Investment Concept - United States

For more than 25 years now, the ACRON Group has applied its investment concept to successfully initiate profitable and innovative real estate investments in the southwestern United States. Its main focus is on office real estate. ACRON always establishes a new ACRON [name of property] L.P. for each of the properties to be acquired and maintained. Interests in the companies are sold via public offerings or private placements and are extremely attractive for investors in terms of their tax treatment. Moreover, profitable means of debt refinancing – a common procedure in the United States - generate investment profits and additional special distributions. ACRON is therefore in a position to offer an attractive investment concept yielding above-average returns even in a difficult market environment.

Investment Concept for the ACRON L.P. Series

• Concentration on specific markets in the southwestern United States.
  
  
• For more than two decades now, ACRON has been doing business from its offices in Tulsa, Oklahoma, and Dallas, Texas, monitoring these and other potential investment markets nearby. In 2006, ACRON opened another management office in Houston, Texas.
  
  
• The investment targets are located in healthy suburban markets outside the classic downtown areas.
  
  
• ACRON concentrates on investment volumes of up to USD 50 million because the relative attractiveness of "smaller-scale" properties has gone up considerably.
  
  
• This focus has increased the properties' resalability because the turnover rate of real estate in lower price brackets is simply better – especially in current times – than that of large-volume properties.
  
  
• Office buildings are usually rated Class A.
  
  
• Each office building has multiple tenants. The mix of tenants consists of at least three tenants with leases of different lengths, or fewer tenants if their total office space is leased under contracts providing for different terms. Dependence on a single tenant must be ruled out due to U.S. law.
  
  
• Office real estate in this price segment enables returns averaging 7.5 percent per year.
  
  
• After full repayment of the equity by means of annual distributions, ACRON receives a share of the profits generated by the property in the amount of 15 to 25 percent, depending on the relevant agreement. This is usually the case after seven to ten years.

Advantages for Investors

• Superior return averaging 7.5 percent annually, varying depending on the investment.
  
  
• Tax-favored distribution for limited partners.
  
  
• Limited partners are liable only to the extent of their capital contributions – above and beyond this, they do not bear any further liability risk.
  
  
• Low management expenses.

ACRON's Exit Strategy for U.S. Investments

Background

Refinancing is an integral part of ACRON's investments in the United States because ACRON aims to repay the capital contributed by the investors as quickly as possible, thereby minimizing investor risk as early as possible.

Refinancing frees up liquid funds for re-investment in other U.S. facilities (keyword: building wealth). Subsequent losses in property value can be reduced by refinancing early.

In pursuing this refinancing strategy, the ACRON group has adopted a procedure for its real estate investments that has already been standard practice in the United States for quite a long time. ACRON has already successfully pursued this strategy in connection with various investments. This distribution method aims at repaying the equity contributed by the investors as quickly as possible, thereby reducing the investors' investment risk early on and boosting their individual liquidity without dissolving the investment company or selling the property.

Procedure

Net Operating Income (NOI) is defined as the gross rental income less any costs associated with operation and maintenance, caretaking and management of the property. The NOI is the most significant measure for assessing the operating efficiency of a property and for determining its value. The NOI may rise, e.g., thanks to higher rental income which, in turn, can result from property enhancements such as tenant improvements, renovation work, cosmetic improvements, general modernization measures, and investments in state-of-the-art technical systems. Furthermore, progress made in the surrounding area or the neighborhood in which the property is located (e.g., optimization of the road network) may have positive effects on the property, and therefore on the rental situation, and lead to an increase in the NOI.

If, after a few years, the value of the property is higher than at the time of its acquisition due to a higher NOI, ACRON seeks to refinance. In the course of this process the existing loan, which has already been repaid in part, is replaced with a new loan. In addition to paying off the remainder of the original loan, the new loan is used for necessary capital expenditure on the property and the repayment of equity to the investors.