ICON REAL ESTATE FUND III – SUURPELTO

STRATEGY


Unlike our other funds, the ICON Real Estate Fund III – Suurpelto consists of only one site, which is a 100% development site. The focus of the fund is on a project in the central quarter of the Suurpelto district in Espoo. After a legally valid alternation of land use plan the central quarter affords building rights for approximately 25,000 square metres of floor area. The completed real estate will include business premises, four housing blocks and an indoor car park. After the project is finished, its sale price will rise to more than MEUR 100. The project will be constructed in two phases. In the first phase is scheduled for completion in 2018 and the second phase in 2019.

ICON Real Estate Fund III – Suurpelto owns approximately two thirds of the project. ICON Real Estate Fund II owns the rest. ICON Real Estate Fund III – Suurpelto is primarily intended for institutions and other professional investors. Minimum investment is EUR 250,000 and the investment period is approximately four years. We are seeking a total of MEUR 12 capital for the fund. The fund’s duration will end when the properties are complete.

INVESTMENT COMMITMENTS MADE:

ICON Real Estate Fund II LP: MEUR 4.0 (32%)
ICON Board of Directors: EUR 500,000 – MEUR 1.1 (11%)
MEUR 6.9 (57%) remains available for subscription to the fund.

PROJECT


The Suurpelto district in Espoo will provide owner-occupied, rented and right-of-occupancy apartments for about 15,000 residents. There are also plans to create up to 5,000 jobs in the area.

A great deal of development work has taken place in Suurpelto over the last few years. In 2015, the district got a new library and school, and the ICON project will contribute further to the area’s development. The centre of Helsinki is just a 25–30 minute bus ride away from Suurpelto. After the Länsimetro underground route is finished, you will be able to reach central Helsinki in just 20 minutes. In short, public transport in the district is extremely good. In addition, the ICON project will bring comprehensive services to the district, making Suurpelto an attractive area for buyers.

The city concept for the Suurpelto district aspires to sustainable solutions that will increase the energy efficiency of both construction and the society as a whole. All the housing companies will be included in an automatic waste collection system running underground.

The entire Suurpelto area totals 325 hectares, with a total of approximately one million floor square metres of building rights. The planning stage was completed in 2015. The district has a total of seven planned areas, of which Areas 1 and 2 already have a legally binding detailed plan. The infrastructure of these areas is mostly ready. Our plot is located in Area 1.

www-kohde-suurpelto-wire

THE PROGRESS OF THE PROJECT


The deed of sale was signed on 1 December 2014. The building project and property is owned by the ICON Real Estate Fund III – Suurpelto. The property’s mortgage deeds will remain with the fund as security. They will be stored by a third party, such as a bank. The instruments of incorporation have been compiled in cooperation with the law office Kuhanen, Asikainen & Kanerva.

Financing for the duration of construction is applied for through what is known in Finland as a RS loan, which offers the buyer protection during the construction stage, as decreed by the Housing Transactions Act (1994/843). Another alternative is to sell the housing and the business premises before they are complete, for example, to an institution or equivalent investor. Contractors were invited to tender in the period from Q3/2016 to Q1/2017. Building is due to begin in the spring of 2017. The project is constructed in two phases. The first phase consists of three housing blocks and one indoor parking space. This phase is scheduled to be completed in late 2018. In the second phase a 20 floor tower is build and scheduled to be completed in 2019.

HOW PROFIT IS FORMED


The fund’s predicted profit is approximately 19% a year. If market prices fall by 5%, profit will amount to 13.56% p.a., i.e. 54.27% in total, whereas if prices fall by 17.8%, profit will be 0%, meaning that investors recover the capital they invested.

At the current market price, the sale price of the entire complex will be MEUR 100 in total which consists of:
– sale price of apartments MEUR 90,5
– business premises MEUR 4.5
– parking spaces MEUR 5.0.

In short, the project will generate profit amounting to MEUR 13, of which MEUR 3.8 will go to ICON Real Estate Funds and the remaining MEUR 9.2 to the investors.

KEY FACTS


Fund: ICON Real Estate Fund III – Suurpelto Ky
Investment objects: Suurpelto
Period: approximately four years
Minimum investment: EUR 250,000
Security: All the mortgage deeds of the investment object were controlled by the fund until building commenced. The fund also has the shares of a housing company under its immediate control.
Profit target for invested capital: 6% (19.16% p.a.)
Project sales value: approximately MEUR 100
Subscription fee: 0 %
Management fee: 0,5 % p.a.
Success fee: 25 %
Realiser of project: ICON Real Estate Funds Ltd

WAYS TO INVEST


There are five ways to invest in our project in the Suurpelto district in Espoo:

ICON Real Estate Fund II
Find out more about investing in ICON Real Estate Fund II

ICON Real Estate Fund III – Suurpelto
The ICON Real Estate Fund III – Suurpelto is available for subscription.

Convertible bond
The assets are invested in the convertible bond of the ICON Real Estate Fund III – Suurpelto, with an interest of 3% p.a., plus 3% p.a. when the project generates profit of at least MEUR 3. Minimum investment is MEUR 1 and the investment period is approximately four years. As security, the convertible bond has the mortgage deeds of the landed property covering the amount of the loan. The creditor will have possession of the mortgage deeds.

After the RS project (where the property buyer is protected during the construction stage by law) has begun, the security will be traded for the shares of the housing company (i.e. RS-5 certificates) covering the amount of the loan. The creditor will have possession of the shares. Securities will be returned as apartments are sold. The predicted profit for the convertible bond are 6% p.a. Interest will be paid as a whole when the loan is repaid, i.e. after the project has been completed in approximately four years.

Combo
Combo consists of a fund investment together with a convertible bond. Of the assets, 50% will be invested in the ICON REF III – Suurpelto fund and 50% in the convertible bond. Minimum investment is MEUR 1 and the investment period is approximately four years. The predicted profit of the fund investment is 19% p.a., whereas the predicted profit of the convertible bond are 6% p.a. The total predicted profit is 12.5% p.a. To find out more about the securities of the fund investment, read the section Key Facts, and to learn more about the securities of the convertible bond, read the section Convertible Bond.

Buying the housing production / business premises
nvestors can choose either a whole housing block or half of it (debt-free issue price EUR 4,400 per net room area). Reservation fee is 10% of the debt-free price. It is paid on trading day and the remaining sum shall be paid according to the RS payment schedule. The debt-free issue price of the business premises is EUR 14,300,000, for which the initial profit will be 7% p.a. The down payment (10%) will be paid on trading day and the remaining sum shall be paid according to the construction payment schedule.

 


ICON-www-kohteet_0007_Suurpelto

PROCESS CHART

prosessikaavio-1-1

 

prosessikaavio-3-1

prosessikaavio-4-1

prosessikaavio-5-1

prosessikaavio-6-1

prosessikaavio-7-1