Youngfield’s OCPs are a small team of highly specialized and experienced operators in the highly undervalued German real estate market. Led by Finbarr Flahive, Youngfield’s German partner company has very close contacts there in banking and finance, making it possible to identify and close opportunities before they even hit the market. However, it is the entire business model that makes a lot of money. Finbarr’s team of accountants, tax experts, lawyers, investment managers, bankers and property managers come together to make big money from commercial real estate investments. Here are the four principles Youngfield uses to ensure great returns.
This is where many investors pool their money to buy a property that is much more expensive than any of them could individually afford. A German public limited company is set up with a shareholders’ agreement. Foreign investors have equal property rights before the law in Germany. The company owns 100% of the property and there is only one property per company. Typical loan-to-value ratios are 65%.
2. Purchasing strategy
Substantial value is built into the purchase transaction due to the off-market purchase. Thanks to Youngfield’s German partner’s extensive network of contacts in banking and finance, the right opportunities can be seized quickly when they arise. Extensive legal and structural due diligence is performed on the property, which allows the management team to identify and quantify opportunities to increase returns during ownership and / or add value through repairs and improvements.
3. Property management
The typical investment will have been partly neglected and the management team will have to catch up to bring it to its potential. The Chemnitz Medical Center is a classic example of this where the vacant space was considerable when the property was taken over. In the months leading up to completion, agreements were made with new tenants to fill most of the vacant spaces at current market rents when completed. Although structurally perfect, the building was a bit run down and was refreshed as part of the strategy to seek modest rent improvements from existing tenants. The schedule of ongoing improvements is tracked monthly.
4. Sales strategy
The typical Youngfield agreement is for a term of five to seven years and this is specified in the shareholder agreement. As this period approaches, the market will be congratulated on a release which will come to an end during this period. Unlike paper titles, property does not sell overnight and property managers and the rest of the team will decide the best time to sell.