Accolade Fund achieved an appreciation of 1.92% in Q1, which corresponds to the expected annual return
In the first three months of this year, Accolade Industrial Fund achieved a euro appreciation of 1.92%, which corresponds to an expected annual return of 7%. In addition, thanks to its long-term strategy and contractual clauses, the Fund is successfully mitigating current inflationary pressures. The Fund’s property portfolio grew in the first quarter with additional industrial halls, bringing the total leasable area to over 1.2 million sqm. More than 2,500 investors have invested in the Fund.
Despite the fact that the war conflict in Ukraine, the slowing economy and rising input prices affect almost any business, there are many positives to be found in the field of industrial properties even in these challenging times. One opportunity is the shift of more parts of the retail industry to the internet, which, despite the cooling of certain categories of e-commerce companies, is generating demand for new logistics space.
“We are also experiencing new demand in Eastern Poland, for example from Ukrainian automotive supply chain companies that want to continue to operate,” said Milan Kratina, CEO of Accolade. The continued strong interest in logistics space is also evidenced by statistical data on vacancy rates, with the average in Europe being around 3.5%, while in the Czech Republic this indicator is even significantly lower.
Accolade Industrial Fund does not currently have any projects, tenants or financing banks in Ukraine and Russia. The subsequent effects of events in Ukraine can therefore only be indirect – for example, in the form of inflation. However, compared to standard securities such as bonds or equities, the Fund can be used as an effective tool to combat inflationary pressures. It includes an anti-inflationary component, i.e. indexation of rents, where all contracts with tenants contain some form of inflation clauses. These will gradually be reflected in the Fund’s overall rental income. “It is thanks to inflation clauses that at least 80% of inflation is being mitigated. And I would also like to mention that since all rents are paid in euros, we are actually talking about inflation in the eurozone, which is lower than in the Czech Republic,” said Milan Kratina.
In terms of return, the Fund achieved 1.92% in EUR and 1.41% in CZK in the first quarter of this year, which are percentages that correspond to the expected annual return of 7%. “Last year was a truly atypical record year. But the key point is that, if we disregarded the impact of the revaluation of the properties in the Fund’s portfolio, the Fund would continue to hold a very attractive and consistent yield thanks to regular rental income. And we are heading towards this stable state again as the market is already hitting the imaginary limit of new property prices and the returns that come from them,” Kratina added.
Accolade Fund’s property portfolio grew in the first months of the year with two new projects in the Polish and Czech markets. In Poland, the Fund expanded into a brand new location near Górzow Wielkopolski, a city of more than 123,000 inhabitants in the west of the country. Its proximity to the German border makes it an ideal location for international entrepreneurs planning to move their operations to Central Europe. It also has the advantage of excellent transport links with the Czech Republic, provided by the S3 motorway from Szczecin to Prague. With an area of over 53,000 sqm, the modern Park Górzow Wielkopolski is also attractive for tenants because they can take advantage of the well-developed urban infrastructure and the influx of skilled labour. This project has added seven tenants to the Fund’s portfolio, five of which are brand new to the Fund.
In the Czech market, the Fund expanded its industrial park in Ostrov u Stříbra. The tenant of the new 9,500 sqm hall is Urban Transporte, which provides not only comprehensive logistics and warehousing services, but also other logistics services. The company is part of KION Group, which, along with DHL and Tchibo, ranks among the largest tenants of properties owned by the Fund in terms of rental income.
The Accolade Fund emphasises the environment and sustainability. Its portfolio is one of the most environmentally friendly in Europe. Tenant diversification and reliability are also key, ensuring stable returns over the long term. “The current times have created an even more pressing challenge for us to shift and refine our strategies in terms of self-sufficiency and sustainability of industrial buildings. Our entire portfolio is now not only more environmentally friendly, but also more cost-efficient for our tenants’ operations,” adds Milan Kratina.