The WOOD & Company real estate funds have been able to follow the positive trend of the past year, when clients enjoyed above-standard returns. This year, they are also aiming to achieve the targeted annual returns of 8-10 percent, with the sub-fund focused on office buildings (WOOD & Company Office Sub-fund) earning a return of 7.34% in the Czech Crown class as of Sep 30, 2023, and the sub-fund focused on retail centres (WOOD & Company Retail sub-fund) even 8.88% in the Crown class over the same period. This year, the investment group has expanded its product portfolio with additional real estate sub-funds. With the first WOOD & Co. Logistics Sub-fund, it entered the logistics and industrial park development segment. The second new fund, WOOD & Company Real Estate - Open-end Mutual Fund, is designed for retail investors and offers them the opportunity to participate in the strong portfolio of established real estate funds of WOOD & Co.
Real estate has an irreplaceable importance in the investor's portfolio in the form of a stabilizing anchor limiting risks. Investments in real estate provide a stable return and can protect against inflation in the medium and long term by indexing lease contracts or turnover rents in the case of retail centres.
Wood & Company Office Sub-fund has 11 office properties in its portfolio in Prague, Bratislava, and Warsaw. Their total lettable area is 218,300 sq. m., the value of assets under management is CZK 5.655 billion and net operating profit (NOI) is CZK 891.5 million. The average occupancy of the buildings in the portfolio is 93.37%.
The WOOD & Company Office Sub-fund yielded 7.34% in the Crown class as of 30 September 2023. The Euro class has appreciated by 4.83% over the past three quarters. The average annual return since the sub-fund's inception in 2017 is 11.22% and 11.07% in the Crown and Euro classes, respectively.
The latest acquisition of the office sub-fund was the Green Point building in Prague's Smíchov district, and the second phase of the Lakeside Office Park project in Bratislava with 15,200 sq. m. of lettable area became part of the assets in August 2022. This building was fully occupied by the spring of 2023. A second office building in Warsaw is in the final stage of acquisition.
"For our office sub-fund, we buy established office buildings with growth potential, in good locations, with a broad and high-quality portfolio of tenants. The buildings generate stable cash flow. In the coming years, new office construction will be very limited in the markets where we operate, which we believe will lead to further rental growth. We are actively taking care of all the buildings in our fund and continuously investing in them," says Jiří Hrbáček, Portfolio Manager and Vice-Chairman of the Board of WOOD & Company.
The WOOD & Company Retail sub-fund manages the Harfa Office Park office building and the Prague retail centres Galeria Harfa and Centrum Krakov. The lettable area of these assets is 77,500 sq. m., the value of the assets is CZK 2.598 billion and the net operating profit (NOI) is CZK 385.8 million. The average occupancy rate of the buildings in the sub-fund is 94.89%.
The WOOD & Company Retail sub-fund's return for the first nine months of 2023 was 8.88% in the Crown class. The Euro class of the retail sub-fund appreciated by 6.69% over the same period. The average annual return since the inception of the sub-fund is 12.49% in the crown class and 14.81% in the Euro class.
"For our office sub-fund, we buy established office buildings with growth potential, in good locations, with a broad and high-quality portfolio of tenants. The buildings generate stable cash flow. In the coming years, new office construction will be very limited in the markets where we operate, which we believe will lead to further rental growth. We are actively taking care of all the buildings in our fund and continuously investing in them," says Jiří Hrbáček, Portfolio Manager and Vice-Chairman of the Board of WOOD & Company.
The WOOD & Company Retail sub-fund manages the Harfa Office Park office building and the Prague retail centres Galeria Harfa and Centrum Krakov. The lettable area of these assets is 77,500 sq. m., the value of the assets is CZK 2.598 billion and the net operating profit (NOI) is CZK 385.8 million. The average occupancy rate of the buildings in the sub-fund is 94.89%.
The WOOD & Company Retail sub-fund's return for the first nine months of 2023 was 8.88% in the Crown class. The Euro class of the retail sub-fund appreciated by 6.69% over the same period. The average annual return since the inception of the sub-fund is 12.49% in the crown class and 14.81% in the Euro class.
WOOD & Company AUP Bratislava Sub-fund was established in 2021 to acquire the premium Bratislava shopping centre Aupark. It is the only asset of this sub-fund, which, unlike the previous two capitalisation sub-funds, pays a regular dividend. The total lettable area of the shopping centre is 59,600 sq. m., and a stage of expansion of the centre by approximately 7,000 sq. m. has been initiated. This will further improve the center's fashion offering.
The yield of the WOOD & Company AUP Bratislava sub-fund since its inception is 19.47%. The yield for the last 12 months including dividends is 8.49% in the Euro class and 11.86% in the Crown class.
WOOD & Co. Logistics Sub-fund is the latest addition to the WOOD & Co real estate sub-fund family. In November 2023, the sub-fund started preparations for the acquisition of the first logistics development project in Poland, 7R Park Tczew III near Gdańsk. "We want to focus on the construction of logistics parks that offer interesting yields, are well financed, have quality tenants, and offer investors a certain degree of stability and predictability, which is not so common in the current world," Hrbáček adds. WOOD & Co. Logistics sub-fund is designed for qualified investors and targets an annual return of 15% in the euro class with an investment horizon of at least three years. The sub-fund intends to gradually expand its investments to other logistics projects in Central Europe.
WOOD & Company Real Estate - open-end mutual fund is a mutual fund managed by the investment company WOOD & Company. It is designed for retail clients who can participate in the strong portfolio, the experience of the best commercial real estate experts, and the attractive investments of the WOOD & Company Real Estate Fund, SICAV, which is one of the best performing real estate funds in the Czech Republic and Slovakia.
The sub-fund invests alongside existing sub-funds in real estate projects in the segment of office buildings, retail centres, and industrial properties in the Czech Republic, Slovakia, and Poland. The minimum investment in this retail fund is CZK 100 and it can be made through the online investment platform opPortunity by Portu. The expected net annual return is targeted at 7-9% over the long term. As of 31 October 2023, the fund has appreciated by 4.2% in the first half year of its operation in the Crown class and retail investors have so far invested CZK 200m in the fund. "Thanks to synergies at all levels of the investment cycle, the fund has been able to stick to its targets since its inception. Therefore, we believe that it will soon rank among the leading real estate funds for retail investors," Hrbáček concludes.