Why invest in commercial real estate & net lease?

Real estate is, and will continue to be, a dominant means of investing and saving. Most real estate is comprised of owner-occupied residential real estate, frequently acquired as part of a mortgage. On this basis residential real estate represents the lion’s share of most people’s wealth, while at the same time not being treated as an “investment”. Tying a large disproportionate amount of one’s wealth to residential real estate and debt carries a number of risks, which mortgage borrowers are rarely encouraged to question.
The team at Crowdipy aims to help people make more informed real estate investment decisions by providing clear information, presented in a transparent and unambiguous manner. With excessive investment already available in residential real estate, Crowdipy’s focus is on commercial real estate, and specifically the single-tenant sector. The single-tenant sector, comprising commercial property fully leased to one company, is very well suited for long term income investments, as set out below.
Commercial real estate offers many investment benefits that are simply not available in residential investments. Some examples are as follows:

  • Leases in commercial real estate are longer than residential leases (averaging 10+ years for single-tenant buildings)
  • The commercial real estate market is very liquid and the rate of change of ownership (velocity) is greater than that in the real estate market
  • Inflation-tied lease contracts and rents
  • Tenants hold most maintenance obligations
  • Economise of scale
  • Secure leases with larger corporate entities

The single-tenant sector (like much of the wider commercial sector) has been almost exclusively accessible through the intermediation of institutional investors. The real estate team at Crowdipy offer a unique blend of experience and expertise in relation to the single-tenant market. They can offer the best risk-adjusted investment opportunities to the wider public.

Institutional investors, including pension funds and insurance companies are ultimately intermediaries for people / individual investors who are always and everywhere the ultimate source of capital. Their funds are pooled together and ultimately channelled through layer after layer of intermediation to end up in one of the many real estate investment vehicles that ultimately hold the assets. This default arrangement suffers from two major defects:

  • 1. Leakage of investment funds (“layering of fees”): each intermediary charges their own fees for management, maintenance of their platform in order to cover their (frequently very large) office, staff, internal compliance and structuring costs. These limit the amount of distributable income available for the individual investors.
  • 2. Performance related fees (with downside safety): various investment managers take significant cuts of the performance of each investment. The result is a considerably reduced investment benefit for the investors, who despite providing the all-important investment capital, are left at the bottom of the pecking order.

The team at Crowdipy have a dual mandate:

  • 01to “unmask” the traditional routes to commercial property investment for individuals in the form of institutional investors and
  • 02 to provide a new, cost effective platform that taps into this lucrative market by removing unnecessary layers of management and cost, as well as by automating certain features of intermediation through the use of technology.

Track record of the Victorios team behind Crowdipy

Crowdipy is part of Victorios, a dedicated European single-tenant real estate investment specialist focussing on all commercial sectors, including retail, industrial & logistics, office and specialised real estate. Victorios sources opportunities directly with corporate real estate occupiers, developers and investors, helping them unlock the full potential of their bus iness and investment.

Victorios has advised on over €350 million of real estate transactions across Europe in the past three years, having worked successfully with a number of prominent international investors in the single-tenant, net-lease sector. We have worked with prominent international companies including, Tesco, Renault, H&M, and General Electric.

The Victorios team collectively hold over 40 years experience in the field, especially in the net-lease, single-tenant sector. They understand the needs of clients and provide innovative solutions to individual investment challenges.

How does it compare to other forms of long-term investment?

Crowdipy offers a credible alternative to more traditional investment and savings options. Below is a comparison of some of the most common savings and investment options:

Crowdipy Stocks Bonds Bank Managed funds
Expected returns* 10% to 14% -100% to ∞ 0.5% - 5% 0% - 0.5% -/+ 0%
Type of instrument Debt; Equity; Mix Equity Debt Debt Equity
Level of control of investment Equity High High High High
Transparency and proactivity of seller High Low Low Low Low
Engagement with investment managers High Intermediate/High Low Low Low

* please note returns are based on broad estimates and could vary significantly relative to the figures reported in the table.

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