FIRST
DOMESTIC HOUSING OPEN-ENDED REAL ESTATE INVESTMENT FUND
Name
of the Fund:
First
Domestic Housing Open Ended Real Estate Investment Fund
Abbreviation:
First Domestic Housing Fund (EHLA)
Type
of the Fund:
Open
ended real estate fund
Maturiry
of the Fund:
Indefinite
from 01. January 2000
Launching
amount of assets
521.460.000
HUF, 2.000.000 USD
INVESTMENT
GOALS AND INVESTMENT POLICY
Goals
The
Fund will use its initial equity (i.e. the multiplication of the net asset
value per one investment bill and the number of outstanding investment bills)
partly for the activities typical of real estate funds, such as the purchase of
land, the purchase and renovation of properties ready for use or under
construction. It may effect projects of its own on the land so purchased, and
will sell or give the rest on a lease at appropriate dates. In the utilisation
of the completed properties, it will aim at the optimum ratios of sales,
renting and leasing.
Principles
of the investment policy of the Fund
a)
The main objective of the investment policy of the fund is to continuously and
securely increase the net asset value of the fund by establishing a valuable
real estate portfolio, value added investments on the real estates and the
utilisation of the completed properties.
b)
The fund invests its equity into land, completed real estates and real estates
under construction.
c)
Third parties can assists to the Fund with the facility management of the
properties.
d)
The Fund can contract future agreements for the buying or sale of the
properties or it can sell the properties for hire purchase.
POSSIBLE
ELEMENTS OF THE PORTFOLIO, INVESTMENT RATES
The
Fund plans to purchase properties which represent high values, and are able to
generate high yields according to the estimates of the Fund's portfolio managers.
The
Fund Manager will manage the Fund's portfolio in a way that takes advantage of
the current market opportunities as efficiently as possible.
The
planned composition of the Fund's portfolio is as follows:
|
a/
Residential buildings:
|
max.
80%
|
|
b/
Commercial properties (business centres, hotels, castles)
|
max.
80%
|
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c/
Allotments, land:
|
max.
80%
|
|
d/
Liquid assets (cash, current accounts, treasury bills, up to 3 months deposits)
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min.
15%
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As
the Hungarian real estate market is difficult to project we can not establish a
strict guidelines for the real estate portfolio.
The
changes in the Hungarian real estate market can’t be predicted in the
long run, so the composition of the portfolio also can’t de described at
this point; it would be a non-professional promise. In case of the market, and
regulatory changes, the proportional composition of the portfolio – in
order to accelerate the profitability of the fund and therefore serve the
interest of the investors- can be modified based on the following.
In
case the demand for a certain type of real estate, their prices, or the
revenues from their sale drops significantly, and it does not ensure adequate
yield, or in case certain regulations hinder their acquisition, or if not
predictable increases of fees and taxation occurs, the Fund does not want to
deal with the purchase of these real estates or will decrease their proportion
in the portfolio. In case in the given market condition, the given real estate
type is not getting purchased due to the fact that it would exceed the above
mentioned % proportion, and therefore the Fund would miss out on an
opportunity, in this case the Fund manager can increase the % proportion in the
portfolio.
According
to law, real estates under construction can’t exceed 20% of the
portfolio. According to the current regulations, the Fund wants to invest in
the acquisition and completion of not yet completed real estates.
LIMITATIONS
The
Fund’s real estate portfolio contains at least 10 real estates, and none
has a purchase price that individually exceeds 15% of the own capital of the
Fund. A real estate is described as a property that is registered in the real
estate registry with a topographical number. According to law, real estates
under construction can’t exceed 20% of the portfolio. According to the
current regulations, the Fund wants to invest in the acquisition and completion
of not yet completed real estates.
The
not invested funds have to be kept in cash, savings account or certificate of
deposit or in treasury bills – as well as in liquid assets that are
determined by the regulations.
The
Fund manager can take a loan up to 10% of the net asset value on the account of
the capital of open-end fund, for a maximum of 60 days maturity in order to buy
back the its open end investment certificates.
The
fund manager can’t hypothecate the fund’s own capital or it
can’t encumber it in any other way, and in the name of the fund it
can’t issue bonds or any certificates that involve a credit relationship.
Except for the purchase of the securities that involve a credit relationship,
the fund manager can’t offer a loan from the fund’s own capital.
INVESTORS
Domestic
currency clients can currently purchase the investment certificates.
The
fund manager plans to sell the investment certificates to foreign currency
clients as well. Parallel with the approval of this prospectus, the fund
manager is requiring the acquisition the proper MNB (Hungarian National Bank)
–as foreign currency authority- license. After obtaining the license
the fund manager- without any special APTF (State Money and Capital Markets
Supervision) authorization- will issue investment notes for foreign currency
clients.
Method
of trading (sell-buy back)
The
fund manager started public sale and buy back of the investment notes starting
January 4, 2000. The fund manager appoints Quaestor Securities Co. as
distributor
of selling and buy-back transactions.
Method
of purchasing investment certificates
During
the continuous trading of the investment notes, the investors can purchase the
investment notes by signing the account-contract with the distributor, and the
contract to authorize the purchase of the investment notes, and by paying the
purchase price. The investors have to either personally or through an appointed
trustee deliver the commission based contracts to the trading place. The
purchase price indicated on the contract, and the commission fees have to be
paid by cash at the place of the purchase or by a transfer into the
distributor‘s account. The distributor executes the trade on the day of
the actual crediting of the amount (purchase price and commission fees) on
distributor‘s account, or in case of payment at the purchase place, two
days after the payment was made. In case of orders- where on the purchase
contract the purchase price is lower than the wired and credited amount, the
distributor will execute the order in the credited amount.
Method
of repurchase of the
investment
notes
During
the continuous trading period of the investment notes, the investors can resale
their investment notes by filling out and signing an authorization contract,
and by returning the investment note to the distributor.
The
distributor forwards the investment notes to the fund manager on the day of
receiving the investment notes. The fund manager is required to repurchase the
investment notes through the distributor within 90 days starting from the day
the investor returned the investment notes) in such a way that it examines the
liquidity of the fund and it makes arrangements for the purchase of the assets
of the portfolio. The fund manager executes the repurchase order at the price
of the day when the order was made (day T), which price is published two days
after the order was made (on T + 2 days), on T+2days (two days later than the
order was made.
The
investors can deliver the order for resale either personally or through an
appointed trustee to the place of the purchase.
In
case the amount of the investor’s and the at the distributor deposited
investment notes is less,
-
than the amount of investment notes indicated on the repurchase contract by the
investor,
-
or the repurchase price indicated on the repurchase contract and the daily
trading price further the amount of investment notes based on the repurchase
commission, than the distributor executes the repurchase order of the investor
to the maximum extent, to the total amount of investment notes owned by the
investor.
In
case the fund manager can’t execute the repurchase order within 90 days,
than according to the Law the investment fund ceases, about which the fund
manager makes an announcement.
Trading
commission
The
distributor charges a selling and buying commission, which is at both selling
and at buying 0.002% of the selling/purchase price of the investment notes.
These commissions are due at the sale or repurchase of the investment notes.
The amount of commission can change in the favor of the client without any
notice.
Trading
price
The
trading price is the net asset value per certificate for a given day (day T),
which is determined by the deposit manager on T+1 day, and announced by the
fund manager on T+2 day.
Construction
Industry and Real Estate Market Plans of the Quaestor Group
When
the Quaestor Group was shaping its entrepreneurial philosophy, it laid the main
emphasis on the strategy of long-term development.
Substantial
changes have taken place in the structure of demand on the construction market
in the last few years. Central building projects have been considerably cut,
and large construction projects have essentially not been implemented. The
developments of the big industries have come to a halt, and mass housing
construction has practically terminated.
Following
the political changes, the prices of real estate have continually increased, to
an extent by far exceeding that of inflation. This is especially true in the
case of office buildings and office-type properties. The reason for this is the
increase in the number of domestic enterprises and companies operating with
foreign participation, as well as the increase in the demand created by them
which had not changed substantially up to 1992. The situation has changed by
now. A continuous increase in demand is expected in the area of the
infrastructure but no considerably change may be expected on the market of
office construction. Development in this field has slowed down and we do not
expect future growth. Office costs in the Capital do not appear low even by
international standards, and the increase in office rentals has already been
considerably lower than the average rate of inflation in recent years.
There
is substantial demand for lower price category properties, primarily on the
part of small and medium-sized companies, as well as private entrepreneurs.
Although we can rely only on estimates in this respect, the total selling space
of retail units is likely to amount to only half or two thirds of the value
characteristic of advanced European countries, in spite of the development in
the past period.
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