We seek to acquire highly undervalued assets which generate well above average rental yields. The properties are purchased with a view to being swiftly refurbished and then becoming operational. Assets are purchased at a discount to market value and require internal overhaul to create modern student accommodation. Our long term business relationships and special local alliances provide us with a number of unique purchase advantages.
In addition, we take several measures to provide comprehensive asset protection;
Apartment Cluster Strategy - Purchasing properties in 'clusters' of 8-12 apartments within the same property allows for easier management and diversification of location. Each 'cluster' is purchased through a separate Special Purpose Vehicle (SPV) and all SPV's are owned by HFB Benchmark, Inc.
Segregated Cell Structure - An SPV is created to hold each 'cluster' of apartments. This strategy limits liability and affords significant risk protection; if anything happens to a unit, it can only affect a single asset or 'cluster'. This structure provides for a smooth sales transaction. In case of liquidation, the SPV can be sold rather than the property itself providing several tax advantages. This strategy also contains significant risk protection – if anything happens, it can only affect a single asset.
Bank Certified Apartments - Unlike student "pod" developers, HFBB will acquire Bank Certified Apartments which are classified as Multi-use Apartments. This means each asset is mortgageable with the ability to obtain traditional financing, which is not possible with student pods. This provides HFBB the ability to apply Smart Leverage techniques but also means the property can be rented or sold to anyone which means more options and easier liquidation of the asset.
Acquisition of undervalued assets
Positive geared cash flow properties
Properties are acquired at significant discounts ranging from 30%-70% below current market value through targeted off- market resources and High Street Banks creating instant leverage while increasing long term growth potential.
Student accommodations located in capital cities provide a unique opportunity in combing consistent rental revenues, high yields and high growth rates due to the attractive residential property markets found in capital city centres.
These properties can be existing residential or commercial sites located in major European cities which are in high demand for University student accommodation. The Company's value will increase from buying a low cost asset that can be converted to modern student accommodation at relatively low cost, adding considerable value to the property.
Using a smart leverage strategy
By combining long financing terms, fixed interest rates, conservative financial ratios - low loan-to-value ratios with high debt-coverage ratios and 3-month minimum cash reserves - it is possible to increase profits by 5 fold or better.