April 7, 2023
Vera Fund: 2022 Results and 2023 Strategy
Nick Polushkin, the founder and CEO of Vera Fund investment company, shares information about the company's annual success and plans.
2022 was a very intensive and interesting year for Vera Fund, whose office is located in Fort Lauderdale (Florida, USA).
In the 3-4 quarters of the previous year, new interesting objects began to show up, and the company was able to make profitable acquisitions.
Last year, the company acquired 3 commercial properties in South Florida, including the Retail Plaza in Dania Beach, the office building in Boca Raton and the office building on Oakland Park Boulevard in Fort Lauderdale. The total area of these buildings is more than 50 thousand square feet.
At the moment, our company has 10 commercial buildings under management, including mainly office buildings and shopping plazas in South Florida.
In addition, in 2022 Vera Fund began to cooperate with 12 new accredited investors and partners, living both in the United States and abroad.
In the first two quarters of 2022, there were many challenges to find profitable investment properties, since mortgage rates during this period were quite low. The search for objects was difficult due to the large number of investors buying commercial real estate on the market.
At the end of 2022, Triple-N (NNN) class properties appeared the market, when there is a long-term contract with a corporate tenant for 10-20 years, who consistently pays not only rent, but also bears other expenses: property taxes, insurance and engineering service. Meanwhile, the increase in the rental rate was 3%, and inflation rose to 7%, which made contracts for these objects not profitable.The problem was the impossibility in increasing the revenue of this property .
However, buildings of this class were still sold to passive investors, although this is not a niche activity of Vera Fund.
The company's strategy does not adhere to the principle of “being blocked" in strict contractual terms for 10 - 15 years without a guarantee of any necessary changes. In addition to these difficulties, the above-mentioned objects were located in those areas, where it was difficult to increase their potential, add value, or increase the rental rate.
Vera Fund usually works in such a niche, which is associated with the possibility of the initial transformation of the object. We are interested in buildings on large plots with the potential either for new construction or for new projects to be sold to developers. Any real estate, that we buy, is analyzed to understand the meaning of its zoning or the potential for an increase in value.
Vera Fund interacts with various developers, for example, with developers of affordable housing, with developers of apartment buildings, as can be seen thanks to videos posted on social networks about projects successfully implemented by the company.
The plans and strategy for 2023 remain unchanged. Vera Fund investment company, as always, is in search of new real estate: these are office buildings, retail areas on large plots, in areas where there is walking distance to shops, restaurants and upscale modern settlements-complexes with accommodation for entrepreneurs, businessmen, licensed professionals, renting premises from Vera Fund.
They say that the “office” segment will suffer in 2023 We can partially agree with this statement, since we are talking about the centers of large cities, about down towns, where large corporations rented large areas in built high-rises, which are now trying to reduce the leased areas and move to new segments, since some of the employees (up to about 30%) switched to remote work.
However, class A offices continue to be in demand. Such real estate is usually located in the central part of the city, in prestigious newly built buildings, in business centers, which makes it the most expensive in terms of rent. Nevertheless, it is impossible to completely abandon the lease of such premises, because such offices are rented to accommodate the top management of companies and often perform representative functions.
Executive suites concept is performing very well for us. The company focused on executive suites, and now we have 3 buildings with executive suites concept, and by 2022, the average occupancy of executive suites in buildings under management was 95% percent, which is definitely above average.
One of the strategic directions of Vera Fund is the purchase of two-three-storey buildings with an area of 2 to 5 thousand square meters with a large number of tenants.
In each such building, renters are representatives of different industries, therefore, when “difficult conditions” for doing business occur and it is necessary to terminate the lease agreement for some entrepreneurs, there are almost always professionals such as psychologists, psychotherapists, lawyers, insurance agents, accountants and businessmen of other areas whose activities are less susceptible to various crises, as well as new tenants are coming.
The more different tools and approaches a company uses in its activities, the greater the diversification and the lower the risks from unexpected losses due to price spikes, lower demand, inflation, changes in the economy and politics, and other negative factors.
In the near future, the company plans to purchase at least 5 objects, and one of these objects should be outside the state of Florida. Having licenses to conduct brokerage activities in 7 more states of the country, we strive to expand our representation. And these are also our immediate plans!
We hope that the review of the results of the activities of the Vera Fund investment company for 2022 and its plans for 2023 was informative and will arouse new interest in our work.