Prague Prime Homes
Important Information

© 2014 Prague Prime Homes

Important Information

Even though real estates represent actual values, there still may (market-related) factors, which could have an (negative) impact on the asset, finance and earning position of the investment project. Therefore you should consider these factors carefully and also consult a potential investment with qualified people, particularly a tax advisor.

  • The PPH Investment Programme documentation as well as the specific project presentation includes statements that are, or may be deemed to be, “forward-looking statements”. By their nature, these forward-looking statements involve risks and uncertainties because they relate to events and depend on circumstances that may or may not occur in the future. Forward-looking statements are not guarantees of future performance. The actual performance of a project, recurring revenues, sales proceeds and results generated upon disposal may differ materially from the impression created by the forward-looking statements contained in that document or in the specific project presentation.
  • The expected sales prices upon exit, the rent levels, returns and other figures stated either in this document or in the specific project presentation are projections based on assumptions. The selling price of real estate and achievable rental income from real estate are subject of fluctuations and it is possible that because of general market conditions or due to a lower demand for real estate in a particular area of the city the assumed revenue cannot be achieved. This may affect the business and the economic return over the financial planning.
  • Investors should be aware that PPH Management can give no assurance that they will reach, or continue to achieve, the investment objectives and tax advantages of the programme in general or the forecasted assumed returns described in the specific project presentation. Furthermore PPH Management does not offer any guarantees regarding interest payments and/or the return of principal.
  • The success of the PPH Investment Programme in general and of proposed investment projects in specific will depend on PPH Management’s ability to identify suitable real estate investments. In this respect PPH Management may be subject to significant competition in seeking investments.
  • The presented participation form requires that a potential buyer can evaluate the risks, that he would like to invest capital for a period of at least 2 years (buy-to-develop-and-sell projects) or at least 5-6 years (buy-to-let or buy-to-develop-and-let projects) and that the chosen investments are in line with its economic conditions.
  • Problems during the development may delay the project and increase the cost of a project and even though PPH Management puts all efforts to estimate the size of refurbishment costs (if any) beforehand it cannot be excluded that the actual costs will be higher than the estimated costs. This could result in another capital call with investors or the need to increase the debt financing for the project. Both may affect the predicted success.
  • The planned investment term stated in the individual project presentations is based on current assumptions with respect to the redevelopment period (if any) and/or the required time to sell the property or all units in a property. PPH Management gives no assurance that PPH Management will be able to dispose of all units in a property by such dates. In the event that some units are not sold by the targeted exit date PPH Management intends to use the sales proceeds generated at such date to repay bank loans and pay other costs or taxes relating to the sale. The remaining amount (if any at that time) will be distributed to investors. The remaining net project result will be distributed to investors once all units will be sold. Even though it might be possible that PPH Management would receive the targeted sales price for the units, such a delay would have an impact on the annualised returns of a project. It might be also possible that the remaining units will be sold at a lower price which would have an impact on the total returns of the project.  
  • In the event that the sale of the building or the sale of some units in the building takes longer than expected PPH Management will continue to receive a monthly retainer until all units are sold (in case of a develop-to-sell project the monthly retainer payable in the period when only some units are left will be lower than during the development phase – details will be disclosed in the specific project management agreement).
  • In case of develop-to-sell projects no dividends or other returns will be distributed during the investment term. Returns will be generated only from the sales proceeds exceeding the total project costs.
  • Participation programs such as the PPH Investment Programme are generally considered illiquid and typically cannot readily be sold for cash. A secondary market for a stake in a property/shares in the SPV may not exist and, if it does, investors may be unable to resell their investments before maturity except at a substantial discount from their original purchase price. This might be also the case in the event of an unexpected sale of the total real estate.
  • In addition potential investors should be aware that they are investing in a specific project and that there is no diversification of their capital (as it would be the case for example in the case of an investment in a fund).
  • Some of the projects that might be offered under the PPH Investment programme will be structured as a share deal, where investors subscribe for shares in a SPV that has been formed for the purpose of developing and/or owning a specific property. Investors should be aware however that even though the SPV only holds that one property they own the property only indirectly though their shareholding in the SPV and that they are not individually registered as owners in the land register.
  • In particular in respect of properties that have been acquired for letting purposes investors should be aware that the age and quality of a property may affect its occupancy and rent levels and over time, increased costs may be required to maintain a property.
  • Although there will be a due diligence in the course of the acquisition of a specific project it cannot be excluded that certain matters and risks are not identified during the due diligence and properties may be exposed to risks of improper zoning, title registration and defects during planning and construction, which could prolong the planned investment term and/or increase the costs for a project. Both could impact the project’s return potential.
  • The real estate shall be insured at market conditions. Albeit it can occur that certain damages will be not covered through insurance. Under certain events even the destruction of the building might be not covered.
  • Economic or political developments or changes could have a material adverse effect on the business.
  • The tax implications on the participation models under the PPH Investment Programme depend on the current tax regulations in the Czech Republic and in the investor’s home state as well as on the regulations under respective double tax treaties. Tax implications on the participation models under the PPH Investment Programme, which are included in this Information Booklet, shall only be considered as general and indicative information. In addition future changes in tax regulations and/or under double tax treaties cannot be excluded. Such changes could have an impact on the asset, finance and earning positions and on the taxation of income. It cannot be excluded that future changes in the law may affect the business model significantly. PPH Management highly recommends potential interested parties to discuss tax implications of a potential investment with their tax advisor.
  • The purchase price/selling price as well as rents are currently usually paid in CZK. Currency fluctuations between CZK and EUR can have a strong impact on the income and result of the investor.
  • Projects are planned to be financed partly with debt capital. The economic success is dependent on the debt financing conditions. The interest rate may change through the market situation which may affect the outcome of the project.
  • With an investment in a project under the PPH Investment Programme potential investors or SPV in which they acquire shares also enter into a project development management and/or property management agreement with PPH. Such agreement grants PPH Management far reaching rights with respect of the management of a project. Under such agreements PPH Management is entitled to a monthly project development management and/or property management fee. The amount of such monthly retainer will vary from project to project depending on the amount of services to be provided by PPH Management and the fee payable for a specific project will be disclosed in the relevant project presentation and the relevant management agreement. In addition to such monthly fee PPH Management is entitled to a performance related fee amounting to a certain percentage rate of the profit that a project generates. This performance related fee is due at the disposal of a project. The percentage rate might be different for different projects and will be disclosed in the relevant project presentation and the development management and/or property management agreement for the specific project.
  • PPH Management has exercised utmost diligence in the preparation of this Investment Programme documentation and the specific project presentation. However, neither PPH Management as development manager and/or project manager nor Meinl Bank as introducer nor any other advisor of PPH Management, nor any of PPH Management’s or advisors’ directors, officers or employees make any representation or warranty as to the fairness, correctness, accuracy or completeness of the information contained herein. Nor is any liability accepted for the reasonableness of assumptions made or opinions stated or the achievement of projections, prospects or returns.
  • Potential interests should be aware that a loss of capital cannot be excluded: If a project fails investors that have invested in that project may lose some or, in the worst case scenario, all of their investment.