Home-grown fund in the offing
The TFI BZ WBK AIB investment-fund company is confident that its zł.150-350 million offering will find takers when it launches its fundraising effort this week.
Retail investors will be able to subscribe until early next month, when book building for institutional investors is set to commence. Although Krzysztof Samotij, president of the investment fund firm, says that market research has indicated sufficient demand from retail investors to raise the required amount, the example of previous attempts at launching such funds indicates that finding favor with pension funds is both crucial to the success of the endeavor and its most difficult part.
Samotij recognised the difficulty that derailed previous attempts but pointed out that CA-IB's failure last year could be explained away by the fact that institutional investors were given too little time to consider before committing to the fund. This time, he says, the negotiations have already been in progress for two months. He also states that the performance of the retail sales network of BZ WBK has been superior to that of CA-IB's, which should also make it easier to reach the fundraising target.
The fund would be the first vehicle in the country to allow both categories of investors to gain exposure to real estate, and the market reaction has generally been favorable. The listed fund has an eight and a half-year investment horizon and its benchmark yield is 10 percent. The management company will receive a 20 percent success fee for any yield over and above that benchmark.
Agnieszka Jachowicz, head of the three-person real estate team at the fund company, says that it will be looking to purchase 15-25 properties. The maximum value of each transaction will be zł.71.2 million (15 million). This ceiling will allow the fund to avoid competition with foreign funds, including Polonia Property Fund, which belongs to the same capital group as TFI BZ WBK AIB. It will also make it easier to tap the relatively unexplored markets outside Warsaw, where the value of investments tends to be lower.
The problem of the supply of appropriate buildings is a potential stumbling block for the fund, due to the recent surge of demand from financial investors. Jachowicz says, however, that most of that demand has been concentrated in Warsaw and has focused on more expensive properties. She also added that the team has been able to come up with a tentative portfolio of properties that would allow the fund to invest all the assets it plans to raise.
"Obviously, it will not be possible to buy all those buildings since due diligence has not yet been conducted," she explains. "But that shows how well prepared we are." In addition to the real-estate expertise within the fund firm, TFI will also co-operate with real-estate experts within the AIB group, as well as consultants Knight Frank.
The fund is expected to invest some 50 percent of its assets in the capital, with the minimum of 25 percent set up by its issuance prospectus, while the rest will be divided between other large cities and logistic centers. Up to 20 percent of the funds may be invested in Hungary and the Czech Republic.
TFI BZ WBK AIB will invest in office, retail and industrial space, as well as residential development projects. No more than 10 percent of total assets can be allocated to a single property.
Retail investors will be able to subscribe until early next month, when book building for institutional investors is set to commence. Although Krzysztof Samotij, president of the investment fund firm, says that market research has indicated sufficient demand from retail investors to raise the required amount, the example of previous attempts at launching such funds indicates that finding favor with pension funds is both crucial to the success of the endeavor and its most difficult part.
Samotij recognised the difficulty that derailed previous attempts but pointed out that CA-IB's failure last year could be explained away by the fact that institutional investors were given too little time to consider before committing to the fund. This time, he says, the negotiations have already been in progress for two months. He also states that the performance of the retail sales network of BZ WBK has been superior to that of CA-IB's, which should also make it easier to reach the fundraising target.
The fund would be the first vehicle in the country to allow both categories of investors to gain exposure to real estate, and the market reaction has generally been favorable. The listed fund has an eight and a half-year investment horizon and its benchmark yield is 10 percent. The management company will receive a 20 percent success fee for any yield over and above that benchmark.
Agnieszka Jachowicz, head of the three-person real estate team at the fund company, says that it will be looking to purchase 15-25 properties. The maximum value of each transaction will be zł.71.2 million (15 million). This ceiling will allow the fund to avoid competition with foreign funds, including Polonia Property Fund, which belongs to the same capital group as TFI BZ WBK AIB. It will also make it easier to tap the relatively unexplored markets outside Warsaw, where the value of investments tends to be lower.
The problem of the supply of appropriate buildings is a potential stumbling block for the fund, due to the recent surge of demand from financial investors. Jachowicz says, however, that most of that demand has been concentrated in Warsaw and has focused on more expensive properties. She also added that the team has been able to come up with a tentative portfolio of properties that would allow the fund to invest all the assets it plans to raise.
"Obviously, it will not be possible to buy all those buildings since due diligence has not yet been conducted," she explains. "But that shows how well prepared we are." In addition to the real-estate expertise within the fund firm, TFI will also co-operate with real-estate experts within the AIB group, as well as consultants Knight Frank.
The fund is expected to invest some 50 percent of its assets in the capital, with the minimum of 25 percent set up by its issuance prospectus, while the rest will be divided between other large cities and logistic centers. Up to 20 percent of the funds may be invested in Hungary and the Czech Republic.
TFI BZ WBK AIB will invest in office, retail and industrial space, as well as residential development projects. No more than 10 percent of total assets can be allocated to a single property.
