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Construction of micro-apartment complex in Germany

A report on micro-apartment construction project in Germany made by international broker Tranio.com

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Construction of micro-apartment complex in Germany

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  1. Digitisation of property purchase process

  2. Main idea: digitisationof property purchase process Classic model of property acquisition: Buying property as a finance instrument: A turn-key, all-in-one solution 1. Doing a research 2. Making an enquiry 3. Going on a property & location tour 4. Meeting lawyers and tax advisors 5. Choosing the property 6. Reserving the property 7. Signing the agreement 8. Waiting for the ownership record to be placed on the land register 1. Opening the website 2. Purchasing a share in a fund (1 share equals 1 apartment) 1. Less time spending 2. Less fees (no asset transfer tax, no legal fees)

  3. Idea application • Construction of micro-apartment complex in Germany • Sale of units as shares of a fund to foreigners. Initial conditions • High micro-apartment liquidity on a 20-year horizon. • 75% LTV (usually unavailable to foreign private investors). • 10–15% higher price than the market price. • Higher yields in comparison to similar properties on the market. • Core investors and Tranio enter the project via the SPV. • The SPV obtains bank financing with low (1.5%) interest rate and high (75%) LTV. • Foreign unit ownership is structured via SPV shares. • Each SPV stock is associated with a particular unit. Structuring • Project budget: €5 million of equity capital + €15 million of bank loan. • The number of units under construction is ≈200. • Our investor is expected to proceed with €100 million equity in 1 year time. General thoughts Competence distribution • Tranio gathers core investors, finds end buyers and manages all the communication with them. • A German developer is in charge of property construction and asset management.

  4. Risks

  5. What´s next: scenario Working out a legal solution Obtainingprior consent of a German bank Negotiating the purchase of micro-apartments from an experienced German developer on a forward deal (-10% of the market price) or participating as an equity investor in a joint construction project (-15% of the market) Negotiating the terms on which the management company (I-Live) is going to manage the building once it is commissioned and how the Management Company – Bank – Investor – End Client relations are to be managed Initiating the construction and (off-plan) share resale

  6. Contracts to be designed to regulate project relations Investors — Tranio(in the SPV) Developer — SPV SPV — end clients: design an End Buyer Agreement implicating the conveyance of rights for units to them without the management company losing control over the SPV jointly with the bank

  7. Top priority tasks Designing an optimal legal solution – a scenario for the realization of a such a project and its costs Identifying risks Holding negotiations with developers Discussing the scenario with the German bank

  8. Contacts • +44 20 3608 1267 Ekaterina Raznikova Partner Relations Manager Tranio.com +7 985 187 59 29 Skype: live:raznikova George Kachmazov Managing Partner Tranio.com +7 985 231 63 28 Skype: solovey915

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