Entry Yield: 9.2% Gross (8.2% Net)
Duration: 5+5+5 Years (2 years lapsed, 13 years remaining)
Lock-In: 5+5 Years (2 years lapsed, 3+5 years remaining)
CALL 9820855056 or 9930881999
The Investment Memo
|No.||Deal Evaluation||Rating Out Of||Rating||Proposal Scenario||Ideal Scenario|
|1||Tenant||1||1||SmartWorks is a profitable and India’s largest managed offices solutions provider. They focus on enterprise-grade clients that give them a long contract and a good lock-in. ‘Smartworks provides convenient and flexible office space solutions for enterprises and SMEs to minimize their overhead expenses. Smartworks offers a holistic experience to all its member companies by offering modern cost-effective solutions, state-of-the-art infrastructure with a tech-enabled working environment.’ From their website – https://www.smartworksoffice.com/ Their clients include Amazon, Microsoft, Jaguar, Samsung, Hitachi, Starbucks and many more.||Company with strong fundamentals|
|2||Tenant Industry Outlook||0.5||0.5||Post-Covid managed offices are in demand as clients want to have a hub and spoke model of operations where their employees could work from spaces closer to where they live. Hence the demand for managed offices is on the rise and SmartWorks is in the right position to capitalise on this opportunity.||Industries that can bear the ups and downs of the market cycles.|
|Tenant Stickiness (Lower than Market Rent & Capital Expenditure by Tenant)||0.5||0.5||Lower than the market rate. Capital expenditure by the tenant.||Ideally, rentals should be lower than market
The tenant should have ideally spent CAPEX on the property.
|3||Asset Grade||1||1||Times Square is a landmark IT Park with retail and office spaces spread over 6.5 acres of land.||Should be an A-grade asset.|
|4||Asset Location||1||1||Andheri East is one of the largest commercial micro-markets in the city. and has unparalleled connectivity like 300m from the Metro station, 1.5Km from the airport, and 4.3Kms from Andheri Station.||Should be a business district/SEZ/Industrial Hub|
|5||Lock-In||0.5||0.5||3 + 5 Years (It’s a 5 + 5 years lock-in but we are already in to the 2nd year of the agreement hence balance 3 + 5 years)||3+ years recommended|
|Tenant agreement signed or LOI yet.||0.5||0.5||Yes, signed||The agreement should be signed & registered.|
|6||Duration||0.5||0.5||3 + 5 + 5 Years||5+ years recommended|
|Increment||0.5||0.25||15% after 3 years||5% per year or 15% every 3 years is recommended|
|7||Rent Start Date||0.5||0.5||Immediate||Immediate recommended.|
|Deposit||0.5||0.5||6 months||6 months recommended.|
|8||ROI (Rental Yield)||1||1||9.2 %||8% + is recommended.|
|9||Capital Appreciation||0.5||0||Targeted 5% – There’s significant supply that is coming in the market so whether we will get the desired appreciation or not, only time will tell.||Industrial – 2 to 3%, Offices – 5%|
|Exit Options & Exit Load/Hurdle rate||0.5||0.25||Ownership is the form of shares which is in Demat format. The exit will take 4-6 months after the initial 1 year lock-in period.
Hurdle rate of 20% over 12% IRR (Internal Rate of Return) which only includes capital appreciation and income from rentals. Assuming you make 14 rupees on investment of 100 per year. You will be charged 20% of Rs.2 (Over and above 12% return) which is 40 paise.
|For exit, there should be no lock-in.
Exit should be possible immediately.
The hurdle rate should only be on Capital appreciation of more than 8% and should not include income from rentals.
|10||Asset Manager||0.5||0.5||MYRE – My Real Estate is a new age, tech-driven investment platform for commercial real estate investments. They’ve had 4 stellar properties that were funded in record time. Backed by Morphogenesis – one of India’s largest architectural firms, MYRE is one of the top asset managers in the fractional ownership space.||Asset Management companies should be experienced and backed by the right resources to fetch value transactions on the table & also provide timely exits with good returns. They should be tech-enabled and investor-friendly in the form of structuring & execution.|
|Remarks||0.5||0.5||The Time Square pre-leased proposal checks all the right boxes in terms of the tenant, duration, lock-in, and other parameters as shared above. We would recommend you to invest in this asset if you have a 5-7 year investment horizon.||Our 2 paise (Or cents if you like) on the overall proposal.|
Why Invest in Fractional Ownership Properties?
Here’s a quick comparison of fractional ownership opportunities vs other asset classes. If you are looking at stable recurring income with a possible upside/appreciation on the principle, fractional ownership is highly recommended. And as given above, this is an excellent opportunity.
What the above chart does not mention is liquidity – Commercial CRE scores low on that. While one could argue that the shares are in Demat format – what we mean is that exiting it would still take about 4-6 months.
The ecosystem is still developing – probably in a year or so we would be able to trade your shares as easily as stocks – that’s when we could truly add ‘liquidity’ as a benefit.
For any more questions, you may have, please call Raj Shah on 9820855056 or Rishi Dedhia on 9930881999
This is an excellent opportunity and we recommend you invest. To do that, please call us:
CALL 9820855056 or 9930881999
For any questions, you may have on fractional ownership click here to view https://investinpreleased.com/fractional-ownership/fractional-ownership-faqs-all-questions-that-may-cross-your-mind-or-not-answered/
For this opportunity specifically, you can download the below documents.
- How it Works – How will the entire investment process work?
- Tax Note – Taxation-related questions.
- MYRE Capital Firm Profile – Why can we trust them?
- Financial Model – Download the financial model to understand the entire working on the opportunity. What if you get only 3% appreciation or 7% – you’ll be able to play around with the numbers and evaluate all kinds of scenarios.
- Investment Memo – Detailed explanation in the opportunity.