I came across this unlisted company. It promises a nice 7% return on invested capital, and since it’s an unlisted company, dividend taxation would also be more moderate. Risk management seems to be okay. There is leverage, but it’s at a reasonable level. The return comes from rental income. It only invests in larger cities with universities.
It seems good, but is there a catch here that isn’t immediately obvious?
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Yes, there is: those pages don’t say what they have in their portfolio.
There could be some real bombs in there..
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A 7% yield and growth centers. This strongly suggests returns from a past interest rate environment and/or unrenovated suburban apartments that have a “brilliant future” behind them.
Secondly, there are universities in locations where the rental market isn’t exactly top-tier. Speaking of Finland’s largest cities, the TOP 10 already includes some less-than-attractive names. Narrowing the selection to the TOP 6 would yield a better hit rate.
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There was a map like this of the investment targets.
Otherwise, they didn’t disclose the contents of their portfolio.
In practice, Series A shares decide how things go at general meetings.
With Series D shares, you mostly just get to attend and listen while others make the decisions.
Apparently, Karo spotted this Asuntosäästö last spring and shared his thoughts. Worth a read.
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Well, let’s further imagine that the company keeps its promise and churns out that promised dividend for, say, 10 years. So a rough €1,000 investment has produced that 10y x 7.0%, or €700 (the first year’s interest is actually less). There’s no compound interest here if you don’t reinvest the dividends. Then you happily withdraw that grand and realize that inflation has eaten almost half of that grand’s purchasing power. And all this only if—and only if—the business hums along so magically well that a 7% dividend can always be paid.
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How is this operator doing these days? Does anyone have any information about the current status? The website at least seemed to be up…
