
The acquisition team have very strict criteria when sourcing properties for their residential property fund. In order to generate a minimum of 170% return on equity for their investors, only high yielding properties will be purchased into the fund. Prime Residential Buildings - Fund Criteria
Berlin - A City of Tenants 84% of all properties are rented
High rental income
Minimum 8%
Low purchase prices
€1,000/sqm
Tenant occupancy
Minimum 80%
Bank financing
Up to 90% ltv
Annual Profit
Minimum 7%
Rental Yields – Minimum 8% Only blocks of apartments generating a minimum of an 8% rental yield at the time of purchase will be acquired into the fund. This ensures the fund only acquires high income portfolios with a proven tenancy track record.
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Purchase Prices – Maximum 12.5 times the annual rent Institutional investors will calculate the purchase price of a property as a multiple of the rental yield. This means German property prices are generally much lower than other cities in Europe. Propfund will pay a maximum of 12.5 times the annual rent which is known as the “purchase factor”. By applying this low purchase factor, investors can be assured that all the properties in Propfund have been purchased at the lowest possible price ensuring maximum potential for capital appreciation.
Occupancy – Min 80% rented at time of purchase Propfund does not acquire development sites or projects in need of renovation. They only acquire apartments blocks which are already 80% occupied with tenants, avoiding the risk of vacancy rates or additional capital investment for renovations. All tenant contracts are reviewed prior to purchase ensuring that the monthly rental income is secure and will continue to generate a minimum of an 8% rental yield. Bank Financing – Up to 90% LTV This portfolio will be financed from €10,000,000 in private equity and a minimum of €20,000,000 in bank financing. Banks value property based on a multiple of the rental income. Because Propfund is committed to purchasing only very highyielding property we have agreed preferential bank financing terms with leading German financial institutions. Specific terms include: • 30 year term – capital and interest repayments • Interest fixed for 10 years (term of the fund) • Non-recourse to shareholders • Up to 90% loan to value Profit on Equity – Minimum 7% Each building in the fund will generate a minimum cash surplus of between 7% – 10% pa. This will ensure that the fund pays annual dividends to shareholders as outlined in our forecasts. Cash surplus is calculated by deducting all the annual expenses for the mortgage, property management and maintenance and the cost of managing the fund from the rental income. Due to the high income that the portfolio generates from the rental income each year, there will always be a cash surplus which will be distributed to shareholders as a percentage of the equity they invested.
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Propfund Germany 1 will acquire over 500 properties in prime locations in Berlin and neighbouring cities.
Make your pension work harder for you
Investing through your SIPP You can choose to invest in Propfund via a SIPP or as a private investor. Propfund has been SIPP approved by multiple pension trustees.
A SIPP is basically a ‘do it yourself’ pension plan with added benefits, these being: • Control - you decide where your money is invested. • Choice - Invest in a certain asset class - i.e. land, property, stocks and shares, hotel rooms, gold, etc • Consolidation - you can transfer all your preserved pension funds into a SIPP. • Diversification - invest in various asset classes • Costs - the charges on preserved pension funds could be expensive in relation to today’s pension charging structures. • Service - you may well be paying charges, however when was the last time you had a retirement planning review ?
This is a complex area and it does need professional advice. Propfund Germany has teamed up with some of the UK and Ireland’s leading independent wealth management companies who specialise in pensions and investments. They will carry out an initial review completely free of charge for potential investors to assess whether their existing pension plans may be transferred into a SIPP. For further details of how to invest in Propfund using a SIPP and the fees associated with this please contact your Propfund Adviser who will be happy to introduce you to an independent pension specialist. Note: There may be an initial set up fee and ongoing annual charges associated with the management of the SIPP.
“ Grow your SIPP
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investment by 170% over the next 10 years
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Arguably the most prominent pension success story in recent years has been the popularity of the SIPP (Self Invested Personal Pension). This is a personal pension in which the person investing for retirement decides where their pension fund is invested. Traditionally pensions are managed by a pension fund manager who may invest in volatile stocks and shares or boring old cash and the investor has no control or influence on this decision.
A safe & secure investment in the fastest growing capital city in Europe
Secure & Convenient Investment
Propfund Germany is fully regulated by BaFin, the German Financial Regulator Secure Investment
Investment Prospectus: A very detailed 64 page Investment prospectus has been prepared outlining the risks and rules for investing and managing the fund. Customer Care Staff: English speaking dedicated customer care division has been established. Research: 18 months research and planning prior to launching the fund.
Convenient Investment Propfund is a very convenient way to invest into the German real estate market compared to investing privately into individual properties. Propfund Germany is the ideal investment vehicle to take advantage of the very attractive property prices and rental yields normally only available to large institutional investors.
Maximise your German Real Estate Investment Fully Regulated: As a sign of confidence Propfund Germany has been vetted and approved by the German Financial Regulator (BaFin) and we have committed ourselves to the highest levels of industry regulation. Due to the quality of the portfolio and the experience of our fund management team we believe that Propfund has one of the lowest risk, highest return strategies to invest in the German real estate market today. Page 14
Modern governmental buildings in Berlin Marie-Elisabeth-Lüders-Haus at night Spree River reflecting the lights
Trustee: German based trustee structure in place for foreign shareholders with complete transparent paperwork always available on request.
Propfund
Private Portfolio
No. Properties
Approx 500
Only 1
Prices
€1000 /sqm
€1500/sqm
Finance
Up to 90% ltv
Up to 50% ltv
Rental Yields
8% - 10%
4% - 6%
Property Mgmt
Propfund
Investor
Rentals
Propfund
Investor
Annual Profit
7%-10%
4%-5%
Appreciation
High
Medium
Exit Strategy
Multiple
Single
Vacancy Risk
Very Low
Medium
Yes
No
Invest with SIPP
Propfund Germany 1 GmbH & Co. KG is authorized and regulated by BaFin, the German Financial Regulator. For more details: www.bafin.de.
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www.bafin.de
Germany – No. 1 Location for Investment
10 Reasons to invest in Germany 1. Record breaking 3.6% growth in GDP 2. Europe’s largest and most stable economy 3. High productivity and rapidly growing employment 4. Excellent and reliable workforce 5. Innovative population- over 4 million business owners 6. Best infrastructure in Europe 7. Inviting incentives 8. Competitive Tax Conditions 9. Secure Investment Framework
German Economy – Rapid upturn in 2010 The German economy rebounded strongly in 2010, growing by 3.6%, according to provisional figures from the national statistics office. This is stark contrast to many European economies that are stagnating or growing much more slowly. German GDP grew at its fastest pace since reunification in 1990, as an export recovery was matched by increased domestic demand. Europe’s biggest economy had contracted by 4.7% in 2009. That had been its worst performance since World War II. Exports from Germany, the world’s second biggest exporter after China, grew by 14.2% last year, following a 14.3% decline in 2009. In a statement, the Federal Bureau of Statistics added: “What was striking in 2010 was the fact that economic growth was not only based on foreign trade, but also on domestic demand.” Germany is driving the Eurozone’s fragile economic recovery where smaller economies such as Ireland, Greece and Portugal have been struggling with large debts.
Gross Domestic Product Price-adjusted, chain linked Change on the previous year in %
2.2
1.8 2.0 2.0
1.9 1.0
2.7 1.2
-0.8
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2006
2007
2008
2009*
2010*
GDP (trillion)
2.32
2.42
2.49
2.34
2.35
GDP Growth (on previous year)
3.0%
2.5%
1.5%
-0.6%
0.2%
Inflation
1.7%
2.3%
2.6%
0.3%
0.7%
Private Consumption (on previous year)
1.0%
0.4%
-0.1%
0.6%
0.2%
Exports (billion)
893
965
994
971
973
Export Growth
13.6%
8.1%
3.1%
-2.3%
0.3%
Source Destatis - *Forecasts prepared by the IFO Institute
1.2
0.8
Iconic Fernsehturm television tower overlooking Berlin cityscape from a dizzying 1,200 ft in the Alexanderplatz district.
1.0
0.0
10. Quality of Life
Year
3.6
3.4
3.2
2.7
-0.2
-4.7 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10
German Economy – Rapid upturn in 2010
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With a population of over 82 million, Germany is the largest country in the European Union. A labour force of almost 39 million, including four million entrepreneurs, make the country the Continent’s largest economy, with a gross domestic product of around 2.2 trillion euros.
Berlin - A Hub for International Corporations
Hamburg Rostock
Stralsund/ Oranienburg Dreieck Havelland Kremmen
273
Size
82.2 million
Capital
Berlin (Population 3.4m)
Memberships
NATO, EU, Eurozone
Currency
Euro
10
Propfund Germany HQ Pankow, Berlin
Germany
115 1
Potsdam
Phben
1
Dreieck Werder Dreieck Glindow Potsdam
Leipzig Munich
Dreieck Schwanebeck Bln.Weiensee
158
Bln.-Hohenschnhausen
BerlinPrenzlauerberg
10 Bln.-Marzahn
Mitte
1
Kreuzberg
2 2
Hanover
10
114
Charlottenburg
5
10
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LOCATION
Schnerlinder Str.
Reinickendorf
5
158
Bernau
Pankow
96a
273
1
11
Mhlenbeck
111
Brandenburg an der Havel
Propfund Offices in Dublin, London & Berlin
96
5
357,104 sm
10
Velten
Hennigsdorf
Nauen
2
Birkenwerder
5
Bln.-Hellersdorf
100 Kreuz Wilmersdorf
BuschKopenick krugallee Gradestr. Dreieck Treptow
Zehlendorf Kleinmachnow
96
Teltow
Dreieck Spreeau
113
10 Ragow
Ludwigsfelde West
Luckenwalde
10
Bln.-Grnau Schonefeld Int Airport
101 Ludwigsfelde Ost
Bln.-Erkner
Niederlehme KnigsWusterhausen
179
Zossen
Frankfurt/ Oder
12
Frankfurt/ Oder
Grnau
Dresden
Berlin is a city of contrasts and contradictions, full of excitement and forever evolving...
When it comes to fashion, art, design and music, the German capital is the city to watch. A global influx of creatives has turned it into a cauldron of cultural cool reminiscent of New York in the ’80s All this trendiness is a triumph for a town that’s long been in the cross-hairs of history: Berlin staged a revolution, was headquartered by fascists, bombed to bits, ripped in half and finally reunited – and that was just in the 20th century! Famous landmarks such as the Brandenburg Gate, Checkpoint Charlie and what’s left of the Berlin Wall are like a virtual 3-D textbook in a city where you’ll find history staring you in the face every time you turn a corner. Traffic flows freely, public transportation is brilliant, you can walk without fear at night, clubs have no velvet ropes and your restaurant bill would only buy you a starter back home. Page 19
Population
Schwante
Velten
Bad Freienwalde
Eberswalde
109
Dreieck Oranienb.
10
Prenzlau
Maximise your investment returns with Propfund Germany
Germany’s Housing Market Confidence in investment in the real estate industry in Germany is growing strongly as we are seeing the fastest growth since the reunification. Success stories are currently hogging the headlines in Germany. The economic growth forecasts are being revised upward while the jobless figures are tumbling. And even the sentiment in the German real estate industry is buoyed by great optimism making Germany one of the most attractive real estate markets in the world for investment.
Most stable housing market in the world High rental yields: 8%-10% at institutional level Culture to rent: 84% of Berliners are tenants Long term tenants – typical 10-15 years Solid and secure medium term investment No.1 Buy to Let market in the world Property Prices are increasing Very active investment market
Germany’s Housing Market Registers Price Growth in 2010 Germany remains the world’s most stable housing market and continued to show positive signs of growth during 2010. In April, the average price of apartments was €134,000. It had increased by 2.7% compared to the same month last year, according to Hypoport AG, a leading financial services portal. Berlin is currently seeing a net increase of residents with many governmental and large corporations relocating staff there from other German cities; this influx is driving rental demand and rents upwards. House Price Change, Annual (%)
4 2 0 -2
Property ownership & valuation
-4
Much of Germany’s rented property is owned in portfolios by large institutional investors and pension funds and as such it rarely comes onto the open market for sale. However, Propfund is able to acquire these off-market portfolios from these institutions at below market value through the long standing relationships they have established in this sector.
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The method of valuing a property in Germany is dictated by a multiple of the rental yield. This compares favourably to the British marketplace, where demand for a property very much dictates the valuation. By purchasing portfolios of properties, Propfund Germany are able to negotiate and acquire these properties at a much lower price than if they were buying individual properties.
-8 ‘06
‘07
Nominal
‘08 Real
Source: Bulwien Gesa AG
‘09
‘10
Berlin at Dawn
Berlin – A Population of Tenants
Rental Yields Are Rising
Unlike the British, the German population are not infatuated with home ownership; in fact Germany has the highest proportion of rented property in Europe averaging 57.4%, in Berlin this leaps to an average of 84%, nearly three times the average in the UK. Furthermore the German market is characterised by long rental terms of typically 10-15 years compared with less than 3 years in the UK.
Berlin is one of the fastest growing capital cities in Europe, however it still has one of the lowest prices for rental, averaging @5.71 per square metre. Already attracting substantial inward investment, the rents in Berlin are widely expected to increase significantly over the next 10 years. Bringing Berlin more in line with the rest of Germany, this alignment in the market signifies a real buying opportunity with strong fundamentals supporting the rise in rental yields. v12
SPA IRL ITA UK
14.5% 17.7%
v10
24.6%
v8
29.5%
FRA
37.5%
NL
45%
GER
BERLIN
v6 v4
57.4%
A Population of Tenants
n
84%
e ch
M
ün
Tenancy Rates in Europe Berlin at Dawn
in
Kö
Dü
rf
ldo
e ss
t
ar
ttg
u St
t
ur
kf
an Fr
rg
bu
m Ha
nn
Bo
n
B
li er
- W lin r Be
Germany - Rental Index (Monthly Euro/sq.m)
E
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Growing Investor Confidence in Real Estate
What will you be doing with your Propfund investment returns?
Is this investment for you? In just 10 years you could be enjoying 170% return on your investment. Depending on your stage in life and the amount you have to invest, your Propfund returns could be ideal to use as part of your pension within a SIPP, as a way of producing funds for a future family investment such as a planned potential move to a bigger home or to be prepared for your children’s future needs.
The home you always wanted In 10 years time will you be ready to move to that dream house or holiday villa? Propfund could be part of the balanced portfolio of investments which enables you to have the property you really want.
The education they deserve Will your children need that extra financial help to achieve their potential through education? Propfund could help you to provide for them to have the best start in their working life.
The wedding she always dreamed of Might your daughter be at the stage where you are expected to pay for that special day? Propfund may provide a solution where you will be able to walk her down the aisle knowing that this is the dream wedding she wanted.
The retirement you desire
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Are you planning for a relaxing and stress-free retirement? Propfund is a fully approved investment fund which could be an essential part of a balanced portfolio of investments which you can utilise through your SIPP.
The EURIX Group - Real Estate Experts in Berlin since 1996 For over 14 years, the EURIX Group has earned the reputation for service excellence that is unequalled in the industry in Berlin. We have remained true to our fundamental values of service, integrity and professionalism. These qualities continue to shape our firm and help us ensure that our clients expectations are surpassed year after year. Since its foundation in 1996, EURIX has emerged as one of the market leaders in Real Estate, Property Management & Lettings in Berlin, Germany. The Group is made up of experienced multi-lingual staff, each of them expert in either property investment & asset management, property management, lettings, renovations, finance or insurance.
Role of the Management team 1. Structuring the fund • 18 months research and development • Setting up the company • Preparing a shareholder agreement – Investment Prospectus • Obtaining BaFin regulation for the fund
10 reasons to choose the EURIX Group 1. Head office in Berlin, Germany 2. Experienced team of multi-lingual staff 3. Real Estate Sales, Property Management, Rentals
2. Raising Equity • Promoting the fund nationally & internationally • Managing direct enquiries and developing relationships with IFA’s • Presenting the fund on “Equity Raising” roadshows & seminars
4. Property Funds & Asset Management 5. Finance, Legal & Tax advice 6. Currently managing over 850 properties in Berlin worth over €65 million
3. Property acquisition • Sourcing, negotiating and purchasing all properties into the portfolio. • Arranging bank financing, checking all tenancy agreements and structural reports • Obtaining approval from shareholders for acquiring property • Registering all property acquisitions to Propfund
7. Valuer and advisor to some of the largest US Property Funds in Germany 8. Member of Germany’s largest Real Estate Association - IVD 9. Preferred supplier to Germany’s largest network of Financial advisors - ASG & Formaxx
4. Managing the Fund • Overseeing all rental management and property management functions • Management of the finances of the company on behalf of the shareholders • Preparing quarterly accounts and annual performance reports • Regular communication with shareholders • Improving the profitability of the fund through proactive management of the portfolio
10. Fully regulated by BaFin – the German Financial regulator Services include: • Property funds and asset management • Property sales and rentals • Property management • Property development • Finance and insurance
Marco Knoblauch Fund Manager
David Healy Marketing
Rouven Zinke Acquisition
®
5. Selling the Fund • Responsible for selling the individual units or the entire portfolio • Dispersing the profits of the fund • Closing the fund ®
®
®
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Denise Haupt Administration
Page 25
®
Getting Started - Becoming a shareholder in Propfund Germany is simple The process for joining the fund is very straightforward. Please follow the steps below and if you have any questions, don’t hesitate to contact your Propfund Investment Adviser who can guide you through the process.
1
Read a copy of the investment prospectus. Decide the amount you would like to invest.
2
Complete the Investment Instruction and return this to your advisor.
3
The Trustee signs the necessary documents and returns copies of these to the investor.
4
Once you have received the documents you need to transfer the funds to the Propfund bank account.
5 Page 26
Outside the Reichstag Dome, Berlin People walking the spiral walkways to the top of the Reichstag, Germany’s parliament building in the heart of Berlin
Receipt of funds is first confirmed by email. Once the 14 days “cooling” off period has expired, conformation of funds along with a share certificate is sent to you by post, this completes the investment process. Page 27
Europe’s leading economic engine and the 3rd largest economy in the World
Skyscrapers of the Potsdamer Platz district, Berlin.
Frequently Asked Questions
2) What are the criteria for purchasing real estate for Propfund? - The property has to be located within a well established city with a minimum of 50,000 inhabitants. - The fund will include residential and commercial properties with at least 5 units. - The maximum investment volume per building is €3 million. - Purchasing factor of the building must be 12.5 or lower. - The current occupancy rate (of the purchased building) should be at least 75%. 3) Who will be the representative of the investors within this company? The investors participate in the Propfund company through a trustee limited partner. The intervention of a trustee limited partner is, according to many investors, a comfortable and hassle-free solution. 4) How are the profits of the investment distributed? The gained profits of the society will be distributed to the investors of the Propfund company at the end of the Investment window (2020). Page 28
5) How much are the dividend distributions? Once the fund is placed, all investors will receive an annual dividend profit of 7.0%, which will increase during the course of the investment to an expected 10.01%.
6) Is Propfund Germany a safe Investment? The fund is regulated by the German Federal Financial Supervisory Authority (BaFin) and therefore abides by the strict criteria required by the regulator. Additionally, the acquisition, rental and resale of the fund will be managed by a professional and experienced German team. We are confident that the portfolio will continue to be rented out as the future demand for rentals is likely to far exceed supply. Many German experts are reporting of the forecasted increase in the German property market which has a huge potential for growth over the next 10 year investment period. 7) Why should I invest in Germany? Germany is Europe’s leading economy, it has the highest productivity rate in the world, excellent infrastructure and legal framework. It offers security alongside great potential as the real estate market is undervalued and the influx of investors capitalising on this will increase the value of the market. The government want to attract international investors and offer incentives and competitive tax structures. 8) If I wish to exit in 5 years, can it be done and what % penalties will be applied? Yes, you can sell your shares at anytime. If you sell your shares privately yourself then there is no penalty or charge for transfer of ownership. Propfund will provide an internal resale service to all shareholders. Your shares will be independently valued and you would receive 90% of the new value of the shares less the costs of the valuation.
9) Will I need to pay tax in Germany? The objective of the fund is to generate a profit from the rental income on a yearly basis which will be paid to shareholders as a dividend payment each year. The profit will be declared on an annual basis as a taxable income for each shareholder. Based on this final taxable income the shareholder, regardless of whether he is an individual, a company or a pension scheme, has to pay tax in Germany beginning from 25% increasing to 43% should he get more than c100,000 in annual profits.
10) Is there any liability to the shareholder beyond the amount invested? The fund cannot at anytime legally demand shareholders to invest more money than the original equity invested. Propfund does not forecast to call for further equity from the shareholders but if a situation arises where this is required, then a shareholders meeting would be called, but there is no liability, no legal requirement or recourse to shareholders in this fund requiring them to invest any additional equity into the fund.
There is a double taxation agreement between Germany and many European countries which says, where the company or the property is based, the tax return has to be done. But all the taxes a foreigner has paid in Germany will be considered in the tax report in their home country. The tax payable in their home country will be reduced by the amount he paid in Germany. After closing the fund after 10 years, there is no German tax applicable to the capital gain on the shares in Germany, but the taxation law in the home country will have the final status and even if Germany demands no tax, capital gains tax will be applicable in the home country.
11) To which account do I transfer the investment amount to? The payment transfer is made to the Propfund limited partnership account by request of the management. This account is used to make all payments to and from the Propfund society. No other institutions are allowed to sell shares of this company. Page 29
1) What kind of fund is Propfund? It is a blind-pool fund. The fund aims to use €10million in private equity and €20million in non-recourse German Bank financing to acquire high yielding apartment blocks in Berlin and neighbouring cities.
Investor Notes
Propfund Germany - share in our success
Invest in a portfolio of tenanted buildings in Berlin and neighbouring cities at heavily discounted prices
170% ROI forecast over the 10 year term of the investment
Investors receive a return of between 7% - 10% each year
Invest from just e15,000
Capital appreciation returned to investors once fund portfolio is sold at end of 10 year period
Fully managed fund with English-speaking trustee structure in place
Propfund fully regulated by the German Financial Regulator (BaFin)
Cathedral at Gendarmenmarkt (Berlin) Disclaimer: This information serves only as an announcement of the closed property fund Propfund Germany limited company and is NOT a public offer according to German law, § 9 (VerkProspG) for a sales prospectus. This document has been produced from known data and information and is accurate to the best of our knowledge. Any decision to invest should be made only after careful consideration of the investment prospectus which was published on the 4th of December 2008.
Propfund Germany 1, GmbH & Co. KG, Breite StraĂ&#x;e 39b, D - 13187 Berlin