OTP Real Estate & Construction launched in Romania


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OTP Asset Management Romania launched the OTP Real Estate & Construction (OTP REC) fund, the first sector fund in Romania to offer international exposure on the real estate and construction market. According to EFAMA standards, the fund falls into the category of flexible diversified funds. OTP Real Estate & Construction aims at a strategic allocation where at least 75% of the assets are invested in shares and bonds issued by companies active in real estate and construction, a press release reads.

OTP Real Estate & Construction is addressed to retail clients and institutional clients who are willing to accept a medium risk degree and who want a liquid investment with exposure to the real estate market. The recommended investment period is 1 to 3 years.

By launching OTP Real Estate & Construction, the company offers an alternative solution for the Romanians’ appetite to invest in properties. The fund is focused on generating and distributing a high revenue, which makes it a passive income instrument. Just as a person purchases a studio / an apartment in order to get a certain amount of rent money, an investor in OTP Real Estate & Construction can receive a quarterly income generated by dividends and coupons.

Compared to a classical real estate investment, that requires significant amounts of money, the initial investment in OTP REC is the equivalent of a fund unit (face value of RON 500), and the amount for subsequent investments is 50 RON.

Investors holding fund units on the first working day of April, July, October and January are entitled to receive the quarterly distributed income.

The payment is dependent on the income of the Fund. If the value is less than RON 1 / fund unit, it will not be distributed but added to the next quarter / quarters revenue and be distributed when it exceeds RON 1 / fund unit.

The Fund will invest in real estate and construction companies, such as REITs (Real Estate Investment Trusts) in Western Europe and the USA, run by professionals with decades of experience at an international level.

The new investment fund is a viable alternative to classic real estate investments, which many Romanians prefer. OTP Real Estate & Construction is the first sector fund in Romania to offer international exposure to real estate companies that operate or own malls, office buildings, logistic, storage and commercial spaces. From the investment universe of the fund, we can count companies such as Simon Property Group (US), Vonovia (DE), Unibail-Rodamco-Westfield (FR), NEPI Rockcastle (ZA) Globalworth (RO), Strabag (AT), Astaldi (IT).

OTP REC offers investors immediate liquidity, at any time, through a simple redemption of fund units, compared to direct real estate investments that involve a longer liquidation process.

Investing in the OTP Real Estate & Construction Fund has a number of benefits for customers who want to earn a regular income and invest, at the same time, in the real estate market. Here are some of these benefits: a reduced tax, of 5%, on the income distributed by the fund, compared to a 10% tax on income from rentals. The 5% tax is withheld at source; zero transaction costs for fund units (subscription / redemption), compared to the high costs of buying real estate (notary costs, etc.); diminishing the risk of the loss in value of the investment price due to the unfavourable evolution of urban development. The Fund has a very diverse indirect exposure, both from a regional point of view and from the types of real estate perspective; eliminating the time costs, the financial costs related to the administration and usage of the real estate, as well as the risks generated by unforeseen expenses.

Present on the local market since 2008, OTP Asset Management Romania is among the most important investment fund managers in Romania, according to their assets under management.

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