I am in a similar position as Bill.
Separately, I noted both NEST and Golden Bridge have investment term of 6 years and further extension conditional. If we rush the investment in just before the subscription closure and considering longer SEF process time for GV during COVID-19 (I saw someone posting 15 months), is it too risky in term of permant residency application at the end of 5th GV year?
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Once again I agree with you. The exchange rate is one factor for why I am waiting until next year to invest. The other being we canāt travel from the US right now.
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I understand the $ has weakened but who knows what it will do in the coming months. Iām not going to try to time it.
It seems you are more comfortable with residential RE vs Retail, used by NEST. Anything behind that? - do you have information from on the ground? Any other red flags to you regarding the economics of the specific funds? Iām not keen on the 50% profit share of NEST. The others have a more clear hurdle rate.
I also didnāt fully understand the 50% profit share with NEST. Not something Iāve seen before in a PE fund. As for sector, Iām less concerned about retail, which I think will be fine, than I am with commercial, which is going to undergo some serious changes in our new world. Residential, however, should not be impacted, and may indeed strengthen as people may be spending more time at home and therefore willing to invest more in premium accommodation.
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Today I heard back from Mercan about their Marriott project in Porto. I inquired about that before I found these forums and this extremely useful thread. And let me take this opportunity to thank all of you for sharing; I am so grateful for all of your contributions!
William and others, do you have any thoughts about the yield, fee structure, and safety of the Mercan hotel investment program (structured as property) relative to the investment funds? My instinct suggests that the fees are going to be higher, but itās plausible that they bundle other expensive services and perks in the package. I donāt mind researching this if thereās an appetite in the community. If someone already chased this information down, Iād love to know what you found out!
Peripherally, I have misgivings about whether the hotel sector is growing and thriving in the COVID era. My gut feeling is that residential real estate will be more resilient.
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I did look at it, but only very briefly, and I will explain why. On the positive side, it looks like a perfectly decent project, and they promise a 3% dividend plus a guaranteed return of the investment. On the negative side, however, I see a lot of risk.
First of all, your investment would be completely tied up in one asset. If I was going to do that, I would likely just buy a piece of real estate myself to get my GV, as at least that way I have control. Second, indeed, there is some concern about the sector. Hopefully (for all of us!) that is just a short term concern, and life will return to normal. But either way, there is still no diversification of the investment.
My main concern, however is being tied up in a construction project. While this one may be perfectly fine, there are frequently problems with construction projects. Whether it is because a planning or construction permission gets revoked, or the general contractor goes bankrupt, or the agreement with Marriott runs into trouble, any of these (or various other issues) could cause problems. If thatās the case, then you may be stuck and will have to rely on the quality of their guarantee to return your money.
This is no statement against the developer, who I do not know. I have no reason to doubt that they would return your money, but if they run into financial trouble as well, then you may have serious problems getting your money back. To be fair, this is a risk with the fund model as well, but the investments are more diversified, and hopefully the CMVM regulatory regime offers protection.
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Excellent insights! I am most grateful for your help!
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Youāre most welcome. Those of course are my personal thoughts only, and others may disagree. I think the important thing to bear in mind is that there seem to be more and more options available (there were far less a few months ago when I started looking), so itās a question of finding what works best for you!
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Just got off a call with Dunas about the Golden Bridge fund. They have raised only 3.7M so far but are aiming to raise 20M, probably extending their period to June 2021 (currently Dec 2020). Not an active fund yet and have not pulled any actual money from their committed investors yet. Expect 70% of investors to be GV also. No payments until the end and they get paid only if they hit 8%/yr hurdle after which they get 20% - so nice incentive for them to do well. Fees otherwise are on low side. Aiming for Lisbon residential rehab projects. Their on the ground experts (Gamma) has mostly worked in Brazil but has a few Lisbon projects and 2 they are reviewing for this fund already.
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Hi, well behind and only scanning through the thread.
My impression so far has been that so many of the funds are so focused on the same things - residential real estate in major cities, or hotels, or retail. So much money chasing the same things, and so hard to tell the net difference between any of them. One of them, I forget which, had only one actual investment. Like, cāmon. And then yes there are the hard lock-ups.
One firm I talked to representing a couple of the funds (recommended here!) told me that there was a 1% p.a. return and return of capital and that was it. Oh, but youāll be exposed to the downside, Iām sure. Really? It is possible I misunderstood but ā¦ really?
The setup fee for Iberis seems terribly high versus the actual cost of retaining a lawyer on your own - the only way that 7.5% seems justified is if it also includes the SEF fees, and that seems super-unlikely.
FWIW, in talking to Duarte, it sounded like one could exit Bluecrow at any time - there wasnāt an actual lock-up. I still need to read through the subscription doc, Iāll correct myself if I find otherwise. So far I like it the most, primarily because it doesnāt really seem to act or feel like a GV-targeted/focused fund - itās a fund that theyāve happened to register for GV. Anything/everything thatās focused on GV so far has felt sketchy or overpriced or ā¦ and it makes me just cringe.
Can someone provide a pointer to that Monarque fund?
And any thoughts on lawyers? I have a name Iām likely to use but Iām open to information.
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As for fund vs propertyā¦ it feels like property WAS a good option at one point, but that market has evolved and grown so much now that everyone and their brotherās in the game, bringing all the scam artists and inefficiencies and everything else, such that the signal-noise ratioās gone into the floor.
One real estate person I talked to admitted that you could pretty much assume youāre paying a 30% premium on any new-build property vs actual worth - like buying a new car - and he couldnāt understand why people paid it.
FWIW, Iāve come up with a new metric for evaluating funds:
((number of pages in presentation about how great GV is) + (# pages about details of GV) ) / (# pages in presentation) >= .65 ===> RUN AWAY
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Hopping in a bit late here, but this is a great thread. It seems like many of the same conclusions Iāve come to as far as property vs fund are share here as well. Thanks @faizal for clarifying the audit fee as per fund, that was a red flag reading the PDF they sent. I wonder, would the bank fee be the same? Comparing the percentage vs minimum on that as well, it seems pretty high for a ā¬350.000 investment.
I guess it depends on what you are looking for. I am going to invest primarily to get a GV and hopefully get a return (or at least not lose my capital). If you are looking primarily for a return, then these are probably not the best investment options out there. Personally, and I certainly could be wrong, I donāt think a good RE play is a bad one. It is certainly more conservative than a true VC fund (although returns will of course be lower).
Not having a lock up for Bluecrow is very surprising. But thereās a difference between a lockup and liquidity. I canāt imagine that they are offering a redemption right, are they? (They would have to have cash in hand or liquidate an investment, which wouldnāt make sense.) And otherwise, you would have to find a buyer on the secondary market, which would likely be difficult.
Happy to share some thoughts on lawyers. Iāve spoken with a few that seem good. Feel free to send me a message if youād like.
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I agree, my primary goal in investing is the GV not the return. That doesnāt mean I donāt care about the return either, though. I donāt want to accept 1% upside and 100% downside.
Iām still tempted by the 280k property option - sure youāre getting overpriced property but at least you own a piece of property so the value is never entirely zero. My wifeās against it though.
Frankly, I donāt understand why New Edge is being run how itās run. Itās a really simple (and therefore good) concept - buy the JPM fund and the Square CAPC fund and sit on it for 6 years - why do they need to complicate it with a 1.5% IRR and return of capital? Just say "weāre going to buy these shares, sit on them for six years, pass through any dividends, charge 1% p.a. for our trouble, and liquidate in 6 years for whatever the shares are worth? That is something I might have bought into. As it is, no, itās heads I win tails you might not lose.
Itās a shame you canāt just buy the Square CAPC fund flat-out.
The management regulations of the Bluecrow fund make no statement one way or the other about exit - at year 6 or any other year. So I need to talk to them about it a little more.
I have a call in to someone I know to see if I can get more of a perspective on Bluecrow, e.g. is it a major Portuguese WM firm; if so then a lot of things are easier for me to swallow than if itās 3 people in a dark office taking your cash.
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The economics of the NEST fund are unusual but not unheard of. I happen to work for a fund whose model is 0% fee for up to 10% return, 20% on the next 10% return, then 40% of anything above. IOW, comp heavily skewed to the upside. So anything goes.
Assuming it is how I read it, the goal is more to generate current income for the investors with their upside being in the cap gain. This isnāt actually that unreasonable. Consider that youāre dealing in chunky, relatively illiquid stuff here. By law they have to mark to market. Suppose the property gains 10% in value over the year. How are they going to keep 20% of the 10% gain without selling property? You can hope thereās enough cash flow to fund it, but you canāt guarantee it.
If you think about it, 50% of the cap gain at the end of 6 years isnāt really bad, versus 20% annually. I donāt want to do the math but my gut says Iād take the 50%. Esp if youāre getting the better chunk of that 5-7% underlying yield.
(NEST doesnāt do it for me because I donāt like the idea of being that focused on retail real estate. The fund model doesnāt bother me at all.)
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Hmm, havenāt even heard of the JPM or Square CAPC funds. Where did you find those?
yes, same question here. I expect to get some feedback from someone who applied GV via investment fund.
I got a introduction PPT on New Age Fund weeks ago, which is managed by Quadrantis). However, the introduction said the investors would have to sign purchase agreement with another fund company at Macau(which is not found registration on CMVM) . I sent my question list to an immigration consulting firm, but have yet got reply so far. I think New Age Fundās investment goal and portfolio sounds to be attractive and less risky: JP global gov fund (40%)+Square CAPC(60%). However, the key issues are 1) if investor would have rights to monitor the fund manager-Quadrants 2) whatās exit process and 3) If New Age fund cannot achieve its investment goal within 6 yrs, say the value/per share is blow 1 euro, would investorsā application on GV be effected or even failed?
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Matt, I think from what Iāve seen all of the funds have a weirdness around the audit fee and how theyāre being written. For example, the bluecrow fund lists a 5000 audit fee. they list it and it looks like you owe that, but thatās the fee that the fund as a whole pays, you only get charged your fraction. they canāt list a percentage because itās not a fixed number, it depends on the total paid in capital. but you have to dig that out on a per fund basis.
Julia, Niraj, itās significant work to chew up all of the numbers for each fund and even then itās fuzzy since it depends on your actual capital input and the actual fund performanceā¦ and whether you trust that theoretical return they put out there - I wouldnāt.
I think the numbers in the sheet are fairly indicative and accurate, to 1-2k/yr, and itās easier to allow the fuzz until you choose a fund. Iād choose a fund based on whether you believe in the underlying assumptions and/or the track record (if there is one), not 0.2% difference in the fees. Thatās me.
I think you will find that itās all the OTHER costs that will bite you. you need an accountant. you need a tax representative. (these might or might not be the same person/firm.) you need a lawyer. you might need health insurance depending on your situation. you need a depository bank to hold the fund units. the costs for the accountant and lawyer depend on whether youāre resident as well; if youāre a resident then you get to pay VAT, Iāve been advised. you have to go shop around for all that. youāre in for another 15k easy for all of the above, plus the ongoing for your accountant/tax-rep and potentially legal fees for renewal if you go that route. then the govāt fees. maybe more, I havenāt totted it all up yet, Iām still discussing.
From what I can tell, what happens here is that you choose a lawyer. The lawyer generally has a partnership with a tax rep and accountant. The fund generally has a bank they work with. If youāre a US citizen, your choices on bank are limited because most banks donāt want the pain of FACTA regs esp for someone who isnāt on-shore.
I used to let myself get annoyed by this seeming nickel and diming, however (a) itās just free market stuff, (b) the entire point of GV is to stimulate the economy, which means coughing up (c) youāre supposed to care about the country, which means learning how it works.
Julia, I would ask Quadrantis for the management regulation document for the fund. thatās what governs the fund. You should end up seeing it no matter what.
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