The Arete investment and real estate group announced the opening of its third qualified investor fund, based in the Czech Republic and operating under the supervision of the Czech National Bank. This third fund is to follow on from the successful history of the preceding funds, with the first fund having been closed three years ago and investors paid off with a total gross appreciation of 120%, while the second fund has fulfilled its strategy with its current gross appreciation of over 90%. The new Arete fund will both invest into completed industrial real estate in Central and Eastern Europe and also itself construct new logistics and manufacturing buildings. Its portfolio target value should approach €500 million during the anticipated six-year investment cycle.
“After six years of operation of the Arete group, we can be proud of the successes we have achieved. We significantly appreciated the funds invested in the first fund within a very short time, and succeeded in formally closing it, something quite exceptional in the Czech market. We subsequently focused all our energy on the second fund, focused on industrial real estate, and this is continuously achieving above-standard results. We believe that our third fund will follow on from these successes,“ stated Lubor Svoboda, one of the two Arete group co-founders.
“In spite of the slowing of industrial growth in the Czech Republic and the short-term volatility of the stock markets, the overall economic situation in Central Europe is conducive to the further development of logistics and manufacturing. Hence the investment strategy underpinning our new fund once again focuses precisely in this direction. Through combining an aggressive investment strategy into already existing revenue-generating industrial real estate with the construction of new sites, we want to follow on from our historical performance in this next fund. More and more investors consider investing in funds focusing purely on industrial real estate to be a far more profitable alternative to unsecured corporate bonds, and so interest in this type of investment is significantly growing. The attractiveness of this type of asset in the Czech Republic and Slovak Republic is also demonstrated by the severalfold greater interest from global players and investment groups,” added Robert Ides, the second Arete group co-founder.
The third Arete group fund is to focus on industrial real estate with stable yields in combination with construction, specifically of class-A logistics and manufacturing real estate in Central and Eastern Europe. The anticipated investment horizon is six years. The portfolio target value should approach CZK 12 billion and the portfolio should include over 600 000 sqm of leasable area and over 300 000 sqm of building land for further construction. The new fund was formally established last year, but new investor entry is only commencing now.
The investment cycle of the first Arete fund culminated at the end of 2016 with the sale of the whole residential portfolio, made up of several hundred apartments, to a foreign financial investor. The financial and legal closing process for this fund was completed in early 2017, and it was one of the first-ever successfully closed funds in the Czech Republic. The fund achieved a gross appreciation of 120% over the two years of active management.
The second Arete fund was established in 2016, and gradually built up a homogenous portfolio of industrial real estate. Its objective is to continuously appreciate the invested funds of its investors at over 11% per year, while the actual rate of return far exceeds this announced value. The most recent, unaudited results for 2019 show total gross appreciation of over 90%. The entry of investors into this fund was closed in 2018.
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