The Eleo Capital Distressed Property Fund 2 is the second investment venture launched by Eleo in the last four years, on the back of its highly successful Distressed Property Fund 1.
Eleo director Manuel Franck explains that through Fund 2, Eleo aims to exploit current market opportunities by purchasing properties at a discount to their current market values. The dual focus is on converting distressed properties into income-producing rental assets, with the ultimate goal of re-selling at the moment when maximum profit can be realized. The fund will invest in individual properties under R1m, predominantly in the Western and Eastern Cape region through its offices located in Cape Town and Port Elizabeth.
Franck, a member of the Cape Town chapter of global business-owners network Entrepreneurs' Organization (EO,) says that current market conditions create a unique opportunity for exploiting value from this niche distressed property market. "Our philosophy is to keep it simple. We are driven to source the best possible deals on distressed assets, which can be refurbished and quickly returned to market for sale at attractive prices to prospective buyers."
He founded Invela Finance Corporation in 2007, providing bridging finance to buyers and sellers of property. Due to the limited capital available to grow the bridging book and to invest in distressed properties at the same time, he made the strategic decision to plough capital into investment in distressed properties rather than growing the book. Invela secured financial backing from Eleo Capital and made its first acquisition through the Eleo Capital Distressed Property Fund 1 in August 2008. The partnership combined Eleo's property acquisition experience with fund management expertise to develop an investment product that would generate returns from the distressed property market.
Through Fund 1, which is now closed, Eleo has acquired in excess of 400 properties, with over 300 successful refurbishments and sales, and an average turnaround time of 235 days. The fund realized a net return on capital invested in excess of 45 per cent.
