Funds will remain attractive despite interest rate hikes

Funds will continue to be an attractive haven for capital investors despite the fact that interest rates have gone up.

This is according to Pedro Coelho, the Vice-President of Square AM that manages the Portuguese real estate fund CA Património Crescente.
In an interview with the online news source ECO, Pedro Coelho said that while the Portuguese had traditionally invested in fixed term deposits and sometimes stocks and shares, real estate funds are generally more secure and don’t tend to be as volatile as the stock market. Real estate is also a class of assets which the Portuguese “tend to like by nature”.
The vice-president of Square Asset Management also said that it had purchased a logistics platform in Sintra in a sale&leaseback operation with paper distribution company Inapa, as well as buying 11 petrol stations in Spain, which have been rented out to Eroski – the third largest supermarket chain in Spain – of which eight are in the Basque Country.
Square AM also has “various other operations” that should be completed by the end of the year and involve around €30 million.
Pedro Coelho explained that it had begun its asset expansion in 2021 with the acquisition of 10 supermarkets with long-term leases and other properties in a country that is a “natural market” and which will increase the future profitability of the fund.
He says that while it is more difficult to buy property in Spain than in Portugal, there are lots of overseas investors in Spain who want to invest in Madrid and Barcelona. “Spain has around 20 large cities and we think we’ll find good opportunities”.
CA Patrimonónio Crescente currently has 25,000 participants in the fund, many of which have been secured by the Crédito Agrícola chain. It has many excellent assets in its portfolio with a lot of liquidity thanks to good tenants, long contracts and assets that are well positioned in terms of location.
Pedro Coelho, in an interview with ECO says that while the banks continue to offer low rates of return, funds have continued to be an attractive alternative.
However, the moment that banks begin to offer greater rates of interest on fixed-term deposits, some will inevitably prefer the less volatile and guaranteed returns against funds which cannot guarantee capital.