The Berlin-based company Capital Bay is launching an open-ended special AIF for residential property: The “CB Wohnimmobilien Deutschland” fund focusses on residential properties in the top 7 German metropolitan regions and in sustainably growing German cities with more than 100,000 inhabitants. The administrating investment company is Hansainvest.
Right at the start, the fund is investing around €260m in almost 1,900 residential units in the fast-growing cities of Hanover, Dresden, Fürth, Erfurt, Lübeck, Kiel and Nuremberg. All of the properties are located near the city centre, are in the affordable rent category and generate direct cash flows.
“We have thus already implemented our investment strategy and developed a broadly diversified residential property portfolio with stable distributions and returns and a core-plus risk profile,” explains Torsten Doyen, Managing Director of CB Capital Management.
The calculated rents in the fund are around 20% below the current market level and in the sale an average of two factors was deducted from the purchase factor, in contrast to standard market practice.
“Our target IRR of 4.1% is therefore extremely valid and would also withstand market corrections,” says Doyen. “In the fast-growing cities, in particular, there is not enough new residential construction to meet the demand and most of it is taking place in the upper rent and purchase price segment due to the high costs of development and construction. Demand for apartments with affordable rents will therefore significantly outstrip supply in the future, too.”