The value of investment and income may fluctuate over time. The amount paid may be higher or lower than that initially invested for the duration of the Fund. The fund yield mentioned above does not guarantee future performance and does not take into account fees and taxes.
Relevant risks related to BHS REAL ESTATE FUND SICAV, a.s. (hereinafter referred to as the “Fund”), which may affect the value of the investment in the Fund, are primarily risks related to the Fund's investment focus on the real estate market, and include, in particular:
a) The risk associated with investment property includes the risk of investment property that is subject to the lien or other rights of third parties, the risk of insufficient infrastructure for the property to be used, and the risk arising from the property valuation. In view of the nature of the material portion of the Fund's assets consisting of property, its valuation is carried out annually, in accordance with Article 10.5 of the Statute. In the event of a sudden change in the circumstances affecting the price of the property in the Fund's assets, a situation may arise where the current value of the Fund's share determined on the basis of the last valuation made does not correspond to the fair value of the property in the Fund Assets. Should this type of sudden change in circumstances affecting the property price occur in the Fund Assets, the Administrator shall proceed in accordance with the Statute. If the Fund acquires a property in its assets (specifically a building) through construction, there is a risk of defective or delayed construction, which may result in damaging the Fund. Given the nature of the asset, there is also a risk of the asset being destroyed, whether as a result of a third party or as a result of force majeure. Given the Fund's ability to accept loans up to an aggregate total representing twice the Fund's Assets, there is also a correspondingly high risk that an incorrect investment decision, or some other reason, will lead to a decrease in the value of the Fund's assets. Due to the potential credit exposure of the Fund, there is also a corresponding risk of its insolvency.
b) Risks related to construction defects, meaning that the property may be affected by construction defects, which may be hidden defects or defects that appear after a longer period of time. Ensuring high-quality building supervision and contractual liability for defects can eliminate this risk. As a result of these defects, the value of the property may be affected and repair costs may increase, etc.
c) Risks related to the acquisition of foreign property, consisting of the risk of political, economic or legal instability in the case of foreign real estate. This risk may result, in particular, in unfavourable conditions for the disposal (sale) of the property or participation in the company, for example due to foreign exchange or legal restrictions, economic recession or, in extreme cases, nationalisation.
d) Risks associated with the possibility of a company in which the Fund has invested defaulting, in that such a company may be affected by a business risk - credit risk, through the issuer or counterparty failing to meet its debt. As a result of this risk, the market price of the share in this particular company may decrease or may be completely written off (for example, in the event of bankruptcy) or it may prove impossible to sell the share in the company.
e) The risk associated with financing the construction of the property, consisting in the fact that there is a risk arising from the specific factors in the realisation of the construction, e.g. force majeure making construction difficult or impossible, failure to comply with the work schedule, etc. This risk can be limited by selecting reputable developer and construction companies and by introducing inspections by a building supervisor.
f) Risk of insufficient asset liquidity by failing to guarantee the timely and adequate monetisation of a sufficient volume of assets intended for sale (e.g. housing units in residential projects) or the timely and adequate occupation of a sufficient volume of assets intended for rent (for example, non-residential premises).
g) Credit risk, i.e. the risk associated with the eventual non-compliance with its obligations by the Fund's counterparty, where the issuer of the investment instrument in the Fund Assets or the counterparty to the contractual relationship (in realising a particular investment) fails to meet its obligation, or the debtor fails to pay the claim on time and in full.
h) The risk associated with the use of third-party capital to achieve the Fund's investment objectives, which reinforces the impact of developments in market prices of assets in the Fund Assets on the value of shares, potentially allowing for higher profits but also for higher losses.
i) The risk arising from government regulatory activity relating to acquisition, ownership and rental on the value of assets owned by the Fund, in particular the introduction of or increase in taxes, deductions, fees or restrictions by the competent state authorities.
j) Market risk arising from the impact of changes in market developments on the prices and values of assets held by the Fund.
k) Settlement risk, that a transaction involving the Fund's assets may be frustrated as a result of the counterparty's inability to meet its obligations and deliver the property or pay by the agreed deadline.
l) The risk of losing property held in trust, consisting in the fact that the Fund’s property is held in trust and that there is therefore the risk of loss of the Fund's assets held in trust or other form of guardianship, caused by the insolvency, negligence or wilful act of a person holding the Fund's assets in trust or other form of guardianship.
m) The risk of volatility in the current value of shares issued by the Fund due to changes in the composition or value of the Fund's assets.
n) The risk that an investment share repurchase will be suspended, consisting of the fact that the Management Company is entitled, under certain conditions, to suspend the repurchase of the Fund's investment shares, which may result in a change in the current value of investment shares for which repurchase requests are due to be settled and later settlement of repurchases.
o) An operational risk, which may result in loss due to inadequacies or failures of internal processes or human factor or due to external events and the risk of loss of assets placed in trust or another form of guardianship, which may be caused in particular by the insolvency, negligence or wilful act of a person holding the Fund’s assets or securities issued by the Fund in trust or other form of guardianship.
p) The risk of legal defects consisting in the fact that the value of the Fund's assets may be reduced as a result of legal defects in assets acquired into the Fund's assets, i.e. due to the existence of a third party lien, easement, lease or pre-emptive right.
q) The risk that the Fund may be cancelled for reasons stipulated by law, for example, because the Fund's total equity capital has not reached EUR 1,250,000 within 1 year of the Fund's entry into the list of investment funds with legal personality, because the Fund has not had a depository for a period of over three months, due to a request to delete the Fund from the list of investment funds with legal personality, cancellation of the Fund due to insolvency, court decision, reorganisation decision, etc.
r) The risk that the CNB withdraws the Management Company's business licence if a bankruptcy decision has been issued or if the insolvency petition has been rejected because the Management Company's assets are not sufficient to cover the costs of the insolvency proceedings.
s) Risks arising from limits on the Depository’s inspection activities in Section 73 para. f) of Act No. 240/2013 Coll., on Investment Companies and Investment Funds, as amended (hereinafter referred to as the “Act”).
t) The currency risk that the value of the investment may be affected by a change in the exchange rate. Assets held by the Fund may be denominated in currencies other than Czech crowns, while the current value of the Fund's share and profit share is set in Czech crowns (basic currency value). Changes in the exchange rate of the Fund's basic currency and other currencies in which the Fund's investments are expressed may result in a decrease or increase in the value of the investment instrument denominated in that currency. Adverse currency fluctuations may result in a loss.
|BH Securities a.s.
Na Příkopě 848/6
110 00, Praha 1
|Reception: +420 255 710 710|
|Fax:+420 255 710 770|
BHS REAL ESTATE FUND SICAV, a.s.
110 00 Praha 1
|Co ID: 05504643|
|Tax ID: CZ05504643|
|held at the Municipal Court in Prague, insert B 21953|