Clients extend term of Rental Business agreement for another decade

Jun 22, 2021

The decision to extend the operations of the fund until 2031 has been adopted by a majority of the fund shareholders who participated in the vote. The net assets of the fund as of the end of May 2021 exceeded RUB 5 bn. As of 2020, the profitability of the Rental Business Fund stood at 13%.

Launched in 2016, Sberbank — Rental Business earned the trust of market professionals right away by winning Investor Awards 2017 for the Best Investment Product of 2016. Since its inception, the fund has attracted 1,600 shareholders. The aggregate value of shares held by clients who decided to divest topped RUB 940 mn, and they were all snapped up in a matter of only two days by the current shareholders who had decided to increase their investments in the fund. The extension of the fund term for a decade is the first precedent of a kind in the Russian market for real estate funds targeting retail investors.

The fund invests in four quality commercial real estate pieces: two depots near the Tolmachyovo airport in Novosibirsk, a warehouse complex in the village of Valishchevo just outside Moscow, and a distribution center in St. Petersburg. All warehouses are being rented by major nationwide companies that have long-term lease agreements.

The year 2020 saw high investment activity in the warehouse real estate sector. This was due to a sharp increase in online trading during the pandemic and the high demand for quality warehouses among retailers. Against this background, people grew more interested in mutual commercial real estate funds. In 2020, Sber customers invested RUB 15.6 bn in Sber Asset Management’s closed-end mutual funds, which is exactly one-half of what had been invested in all the previous years. The assets of our closed-end funds have reached RUB 50 bn. The key advantage of a fund like that is that you can invest a relatively small amount into high-class commercial real estate and receive a stable income, without being engaged in the direct management of your asset. This vertical will maintain its investment appeal down the road, therefore the clients of the Rental Business Fund have decided to extend the term of the fund’s discretionary investment management agreement until 2031.

Ekaterina Chernykh

CEO, Sber Real Estate Funds

Sberbank — Rental Business is a closed-end real estate fund traded on the Moscow Exchange with no limitations on share circulation. The lower investment limit is set at RUB 300,000. At the end of May 2021, the price of a share approximated RUB 309,500. Rental Business customers receive investment income from their shares quarterly, which is paid out using rental payments from the warehouses rented out. Since April 2021, the fund has been run by the newly-established company Sber Real Estate Funds, which was created to develop collective investments in commercial real estate. The new company is introducing a modern IT processing, analysis, and data exchange platform to reduce the cost of management and operation of real estate.