Commerz Grundbesitz-Investmentgesellschaft mbH (CGI), a member of Commerz Grundbesitz Group, has signed more deeds in acquisition and sales transactions than ever before, thus showcasing its active real estate portfolio management. According to in-house statements, the transactions volume exceeded €6.85 billion in the past two calendar years, covering 54 properties.
The Fund object One Curzon Street in London was sold by hausInvest europa after an ownership period of 4 years with a profit of €52 million, measured above the last book value.
In 2004 and 2005, 18 properties were acquired for the two open-ended property funds managed by CGI, hausInvest europa and hausInvest global, at a total purchase price of approx. €3.79 billion. Inversely, portfolio objects with an aggregate volume of approx. €3.06 billion were successfully disposed of during that same time. Sales revenues exceeded the book value by approx. €343 millions before ancillary costs and taxes, and by approx. €200 million after the deduction of all costs (ancillary sales costs and taxes).
"The volume of real estate transactions is determined in particular by the capital inflow situation for our Fund," says Dr. Frank Pörschke, Management Spokesman for Commeerz Grundbesitz Group.
"During sales periods with substantial capital inflow, real estate acquisitions tend to carry the day so as to invest the resulting liquidity swiftly into real estate for the sake of higher returns. In times of major capital outflows, additional liquidity is realized through real estate sales," Pörschke continues to elaborate.
Prerequisite for this strategy though is to always keep the real estate books values up to date. Especially in recent years, German real estate markets fell behind the pace of the European economy, manifesting the slowest development by far. While upward and downward revaluations abroad balanced each other, or even achieved overall increases in value, German properties lost in value more than others. That is why German Fund real estate has been steadily depreciated over the past 10 years by a total of now 26%. Yet the severe market adjustments have affected the German share of the Fund real estate with a disproportionately low 20%.
"We've done out homework and have taken care of the necessary adjustments in market value. The key to our success is a balanced investment strategy, effecting an enhanced risk diversification. That is why we have spread the investments of hausInvest europa across 10 different European countries," as the Fund Manager points out.
In the calendar year of 2005, hausInvest europa netted an outflow of €1.7 billion in redeemed capital, specifically because of an ROI weakened by depreciations. These outflows were matched by €2.3 billion in revenues from real estate sales. In December of 2005, the suspension of payment by a competing fund caused outflows in redeemed shares across the entire industry. hausInvest europa was in no way exempt from this.
"We suffered a net capital outflow of about 4% of the Fund volume in December of 2005. Unlike other funds, hausInvest europa required no supportive action by the parent company though, nor any unplanned loans. Meanwhile, the capital outflow has clearly slowed down again," as Pörschke explains. At present, hausInvest europa holds sufficient cash reserves, and even reports a slightly increased liquidity of approx. €1.3 billion.
According to Pörschke, the last two years for hausInvest europa have been marked by the Fund's progressive restructuring phase. "We have optimised the real estate portfolio of hausInvest europa and cleansed the Fund of some of its properties. Cases in point were the smaller and therefore high-maintenance objects in Germany. Economically unattractive objects abroad were also disposed of without loss, such as the vacant office building on Buckingham Palace Road in London, which was sold for approx. €180 million in December of 2005. On top of that, some real estate was sold for the sake of extra profits. B