The valuation of the properties this year was again carried out by Colliers International in Gothenburg. We are pleased to report that, following receipt of the valuation report and the audited accounts of the Swedish Group for the year ending December 31st 2012, both funds report continued growth in value during 2012.

Evanridge Swedish Property LLP’s total initial investment of £2.8m has grown to £6,924,780 a total increase of 142.31% over the investment period. Taking the average start date for the investment as 1st May 2006, this represents an average simple annual increase of 21.33% per year to the end of December 2012.

Evanridge Swedish Property 2 LP’s total initial investment of £1,634,746 has grown to £3,256,510 a total gross increase of 99% over the investment period. Taking the average start date for the investment of 1st August 2007, this represents an average simple annual increase of 18.30% per year to the end of December 2012. Please note that these are gross results and therefore do not take account of any capital gains tax that may be payable in Sweden, or of the effect of any carried interest or other profit share which would be due to Evanridge LLP as General Partner or Managing Member. The potential impact of these items upon eventual returns will be discussed further at the next AGM.

It should be noted that the returns above include the effect of higher valuations and loan amortisation. The Swedish Kronor gained slightly against the British pound during the year and this factor is also included in the results. Given the uncertainty in world property and financial markets which prevailed throughout 2012, we consider this to be a very pleasing result, demonstrating the robustness of the Swedish property business model.

Please read the Newsletter PDF for further information.

ER Spring Newsletter March 2013.PDF (770kb)

The valuation of the properties this year was carried out by Colliers International in Gothenburg. We are pleased to report that, following receipt of this and the audited accounts of the Swedish Group for the year ending December 31st 2011, both funds can report continued growth in value during 2011.

Evanridge Swedish Property LLP’s total initial investment of £2,857,830 has grown to £6,225,149, a total increase of 117.83% over the investment period. Taking the average start date for the investment as 1st May 2006, this represents an average simple annual increase of 21.12% per year to the end of December 2011.

Evanridge Swedish Property 2 LP’s total initial investment of £1,634,746 has grown to £2,936,596, a total increase of 79.64% over the investment period. Taking the average start date for the investment of 1st August 2007, this represents an average simple annual increase of 18.02% per year to the end of December 2011.

Please note that these results do not take account of any capital gains tax that may be payable in Sweden, or of the effect of any carried interest or other profit share which would be due to Evanridge LLP as General Partner or Managing Member. The potential impact of these items upon eventual returns will be discussed further at the AGM.

It should be noted that the returns above include the effect of higher valuations and loan amortisation. The Swedish Kronor weakened slightly against the pound during the year and this factor is also included in the results. The operating profit of the portfolio, whilst still reporting a profit under UK GAAP, was below budget due to costs arising from exceptional refurbishment work needed in relation to certain flats. Valuations are based on assessed market value as at the end of December 2011, the method used is substantially one employing a discounted cash flow which takes into account rentals, operating and maintenance costs. The valuation effectively comprises the future income stream of the properties which a new owner could achieve by purchasing the properties at the point of the valuation.

Overall, the Evanridge Sweden AB portfolios showed a growth in valuation of about 7 % during 2011.

Based on the valuation methodologies used, there is no guarantee that the stated indicative values would be achieved if the portfolios were to be offered to the market immediately.

Download the full newsletter here – ER Spring 2012 Newsletter final.PDF (213kb)

UNIT TRUSTS
EVANRIDGE PROPERTIES
Evanridge Sweden 3AB Swedish Residential Property Fund
Type: Exempt property unit trust/limited partnership
Aim: Income and growth by investing mainly in portfolios of pre-let residential properties in Sweden
Minimum investment: Lump sum £50.000
Investment split: 100% in
Swedish properties
Closing date: March 31.2012
Charges: Annual 1%.performance fee 20%
Commission: Initial 3%
Contact: www.evanridge.co.uk

Evanridge Properties has introduced a fund that opens up the Swedish property market to UK investors.

Evanridge is a specialist property fund manager established in 2005 to invest in Sweden. Its founder members, who have backgrounds in agriculture and taxation, have been investing in property since 1998.

Evanridge Sweden 3AB Swedish residential property fund is the third in the Evanridge range. The existing funds, closed to new investment, have produced annualised returns of above 14 per cent since inception. The new fund is targeting returns of at least 12.2 per cent a year. It is available as an exempt property unit trust for pension investors through a Sipp or Ssas, and a limited partnership for high net-worth individuals.

Evanridge says Sweden is attractive as it has resisted much of the economic downturn. The vast majority of people there rent rather than own properties and rents in the private sector are Government-controlled.

The market is also characterised by a supply shortage and growing demand. Evanridge says few properties are being built and it is possible to buy prelet existing properties at about 80 per cent of the construction cost. This also helps to preserve the value of the portfolio as it is unlikely that a flood of new properties will come on the market to meet the demand. Regulations in Sweden mean it is not possible for Evanridge to buy individual properties instead, it buys portfolios of well located, high-quality properties with target rental yields above 6 per cent. Bank lending to finance the deals is restricted to 75 per cent of me purchase price at a fixed cost of borrowing below 5 per cent.

As Evanridge wanted the fund to be as safe for investors as it could possibly be interest rate and currency risks are hedged, while the fund is managed to preserve capital. It says the properties provide an inflation-linked income stream and vacancy rates are low due to the nature of the property market in Sweden, where waiting lists are long. However, as with other bricks and mortar funds, this may lack liquidity.

Money Marketing 23rd February.pdf (1.3mb)

Nigel Evans, partner of Evanridge Properties, said the group wants to make the Sweden 3 AB unregulated collective investment scheme, which buys and manages pre-let residential and commercial buildings in Sweden, available to IFA market.

He said the first two funds saw 95 per cent of investment through word of mouth and 5 per cent through advisers, but now Mr Evans wants to grow the IFA share. He added: “From an IFA perspective this fund ticks the high risk box. However it delivers-a steady inflation-linked income stream for capital growth. All we can say is come and have a look.”

Mr Evans said he and two fellow farmers got into fund management in 2005 when they were looking to diversify their own wealth, but were fed up with the high charges and lack of transparency in the active fund management industry.

He said: ‘We wanted good value for money. We realised the real opportunity was in commercial scale residential investment. We looked at Sweden because the rule of law is strong, it has a budget surplus, strong earnings, low debt and high affordability”.

The first two funds, launched in 2005 and 2007, attracted £l8m of investment, predominantly through Sipps, and have delivered 19 per cent and 16 per cent growth to date. The new fund will target a 12.2 per cent internal rate of return, net of all fees and expenses, over a seven-year term. The closing date is .31 March 2012 and the minimum investment is £50,000. It has no initial fee, an annual management charge of 1 per cent and a 1 per cent acquisition fee. A performance fee is paid when the investment is wound up, but only at 20 per cent over a 10 per cent hurdle.

Mr Evans said the majority of his investors were conservative and saw the fund as low risk, with 80 per cent of investment through Sipps on platforms such as AJ Bell, James Hay and Skandia. He said: ‘We buy the properties with tenants and we run them. There is no speculative development. We operate the properties as a going concern providing houses for tenants and income streams. We keep overheads low so we can keep costs structure low. It is like running a vertical farm.”

Kusal Ariyawansa, certified financial planner for Manchester- based Appleton Gerrard Private Wealth Management, said:

“These types of investments can offer a good return and are relatively simple concepts. I am happy to look into them and give clients a point of contact for them, but I cannot directly advise on them because I am nervous of Ucis”

Financial Adviser 16th February 2012.pdf (1.4mb)

For more details or if you would like a meeting in your area contact Bill Ridge on 07887911662

NEE: How has Sweden’s participation in the Irish bailout affected the mood in financial circles? Do you expect it will have any impact on investor concern in the long run? Not as a stand alone activity. A more widespread crisis including more countries that need bailout will of course have an impact on investors. On the other hand Sweden is the country in Europe that has survived the financial crisis best with a very high GNP increase and a reasonably low unemployment rate.

Sweden’s economy is experiencing moderate growth, prompting talk of raising interest rates. How do you envisage this development will be seen by investors? Sweden’s economy his experiencing a very high growth (the figure for GNP in November was over 6%!). The basic fundamentals in Swedish economy are very sound. This together with a well educated work force, a very good infrastructure and low administrative burden and competitive tax regulations for companies should attract investors. At the same time Sweden, as a small exporting country with many global companies with operations around world, is affected by higher interest rates and a more widespread financial crisis in the financial system in Europe. But such a development will also hit other countries and Sweden’s current situation is stronger than most other countries. Thus Sweden should continue to be an interesting market for investment despite the international developments.

Britain’s Prime Minister, David Cameron, is to host a New Year summit with leaders of Nordic and Baltic countries in London. It’s being trailed as an opportunity to exchange ideas on issues such as the green economy, social cohesion and gender equality. Are these traits real, are they exportable, and how can investors benefit from the summit?

Sweden is probably one of the leading countries in all the above mentioned areas. Sweden has one of the “greenest” economies in the world both when it comes to handling pollution and the climate issues. Social cohesion and gender equality is also areas that have been in focus in Sweden for many years and Sweden is one of the more developed countries in that respect.

“For liquid bio fuels, the current possibilities of tax exemptions have contributed to large investments in production capacity. In this area there are also great opportunities for grant funding.”

The social cohesion quality is something that is really on the table in virtually all countries due to the financial crisis and huge deficits in many countries. The fact that we see globalisation effecting the way we work, communicate and do business, implies that also questions of social cohesion quality will be an important area for countries to attract a skilled workforce. Thus we will probably see that companies will tend to invest in this area in a more consistent way taking into account what other countries do, i.e. will see a more consistent social welfare system – at least in Europe. The summit will in that respect be an important event were different systems and ideas can be discussed and be brought up to light.

As the leading business adviser we see that manage talents is one of the most important future issues for the business community. This together with an increasing mobility of the workforce between countries implies that the gender issue needs to be managed. Many countries, companies and other organisations have already understood that keeping half of the population out from the labour market is extremely contra productive. An education and welfare systems that support women to educate and to be able to combine family and work in order to make it possible for women to take active part in the shaping of future businesses is vital for most developed countries. The question is not if this is exportable. Developments in this area will with certainty take place, it is only a timing issue. With this as a background investors should be able to benefit from the meeting just by it bringing this area up for discussion and thus put a focus on this very important issue. Sweden is a global centre for green energy. What incentives are available for investors wanting to take advantage of opportunities in this sector?

The electricity certificate system provides incentives for investment in bioelectricity. For example it has created benefits for investment in wind power, also many paper mills have invested in power generation facilities. The system has also led to significant investment by local energy companies in combined heat and power plants. The electricity certificate system is planned to be extended to also include the Norwegian electricity market.

From 2011 there will however be some restrictions on the right to tax reductions on low mix bio fuels. Investments in biogas – mainly for vehicle use – have more recently picked up speed. Probably because higher environmental requirements on landfills, but also because of changes in the tax regulations making it possible transport the biogas in pipelines together with natural gas . Biogas is at current tax exempt.

Taken from New European Economy

The Swedish economy is in an upward spiral where rising demand leads to increased output and higher employment, which in turn give demand a further boost. GDP will increase this year at the high rate of 5.6 percent. Although growth will fall off considerably in the period ahead, it will still be strong in the next two years at 3.8 percent in 2011 and 2.9 percent in 2012.

Employment to increase by 110 000 persons 2011–2012

The positive tendency of the labour market is expected to continue. In total, the number employed will be 2.5 percent higher in 2012 than in 2010, equivalent to about 110 000 persons. The largest increases will be in the construction and service industries. In manufacturing and the general government sector, the number employed will not change appreciably in 2011 and 2012 compared to 2010.

Even though the labour market is improving and the number employed is rising, unemployment will recede rather slowly and will still be 7.5 percent at the close of 2012. That is above the unemployment rate that the NIER considers compatible with cyclical balance on the labour market. A lower rate of increase in earnings, higher growth in productivity and a stronger krona will mean that inflation as measured by the CPIF will be less than the inflation target in 2011–2012. But to prevent resource utilization and inflation from rising too much in the next few years, the Riksbank has begun to move toward a less expansionary stance in monetary policy. The repo rate is expected to rise to 2.75 percent by the end of 2012.

Need to stimulate demand greatest in the near future

The Budget Bill for 2011 provides for unfunded measures amounting to roughly SEK 13 billion. In the NIER’s opinion, Sweden’s comparatively robust general government finances leave a margin of SEK 25 billion for further unfunded measures. The need to stimulate demand will be greatest in the near future, when resource utilization in the economy is low. This warrants making use of the existing margin for unfunded measures in 2011 and 2012.

The Scandinavian country’s economy, which is expected to end the year as Europe’s strongest, swelled by a much better-thanexpected 2.1 percent compared to the previous three-month period, and year-on-year the growth was even steeper, at 6.9 percent, Statistics Sweden said.

The latter is the highest gross domestic product growth rate since the statistics agency began its quarterly measurements in 1970, and “is most probably the highest since 1950,” Peter Buven, an analyst with the statistics agency, told the TT news agency.

Swedish Prime Minister Fredrik Reinfeldt hailed the growth figures, which he described to TT as “very strong in an environment where many others in Europe have deep problems.”

However, he stressed the necessity of showing “humility, since Sweden is very exposed by its dependance on exports to the world around us, which is seeing a completely different kind of development.”

In light of the current Irish banking catastrophe and deepening concern about other eurozone economies, “it is difficult to estimate how long (this strong growth) will last,” he acknowledged.

Meanwhile, Buven pointed out that the strong GDP growth figures announced Monday were “of course due to the deep drop we experienced last year.”

In 2009, Sweden saw its economy shrink a full 5.3 percent, but according to Mats Dillen, the head of Sweden’s National Institute of Economic Research (NIER), the country’s GDP is now back at its pre-crisis 2008 level.

“The financial crisis is looking even deeper now than we thought before. That means things are looking even better this year, as we emerge from a negative situation and see a powerful boost upwards,” he told the TT news agency.

A few months ago, NIER forecast that Sweden would register 4.3 percent growth this year and 3.4 percent in 2011, but after seeing Monday’s statistics, Dillen said “for the current year, we will probably have to significantly revise up the expected growth.”

“We will probably see growth above five percent this year,” he said, adding that he would not yet make any new estimates for next year, since “we also need to take into consideration the international development.”

The Swedish growth figures, which already soundly beat analyst expectations in the second quarter, were again far better than expected in the July-to-September period.

According to a poll by the Dow Jones Newswires, analysts had anticipated a 1.3-percent hike compared to the second quarter.

and an increase of 5.6 percent compared to the third quarter of 2009.

Statistics Sweden meanwhile slightly revised down the growth numbers for the the April-to-June period, showing that Sweden’s GDP grew 4.5 percent year-on-year. Quarter-on-quarter, the number remained at 1.9 percent.

Contributing to the strong third-quarter growth, according to the statistics agency, was a 3.5-percent increase in household consumption expenditures and a 1.8-percent jump in government consumption expenditures.

Changes in inventories meanwhile alone contributed to 2.9-percent of the GDP increase, Statistics Sweden said. Sweden, which emerged from recession in the second quarter of 2009 and saw growth quickly pick up in the first quarter of 2010, now has one of Europe’s strongest growth rates.

Like Reinfeldt, Finance Minister Anders Borg, who has been largely credited with the Scandinavian country’s dramatic turnaround, also cautioned Monday against allowing the strong growth figures to lead to “hubris.”

“We must remember that when countries explode, as we have seen in Iceland and Ireland, this has usually been preceded by extreme confidence. Things have looked good and one has been afflicted by hubris. But we will not let that happen to us,” he told reporters in Stockholm.

“It is extremely important that we keep our public finances in order,” he added.

Taken from The Local - See online here .

Evanridge Properties was founded by Pembrokeshire milk producers, Nigel Evans and Bill Ridge, along with former tax inspector Huw Evans, in 2005.

Its first two funds have achieved annual growth rates of 15% for investors – generated from rental income from its Swedish portfolio of properties.

The capital growth funds raised £5m and £3m respectively, with half the investors high net worth individuals based in Wales. The proceeds of the funds will be reimbursed to investors after seven years.

Evanridge is now looking to raise £5m of equity funding for a third fund, for which it has agreement to leverage further finance of £15m with Swedish bank Handelsbanken. The £20m would be used to acquire further property interests in Sweden.

And the fund has scope to increase equity funding to £10m, which would take total funding to £40m.

Evanridge, which oversees its own fundraising activities, is looking for minimum investments of £50,000.

The firm’s current portfolio in Sweden extends to 185 homes with ownership of a number of industrial properties as well.

In contrast to a floundering UK property market, Evanridge has driven positive year-on-year returns for investors in its first two funds.

Mr Ridge of Vaynor Farm near Narberth said: “Property prices in Sweden haven’t experienced the same turbulence as the UK housing market. Prices have remained firm and we are confident that there is more opportunity.”

Evanridge has invested in fully- let apartment blocks in commuter towns in south-western Sweden. Only 40% of the population are homeowners in Sweden and it is the only country in Europe where rents are regulated.

However, deregulation is now on the political agenda.

Mr Evans, who runs Spittal Cross Farm near Haverfordwest, said this would have positive repercussions for property values.

He added: “If the rental market is deregulated, rents will increase.”

The success of Evanridge has taken the partners away from the day-to-day running of their farms, but stress the skills they have gained in the agricultural sector have been invaluable.

Mr Evans said: “There is a misconception that farming isn’t like any othe rbusiness, but that just isn’t the case.

“The skills needed to run a farm business are no different to any other. Farming involves property and financial management, so for us Evanridge is just an extension of this.”

The partners, who have been joined by former farm business consultant and MBA graduate, Bryony Fitzgerald, had formed a property syndicate before launching the business.

Evanridge’s existing investors range from farmers to city professionals, with many seeing its potential for capital growth benefiting their retirement or succession planning strategies.

A third fund is being created because existing clients want to increase their capital commitment and also have family and friends who wanted to invest.

Evanridge is hosting a series of meetings for anyone interested in hearing about its existing activities and possible future opportunities for investment. The first presentation will take place at Plas Hyfryd, Narberth, on November 4.

Perspective has just launched a regulated property investment fund called EPH Sverige which it said offers investors a steady income and is suitable for Sipp and SSAS investments.

EPH Sverige has a minimum investment level of £10,000 and is looking to provide investors with geared net returns of at least 12% over five years and 14% over seven years, with net yields ranging from 5% to 8%. The fund will focus on pre-let residential property with some elements of commercial property.

Paul Hogarth, co-founder of EPH Partners who act as property advisers to the fund, said: “The fundamentals of the Swedish property market should provide an attractive rate of return for investors. Capital values in southwest Sweden are low, often less than the price of the land and build cost which restricts residential development in southwest Sweden meaning there is no over-supply of property. Also, as a result of state-controlled rent reviews, inflation-linked rental growth is guaranteed.

“Given the current turmoil and volatility of equities at present, the dire state of the UK property market and the general lack of exciting opportunities for investors, EPH Sverige offers a particularly attractive investment and risk/reward ratio.”