Assured Exit Property Investment (AEPI)

• Innovative way to property invest in emerging regional capitals where the developer shares the rewards and exit strategy with the investors
• Low risk, hands free investment with fund-like returns
• Average of 32% IRR achievable
• Developer incentivised to achieve a minimum 44% growth on list prices within three years
• Aligned incentives - developer earns his profit when our investors make theirs
• Huge 20% discount on current market value (including effectively free balconies) - 23% when purchasing three or more units
• 5/95 payment terms with up to 90% LTV available (subject to status)

We have used our extensive experience and local market analysis to create a low-risk, hands-free way of investing in high-growth, third-tier markets.

We have also listened to extensive feedback on this strategy from our investors via a series of focus groups and blog discussions prior to launching, which has enabled us to launch this deal to best suit your investment requirements.

AEPI Strategy Explained

Assured Exit Property Investment is all about creating a credible and profitable method of sale within a fixed time frame before the initial investment is made.

We are turning the conventional approach to overseas property investment on its head, by building the exit before we have the entrance.

This strategy makes sense in emerging regional capitals (or third tier cities) in central and Eastern Europe where we can expect to see a spike of property price growth. Investors will therefore want to be able to exit the market with a property sale once this growth has taken place.

The "assured" bit is about having confidence that a credible route to re-sale exists prior to making the original investment.

It is also about having the knowledge that the agent responsible for delivering the re-sale is massively incentivised to make the sale - whilst guaranteeing a minimum profit level for investors and all delivered within a set time period.

The strategy is based on securing an agreement with the developer which allows the customer to benefit from buying a property below market value and then being in a position to sell the property quickly at an agreed price to maximise that capital gain.

The developer, instead of taking his profit on the first sale to our investors, will make his profit later - at the point where he then re-sells the unit to the local market whilst booking a profit for our investors. All the mortgage finance can be set-up prior to the investment too as the units will already be close to completion.

Toamnei Residence

We have applied this strategy to Toamnei Residence in Baia Mare where units are currently selling on the open market for €1,190/sqm for internal space (including vat).

You buy at €952 (or €916 if buying three or more units) and agree to sell at €1,711 or higher and share some of the net profit with the developer in return for him offering deep discounts of up to 23% of market value.

Our growth forecast analysis tells us that we can expect prices in Toamnei Residence will reach €2,000/sqm in five years.

If you bought all 15 units on offer and achieved the sale within a two year timeframe - under our rapid growth scenario highlighted in the Investment Report - estimated probability of 60% - you will make 32% IRR after profit share. (IRR is like an annualised return on your investment but takes account of money going into the investment and coming out the investment at a variety of different times).

In our low-probability, slow scenario - estimated 30% likelihood - you would achieve a sale within four years, the developer would miss out on his net profit share (as this expires after three years for non-rented units) and you would still achieve a 19% IRR.

At all times you have the security of direct ownership of your property once you have signed your final contract.

In addition, as the units will complete at the end of 2008, establishing a mortgage will be easier and our potential lender will be able to value the units in their current advanced state of construction.

We have researched this deal and the AEPI strategy in great detail and the Investment Report provides an in depth analysis of the different scenarios, details why the AEPI strategy is suitable to a city like Baia Mare and provides a wealth of useful information to help you decide for yourself, if this deal is one for your Portfolio.

Download the Investment Report here

Below, you can view video demonstrations of the spreadsheets for Toamnei Residence, highlighting purchase price and growth predictions, explained by Peter Bennett - Director of Strategy & Analysis and Neil Lewis - Chief Executive Officer:

AEPI Purchase Price and Cost Analysis

AEPI Growth Predictions

To view the videos full screen, please click the second icon from the bottom right on the player below.

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