Until now, real estate investors who wanted to realise a construction project usually turned to traditional capital providers, especially banks. “But the need for alternative forms of financing has been growing for years,” explains Kevin Hinder, Co-Founder and CEO of Property One. There are many reasons for this: “One decisive factor has to do with the fact that it is becoming increasingly difficult to access capital given the increasingly complex situation on the real estate market.” In the worst case, this leads to temporary financing gaps that can jeopardise the launch and completion of projects. The challenge for professional real estate investors is therefore to actually be able to seize the market opportunities that present themselves. “These opportunities are still absolutely present in the Swiss real estate market,” Hinder emphasises. The local industry is confronted with an enormous shortage of living space in the short and medium term, and the supply is disproportionate to the increasing demand. “Although the market is yearning for new projects, so to speak, there is a lack of the necessary funds as well as often a lack of flexibility to seize the opportunities that arise.“
Opening up alternative paths to success
Property One Investors AG has created the ONE Real Estate Debt Fund to remedy this situation. This fund gives professional players in the Swiss real estate market, such as owners, architects and project developers, access to an alternative financing option. Specifically, the fund grants subordinated loans that are secured by promissory notes. The commonly known “second mortgage”, so to speak. Property One’s corporate DNA comes into its own here: “Our fundamental expertise and experience come from the world of real estate,” Kevin Hinder explains. Thanks to this expertise as well as a profound understanding of the market, it is possible to create attractive, real estate-based financing solutions for clients. “We understand the language of our borrowers.”
The possibilities of the subordinated loans from the ONE Real Estate Debt Fund are accordingly diverse: In addition to bridging financing bottlenecks, the funds also optimise the bank’s own capital structure and return on equity. Consequently, additional equity is released for further market opportunities. “In addition, we are extremely flexible in terms of the general conditions regarding repayment modalities, interest repayments and project progress, as long as we always receive a debt certificate on a Swiss property,” explains Hinder. As an institution subject to FINMA supervision, Property One Investors AG ensures at all times that all framework conditions are complied with and that all loan requests are thoroughly examined and assessed.
A proven tool
Critics of subordinated real estate loans often cite the – supposedly high – interest costs incurred as a counter-argument to this financing approach. For Kevin Hinder, this justification is not valid. “Subordinated real estate loans are a flexible catalyst for new market opportunities, which has a market price and enables further investment opportunities for borrowers.” For this very reason, he said, the form of financing established itself as a proven financing tool in Europe, the UK as well as the US years ago. “Our track record also speaks for itself,” Kevin Hinder emphasises. The figures prove him right: in the last two years, more than 250 million Swiss francs have been moved through the ONE Real Estate Debt Fund. During this time, there were no loan defaults and the investments generated a net return of around 6% per year. “We were thus able to establish ourselves with our fund as a sustainable business booster for local real estate professionals and arrange win-win situations.”
Anyone who would also like to benefit from this boost can contact the experts at Property One Investors AG at any time.
Further information can be found at finance.propertyone.ch
The information in this document has been prepared with the greatest of care and in good faith and is intended for information purposes only and does not constitute investment advice. Opinions and assessments contained in this document are subject to change and reflect the viewpoint of Property One Investors AG (POI). No liability is accepted for the accuracy and completeness of the information. Past performance is not indicative of current or future performance. This document is marketing material. Furthermore, this information is intended exclusively for qualified investors within the meaning of Art. 10 para. 3 and 3ter of the Collective Investment Schemes Act (CISA) domiciled in Switzerland.
About Property One Investors AG
The owner-managed company was established in 2013. It is a specialised provider in the real estate and investment segment. Its focus is on the asset classes of real estate and private real estate. Since December 2020, Property One Investors AG has been authorised to manage collective assets and is subject to supervision by the Swiss Financial Market Supervisory Authority (FINMA).
