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| Issue 27: Two new investments that will weather any recession |
Torcana Ltd
June 2010 |
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Good afternoon all
Today I´m writing about a new kind of Torcana investment. It´s one we´ve been working on for a while and it´s probably the safest and most conservative product we´ve ever launched.
That´s not to say it´s boring though. You can get involved from as little as €50,000 ($61,000) and returns over 5-7 years are as high as 95%.
You´ll find full introductory details below and I´m looking forward to your initial thoughts and feedback.
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 The market that stayed out of trouble
Over the past 3 years a wide range of governments, regulators, banks and buyers have collectively been suffering from what might be described as Icarus Syndrome.
Laws and tax breaks were installed to encourage rampant construction of apartments, offices and hotels in dubious locations. "Soft touch" regulation was all the rage and banks were competing with each other to see who could rubber stamp the most loan and mortgage application forms in the shortest possible time. Buyers were borrowing beyond their means to purchase overpriced property developments around the world.
Too many thought they could keep on flying forever until finally, in early 2007, Icarus like, they soared too close to the sun and fell back to the ground with an almighty thud.
While all that craziness was happening, there was one country that paid no attention to the excesses of its neighbours during the boom.
Their banks didn´t get carried away with huge loan to value mortgages and their citizens generally saved more than they spent. Economic growth, rental rates and property price inflation were all stable and steady. It was and still is by far the most important economy in Europe and has been a profitable and safe haven for investors for decades.
I´m talking about Germany of course. "Brand Germany" was one of the main factors in the huge success of the solar investment product we launched earlier in the year. Our new range of syndicated commercial property deals share many of the same brand Germany benefits - i.e. safe & predictable investments with high rental income and solid financing with low entry levels.
Our local partners
The local partners we have formed an official collaboration with have been buying, letting and selling all types of German property for 20 years. They are also experts at sourcing, structuring and (crucially) managing German properties. They have transacted over €250 million worth of property deals and currently have more than €50 million worth of German real estate under active management. In short, they´re good at what they do and I´ve been very impressed with their focus.
Torcana have gone back to basics with this product and nothing has been left to chance. Our due diligence has been extensive and we are confident the German properties listed below will sell well in any type of market - booming, busting or steady.
Why? Because their fundamentals simply don´t change.
If you´d like to learn how to balance your portfolio with this type of product, please read on.
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Characteristics of our investments
Muliple tenants: We favour multi tenanted properties with strong leases in mature areas. These represent significantly lower investor risk than large single tenanted properties, particularly in the current volatile global environment.
Established Buildings: We target high quality established assets rather than new build. In Germany, existing buildings are available at 50-80% of the site and build costs for similar new ones. They are also in the best locations.
SME Tenants: Our target commercial tenants are the small and medium sized businesses that are the heart of the German economy.
Cashflow Positive: Net yields on acquisition cost of 6.5% -7.5%, and financing of 60%-70% mean that the properties pay their way each year after all costs and payment of full interest and capital to the bank.
Clear Exit Strategy: The investment period is 5-7 years to take advantage of lease renewals and expected returns on investment are 70-100% within this period.
Low Entry: Even though high quality and multi tenanted properties cost at least €1.5m, all deals are structured in a very clear and tax efficient manner which enables investors to take part from €50,000 ($60,000 / £41,750).
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East West Portfolio - From €50,000 / $61,000 / £41,750
An opportunity to purchase a low-risk portfolio of small high quality German property assets, with a spread across 5 properties and 32 tenants and 26,800 sq ft of rentable space.
The investment achieves 7.6% yields and finance of 70% has been secured net of all closing costs and fees. Minimum investment is €50,000 and expected returns over 5-7 years are 65-89%.
This is a highly attractive medium to long term hold, giving the investor access to the stability of the German economy and property markets.
The average cost per sq ft of the properties is c €85.68 and our estimates are that the total investment represents just 55% of the cost of building equivalent replacement properties on the same sites today.
Total annual rental income is €173,700 (€14,475 per month) which the sellers will guarantee for a period of one year post completion to further reduce risk to investors. The total investor equity needed is €698,000 ($864,000) and the total finance available is €1,570,000.
We are now accepting subscriptions from €50,000 onwards and demand is expected to be high. For further information, please click here and complete the short enquiry form.
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Dusseldorf/Krefeld - From €50,000 / $61,000 / £41,750
An opportunity to purchase two complementary properties containing an excellent mix of 17 retail, medical and residential tenants in two major German cities.
Rental yield is 7.11% with expected increase to 7.9% in 2011 and 65% financing has been secured. Minimum investment is €50,000 and expected 5-7 year returns are 66-96%.
The larger property is a REWE supermarket (Germany´s 2nd largest chain), with apartments overhead and a separate small block of apartments at the rear. The second property is a medical centre in Dusseldorf containing a pharmacy and 3 medical suites, each occupying one full floor.
The average cost per sq ft of the properties is €80 in Krefeld and €174 in Dusseldorf, both of which are a fraction of the site plus build cost today.
The total investor equity needed is €1,090,000 and the total finance available is €2,060,000 (65%). Total annual rental income is approx €223,965 (€18,664 per month).
This investment is now 90% subscribed with just €113,300 ($140,000) is needed to complete. This will be allocated to a Torcana investor (or two) on a strictly first come first served basis.
It is expected that a €100,000 investment in 2010 will return approx €166,000 - €196,000 on exit in 2015-2017.
For further information please click here and complete the short enquiry form.
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Torcana Interactive
Podcasts (including Germany)
Seminars & Presentations
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About Us
Torcana is a Dublin & Florida based investment specialist which promotes a variety of real estate and renewable energy investments in Germany, Florida and the UK.
We focus only on completed, cashflow positive, high quality assets with solid management and a clear resale market in place.
(C) Torcana Ltd 2010
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Contact Us
Torcana Ltd
14 Pembroke Cottages
Main St Dundrum
Dublin 14
Ireland
Ireland: +353 1 4433 991
USA: +1 321 806 1195
UK: +44 207 193 4024
Skype: torcanaltd
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