The Generali Real Estate Fund for qualified investors achieved an above-average yield of 5.44% in 2018.
The yield is the sum of rental income, interest income and the first revaluation of the market value of the real estate held by the Fund. The revaluation is based on a valuation report issued at the end of 2018 by the renowned appraiser Cushman & Wakefield. The Fund is managed by Generali Investments CEE, the largest investment company on the Czech market.
“Continued growth in real estate prices in the regions contributed to the very good yield we saw in 2018. Our analysts anticipate a slowdown in the future. Nonetheless looking ahead, we expect good yields, mainly from rental income. Our objective is to reach about 3% p.a.,” said Marek Bečička, Director of Real Estate.
The four-year fund, which is administered by Generali Investments CEE, has invested in residential and commercial real estate in Brno and Pilsen. The Fund strategy is based on the expectation that the market value of residential and commercial buildings outside of Prague has higher potential growth than those in the capital city and that quality buildings are able to retain reliable tenants.
Generali Investments CEE, investiční společnost, a.s. and RSBC Group partnered to open the Real Estate Fund, an open-ended mutual fund for qualified investors of Generali Investments CEE. RSBC Group acts as the Fund’s expert advisor and property manager. In 2018, RSBC Group completed the reconstruction of part of the residential portfolio in Pilsen and achieved an occupancy rate of close to 100%. In Brno, commercial real estate was improved through reconstruction of a parking garage, façade repairs and other interior improvements. All of the investments aim for full occupancy and stable rental income.
“The residential buildings in the Fund’s portfolio are located in the centre of the university town of Pilsen. The combination of student tenants and long-term tenants in the buildings works very well. The occupancy and rental income from our commercial buildings in Brno are also gradually increasing according to our plans,” said Marek Bečička.
The Fund’s four-year duration was set in regard to the so-called ‘tax test’. When this investment period is respected by the client, the returns will be tax-exempt for Czech tax residents who are natural persons. The total yield is the sum of the annual yields from rental income, interest and revaluation of the real estate portfolio as at 31 December of the given year. Expenses such as portfolio acquisition, sale and administration costs are deductible.