Property One Group.
01. July 2021

Grow Your Real Estate Portfolio With Subordinated Mortgages

The purchase of real estate is generally a safe and profitable form of investment. Read on to find out what financing idea can enable your real estate portfolio to grow – with properties from your existing portfolio serving as collateral.

 

Loans Based on Your Existing Portfolio
Purchasing real estate is considered to be a relatively safe long-term capital investment. When you are financing investment properties, traditional credit institutions usually grant between 60 and 75% debt capital (in the form of a mortgage). The difference from the purchase price needs to be contributed as equity capital. However, there is usually only limited free equity available for a planned acquisition or construction project.

In such cases, Property One would be happy to assist you with a mortgage of up to 80% of the sustainable market value of your property portfolio.

This allows you to cover the financing gap between the loan committed by the traditional source and 80% of the market value of the property.

Additional capital can be released if you already have an existing real estate portfolio. This capital and the subordinated loan can in turn enable you to purchase an additional property.

The subordinated loan is secured by mortgage certificates on the properties from the existing real estate portfolio. Experience has shown that the loan can be repaid through the rental income generated.

Acquisitions and construction projects for which only limited free equity is available can be guaranteed, planned and implemented by means of the subordinated loan – assuming that you have an existing real estate portfolio (investment property with rental income).

 

Precise Planning Is Crucial
It is not possible to finance every property in this way. However, thanks to our real estate DNA, we can draw on in-depth market knowledge and combine our real estate expertise with financial market know-how for the benefit of borrowers. As your real estate and financing experts, we provide you with all the advice you need in the event of a planned acquisition, guaranteeing reliable and discreet review and handling of your transaction.

Property One Is Your Partner for Subordinated Real Estate Loans
Property One Investors AG has been authorised by FINMA as a manager of collective assets since December 2020.

Property One launched the ONE Real Estate Debt Fund in February 2021. This fund was created to allow real estate investors access to more financing opportunities using subordinated loans.

The loans granted by the ONE Real Estate Debt Fund are secured by mortgage certificates. The amount of the loans ranges between CHF 1 million and CHF 30 million. The maximum term of the loan is 36 months. Loans are granted for investment properties, bridge financing and construction projects (including those intended for sale), for commercial and residential use (excluding owner-occupied housing). All kinds of commercial uses are included (offices, sales, logistics, manufacturing, industry, hotels, etc.).

 

Example: Existing portfolio

 

Property One’s offering is aimed at professional players in the Swiss real estate market, including property owners, architects, project developers, building contractors, etc., and offers an additional option alongside conventional real estate financing.

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The granting of credit requires an in-depth assessment and approval of the counterparty, the security and the transaction as a whole.

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