Prospectus approval by AFM and next steps

BRXS news
Co-Founder BRXS
Amrita Ramsaransing
Co-Founder BRXS
January 4, 2024


Over the course of 2023 we worked on our (longer than anticipated) Prospectus Approval Process, in order for us to scale BRXS to the next stage. Our initial exemption model, which is allowed under the exemption rules set by the AFM, was a good start model however it had some growth limitations, this is why we worked with our external advisors on a growth model for all our future investment offerings.  You can read more about the detailed work around the approval here.

At the end of December 2023 we finally received our approval to offer notes under an approved prospectus model that consists of three parts: a registration document, a securities note and a summary. It is important to note that all these three parts need to be read together before making a decision to invest. In this blog we are providing more details about what this prospectus means for all our future investment offerings and what does or does not change for any past investments.

Approval explained

A brief look back on the road from exemption to approval

When we started BRXS in 2021, we wanted to launch an offering that was both legally allowed and one that would allow us to test if there was an interest for our idea: making investment in real estate accessible for everyone.
We worked with our external advisors on finding a fitting legal model, which we concluded was the exemption under Dutch law, where we were not obligated to publish a prospectus. This exemption applies when you offer notes up to a total of less than EUR 5 million in a 12 month period. An exemption does not mean not complying; it means that as long as you remain below that threshold you do not need to publish a prospectus however you do  need to follow certain rules (eg. having a banner clearly stating you are exempt from a prospectus publication, providing for each investment note terms and an information document).

Under the exemption model we wanted to ensure that each investment offer was and still is protected in case something goes wrong. With our advisors we chose the best way to do so was to do each investment offering under its own entity. Which works if you have 5 - 10 entities however it does not scale if you want to have 10 -100+ offers and the same number of entities, after all, setting up and managing multiple individual entities is costly, time consuming and complex.

The exemption limitations and the offering set up worked well for us in the first few years, to offer more and to grow we needed to work on the next steps.

The approval and how it works

The next natural step in continuing to offer notes was to go for an approved prospectus. In the next model two things were important for us: 1) scale and growth 2) investor protection.

The approval we received is given for one issuing entity: BRXS Properties and all future investment offers under this approval will be done by this entity. Each investment opportunity is separately offered and investors continue to be protected as we put a lien (also known as a mortgage right) on each offering. This makes the process more straightforward:

We continue to do all the work around selecting, reviewing, preparing, renting out and managing these residential properties that we purchase.

As each investment could have different risks, property specific information and interest rates. As an investor it is important you have the detailed information, this is reflected in the type of approval we have, a prospectus approval that consists of three parts:

We are able to provide multiple offers (that are individually protected) through one entity, however for each offering we need to submit an individual securities note and summary for approval with the AFM. Only once we receive this approval we can start offering this specific investment.

First offer under the approval

Our prospectus approval consists of three parts, in order to obtain the initial approval and to complete the process, we had to make a decision to either wait until we had a new investment opportunity or to use an existing investment opportunity we had already.

Before the Summer of 2023 we purchased our Vrijenban and Oosterpark property under BRXS Properties in order to have them ready to offer under the approval. As the approval took longer than anticipated we had to offer these properties under the exemption.

At the time of purchase and offering the approval process was ongoing (in various review and update rounds), which meant we had to update our registration document and financials (with our auditor) that were under review at the AFM. To avoid other significant property related updates we halted any and all purchases, otherwise we might have been stuck in an endless loop of the approval process.

To complete the first three part prospectus approval we therefore chose to use an existing property Oosterpark.

The first offer under our approval is going to be a refinancing. We offer existing note holders to refinance their notes under the approval (at no additional cost) and a portion of unsold notes in the first offering will be reissued and offered under the approval.

It is important to keep in mind this is an offer for a limited period of time and if we do not at least (re)finance 6.420 notes before the end period of the offer, we can either prolong the offer or cancel it all together. If the offer is cancelled existing noteholders will keep their notes under their current terms as is, and the initial unsold notes will fall under the exemption as well.

Existing investments and the approval

All existing investments are done under a legally allowed exemption and their investments are separated and protected under their individual entities. Today they will remain as is.  

We did look at the options to potentially refinance them under the approval, however the process would be too costly and complex (moving from one entity to another could trigger another property transfer tax which negatively impacts the investment), next to that we would need to write, submit and get a securities note and summary for the refinancing approved by the AFM, and additionally the already approved registration document would have to be updated reapproval each time (the AFM charges for each updated registration document and new securities note and summary) and for a refinancing you have to be able to get all existing noteholders onboard (or find new noteholders, ready to take over in a short period of time) otherwise the offer falls apart.

The future

While 2023 was mostly working behind the scenes on this complex three part prospectus, we look forward to building the next phase of BRXS and offer hopefully many new investment opportunities under this approval. We hope you continue to join us on this journey!

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