5 Questions to: REAM

What makes REAM Group management unique?

REAM’s strategy is based on the development of four different activities in the same investment vehicle:

• Real estate development, through the brand Devlop;
• Co-living residences, through the brand Flexiroom;
• Hospitality, with a 31-room hotel named Kazakiwi;
• High-yield diversified rental portfolio with retails, offices and flats, through the brand Invest.

REAM management distinguishes itself with its innovative vision based on the diversification of its portfolio across real estate sectors and locations with a good balance between buy&hold assets and construction projects.

We possess deep market expertise, leveraging local insights and regulatory knowledge thanks to both the Management team cumulating more than 20 years of experience in the real estate and investment environment, and the operational team composed of experts in their field. Our flexible and streamlined structure enables us to internally manage and oversee all activities, ensuring 360° control over the operational chain. With precise knowledge of asset evolution, we maintain financial control. Our marketing and sales processes for development assets are highly efficient. We achieve exceptional occupancy rates and annual rental revenue increases exceeding 5% for co-living and rental properties. Our asset lifecycle management prioritizes proactive property management for optimal efficiency.

Notably, REAM integrates sustainable practices, considering ESG factors in investments and property management, setting a high standard in the industry with for instance the development of an “éco-quartier” in Profondeville.

What challenges is your industry facing?

The year 2023, following on from 2022, has had a particular impact on the real estate market. First, COVID-19 and the Ukraine war increased construction costs. Then, rising interest rates, affecting both: buyers' investment capacity and therefore the speed of sales on development projects; and financial costs and therefore margins. A slowdown in the economy in Luxembourg and Belgium have led to major operational changes and difficulties for some of the sector's major players.

Meanwhile, there are signs of recovery: inflation is decreasing, and governments, especially in Luxembourg, are implementing policies to kick-start the economy. As a result, the market is optimistic about the outlook for H2 2024.

To counterbalance the slowdown and difficulties on the development front, the rental market is in full swing. Demand for housing continues to grow, while supply is falling due to a lack of development, leading to a shift in the market towards rentals.

In view of current market developments, our strategy will focus on targeted development of the Flexiroom portfolio, in line with current lifestyle trends.

In real estate, as in other investment segments, confidence will determine market trends in 2024.

What is your strategy for the coming 5 years? Can you describe your investment philosophy and approach to selecting portfolio assets?

Currently, REAM aims to transition into a CSSF regulated fund within 5 years while maintaining a diversified portfolio with an optimal risk/return ratio. Our target is to manage a portfolio worth €100 million in gross assets. To achieve this, we will concentrate on expanding our co-living and hospitality activities.

Our strategy aligns with the evolving residential market and demographic trends in Luxembourg. We aspire to develop inclusive housing solutions that embrace ecological principles and adapt to changing lifestyles, thus fostering economic and social growth.

With expertise in development, property management, and revenue optimization, we aim to expand both Flexiroom and Kazakiwi brands. We are planning to open new co-living residences in Luxembourg and Wallonia, as well as extend our current Luxembourg hotel to over 55 rooms. Additionally, we are scouting for new hospitality assets with similar characteristics: around 50 rooms, centrally located, and easily accessible.

How does REAM assess and manage risks within its AIF portfolio, particularly in relation to real estate market fluctuations and economic uncertainties?

As an alternative investment fund, our activities undergo annual audits by Akene. Our assets are valued twice, internally and by external assessors, then reviewed by Altus. Recent challenges include rapid interest rate increases, economic downturns and legal issues affecting valuation methods.

We maintain a conservative approach in valuing our portfolios, adjusting yields to reflect market risks and making provisions for uncertain project sales. Despite this, our occupancy rates remain high at nearly 99%, and rents increased by over 5%.

Our Kazakiwi hotel, opened in April 2023, exceeded expectations with a 73% occupancy rate and a 12% higher room rate than planned. This success has prompted us to expand with the Néokiwi project by 2026.

To mitigate risks, we will focus on developing our co-living and hospitality sectors while managing leverage.

How does REAM stay competitive in the AIF industry?

REAM maintains competitiveness in the AIF industry through several key strategies:

1. Real Estate Expertise: REAM leverages deep understanding of market trends, property valuation techniques, and risk management strategies, ensuring informed investment decisions.
2. Innovative Investment Strategies: REAM tailors investment strategies to meet evolving investor needs and market dynamics, staying ahead with innovative approaches to maximise returns.
3. Client Satisfaction and Long-Term Relationships: REAM prioritizes client satisfaction and fosters long-term relationships, delivering value and trust through personalised service and tailored investment solutions.
4. Regulatory Compliance: REAM stays abreast of regulatory updates and adheres to stringent compliance protocols, ensuring alignment with legal requirements and maintaining investor confidence.

Moreover, REAM's unique strategy sets it apart in the market. By offering a diversified real estate fund with both development activities and a buy & hold portfolio in Luxembourg and Belgium, REAM provides investors with opportunities for quality rental investments and participation in residential property development. This mixed portfolio, spanning rental investment and property development, targets strategic assets with high potential to generate recurring and predictable revenues, as well as higher turnover revenues over a 3 to 5-year project duration. This distinctive approach offers investors a comprehensive wealth-building opportunity with multiple avenues for growth and income generation.