Accolade fund achieves 1.92% appreciation in the first quarter of the year, in line with expected annual return
Prague, 10 June 2022 - In the first three months of the year, the Accolade Industrial Fund achieved an appreciation of 1.92% in EUR, which corresponds to an expected annual return of 7%. In addition, thanks to its long-term strategy and contractual clauses, the fund has been successful in mitigating current inflationary pressures. Several new warehouses were added to the fund's property portfolio in the first quarter, bringing the total leasable area to more than 1.2 million m2. More than 2,500 investors have already invested in the fund.
Despite the fact that the war in Ukraine, the slowing economy and rising input prices affect almost any business, there are many positives to be found in industrial real estate even in these challenging times. One such opportunity is the shift of more retail segments online. Despite the cooling of certain categories of e-commerce, this shift is creating demand for new logistics space.
“We see new demand, for example, in eastern Poland, where there are Ukrainian automotive chains that want to continue to operate,” says Milan Kratina, CEO of Accolade. The continued strong interest in logistics space is also evidenced by statistical data on vacancy rates, where the average in Europe is around 3.5%. The Czech Republic is well below this figure.
Accolade Industrial Fund does not have any projects, tenants or financing banks in Ukraine or Russia. The effects of the events in Ukraine are therefore only indirect, taking on the form of inflation, for example. However, the fund itself acts as an effective tool to fight inflationary pressures compared to standard securities such as bonds or shares. It includes a protective counter-inflation mechanism in the form of rent indexation, where all contracts with tenants contain inflation clauses that will gradually be reflected in the fund's overall rental income. “It is thanks to inflation clauses that the fund is managing to mitigate at least 80% of current inflation. Let me also say that since all rents are paid in euros, we are actually talking about inflation in the euro area, which is lower than inflation in the Czech Republic,” explains Kratina.
The fund achieved a return of 1.92% in EUR and 1.41% in CZK in the first quarter of the year, which corresponds to an expected annual return of 7%. “Last year really was out of the ordinary in terms of the record return. What’s more important, though, is that if we subtracted the impact of the overvaluation of the properties in the fund's portfolio, it would still hold a very interesting and consistent return from regular rents. And this is where we are headed – to a stable situation where our yield is primarily driven by rental income again. Because the market is already hitting the imaginary limit of new property prices and corresponding returns,” explained Kratina.
The beginning of 2022 brought two new projects on the Polish and Czech markets for the fund’s real estate portfolio. In Poland, the fund expanded to a brand new location near Górzow Wielkopolski, a city of over 123,000 in the west of the country. Its proximity to the German border makes it an ideal location for international businesses planning to move their operations to Central Europe. Another advantage is an excellent connection to the Czech Republic, which is provided by the S3 highway from Szczecin to Prague. The modern Górzow Wielkopolski park, with an area of over 53,000 m2, is attractive for tenants because it allows them to leverage a developed urban infrastructure and an influx of skilled workers. The project added a total of seven tenants, five of which are completely new, to the fund's portfolio.
In the Czech market, the fund expanded its industrial park in Ostrov u Stříbra. The tenant of the new warehouse with an area of 9,500 m2 is the company Urban Transporte, which provides comprehensive logistics and warehousing services. The company is part of the KION Group, which together with DHL and Tchibo belongs to one of the largest tenants in the fund’s portfolio by rental income.
The Accolade fund places great emphasis on the environment and sustainability. Its portfolio is one of the most environmentally friendly in Europe. Diversification and reliability of tenants are also key for the fund, ensuring stable returns in the long run. “The current times have created an even more pressing challenge for us: to push and improve our strategies for the self-sufficiency and sustainability of industrial buildings. Our entire portfolio is now even more environmentally friendly and cost efficient for our tenants,” adds Kratina.
The Accolade Industrial Fund was established in 2014. It is intended for qualified investors, who have the opportunity to take part in the development of modern, sustainable industry in Europe. The fund currently has over 2,500 investors.
The fund's portfolio consists of 22 industrial parks with nearly 80 tenants in the Czech Republic, Poland, Germany and Slovakia, and is worth CZK 26.6 billion. The leasable area of all properties is more than 1.2 million m2. The parks also meet the strictest environmental criteria and have passed the prestigious BREEAM sustainability certification. This makes them one of the greenest industrial building portfolios in Europe. The minimum initial investment is set at EUR 75,000.
The recent significant growth of e-commerce shows the importance of modern industrial facilities, which have become an interesting investment opportunity. The fund has ranked several times in a row as the best performing real estate fund in the Czech Top Real Estate Funds ranking. For more information, please visit https://accolade.eu/cs/fond.