Mint Investments expanded its range of investment products by setting up a residential fund for retail investors that will focus exclusively on rental properties. Mint I. rezidenční podfond SICAV will invest in properties located in economically strong regions, which according to co-founder Radim Bajgar, are Prague and Brno for the time being. Along with opening for business to retail investors, the fund completed its first acquisition: an apartment building in Brno with 120 units and around 3,500 sqm of office space, which it bought for over CZK 500m.Built in 2012 by Unistav for its architect and developer Jaromír Černý, the building is almost fully leased. Seen from a Prague perspective, that might sound like a remarkable achievement. Fortunately for Brno’s rental market, it’s driven by numerous IT and software companies and a bulging professional class rather than hordes of Airbnb tourists. Or as Bajgar puts it, “Thanks to its concentration of local and foreign technology firms, Brno is currently one of the most dynamically developing economic agglomerations in Central Europe.”
Bajgar is one of the fund’s five founding shareholders, but only he and Vojtěch Kraus will be actively involved in day-to-day operations. The idea is to invest in the sort of “build to rent” residential stock that’s common in Western Europe but is still new in Central Europe, which is still obsessed with ownership. “We’ll rent very efficient apartments,” he says. “Small size, very efficient floor plates, 1- or 2-bedroom units with kitchenettes, completely furnished. “Within this segment you have to be able to offer your customers also a lot of other services, so they worry as little as possible about day to day problems.”
Extra services might mean anything from child and pet care, cleaning and housekeeping services or IT support on demand. Price-wise, rents should be similar to the best apartments on the standard market offering (meaning not the luxury units offered to diplomats and expat executives). “We want to offer people quality for really good value for their money and be adequately priced,” says Bajgar. “Young professionals, middle management of companies sometimes maybe foreign students who don’t want to live in dormitories.”
All apartment buildings added to the portfolio will be listed on the Mint Living web platform through which potential tenants can locate empty units for rent and existing tenants can both communicate with property managers and secure additional services. This includes tenants in the fund’s first acquisition, which has been renamed Mint Living Brno Campus.
The fund will collect a 1.5% fee on the fund’s equity, along with a 30% performance fee for returns above a 5% annually. Rather than taking development risk, Bajgar explains that the fund is in negotiations with top residential developers on the future purchase of projects. Once permitted, the fund would acquire the shares in the SPV owning the property. ” We always invest in real estate companies because we bank finance them independently” he says. “We don’t like creating cross-risks between different assets.” At the moment, the fund has collected CZK 270m, enough to acquire Mint Living Brno Campus, thanks to the 60% financing it received from Česká spořitelna. The expectation is that it will pick up another CZK 500m during the coming year. The fund is being sold through the Conseq trading and distribution platform and all the usual distribution networks like Broker Trust, Swiss Life/Fincentrum, OVB, or Broker Consulting can sell its investment shares. The minimum investment is CZK 500.
