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Frequently Asked Questions

1. Regulation & Security

1. What is Foxstone?

Foxstone is a real estate crowdfunding platform linking investors together to purchase shares in a rented investment property in co-ownership, (to collect a rental income proportional to their equity stake) or to grant a loan to a real estate developer, (to collect a fixed amount of interest).

Foxstone is neither a financial intermediary, nor a real estate investment fund. The platform solely acts as a link between investors and sellers or property developers.

2. Is Foxstone in compliance with the Swiss regulations?

Yes, 100%. Foxstone’s business model complies with all the Swiss regulations. Two non-compliance confirmations were obtained from the FINMA (the Swiss Financial Market Supervisory Authority). Foxstone’s business model is compliant with:

  • The Federal Act on Stock Exchanges and Securities Trading
  • The Federal Act on Collective Investment Schemes
  • The Federal Law on Banks and Savings Banks
  • The Federal Law on the Acquisition of Real Estate by Persons Resident Abroad
  • The Federal Act on Data Protection

3. Is the platform secured?

Yes, the platform uses advanced encryption technologies (SSL 256 bits) to ensure a high standard of security throughout the system.

4. Where is the data stored?

Foxstone uses the IT infrastructure of a Swiss data center, in compliance with FINMA’s requirements as per the Federal Act on Data Protection and certified ISO 27001:2013. All the sensitive data is hosted in Switzerland.

2. Co-ownership

Co-ownership: General

5. What is co-ownership?

Co-ownership refers to the direct acquisition of fractional ownership of a property with the entry of the acquirer’s name in the land registry as a co-owner. The properties proposed for acquisition are existing and rented yielding buildings.

The co-owners of the property receive quarterly their net rental income, in proportion to their number of shares, and realize a potential capital gain at the sale of the property.

Co-owners can put their shares on sale at any time on the Foxstone platform.

6. How does Foxstone select the properties?

The selection of the properties is done through a strict analysis in five steps:

  1. The buildings are examined internally by a team of experienced real estate professionals through a series of dynamic financial models and analyses.
  2. Foxstone’s legal partners review the legal aspects (lease agreements, insurance and maintenance contracts, etc.) to eliminate any major legal issues.
  3. Foxstone mandates a certified expert to carry out an independent valuation. This valuation provides an estimate of the building’s value to ensure that the acquisition price is in line with the market value.
  4. A technical analysis is performed by an independent expert to ensure that the building is in good condition and to budget the potential works to be planned over the next 7 years.
  5. A final valuation is carried out by the mortgage provider.

At the end of this process, Foxstone retains only the properties that make up the most attractive investment opportunities , which corresponds to approximately 3% of the properties analyzed.

Foxstone focuses on existing and already rented residential buildings which are in excellent condition and which are located in large cities or peripheral areas with high growth potential.

7. Which official title certifies my investment in co-ownership?

Once the acquisition of the building is concluded, the name of each investor is entered in the cantonal land register as a co-owner. The entry in the land register guarantees ownership through the existence of a real rights.

A copy of this registration can be found on the online dashboard of each investor, who also has the possibility to obtain a certified extract of co-ownership directly from the cantonal land register.

8. What would happen to my co-ownership shares if Foxstone came to disappear?

Co-ownership implies that the names of the co-owners are entered in the land register. This title guarantees the co-owner investor real rights on the building.

Therefore the investors have no dependency on Foxstone which is only the administrator of the co-ownership. In the event that Foxstone comes to disappear, this would have no consequence on the co-ownership. The administration of the co-ownership would then be delegated to another company.

9. What kind of revenue can I expect from a co-ownership investment?

Co-owners receive quarterly the net cash flow from the property. It results from the rental income from which operating expenses, investment expenses for the improvement of the property and mortgage-related expenses are deducted.

Below is an example of an annual account:

Rental income
Operating expenses(Water, electricity, maintenance costs, insurance, property management fees)
Mortgage interestRate fixed for 7 years with a banking partner
Property taxVaries according to the canton
Vacancy allowanceSafety margin if an apartment stays empty for several weeks
Foxstone’s management fee (0.05% to 0.25% of the property price)Monitoring of the management, quarterly reports and proposition of a strategy for the building
Net income
Provision for renovation fund(or guarantee account)Provision to perform the works
AmortizationSince the credit is relatively low, banks do not require an amortization
Distributed income

At the time of sale of the property or when the investors sell their shares, they shall receive their invested capital in return plus any capital gain resulting for the appreciation of the property.

Each investment carries a risk which can strongly impact the yield. Foxstone advises every investor to read the Risk Factors document, which summarizes some of these risks, and to consult a financial expert and a tax advisor for each investment. No guarantee whatsoever is given as for the reimbursement of the capital and the payment of dividends.

 

10. What is the renovation fund (or guarantee account)?

In order to guarantee the maintenance and renovations of the building, which will be necessary in the coming years, the co-ownership agreement requires the administrator to set up a capex reserve (guarantee account) on behalf of the co-owners community. The percentage of revenue collected for this account is determined in advance based on the condition of the property and the recommendations in the inventory of fixtures. This percentage is defined by the administrator at the general assemblee for the following year.

This fund is solicited in case renovations are needed and for the payment of the bank if the rents no longer cover the payment of the interests. Thus, the co-owners are all the more protected from a possible subsequent call for funds. When selling their shares of co-ownership, investors collect the balance of this account in proportion to their participation.

11. What happens to the renovation fund when I sell my shares?

The renovation fund consisting solely of cash, is owned by the co-owners. Therefore, the share of each investor in the renovation fund is calculated pro rata of his or her share of co-ownership. In the event of a sale of a share of co-ownership, the shares of the renovation fund belonging to the out-going co-owner increases the selling price.

12. What are the differences between crowdinvesting in co-ownership and PPE condominium?

PPE condominium usually consists in the purchase of an apartment. It gives the owner the right to use this apartment either to live in it or to rent it (and generate returns).
A crowdinvestment in co-ownership consists in the purchase of a part of a building; each co-owner holds a fraction of the entire building. The goal is to earn a return and not to live in it.
As a real estate investment, crowdinvesting in co-ownership has the following advantages over PPE condominium:

  • The required investment is lower
    In Switzerland, to buy an apartment of 80 m2 it takes on average an equity contribution of CHF 150,000. Whereas the minimum amount of a crowdinvestment with Foxstone is CHF 50,000.
  • The rental risk is lower
    In the case of a purchase of an individual apartment for the purpose of renting it, the owner bears the entire rental risk. While owning a part of a building composed of several apartments (as in the case of crowdinvesting) dilutes the rental risk in the case of the departure of a tenant.
  • The interests of the co-owners are aligned
    In the case of a PPE condominium, some co-owners occupy the apartments and others rent them to generate a return. During the votes of the assemblee of co-owners, this situation may lead to divergent interests as to the expenses to be incurred in the common areas. In the case of crowdinvesting, all co-owners share the same goal: to generate a return, which facilitates the decision-making.
  • The property management is taken in charge by real estate professionals
    In the case of a crowdinvestment in co-ownership, the management of the building is delegated to a property manager which is responsible for the collection of the rents and the maintenance of the building. Foxstone acts as the administrator of the co-ownership and takes the strategic decisions for the enhancement of the building. The co-owners can participate in the major decisions regarding the management of the building at the annual general assembly held digitally.

13. Can I visit the property before proceeding with my investment?

No, for obvious logistical reasons we usually do not organize private tours of the buildings before buying them. However, you have access to the photos as well as the technical and structural details of the property, summarized in the prospectus of each investment proposal.

14. Can I live in one of the apartments of the co-ownership?

No, crowdinvesting does not give access to the individual use of the property, unlike the PPE condominium. Co-owners invest in order to collect returns and not for the purpose of living on the property.

15. What are the documents required to complete an investment?

Each investor expressing an interest in an offer receives the investment file including:

  • The investment brochure,
  • The brokerage and management mandate,
  • The co-ownership agreement,
  • The mortgage contract,
  • The deed of sale.

And must fill, sign and return the following documents:

  • The subscription form,
  • The power of attorney form in two copies,
  • The accreditation with the mortgage provider (information on the investor and the origin of the funds),
  • The document for the notary.

These documents are required by the mortgage provider and the notary.

Co-ownership: Mortgage

16. What is the target debt ratio when acquiring a property in crowdinvesting?

In Switzerland, the debt ratio on residential buildings can reach 80% of the value of the building. For the financial stability of the investment and in anticipation of future hikes of interest rate, we generally prefer to borrow a maximum of two-thirds of the property’s value. We want the building to be self-sustained and the mortgage cost to be largely covered by the rental income.

17. Which banks provide the mortgages?

Foxstone has partnerships with several renowned Swiss banks through which agreements are concluded to make the crowdinvestment in co-ownership as fluid as possible.
Each investor has to have filled beforehand the investment form supplied by Foxstone at the time of his subscription. These forms are sent to the bank in order to verify the origin of the funds and the investor’s solvency.

18. What is Foxstone’s policy regarding interest rates?

In order to protect the co-owners from a potential interest rate hike which could negatively impact the investment’s revenues, Foxstone generally sets interest rates over a seven-year period.

19. Who takes care of the debt settlement and how is it settled?

As the delegated administrator of the co-ownership, Foxstone takes care of the payment of the interest and the settlement of the debt. These payments are made with the rental income of the building. In case the rents would not be sufficient to cover the payment of interest, renovation fund (guarantee account) is solicited.

20. Do the co-owners bear joint and several liability for the total amount of the mortgage?

No, each investor is responsible for the mortgage only in proportion to his equity participation. Indeed, contrary to the current practice, the mortgage responsibility is uncoupled. By decreasing the debt ratio, Foxstone decreases the risk of default on the payment of interest and the reimbursement of the debt because the property is self-sustained with large safety margins. This credit structure allows the bank to waive the joint and several liability on the mortgage. Thus, the investors can take part in the operations without having to bear the responsibility for the total amount of the mortgage.

Co-ownership: Property Management

21. Who takes care of the management on a daily basis?

The collection of the rents and the day-to-day management of the buildings are delegated to established and renowned property managers with whom Foxstone concluded advantageous agreements for the co-owners, giving them preferential rates throughout Switzerland. The co-owners community delegates the renovation decisions and the payment of the mortgage to Foxstone.

22. Can the co-owners revoke Foxstone’s management mandate?

The co-owners are free to choose the property manager and revoke Foxstone’s management mandate. This will require a qualified majority of co-owners, as provided in the co-ownership agreement.

23. How are the renovation and maintenance costs collected?

The costs of the eventual maintenance and renovations are directly collected on the rental income; if this one is not sufficient, the capex reserve (guarantee account) can be solicited.

24. What are Foxstone’s fees for crowdinvesting in co-ownership?

For crowdinvesting in co-ownership, Foxstone takes the following fees: 3% of the gross value of the asset once the transaction is concluded and management fees of 0.05% to 0.25% of the property price, decreasing according to the amount of the transaction.

3. Crowdlending

25. What is crowdlending?

Crowdlending is the granting of a loan to a real estate company in order to finance a real estate development project or refinance an existing real estate asset.
Investors receive a fixed interest on a quarterly basis and recover their capital at the maturity of the loan, the duration of which varies from 1 to 5 years.
They have the possibility to put their loan contracts up for sale at any time on our secondary market.

26. Which title certifies the loan?

The loan is materialized by a debt contract issued by the borrowing company which owns the construction project or the building to be refinanced.

27. What would happen to my loan if Foxstone came to disappear?

In the event that Foxstone were to disappear, this would not affect the loan. Investors are still in possession of the debt contract issued by the company owning the real estate development project entered in the land register on behalf of the company. Depending on the investment offers, these contracts may also be linked to a first or second rank mortgage note, thus increasing the safety of the investment.

28. What kind of construction contract is concluded for real estate development projects?

The construction contracts are of the “general contractor agreement” type. These contracts are slightly more expensive than the “total entreprise contract” type, but they reduce the risk of delay and budget overrun because the company is responsible for any discrepancy. Thus, any overrun of the agreed construction budget is the responsibility of the construction company and any delay from the delivery deadline is penalized.

29. How can I monitor the progress of a project?

The real estate developer supplies quarterly reports (according to the project) on the project’s progress with photos of the construction site. Foxstone synthesizes these reports and publishes them on the investor’s online dashboard for an easy consultation.

30. What are the documents required to complete a transaction?

Each investor expressing an interest in an offer receives the investment file including:

  • The investment brochure,
  • The loan agreement

And must fill, sign and return the following documents:

  • The subscription form,
  • The power of attorney form in two copies,
  • The bank accreditation form (information on the investor and the origin of the funds),
  • The document for the notary.

These documents are required by the mortgage provider and the notary.

31. What are Foxstone’s fees for crowdlending?

For crowdlending, Foxstone takes the following fees: 3% of the amount of the loan from the investor and 3% of the amount of the loan from the developer.

4. Investment

32. What is the size of the investment offers Foxstone is seeking?

Foxstone is seeking investment opportunities the price ranges of which vary between CHF 1 million and CHF 15 million for crowdinvesting in co-ownership and between CHF 2 and 30 million for crowdlending projects.

33. Who is authorized to invest through the platform?

For the time being, we focus only on residential properties, which are subject to the Federal Law on the Acquisition of Real Estate by Persons Resident Abroad (LFAIE). Therefore, only Swiss citizens and holders of residential permits B and C from the Member States of the European Union (EU) or the European Free Trade Association (EFTA), are allowed to invest in this type of offer.

34. Can a company invest?

Yes. However, the majority of the company’s beneficial owners have to be Swiss citizens or Swiss residents. The applications will be treated on a case by case basis.

35. What is the minimum amount of an investment?

Depending on the size of the transaction and the regulation in effect for this type of investment (crowdinvesting in co-ownership or crowdlending), the minimum amount can vary. It generally starting at CHF 50,000.

36. How can I monitor the evolution of my investment?

All information, documents and contracts are available at any time on the platform in your secure account. You can view, download or print them. You receive an activity and management report containing detailed information on the evolution of your investment quarterly. In addition, an online professional dashboard allows you to monitor your portfolio and calculate the exposures by investment type, geography, liquidity and many other financial ratios.

37. To which taxes are my revenues subject?

Taxes vary according to the type of investment and the particular taxation of each investor. Each investor is invited to consult his own tax advisor before considering an investment.

38. Are the yields proposed by Foxstone guaranteed?

No. All the information displayed on the Website and through the platform as well as in all the investment documents is for information purposes only.

Each investment entails risks which can strongly impact the yield. Foxstone advises every investor to read the Risk Factors document, which summarizes some of these risks, and to consult a financial expert and a tax advisor for each investment. No guarantee whatsoever is given as for the reimbursement of the capital and the payment of dividends.

39. How is the capacity of an investment offer allocated?

The capacity of an investment offer is allocated on a “first-come, first-served basis”. An investment is registered once the investor fills all the documents, is approved by the bank and transfers the funds on the escrow account.

40. How may I diversify my investments?

We strongly recommend you to diversify your portfolio. This is why we propose buildings with various usages, in diverse geographical areas with a panel of financial instruments offering an optimal diversification and allowing to limit the systematic risk.

41. What happens if the amount to be raised for an investment is not reached?

If the amount to be raised is not reached, funds already transferred on the escrow account opened for this purpose are returned to the investors.

42. Does Foxstone invest in the opportunities offered on the platform?

For the time being, Foxstone does not invest in the opportunities offered on the platform. However, in the near future, an entity owned by Foxstone will co-invest in the proposed offers in order to insure a perfect alignment of interests with investors.

43. Does the invested amount cover all the transactional expenses?

The amount of your subscription includes all the transactional expenses. These comprise the notary’s fees, the bank charges, the technical, financial and legal audit, the independent valuation and Foxstone’s fees.

The investor has to bear the fees of the advisors he hired for an investment besides the notary costs for the certification of his signature.

44. Why do I have to sign a power of attorney?

In order to simplify the acquisition process, the investors sign a power of attorney which allows Foxstone to represent them in front of the notary to finalize the acquisition of the building in co-ownership. This avoids investors having to move to notaires in the different cantons in which they invest.

45. What is a KYC and why do I have to fill it?

A KYC (Know Your Customer) is the form used by banks to verify the compliance of the customers with the anti-corruption laws and to prevent identity theft, financial fraud, money laundering and the funding of terrorism. This form is required by the bank, independently of Foxstone, to accredit the investor before he transfers funds on the bank account dedicated to the transaction.

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