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Press article
Börsen-Zeitung
03
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08
.
2021

Fintech Linus Digital Finance offers participation in existing properties

The fintech Linus Digital Finance is adding investments in existing properties to its product range from autumn this year. The targets of the new equity segment are first-class (core) residential and office properties in Germany's top 7 cities.

By Thomas List, Frankfurt

Fintech Linus Digital Finance is adding investments in existing properties to its product range from autumn this year. "We recently acquired a newly built residential property in Berlin-Mitte for just under €10 million as our first portfolio investment," said David Neuhoff, founder and Chief Executive Officer of the company, in an interview with Börsen-Zeitung. "We will soon make this available to our clients via our investment platform." Semi-professional investors must invest at least 200,000 euros, professional at least 50,000 euros. Institutional clients are also being addressed, however.

Target Core Objects

The target properties of the new equity segment are first-class (core) residential and office properties in Germany's top 7 cities. "The newly built or freshly renovated residential and office properties should be let on long-term leases, have little need for investment in the coming years and generate as constant a cash flow as possible." Linus Digital Finance focuses on properties between €10 mill and €50 mill in purchase price. "We finance with a moderate leverage of 50 to 60 %. These are bank loans." Depending on the amount of equity investment, Linus takes a portion of the investment amount permanently on its own books. "For the residential property now acquired in Berlin, it will be 10 to 15 %."

From autumn 2021, you can invest in high-quality portfolio properties with LINUS.
Learn more now.

This approach, both in terms of property size and on the financing side, corresponds to that of the business segment in which Linus has been active since its founding in 2016: debt financing of real estate. Through a private debt fund that it manages, the company finances real estate projects with debt and mezzanine capital. Semi-professional, professional and institutional investors can participate in these investments via a digital platform (see BZ of 18 May).

Neuhoff wants to use the pipeline of properties already (debt) financed by Linus for the new equity investments. "We finance the properties in development, so we see them early, have good relationships with the project developers and therefore believe that we can generate a good pipeline for the equity investments." Competition for the properties is considered manageable, as properties of around €20m are too small for many funds. "We acquired our first property off-market from a developer we already knew."

Two to three objects a year

Neuhoff can imagine that "in addition to the property we have already acquired, we will buy two or three more properties this year. But the decisive factor is that they are high-quality properties." In perspective, an annual distribution yield of 3 to 4 % and an expected total return of 5 to 7 % is expected.

The holding period for the portfolio properties is to be between five and ten years. "At a point in time specified in the sales prospectus, the property will either be sold or, if the property is to be held for longer, the investor will be granted the right to sell his investment to us as investment manager at the then current value." In the future, the investments will also be tradable on the company's own platform so that investors can sell their shares to other co-investors.

From autumn 2021, you can invest in high-quality portfolio properties with LINUS.
Learn more now.

To assess the market opportunities of digital platforms among wealthy individuals, the market research institute Yougov conducted a survey on behalf of Linus in April 2021 among 253 people with financial assets of between 500,001 euros and 1 million euros (60% of respondents) or more than 1 million euros (40%). According to the survey, almost 40 % of investors can imagine investing 50,000 euros or even 200,000 euros via an online platform, or have already done so. Another 28 % of respondents would first invest smaller amounts via an online platform. Only just under a third value personal advice and do not want to invest purely digitally. This is not surprising for Neuhoff. He points to digital brokers like Trade Republic. "In 2020, there were as many direct shareholders in Germany as there had been since the turn of the millennium. That was strongly driven by the many possibilities of digital and thus greatly simplified access to share trading." What has long been common practice in e-commerce with Amazon, Zalando and Co. is now spreading to the investment sector.

Trust is a decisive factor for the success of an investment platform. According to Neuhoff, Linus Digital Finance benefits from recommendations from previous clients, but also offers more cautious prospective investors the opportunity to start with smaller sums. "The longer we exist, the more attractive we become for more online-shy investors."

First listing on 19 May

The initial listing of the company's shares on the Frankfurt Stock Exchange on 19 May should also help to build confidence. However, in view of two major shareholders who together hold just under 75 % of the shares, liquidity is manageable. "We will always consider whether measures make sense to make the share more liquid." This applies in the long term, he said. Currently, however, there are no plans for this.

Further articles

Press release
30
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.
2021
Strategic expansion of investment offering: LINUS Digital Finance to offer long-term portfolio investment in core real estate in the future

· For the first time ever co-investors will be able to subscribe equity real estate investments in German A cities digitally from autumn 2021 on-wards · Newly-built residential property in Berlin-Mitte acquired as first invest-ment opportunity · Inclusion in XETRA trading means additional liquidity for shares in Linus Digital Finance AG

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Press release
12
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07
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LINUS Digital Finance ignites next stage of growth offensive: Digital platform now also available in the UK

- Digital platform now also accessible for British investors - German investors can also invest in the UK in the near future - Next step on the way to becoming the leading pan-European real estate FinTech

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Press release
29
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06
.
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LINUS Digital Finance and institutional investor finance building construction phase of a residential project with over 19,000 m² in Berlin-Wilmersdorf as whole loan

Financing volume amounts to 48.75 million euros with a two-year term - Whole-loan financing enables 49 eligible residential units in addition to freely financed development - First life-cycle project in the LINUS Digital Finance portfolio

Find out more
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