A: ICON’s alternative investment funds are private equity funds in the form of a limited partnership, and these funds involve investing in real estate developments. ICON Real Estate Funds Ltd is a registered fund management company whose operations are supervised by the Finnish Financial Supervisory Authority (FIN-FSA). ICON’s alternative investment funds are usually project-specific with a minimum investment amount of EUR 250,000 and they are targeted at professional investors. ICON Real Estate Fund II is an exception, as it is also directed at non-professional investors and its minimum investment amount is EUR 100,000.
A: ICON Real Estate Funds Ltd is a registered fund management company, and its operations are supervised by the Finnish Financial Supervisory Authority (FIN-FSA). The valuations of its real estate are performed by Newsec, Catella and Realia Management. Its audit firm is PwC.
A: ICON’s Investment Council and Management Group examine the real estate market daily and look for new properties. For each real estate project, they make a proposal and strategy and present them to the Board of Directors. The Board of Directors makes the final decision on whether or not to invest.
A: Icon’s owners and key persons invest continually in our funds and bonds themselves. As capital becomes available from other projects it is reinvested. Our intention is to allow investors to join the funds we are ourselves investing in – as a result, we all have access to ever increasing and profitable real estate and we all reap maximum benefits.
A: Every one of our key persons has been personally involved in building new residential buildings and handling the process of changing an office building into a residential building, and therefore we are all well acquainted with real estate development as a strategy. We know the market and have known it for decades, and this has given us extremely functional operations models, procurement channels and insight into the best development projects. We also apply a very realistic approach and avoid making unnecessary sales pitches or creating unrealistic expectations of increased value. Everything we do is based on transparency, openness and honesty – after all, our own money is tied up in the same real estate we sell our customers.
A: Real estate investments are long-term. For this reason we do not recommend that you invest all your assets in this type of property. Instead, we recommend that you spread your investment portfolio evenly between three asset types:
1/3 real estate
1/3 bonds, cash or raw materials
ICON’s real estate funds are actively managed, and our Investment Council is always able to react extremely quickly if the market situation changes.
A: First we need to consider the factors that influence real estate prices.
A: Our Investment Council’s combined experience in the real estate investment sector is more than 100 years, and the average annual returns on invested capital amount to more than 13% per year.
The gross return for our first fund is over 25%. At the end of 2015, the average returns for this fund were more than 10% a year.
Our second fund has generated a return on investment of more than 11% for its investors in a couple of years when calculated by invested capital. Thanks to the real estate already acquired, this fund will most probably achieve an average yield of 13%.
A: If you make direct investments yourself it is often difficult or impossible to distribute your investment between different cities. Also, you will have to manage your properties yourself. When you invest in ICON funds, your investment will be well distributed and comprehensively protected from fluctuations in the real estate market. Unfavourable market developments will reduce only the returns from the fund.
A: Investments are made into private equity funds (limited partnership), which is a common operations model in this sector in Finland. Investors are silent partners. In operations based on the limited partnership model, all returns must be paid to the investors, which guarantees that the yield will not remain inside the company.
A: ICON specialises in real estate development. This is divided into two forms: conversion projects where we convert an old office building into new apartments and building s where we buy landed property (a plot) and build a new housing block on it. We always sell all our apartments during the building stage or soon after they have been completed.
You can find details about investments in our funds via the following links:
Fund I: ICON Real I LP’s strategy
Fund II: ICON Real Estate Fund II LP’s strategy
Fund III: ICON Real Estate Fund III – Suurpelto LP
A: Our funds include a management fee of 0.5%–1.2%. Subscription fees vary from 0–3% depending on the sum invested. Success fees are between 22% and 25% and are calculated from the development project’s net gain as follows:
A: The success fee is calculated from capital gain and net rental revenue.
EXAMPLE / purchasing real estate:
EUR 1,000,000 Purchase price
EUR 1,000,000 Building or renovation costs and other costs relating to the project
EUR 3,000,000 Debt-free sale price
EUR 1,000,000 RETURN
EUR 250,000 Success fee (25%)
EXAMPLE / net rental revenue (rent minus all the real estate’s costs = net rental revenue):
EUR 200,000 Net rental revenue from the property per year
EUR 50,000 Success fee (25%)
All the returns to investors presented on this website are target returns and net returns. This means that ICON’s fees have already been deducted from the gross return of, for example, 13%.
A: Often people who join a fund are planning to invest in it for a longer period, because real estate investments are very lucrative. Because returns are generated by being active, a longer investment perspective is quite natural in this sector. Nevertheless, situations in life may change and if for some reason you want to leave the fund, your share is naturally marketable on the secondary market. Be aware, however, that selling your share may not occur overnight. It is best to allow a few months for this.
A: In this market, renting does not result in a very large rate of return and therefore our strategy is to add value to our real estate by building or converting and then selling it. We carefully select our development projects from areas with migration gains, because this guarantees a demand for the dwellings. By selling the dwellings we have built or converted, we ensure our investors an exceptionally high yield. Our returns target for ICON Real Estate Fund II, for example, is more than 10% per year.
A: It is ICON’s target to double its investors’ invested capital in eight years. Thus, the annual average cumulative returns are 13% and are made up of the gains made by selling the developed real estate.
A: Taxes follow the normal taxation on capital if you are investing personally. If you are investing as a company, taxation follows normal corporation tax.