Fund

FUND FEATURES

Fund Name

Red Ribbon RE RISE India Real Estate Fund

Strategy
  • Income from Grade A commercial buildings
  • Capital Growth from new build and redevelopment
  • Regional focus on the Western and Northern regions
  • Real Estate fund with the ability to invest up to 25% in listed real estate related equities
Target Returns
  • Capital Growth share class ROI: 20% pa
  • Income share class ROI: 10% pa
Asset Allocation
  • New build including inner city slum redevelopment - up to 35%
  • Grade A commercial properties for rental yield - up to 35%
  • Listed equities of developers and suppliers to the real estate sector - up to 25%
  • Cash Reserve - up to 5%"
Sustainable Finance Disclosure Regulation (SFDR)
  • Investment criteria include targetting assets and local partners who make use of offsite construction technology and environmentally friendly techniques
  • In accordance with the Fund's stated investment objectives, the Fund's investments include targetting inner-city slum redevelopment projects
Target Equity

€200 million

Fund Advisor
Red Ribbon Fund Management Limited
Investment Advisor's Co-Sponsors & JV Partners
  • RE RISE GmbH
  • Hamberg Capital SARL
Asset Manager

Substantia Real Estate India Private Limited

AIFM/PM

Limestone Platform AS Luxembourg

Legal Structure
SICAV-SIF

Share Classes

  • Capital Growth - Institutional & Well-Informed
  • Income - Institutional & Well-Informed

 

Hurdle Rate
  • Capital Growth share class: 8% pa
  • Income share class: 6% pa

Subscription Fee

 

  • Institutional – 1% (not charged to the investor)
  • Well-informed – 5% (not charged to the investor)

 

Management Fee
  • Institutional – 1%
  • Well-informed – 2%

 


Performance Fees

  • Capital Growth classes: 10% (over 8%); 20% (over 16%); 30% (over 24%)
  • Income classes: 10% (over 6%); 20% (over 12%); 30% (over 18%)

Term

Closed-end: 8-year term with two 1-year extensions (8+1+1)

 

Currency

EUR, GBP and USD


Minimum Subscription

  • Institutional: €/£/$ 1,000,000
  • Well-informed: €/£/$ 125,000

 

Depository & Custodian

RBC Investor Services Bank S.A

Legal Advisor
GSK Stockmann
Auditor
Deloitte Luxembourg
Domicile
Luxembourg

Why Indian real estate?

001-knowledge-1 maroon

Market Opportunity

 

 

Indian real estate market is expected to reach $1 trillion by 2030, becoming the 3rd largest in the world.

002-framework-1 maroon

Regulatory Framework

 
 
Real Estate (Regulation and Development) Act 2016, RERA, is a landmark change in regulation bringing about consolidation, quality, and transparency, making it an ideal time to enter the market.
003-statistic-1 maroon

Attractive Risk / Return Profile

 

 

Investing directly in real estate projects alongside reputed developers and indirectly in listed equities, enables a weighted average return commensurate to the risk/return profile.

 

004-line-chart-1 maroon

Increasing Investment

 

 

Increase in transparency and returns have seen a surge in private investments in the sector, attracting institutional investments worth $14 billion between 2015-2019.

005-demand-1 maroon

Robust Demand

 



Growing economy has given a push to demand for office spaces and commercial properties.

Opportunities in all asset classes

Residential

  • National Capital Region (NCR) is expected to generate maximum demand in middle-income group (MIG) and high-income group (HIG)
  • Developers are focusing on affordable and mid-segment to cater to high demand
Opportunity: Shortage of 110 million units by 2022 according to the Government initiative “Housing For All by 2022”.

Commercial

  •  India’s commercial space absorption hit a new high of 69.4 million sq ft in 2019.
  • Business activity is shifting from Central Business Districts (CBDs) to Suburb Business Districts (SBDs), Tier 1 to Tier 2 cities
Opportunity: Office space leasing in the top eight cities is expected to cross 100 million square feet between 2018-20

Retail

  • The number of malls was 188 in 2012 against 246 in 2017
  • Private equity investments in the Indian retail assets increased by 15% in 2017 to reach US$800 million
     
Opportunity: India’s retail market is expected to increase by 60 per cent to reach $1.7 trillion by 2026

Equity

  •  The first Indian REIT was introduced in 2019 and as of July 2020, it outperfomed the Realty Index.
  • The Indian stock market is highly volatile but yields higher returns in the long run.
Opportunity: Listed equities have high short-term volatility but achieve better returns over the medium to long term.

GROWTH DRIVERS

Urbanisation

 
  • India’s urban population is expected to reach 543 million by 2025.
  • Every year 10 million people migrate to urban cities.
  • Shift from an agrarian economy to an industrial/service economy is underpinning urbanisation.
  • Rising income and employment opportunities have led to more urbanisation and more affordability for real estate in cities.

High Growth Economy

  • The Indian economy has grown to become the 5th largest economy with a GDP of 2.86 tn in 2019 from the 12th largest economy with a GDP of 1.34 tn in 2009.
  • Increasing purchasing power parity of the country from $13.36 in 2009 to $21.10 in 2019.
  • With a population growing by 25 million people born every year (the population of Australia) contributing to a middle class of 570 million (2021).
 

Policy Support

  • Progressive and structural policy changes through acts of parliament
  • One of the first countries to regulate real estate through RERA (Real Estate (Regulation and Development) Act 2016)
  • Relaxation of FDI norms to allow 100% ownership
  • “Housing For All 2022” scheme to promote affordable housing through tax incentives for developer
  • Regulator driven progressive framework for Real Estate Investment Trusts (REITs)
  • India ranked 34th in real estate transparency index (from 39th in 2015)

Easier Financing Access

  • Economic growth is increasing the household income, especially for middle and low income class.
  • In addition, the government has launched schemes to make credit access easier and tackle the lack of affordable housing.
  • The Credit Linked Subsidy Scheme (CLSS) to make available affordable credit for low-cost housing buyers.
  • The Beneficiary-Led Construction (BLC) offers a central assistance of INR 0.15 million per family for new structure or extension of existing units.
  • The Primary Lending Institutions (PLIs) credits interest subsidy credited straight to the borrower’s account thus reducing the overall burden of the housing loan.

Commercial Property Demand

Commercial Property Demand
  • Office market is being driven by growth in ITeS/IT, BFSI, consulting and manufacturing industries.
  • Grade-A office space absorption is expected to cross 700 million sq f by 2022, with Delhi-NCR contributing the most to this demand.
  • Business activity is shifting from CBDs to SBDs and Tier I to Tier II cities increasing the demand in Tier II cities
  • Co-working space across top seven cities reached 12 msf by end of 2019.

Residential Property Demand

 
Residential Property Supply
  • Rapid urbanisation, growth in population, rise in disposable income and easier access to finance has increased the demand for residential properties.
  • Housing loans account for more than half of retail loans
  • In February 2018, National Urban Housing Fund (NUHF) was approved with an outlay of 60,000 crore (US$ 9.27 billion).
  • Developers are now focussing on affordable and mid-range categories to meet the huge demand.
Sources: IBEF

INVESTMENT STRATEGY

Asset  Allocation

  • New build including inner-city slum redevelopment
  • Grade A commercial properties for rental yield
  • Listed equities of developers and suppliers to the real estate sector
  • Cash Reserve

Regions


INVESTMENT PROCESS

001-knowledge-1 maroon

Sourcing

Network and IPC

  • The fund team members have an extensive network from past experience and established relationships, which will be used  to identify developer partners

Developers:

  • The developers will provide a constant source of investment opportunities for the fund as active players in the market

Service Providers:

  • The fund has identified established and local service providers for legal due diligence and financial analysis, taking into consideration regional variations in real estate laws
002-framework-1 maroon

Selection Criteria

Developer Selection

  • Track record
  • Reputational Risk
  • Local expertise
  • Brand value
  • Partnership mindset

Project Feasibility study

  • Asset allocation
  • Deal size
  • Return on investment
  • Duration
  • Social impact
  • ESG parameters
  • Micro Market analysis
003-statistic-1 maroon

Detailed Due Diligence

Operational due diligence

  • KYC/UBO/PEP check
  • Balance Sheet analysis
  • Statutory compliance
  • Media/PR check

Asset due diligence

  • Title check and legal due diligence
  • Environmental Impact Assessment
  • Tenant covenant check
004-line-chart-1 maroon

Investment Committee

Presentation

  • Presentation of short-listed investment opportunities by the fund’s team
  • Discussion and Q&A among investment team and the committee

Approval/Rejection

  • Vote by investment committee’s members