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Glossary of Terms

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Glossary of Terms and Concepts

EXPLANATION OF TERMS AND CONCEPTS YOU MAY ENCOUNTER AS AN INVESTOR

Investment Apartment & Investment Villa – as a property – is a form of investment into a real project and real scheme, which will be offered to third parties for rent after completion – thus generating profit for the investor. Typically, investment apartments are not intended for the investor's personal use, although there are exceptions that allow for occasional use. Such apartments are mainly part of schemes like PBSA, BTR (see explanation below), or hotels. For more information about the potential use of the properties we offer, please contact us.

Holiday Villa – as a property – is a standalone villa offering, unlike an investment villa, the opportunity for personal use or management of the property according to the investor's wishes. It can be rented out (e.g., through booking.com or other platforms), fully utilized by the investor, or a combination of both. For more information about the use of individual projects, feel free to ask us.

Off-market – or "Off (regular) Market" – is a term used for investment opportunities that are considered "under the counter" and thus not promoted or offered through regular channels (real estate portals, advertising, etc.). These are typically properties or opportunities intended for a narrower circle of investors. VIVA Asset Management collaborates with developers who have such offers. As their partner, we have access to these, but can only disclose them to serious inquiries or members of our VIVA Club, which represents this selective group of investors.

Asset Class – or "Class of Economic Assets" – a document or physical asset that generates active profit. Besides real estate, it includes bonds, stocks, shares, and more. Market influences these assets – demand and supply, but also the economic and political situation, as well as force majeure (things that we cannot influence – natural disasters, epidemics, etc.).

Leasehold – is a form of land or property holding by renting from the original owner. Some properties stand on so-called Leasehold land, meaning that they have rented the land from the original owner for a certain period. Since it's about the land under the property, these contracts are usually made for 25 to 100 years with the possibility of extension. This contract is difficult to terminate, as it is usually tied to the very existence of the building.

Freehold – is a form of land holding where ownership of the land fully transfers to the investor or new owner. It refers to standard rightful ownership of land, or its share (in the case of apartment buildings, if the ownership also relates to the land of the property).

Yield – or "Return & Profit” – is a percentage representation of return on investment, usually on an annual basis. It reflects the positive interest received by the investor in the form of "earnings" or "profits" from the investment. Specific payouts of profits are tied to the contract and payout conditions, but generally, we encounter either quarterly or annual profit distributions. If an investor guarantees you a 7% yield for 5 years, it means your investment of a certain value will have a 7% increase each year (from the invested amount) – for example: 7% of 100,000€ is 7,000€. Yields are, of course, net (after deducting fees and taxes) as well as gross (before deduction of fees and taxes).

BTR – Built to Rent – or “Built for the purpose of rental” – is a subsegment of rental investment real estate schemes. It refers to a property (residence) consisting of apartments intended for rental to third parties (tenants). This segment is popular due to additional services as well as relatively flexible rental contracts (possibility of stay from just a few months). Due to the universality of the target audience, this segment is one of the most profitable for both institutional and private investors.

PBSA – Purpose Built Student Accommodation – or “Purpose-built student apartments” – is a scheme of private student housing providing, besides accommodation of higher standard (compared to dormitories), also services and social spaces to tenants included in the rental price. In most countries, this segment is legislatively defined regarding taxes and fees, making it an attractive option for private investors. Due to the still high demand, it represents a stable source of income.

MOIC – Multiple of Invested Capital – or “Multiplication of invested capital” – is a numerical investment analytical indicator expressing multiples of invested capital against the resulting value of investment appreciation minus entry costs. In short, it expresses how many times the invested capital multiplies (usually this indicator is linked with another indicator containing a time dimension).

IRR – Internal Rate of Return – or “Internal rate of return” – is a percentage investment analytical indicator expressing the return on investment over time. The indicator considers not only the turnover and profit flowing from operations but also the passive appreciation of the property according to market price. The calculation coefficient also includes the cost of potential financing (interest), as well as inflation or the periodicity of profit payments. Alternatives to this indicator are also known as XIRR (Extended Internal Rate of Return) or MIRR (Modified Internal Rate of Return).

NPV – Net Present Value – or “Net present value” – is a percentage investment analytical indicator expressing the present value of invested capital based on anticipated future developments of the real value of capital, taking into account the time dimension. Usually, the investment is devalued by inflation, and this coefficient can express the comprehensive value of future profits as well as the total value of the property in the future.

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