[Issuer] SafeGuard Real Estate Fund

• Business Name: SafeGuard Real Estate Accommodation Fund
• Current AUM: US$150m in other mandates managed by SafeGuard
• $ Volume of Transactions Completed Last 12 months: US$11m
• Target Launch Date: Q4 2022
• Location and Team Size: Singapore with 5 members
• Years in Operation: 7 years and managed over US$500m of institutional grade real estate assets globally
o If less than 2 years in operation, number of years founding team has worked together:
• Historical Loan Tape (years): 5 years
• Key Professional Partners (legal, accounting, operational, technical, structuring):
o Legal: Withers Khattar Wong
o Fund Manager: SafeGuard Real Estate Management (Capital Markets Licensed under Monetary Authority of Singapore)
o Audit: Ernst and Young
o Fund Administrator: TricorIAG
o Structure: Singapore VCC, a SPV registered with Monetary Authority of Singapore
Strategy:
• Business
o Describe your business and go to market strategy.
 What makes your approach unique within your industry?
Founded in 2014, SafeGuard Real Estate Management (SafeGuard) is a Licensed, Singapore based real estate fund and investment manager. Rapidly growing since incorporation, SafeGuard manages real estate funds on behalf of discretionary investors, and third party segregated mandates. Safeguard pursues controlled risk, core and value-add strategies in institutional grade real estate markets globally.

We address the funding gap on quality projects which are located in markets which are underfunded. These businesses typically require capital due to the need for capital intensive investment in land or real estate and presents strong case to scale and grow in their markets.

 Why are you a good partner for Centrifuge?
We are a team of former fund managers and bankers. We are a strong believer of Web3.0 and the blockchain fuelling the growth of the future and disrupting the traditional banking and asset management industry.

 How do you differentiate yourself from competitors?
We have been funding our proprietary, blockchain based tokenisation platform to offer institutional grade real estate investments to accredited investors. The platform is called SafeRe and the ideal is to bypass banking, financial institutions and intermediaries to enable investors to pick and choose the real estate tokens they would like to invest and reap the full benefits of the returns without having to go through a layers of middlemen or brokers and paying hefty fees.

o How is your entity financed today, what are the current sources of capital:
 Equity raised: We have raised close to US$80m across our many funds and mandates. This is a new offering we intend to launch soon.
 Debt raised: None.

o What is your entity’s revenue/fee model:
 Origination fees: NA, we charge an annual fee of around 1.5% on the funds managed.
 Target spread: NA
 Other: NA

• Capital
o Please explain the source(s) of, and ability to scale, your first-loss junior (TIN) capital in the pool: Our sources of funding are through traditional means from High Net Worth individuals, Family offices and Institutional Investors. We will be tapping SafeRE, our online blockchain platform to distribute as well.
o Please explain the source(s) of, and ability to scale, your senior (DROP) capital in the pool: Our sources of funding are through traditional means from High Net Worth individuals, Family offices and Institutional Investors. We will be tapping SafeRE, our online blockchain platform to distribute as well.
o Capital relationships and how much you will bring through Centrifuge KYC to invest in either senior or junior tranche of your pool:
From our existing investors, we can tap those with interest to gain exposure to Defi to invest via Centrifuge and now, we can tap other sources of Crypto investors to invest into a fund with income producing assets as the underlying.

• DeFi
o Outline why DeFi is important to your business strategy:
As articulated earlier, we strongly believe that the financial sector especially the Asset Management space is ripe for disruption. Investors are demanding transparency, frictionless and quality investments underpinned by institutional grade assets that they traditionally would have no access to.

DeFi is able to grant investors that access and in return help fund businesses with innovative ideas to grow and scale.

o Articulate why Centrifuge’s community and protocol is a fit for financing:
We have seen the approach and ability of Centrifuge in managing the current Pool of offering on Tinlake and it is exactly the way we envisage a Decentralised Asset/ Fund Management to look like. The ability to cut out inefficiencies and unnecessary participants in the process is aligned with our vision.

Structure: Risk & Terms
• Please explain the key risks inherent in this opportunity and asset class:

The Fund will be subject to general risks inherent in investing in real estate (which risks may be increased if an investment is leveraged), including (without limitation): (a) changes in the general economic climate; (b) changes in local market conditions leading to an oversupply of space or a reduction in tenant demand for a particular type of property or property-related services in a given market; (c) attractiveness and location of properties; (d) the ability of tenants to make lease payments; (e) changes in interest rates, costs and/or the costs or availability of credit; (f) increased operating costs, including energy costs and property taxes; (g) changes in regulatory requirements and applicable laws, including taxation, environmental, landlord/tenant, building, usage, development, rent control and/or planning laws; (h) credit risks of tenants, borrowers, buyers and sellers of properties; (i) environmental factors and natural disasters; (j) acts of terrorism, acts of war and uninsurable losses; (k) the quality and strategy of property and asset management; (l) quality of maintenance, insurance and management services, and (m) competition. The marketability and value of the Fund’s investments will, therefore, depend on many factors beyond the control of the Fund and the Manager. As a result, there can be no assurance of maintaining or increasing the value of the Fund’s investments or that there will be a ready market for any of the investments. The Fund’s investment objectives may not be realised and all investments present a risk of loss of capital.
The financial performance of the Fund may be adversely affected by general national and international economic conditions, by conditions within the real estate market or by the particular financial condition of the parties doing business with the Fund. In particular, the value of an investment may be adversely affected by changes in the rates of inflation, cost of borrowing and taxation, and/or local real estate market conditions, including an oversupply, the performance of other competing prime real estate properties or reduced demand for prime real estate space. As a result, the Fund’s revenue and results of operations depend, to a large extent, on the performance of the economy, as well as global economic factors. Additionally, factors which may adversely affect the financial performance of the Fund include natural disasters, terrorism, acts of war, military actions, unexpected changes in political regime or ruling authority and uninsurable losses.
• Pool Size & Pipeline:
o At Launch: 0
o 6 Months after Launch: US$20m
o 12 Months after Launch: US$50m
o Origination Pipeline Details: We have maintained a pipeline of cashflow yielding assets located in capital cities globally that we execute on immediately once funds are raised.

• Asset & Rates:
o Asset Type(s): Income producing accommodation real estate, located in prime, gateway cities globally.
o Average Ticket Size: 5m to 10m
o Average Asset Maturity: 3 years
o Expect Default Rate: 0%
o Expected borrowing rate on senior tranche (on-chain): 5%
o Expected lending rate to end borrower (off-chain): 5%-7%

3 Likes

Hi Kylan. Thanks for the submission. One detail of your POP-submission draw my attention.

In the POP-template, one of the criteria is a pool size of at least 10 mio at launch

image

The information given deviates from the criteria. Could you give a short explanation how to reach the suggested amount?

Hi @KingPin, thank you for your submission and interest in launching a Pool on Centrifuge!

I also have a question, regarding the capital you are bringing to the pool.

When asked to explain the source of both the TIN and DROP capital in the pool, you write:

Can you please clarify what that means? It is a bit unclear (to me at least) what exactly that means. Would you be able to attach some figures to make that clear to the community?

Thanks.

POP Score: SafeGuard Real Estate Fund

The Centrifuge community has reviewed the POP for SafeGuard Real Estate Fund, based on the 10 criteria, and the result is: :six: / :ten:.

SCORE

For each criteria, either a :zero: (criteria not met) or :one: (criteria met) will be given.

Below you will find the results of the individual criteria:

Business Years in Operation: :one:
Off-Chain Institutional Investors: :one:
Strong Pipeline: :one:
Volume Originated last 2 years: :zero:
Historical Loan Tape: :one:
TIN Tranche: :zero:
DROP Tranche: :zero:
Pool Value at Launch: :zero:
Pool Value in 1 Year: :one:
Asset Maturity: :one:

RESULT

:no_entry_sign: This proposal does not meet the threshold of >66%.

NEXT STEP

The Centrifuge DAO may still give a recommendation and this POP may continue to advocate for their proposal publicly in the Forum and seek a path forward to finance RWAs through Centrifuge. However, a POP should be aware that the other organizations (underwriters and institutional investors) do not have a requirement to engage nor do any of the following steps in the POP process.

If you want to see all the steps of Stage 1 of the POP process, you can check this post here.

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