Realty World Caribbean

Realty World Trust (RWT)

NewsLetter

To Owner of a Commercial Property

Whether you are going to sell your property

or simply experience a shortage of capital for expansion,

 you need to know your options.

For example, a sale-leaseback where a company sells its property and simultaneously leases it back on a long-term basis.  

The both ways lead to capital markets.

 Raising equity finance is cheaper than borrowing money.

If you need money

the following information will be of use for you.

*   *   *

How to get access to capital market

There are two types of investments: direct and in shares.

Direct Investments

An individual who provides direct capital to startup or small companies (less than US$10 million) is called Angel Investor. Direct Investment is sufficiently large to affect a company's subsequent decisions and in fact means acquisition.

Most Angels are interested in ultra high growth industries capable of producing very high annual returns. More of it, investors need exit strategy. That’s why Angels hunt for companies that are "mezzanine" stage - the stage right before completing an initial public offering.

This leaves individual real estate owners seeking relatively small amounts of capital with little interest from direct investors. This way your chance to get money is close to zero.

Investments in Shares

As opposed to insignificant Direct Investments, there are rapidly growing massive investments in shares of local companies by foreign entities, an important feature of an increasingly globalization and coming Caribbean Single Market.

There are two options here:

1. To complete your individual initial public offering (IPO)

2. To convert your shares to the shares of an investment holding company.

1. Individual initial public offering.

Coming to the capital market is a major investment for any business and it is extremely expensive. For example, a listing on the London Stock Exchange is likely to cost your company at least £500,000. This figure can rise significantly, especially when factors such as underwriting fees are taken into account. The Exchange also charges fees to listed companies.

One of the greatest surprises for some companies coming to market is to spend 5 to 10 % of the offering proceeds to pay professional fees.

To go this way initial capital of a company should be minimum USD15 million to be in a position to pay start-up expenses.

2. Realty World Trust offers you the other option.

Major investors like pension funds are not making direct investments. They operate these days as a fund of funds. They are looking for fund managers who will make and manage investments for them. Usually they have Investment Companies investing on their behalf in Real Estate.