Four years ago, Optylon Krea’s Chairman Hakan Kodal predicted that Portugal’s golden visa’s investment fund category would skyrocket, garnering demand that would rival, if not surpass, that of the real estate option.
Kodal struck gold with his prediction, which came prior to the pandemic, as the fund category is now the most popular option among golden visa applicants, but Optylon Krea doesn’t just deal with forecasting demand, we act on it, and with our NEXT Fund, we are again pioneering new investment options for our investors.
While most investment funds in the market are regular funds investing in residential projects, we decided to take a more prosperous route for the investor.
Our popular PRIMA fund deals with touristic branded residencies, an upgrade on residential investment options, and after the success of our NEST Fund, which primarily deals with commercial real estate, we spun off the new NEXT Fund, which invests in prime street-retail, commercial projects, and which offers something unique to our investors.
Our move toward prime retail asset investments was motivated by intensive, intricate data-driven analysis, which showed us a gap in the market that we could take advantage of, and which would allow us to provide something magnificent for our investors, with yielding investments and high potential of capital gain with measured risk.
Our data showed us that the high street retail market in Portugal is a very interesting one, uniquely situated to attract massive demand from all over the globe. While prime residential segment in Lisbon has reached margins near those of Barcelona and Madrid but seems to have capped and won’t make it to the levels of other countries such as Italy, prime retail properties in Lisbon still have tremendous potential for growth, and our NEXT Fund thrives within this gap.
Prime street retail in Portugal was the first asset class to rapidly bounce back after the pandemic restrictions were lifted as people rushed to get back any sense of normalcy, and it has not looked back since.
Our experience in this area, coupled with our amazing asset management team, allowed us to create the innovative NEXT Fund, which only invests in top street retail assets. The elite retail market continues to thrive as more companies choose Lisbon as their next destination for a shop, which is unsurprising given rental levels in Lisbon are much lower than in London or Paris, for example, but the purchasing power is still there and growing, which attracts local and global companies.
NEXT Fund’s focus on prime retail real estate means that the renters can be described as triple A which is usually international brands with strong rental contracts. International retailers are always on the lookout for the perfect destination for their next shop, as they must continuously grow, brand image, and their investments of millions are backed up by a willingness to stay. This is the crowd we work with under our NEXT Fund, as renting international retail corporations means less risk, better payments, and longevity. The only true risk our investors face is the market risk itself, which is measured and quite low.
However, NEXT Fund’s true ROI doesn’t come from the rent itself, as targeted rental returns are just slightly above average for the asset class at about 3%, but the bulk of the profit comes through the arbitrage gain at the exit
The previous NEST Fund excelled at buying properties at 15% lower than market value during pandemic. On the first fund we advised, LIG1 also invested in retail component of a trophy asset under development we have flipped the asset and realized 9% average distribution over 4 years. The same methodology will allow us to provide target returns higher than 8%, in NEXT Fund.
But what really makes this interesting for investors is how we advise the fund. At Optylon Krea we place all our faith in our ability to locate and expertly manage unique opportunities that can yield strong returns, and this is reflected by how we structure our performance fee, which we only take at the end of the holding period when the portfolio is sold and if there is a capital gain.
In essence, we do not charge a performance fee on the dividend whatsoever, but we do share in the arbitrage profits once we sell the properties for an increased value. This way of work means we can only choose projects that have minimal risk, strong potential, and are only available to those who have the expertise and ability to find them.
This way of work has helped us partner with a wide array of investors throughout the globe, but it has also put Optylon Krea’s name above and beyond anyone else in the market. Now, local or international funds come to us at their exits or when they are considering expanding in Europe, as they know we have the best assets to offer and that we work on a data-driven level unlike anyone else in the market.
This means our investors, who are mostly golden visa applicants are assured to be investing in projects which are well managed and measured risk.
The way our NEXT Fund operates is unique within the realm of the Portuguese golden visa, and the good news is that applicants can easily qualify for the program while investing in a unique, profitable opportunity.