2024 YELDO Performance Report

We are glad to share our 2024 Performance Report, highlighting our dedication to transparency and celebrating another year of growth for YELDO.

EXECUTIVE SUMMARY

• Strong Performance: In 2024, we achieved key milestones, including surpassing EUR 1 billion in total transacted value*, completing 16 investment exits, and maintaining a 14.2% historical IRR.
• Capital Protection and Aligned Interests to Drive Returns: we have continued to focus on capital protection in 2024, prioritizing senior and mezzanine positions. By incorporating equity kickers into agreements, we have aligned interests with developers to maximize value, boosting returns for investors while managing risk effectively.
• Geographic Expansion and new Asset Classes: in 2024 we have diversified our investment portfolio across seven European countries, with Portugal and Liechtenstein joining Italy, Switzerland, Spain, Luxembourg and Monaco. We have also included first investments in Student Housing and Co-Living, capitalizing on growth opportunities in the asset class.
• Focus on Real Estate Private Debt: despite significant macroeconomic challenges, we continue to identify compelling opportunities for investors in Real Estate Private Debt, supported by growing demand for alternative financing solutions.
• Resilient Portfolio Creation: our investment approach has consistently emphasizes building a resilient portfolio by carefully selecting and allocating single deals to ensure diversification and maximize returns. This strategy provides investors access to a naturally diversified product with varying exposures, enhancing stability and growth potential.

KEY HIGHLIGHTS 2024

In 2024 we celebrated more than EUR 1b in total transacted value, we marked our 16th investment exit and maintained an historical IRR of 14.2%.

THE MACROECONOMIC LANDSCAPE IN 2024

Financing Challenges for Real Estate Borrowers

In 2024, macroeconomic changes have reshaped the real estate market. While the European Central Bank has started to ease interest rates through gradual cuts throughout the year, it is clear that its commitment to managing inflation will keep interest rates high compared to the historical lows we have witnessed in recent years.

As many low-interest loans approach maturity, developers face challenges in fundraising and refinancing, particularly as traditional banks reduce credit availability. Private credit is increasingly filling this gap, while equity investors deal with the erosion of asset values due to elevated rates.

Focus on Prime Deals

Amid high demand for alternative financing, lenders need to prioritize quality assets. Residential and Logistics properties in prime European locations remain more attractive for financing compared to Office and Retail spaces, while new asset classes - such as Student Housing and Co-living - are emerging as a trend in the European Real Estate investment space.

Greater Portfolio Diversification

The traditional 60-40 portfolio (60% equities, 40% bonds) is increasingly seen as inadequate in today's dynamic market environment. While not a new concept, investment managers now advocate for a more diversified allocation, suggesting a balanced portfolio of 50% equities, 30% bonds, and 20% alternative investments, including Real Estate. [2]

This strategy not only enhances returns but also helps stabilize volatility, offering investors a more resilient approach to navigating market uncertainties.

YELDO's strong track record in alternative investments demonstrates the value of incorporating these opportunities into a well-balanced portfolio.

YELDO PERFORMANCE 

Since our inception, our investment offering has been focusing on stable economic areas in Continental Europe and selected asset classes, such as Prime Residential, Prime Hospitality, Logistics. 

Our philosophy continues to prioritize asset-backed preferred positions, such as preferred equity or debt, offering investors protection through sponsor equity participation, while including profit sharing mechanisms such as equity kickers that align Sponsor’s interests with YELDO investors.

Our 2024 Performance

Considering our 2024 fundraising efforts, 31.7% of the total capital has been invested in senior positions, such as senior loans and 65.4% in mezzanine positions, yielding an expected gross average annualized return (IRR) of 15.6%. [1]

Our investment portfolio has become more diversified, now spanning seven European countries, thanks to the addition of Portugal and Liechtenstein alongside Italy, Switzerland, Spain, Luxembourg, and the Principality of Monaco. 

Furthermore, we expanded into new asset classes with our first investments in Student Housing and Co-Living, key growth areas addressing evolving market needs.

Expanding into Portugal enables us to capitalize on a rapidly developing real estate market fueled by economic stability and increasing foreign demand. Similarly, our focus on Student Housing and Co-Living caters to the growing demand for affordable accommodation among students and young professionals, ensuring stable income streams while mitigating vacancy risks.

Our Performance since inception (2019-2024)

Since 2019, our investment offerings have mostly focused on protected positions, balancing between Senior (39.8%), and Mezzanine (54.2%). 

Residential real estate projects remain at the core of our strategy, making up 79.7% of our portfolio, with prime residential properties driving growth. Logistics opportunities represent 6.0%, reflecting the increasing demand for efficient supply chain solutions, while hospitality projects account for 5.5% of our offerings. The newly added student housing sector now constitutes 4.9% of our portfolio.

Geographically, YELDO has historically focused its investments in Italy, which accounts for nearly 60% of our offerings by invested capital, and Switzerland with 13.3%. Portugal - our latest addition - now accounts for 10.1% of our investment portfolio. Monaco, Spain, Luxembourg and Liechtenstein follow next, further enhancing diversification.

This geographic and asset class diversification strengthens our ability to navigate uncertain times and positions us to capitalize on growth opportunities in resilient Western European markets. It also ensures stability through exposure to secure markets like Switzerland, Monaco, Luxembourg and Liechtenstein, while embracing the growth potential of regions like Portugal, Spain, and Italy.

YELDO’S PERFORMANCE IN CONTEXT: TRADITIONAL VS. ALTERNATIVE PORTFOLIOS

From 2021 to 2024, YELDO’s investment offerings consistently outperformed traditional portfolio allocations. During this period, the traditional 60/40 portfolio, comprising  60% equities and 40% bonds, delivered an annualized 2.6% rate of return (IRR). In contrast, YELDO’s investments achieved an annualized return of 14.0%. [3]

When incorporated into a diversified portfolio, YELDO’s alternative investment offerings further demonstrated their value. A hypothetical portfolio consisting of 20% YELDO investments, 50% equities, and 30% bonds outperformed the traditional 60/40 portfolio by an average of 2.5% per year, nearly doubling the return of the more traditional portfolio. This data underscores the potential for alternative investments to enhance returns and reduce volatility within a balanced portfolio structure.

Focusing on the 2024 year-to-date performance, the alternative portfolio, with a 20% allocation to YELDO, achieved an IRR of 9.7%. This is a notable improvement over the 8.4% IRR recorded by the traditional portfolio. These figures highlight the resilience and consistent performance of YELDO investments, even amid evolving market conditions.

CONCLUSIONS

As we navigate an evolving market landscape, YELDO’s mission remains to provide direct exclusive access to off-market institutional-grade investment opportunities. 

By curating a diverse range of real estate deals across geographies, asset classes, and risk-return profiles, we empower investors to tailor their strategies, whether through deal-by-deal investments or a diversified approach via our YELDO Private Debt Fund.

Our ability to adapt to emerging market trends underscores our commitment to staying ahead of industry trends. By introducing new asset classes, such as Student Housing and Co-Living, we address evolving demands while offering robust investment opportunities. Furthermore, our incorporation of profit sharing mechanisms aligns developer and investor interests, reinforcing our strategy to maximize returns while mitigating risk.

Looking ahead, we believe Real Estate Private Debt will continue to serve as a compelling source of value for investors in 2025 and beyond. 

Log onto our investment platform and discover our upcoming investment opportunities.