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When finance invests

in life estate

Turquoise Finances SA, a management company located in Geneva and managed by Mr Michel Jacques Petit, launches a SIF-SICAV (Specialized Investment Fund set up as a Variable Capital Investment Company) which invests in life estate in Europe. An activity this company knows well. It has been developing private Funds through this variation in real estate selling for more than five years.

What are the main principles of the SIF-SICAV "Fonds Viager Life SA"? Michel Jacques Petit: The Fund strategy is to buy occupied life estate. We are the only to offer this form of specialized investment in this sector. Concretely, as for a regular life estate transaction, the annuitant receives a "bouquet" (a determined capital paid the day the deed is signed) and for the rest of his life, annuities on a monthly basis. Once it ends, real estate is sold after it has eventually been restored. This Fund has the advantage of not being correlated to markets and of having a nil indebtedness rate as it works from its own funds only. In which countries do you plan to buy real estate? M.J.P.: Thanks to its experience, regarding first purchases, the fund management works on buying real estate on buoyant market only such as the French Riviera or Paris and should reach about 400 units in 2011. In a second time, investments will be made in Italy, Belgium, Luxemburg and any European country which authorizes a real estate selling in return for a life annuity similar to the French model. Who does this new Fund apply to? M.J.P.: The SICAV is intended for those who wish to diversify their portfolio. So, we aim at both various institutional actors of the market and qualified private investors within the meaning of the instructions of the CSSF (Commission for the Supervision of the Financial Sector) in Luxembourg. All qualified French investors will obviously be able to subscribe.

Why is it an ethical investment? M.J.P.: Fonds Viager Life SA is a financial tool that vehicles an ethical notion because it aims to strengthen social cohesion by limiting impoverishment and isolation of elderly people. Completing retirement pension while continuing living at home is an ideal that seniors can achieve thanks to our investments, not forgetting that most of the time children receive the initial «bouquet» by donation. This increase of purchasing power feeds economy, acts as a lever, and reduces disparities. In your opinion, are ethic and profitability compatible? M.J.P.: The private funds which invest in real estate sold in return for a life annuity that we manage have realized a capital gain between 12% and 14% per year. In comparison to these funds, the number of life estate of the new SICAV will be multiplied by 10. With that in mind, it will dispose of more important property assets that only grow after each release. The business plan made on a period of 20 years, confirms a return on invested capital well over the average conventional real estate funds. So, investors will benefit of supported long-term growth valued at 12% per year, and this rate is made to grow depending on the increase of real estate. Is the fund going to pay a return? M.J.P.: The functioning of the SICAV is mainly based on capital gain however the prospectus which allows issuing foresees the possibility to pay dividends.

The Fund strategy is to buy occupied life estate. Interview by Lucie Portejoie

According to your opinion, why do you think real estate sold in return for a life annuity has a real potential and is going to become inevitable? M.J.P.: The lengthening of lifetime and economic crisis presage major difficulties for retirement plans. Today, it has become the centre of concern. Seniors have financial difficulties because of a retirement pension judged too low and others who are better off are not ready to give up their spare time or their property. It is then naturally that life estate, an ancestral method, which had already for purpose to overcome the relative absence of retirement pension all along the 19th century, comes back up to date after been for a long time given up. And as an evidence, for several years now, we notice a growing development of the life estate market.

In brief Code ISIN Actions A: LU 0569699696 Code ISIN Actions I: LU 0569699852 Depositary: ABN AMRO BANK (Luxembourg) SA Manager: Turquoise Finances SA Investment horizon: Medium and long term Creation date: December 2010 Currency: Euros


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