Crowdberry investors earned almost double on real-estate
13/06/2024
Crowdberry investors have achieved extraordinary double-digit returns by investing in Slovak commercial real estate. In 2020 and 2021, these investors had the opportunity to invest on Crowdberry's platform in a logistics distribution hall in Nitra and a land development in Trnava, both with long-term lease agreements in place. Earlier this year, these properties were successfully sold by developer KLM Real Estate. Crowdberry investors invested almost €1.5 million in the two projects and the total sale proceeds exceeded €2.7 million, almost doubling their investment in just three and a half years. The average annual return to investors was thus approximately 20%.
Investing at the right time in a growing segment
The investment strategy behind the real estate investments was based on the explosive growth of online sales in Europe, which rose 14% in 2019 and by more than 25% in 2020, mainly dueto the Covid-19 pandemic. It was during this period that Crowdberry launched its investment campaign with developer KLM Real Estate, totalling almost €1.5 million in the two logistics facilities in Trnava and Nitra. The investors not only became co-owners of the distribution halls together with the developer, but also co-owners of the land on which the developments sat, which both had 10-year lease agreements with Slovak Parcel Service.
The private investors were attracted by the unique opportunity to actively participate in the projects’ early stages and in the profits from the success of the development projects. The investment horizon was three years with a preliminary expected return of 11-14% per annum.
"The growth of online receipts and demand for e-commerce requires functioning infrastructure, and so-called last-mile logistics is an essential element that is built on distribution centres with good accessibility to the regions and regional cities. As well as e-commerce, freight forwarding sales were also growing, indicating the growth potential of this real estate segment, which urgently needed to increase warehousing capacity. These were all positive signals for investors as well, as evidenced by the current sale of real estate to an institutional investor." Peter Bečár, a Crowdberry partner who has worked in real estate for more than 15 years and also runs the Prague-based investment fund CB Property Investors.
Direct investment in local and proven companies
The Crowdberry team carefully set up an investment structure that protected investors from negative scenarios and minimized development risks. The goal was to achieve superior returns with strong protection, while allowing them to participate in the growth of the lucrative commercial real estate segment. At the end of the first quarter of 2024, the developer KLM Real Estate, with 20 years of experience and the successful implementation of dozens of projects, proceeded to sell both halls according to the set investment documentation.
The properties in the commercial zone in Trnava and Nitra, serving as distribution centres mainly in the area of e-commerce, were purchased by an institutional fund for €2.7 million, almost twice the value of the initial investment and representing an average annual return of approximately 20%.
"We are actively working with the investment team on other similar exits for our investors and we have also launched a new investment opportunity – again in a commercial leasehold property in the region. This time, investors have the opportunity to co-own a retail park near Nitra, an area that is very poorly covered by this commercial function," adds Peter Bečár.
Another commercial property from KLM
This investment opportunity in a commercial property with creditworthy tenants and high security attracted dozens of investors within days of its launch. The advantages of this investment opportunity are not only the anchor tenant Tesco or the location of the project on amain thoroughfare, but also the security mechanisms for investors. Important are the so-called liquidity preference, where capital is returned first to Crowdberry investors and then to the developer, the preferred yield of 11%, and rent indexation, i.e., inflation protection.
By investing in development assets directly with developers and owners of real estate projects and timing the exit correctly, investors can achieve double-digit annual returns. Crowdberry represents this investment strategy not only in real estate investment opportunities through the crowdinvesting platform, but also through the real estate fund CB Property Investors – the leading real estate fund in the Czech Republic, in which many Slovaks also invest. The fund has been among the top ranked of its kind for some time with an average annual return of over 15% p.a.
