Finer Investment Solutions in the Right Patterns
Certain assets are traditionally reserved for large institutional investors (sovereign funds, management companies, insurers, etc.). However, there is a solution to enter this limited market which often offers above-average returns.In addition to this, you will need to know more about it.
To tackle the institutional market, where there is strength in unity, the club deal is a solution that offers advantages particularly suited to private clients. In some cases, it is backed up by a tax system, and responds to diversified asset management.
What are we talking about?
In addition to this, you will need to know more about it.Like what traditional real estate investment funds such as OPCIs or SCPIs offer, the club deal is a solution allowing individuals to access transactions reserved for institutional investors. The principle of a club deal is to bring together investors to carry out a clearly identified transaction with an established strategy.The assets acquired can be of all types (offices, shops, hotels, activities or logistics, etc.). You can check out more real estate co-investments in Singapore from Real Vantage.
Capitalization or distribution objective?
There are two club deal profiles: capitalization club deals and distribution club deals. The strategy and the investment period, the asset class concerned by the operation as well as the financing structure will be the main parameters defining the profile of the club deal. Thus, capitalization club deals are primarily aimed at clients who do not need additional income and who wish to enhance their assets.
in time. The debt is structured to minimize the level of mobilizable cash, all of the flows taking place at the end of the operation. Conversely, distributive club deals will be structured with a lower level of debt, making it possible to generate distributable income. The target customers of these operations are therefore investors wishing to have additional income directly or within the framework of their patrimonial holding.
Investment criteria to be respected
The selection criteria for real estate transactions are analyzed in correlation with the club deal’s strategy objective.
- Indeed, the approach will be different depending on whether it is a heritage strategy or high added value, a capitalization or distribution club deal, an investment over a short period (5 years) or a long term (7 years).
- The main criterion remains, as always, the location of the asset. This must be located in an environment suited to its typology. For example, we can cite an office building located in the tertiary zone of a large city or a business with a large catchment area.
A long-term holding objective will lead to an interest in mature products, very well located and with fairly low exposure to risk, whether rental or technical. This is typically the case when acquiring a single tenant building with a firm 9-year lease. Conversely, a shorter-term approach will be synonymous with a higher return objective and therefore greater risk-taking.
In this type of strategy, the most frequent investments are either real estate development, or assets to be restructured with major works and operation of the asset to be optimized (rental status to be reworked for office assets or a figure more important business to optimize if the investment is made in the hotel industry).