Understanding the Returns
Year 1 Year 2 Year 3 Gross Returns 9.46% 8.71% 8.97% Net Returns 8.40% 7.64% 7.90%
To download the ROI Calculator – please call Raj Shah on 9820855056 or Rishi Dedhia on 9930881999
Review of the Asset
Here’s a quick review of the Strata Hosur, Tamil Nadu Industrial Opportunity. Here’s the review break down:
No. Deal Evaluation Rating Out Of Rating Proposal Scenario Ideal Scenario 1 Tenant 1 1 Mattress & Furnishing Co – Profitable & backed by Sequoia. One of the innovations for the company has been its ability to compress and ship the mattress. Company with strong fundamentals 2 Tenant Industry Outlook 0.5 0.5 The mattress industry in India has grown at 11% CAGR for the last 5 years. 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 Tenant’s outflow is controlled + will be spending CAPEX on the property Ideally, rentals should be lower than market
The tenant should have ideally spent CAPEX on the property.
3 Asset Grade 1 1 Industrial built to suit by Avighna developers Should be an A grade asset. 4 Asset Location 1 1 Hosur – Tamil Nadu which is an existing industrial hub. Should be a business district/SEZ/Industrial Hub 5 Lock-In 0.5 0.5 5 Years 3+ years recommended Tenant agreement signed or LOI yet. 0.5 0 Only LOI signed. The agreement should be signed & registered. 6 Duration 0.5 0.5 10 Year duration 5+ years recommended Increment 0.5 0.25 3% annually 5% per year is recommended 7 Rent Start Date 0.5 0 Oct 2021 Immediate recommended. Deposit 0.5 0.5 5 months – which is okay. 6 months recommended. 8 ROI (Rental Yield) 1 1 8% 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 – 3%, Offices – 5% Exit Options & Exit Load/Hurdle rate 0.5 0.25 Ownership is the form of shares in Demat format. The exit will take 4-6 months after the initial 6 month lock-in period.
Hurdle rate of 20% over 8% CAGR (Compound Annual Growth Rate) which only includes capital appreciation and not income from rentals. Assuming you make 10 rupees on investment of 100 per year. You will be charged 20% of Rs.2 (Over and above 8% 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 Strata – Trendsetter in the fractional ownership space with a good track record. Asset Management company 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 0.25 When rental income is delayed there has to be an interest component equivalent of the FD rates at least to be credited to the investor. In this case, it may not be so hence this a minor drawback. Strata is backed by a sound team and hence their assets tend to be subscribed soon. We expect the same to happen here as well. Our 2 paise (Or cents if you like) on the overall proposal. Total 10 7.75
Frequently asked Questions
What is Fractional Ownership – See our Video below.
Fractional Ownership V/S other investments
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
Strata proposals get funded within 2-5 days of their launch. If this interests you, call us so that you don’t miss out.
Booking – 10%
Balance – 90% on draw down – End of April
To invest please call Raj Shah on 9820855056 or Rishi Dedhia on 9930881999