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Real estate funds

The door was opened for MPC Capital to trade with Dutch real estate funds as long as ten years ago. In 1995, the first closed-end fund was designed and sold with a Dutch office property comprising 2,200 square metres. Today, the real estate of all funds available from MPC Capital covers around 2,100,000 square metres. By the end of 2005, the issuing house was involved with a total of 90 funds in 277 properties, the majority being office properties. The properties are located in the Netherlands, Portugal, Germany, the USA , Canada, Austria and England. When designing each fund, strictly defined quality criteria are the most important factors for MPC Capital AG. The investors benefit from this in the long term. This also applies to genuine innovation, which in 2005, MPC Capital designed for the area of real estate investments: with the Real Estate Opportunity America Fund, MPC Capital opened up a new class of assets to private investors, which hitherto had been the exclusive preserve of institutional investors and very wealthy private customers. The investment, which was designed as an umbrella fund, invests in three North American Real Estate Opportunity Funds specialising in real estate opportunity investments.

Portfolio classic closed-end real estate funds
Investors who invest in classic closed-end real estate funds have the opportunity to participate worldwide in lucrative real estate. A professional fund and real estate management team takes on the tasks for investors of selecting, assessing, financing and ongoing management of the investment. The focus of these investments is generally office properties in first-rate locations with tenants with excellent financial standing - so-called core investments. Long-term tenancy agreements with weighted time remaining until expiry of between eight and ten years ensure a high degree of reliability for the development of the distribution of the fund calculated for between ten and twelve years. This constant and continual distribution flow and the independence from developments on the stock markets and money markets are the features which have made real estate investments a permanent component in the personal asset structure of investors. By subscribing as little as EUR 10,000, good return prospects of this sort can be integrated into the personal portfolio.

Based on treaties on avoidance of double taxation, investors have the benefit of an extremely stable tax framework. Income that is raised abroad is often subject to lower rates of taxation abroad, as double taxation avoidance treaties tend to regulate taxation using the "situs" principle. This places the tax right in the country of the location of the real estate and not in the investors’ country of residence. Income from foreign real estate investments is not, for the most part, subject to taxation in Germany. The income is simply added on in the calculation of the tax rate of income to be taxed domestically ("saving clause as to progression").

MPC Capital's experience and competence can be found in 90 real estate funds, which are invested in 277 properties in attractive locations in the Netherlands, Germany, Portugal, the USA, Austria, England and Canada. MPC Capital has been developing, initiating and selling traditional closed-end real estate funds since 1995. The total investment volume of the real estate funds is almost EUR 5 billion. In 2005, eleven investments with an equity volume of EUR 409 million and an investment volume of more than EUR 800 million were initiated.

In 2005, MPC Capital kept its market share of closed-end real estate funds almost constant at 9.1% and consolidated its market leadership in Germany. In terms of the Holland and Canada funds, the company asserted its excellent position with market shares of 43.8% and 64.1% respectively.

Holland, Canada and England funds in 2005
In 2005, the MPC Capital Group issued two Dutch real estate funds for Dutch investors and seven other Holland funds in Germany and Austria. The global situation in terms of the real estate markets has considerably limited the availability of attractive real estate.

The range of Canada funds was continued at the start of 2005 with the seventh and eighth Canada funds. These were sold in the first six months of the financial year.

At the end of the 2005 reporting year, MPC Capital initiated another attractive investment for investors in the heart of London, the second largest real estate market in Europe. The fund property "256 Strand" is located directly adjacent to the Royal Courts of Justice. The " class A " office building with over 7,000 square metres is leased in its entirety to a famous American legal chambers. The weighted time remaining until expiry is around 16 years. The annual dividend is calculated with 6.5%.

New development of Real Estate Opportunity America
MPC Capital was the first German supplier in the reporting year to expand the successful traditional real estate funds with investments in long-term leased properties by introducing a new funds concept. The Real Estate Opportunity America Fund combined the security components of real estate investments and the attractive income possibilities of active management.

The investment, which was conceived as an umbrella fund, invested in three North American real estate opportunity funds, which have specialised in real estate investments offering excellent prospects. They are real estate properties with the potential for development and an increase in value. Possible investment objectives are standard properties, which are newly positioned, renovated, re-leased or which should be allocated to another use, as well as project developments. Well-known real estate experts with impressive track records manage these three target funds in a professional manner.

Due to the high minimum investment of around USD 10 million, this asset class has hitherto generally speaking been the preserve of institutional investors or very wealthy private customers. MPC Capital is offering German private investors the exclusive opportunity to invest in such funds with investments starting at USD 10,000 and to participate in this real estate potential which is rich in opportunities. The term of the fund, with a forecast average capital lock-up of around 4.5 years, is expected to be eight years.

The fund volume is USD 168 million, of which at the reporting date of December 31, 2005 USD 156.5 million (EUR 117.4 million) has already been syndicated.