Bonds - Lux Real Estate Investements

Lux Real Estate Investments has developed a safe and solid investment platform based on the profound governance, compliance, fiscal and securitization policies that the Luxembourg law provides. Unique features such as the safeguarding of the assets by an independent securities trustee, as well as the rigid investment and risk management policies deployed by a professional management, provides both investors and shareholders with the optimal solution for capital protection and investment returns.

True Securitization

Bondholder's retain at all time a senior position on the assets which are under exclusive control of the indepedent securities trustee. No profits or dividends are extracted until the principal invested capital and all interest obligations have been paid in full to the bondholders.

The assets (including all cash positions) are directly allocated to the bond and remain throughout the whole investment period administratively seggregated (compartment) from all other assets and liabilities of other compartments. These assets are exclusively reserved for the bondholders and only the bondholders can exercise rights and claims on these assets.. The assets in the compartment remain throughout the whole investment period under exclusive control of an independent securities trustee. These securitization rules are defined in the Offering Memorandum which constitutes a legal contract between the company and the bondholders.

Fixed Income

Our investment strategy is highly diversified and focus on frequent and short term capital gains, unlocking the upside potential in both new development projects as well as in existing real estate. We also aim at rading of significant discounted real estate portfolios originated from reputable sources. We aim for shortest possible investment cycles to be able rapidly capitalize the upside potential and redeploy returns and compound the profits We further improve yields deploying our non-utilized cash to short-term secured lines of credit i.e. bridge finance, construction loans, re-financing, etc in which we retain at all time a senior position. This investment strategy generates relative high yields and the frequent conversions of assets into cash provides a steady cash flow required to pay our bondholders the agreed fixed coupon rates and payouts in accordance with payout schedule .

Investment Grade

Once the actual real estate portfolio has been established the bond will acquire a rating. As the capital is invested largely in new developments with significant upside potential and exceptional net cash flows its likely the bonds will obtain an investment grade rating. The rating will be obtained from Egan Jones..

Risk Mitigation

Lux Real Estate Investments has structured its bonds in such way that throughout the whole investment period the value of the newly developed assets will be significantly higher than the issued capital plus interest obligations. The administrator and risk manager monitors these values and provides annually a "capital protection certificate" confirming the sufficiency benchmark.

Sufficient and adequate provisions for interest and other obligations will address the risks of potential insolvency. Leveraging such provisions is allowed but limited to strict investment rules. The administrator will provide each year a "liquidity sufficiency certificate" to confirm the optimal liquidity positions and allocation hereof together with a report of the risk advisors regarding the valuation of the real assets.

We strive to minimize risk by limiting concentration of investments in a single territory, market, object or project. The portfolio will consist of proper mix of new developments and existing real assets consisting of prime commercial and residential real estate. The properties are situated in countries with a strong and sophisticated regulatory environment. We target primeraly niche-markets with high demand and above average growth of asset values. The main focus is on properties that can be acquired with significant discounts via reputable originators.

Part of the capital will be invested in high quality development projects undertaken by experienced companies with an impeccable on-time, on-budget and zero-defect track record of success. This includes also refurbishments, especially of office spaces situated in major cities being converted into residential. Of particular interest are properties that are close to obtain residential zoning approvals and permits and for nearly completed real assets for which long-term lease contracts or exit sale commitments have already been concluded prior to project completion.

As the currency of the bond issue and the assets in which we invest are the same, the bondholders are not exposed to volatile currency exchange rates and unexpected currency exchange losses nor the high costs of hedging and “stop loss” strategies.

Taxation

Prospective Bondholders are advised to consult their own tax advisor as to the tax implications. Buyers and/or sellers of bonds may be required to pay stamp taxes and other charges in accordance with the laws and practices of the country of transfer in addition to the issue price or purchase price (if different) of the bonds. Transactions involving the bonds (including purchases, transfers or redemptions), the accrual or receipt of any interest payable on the bonds and the succession of ownership of a bond may have tax consequences for prospective bondholders which may depend, amongst other things, upon the tax status of the potential purchaser and may relate to stamp duty, stamp duty reserve tax, income tax, corporation tax, capital gains tax and/or inheritance tax.succession.