CMC Capital, the Cork-based wealth management and property investment division of Crowley & McCarthy Chartered Accountants, has announced plans to invest a further €100 million in German commercial property. The company plans to raise €20 million in equity for their new German commercial property syndicate from Irish investors.
CMC Capital has successfully invested €500 million in German commercial property on behalf of syndicate and private client investors since first entering the market in 2004. This includes the recent purchase, through a joint venture with a UK partner, of Germany's busiest shopping center, the A10 Centre outside Berlin, for €245 million.
The minimum investment in the new syndicate will be €100,000 with €10,000 increments thereafter. The €20 million in equity will be combined with non-recourse finance of 80%, creating an expected total portfolio value of €100 million. The CMC Capital approach is to spread the investment through three or four properties in Germany's leading cities, thereby reducing risk by diversification, and providing investors with exposure to a number of commercial regions.
The syndicate is expected to run for 7.5 years with a projected rate of return on the investment of circa 27% simple per annum (pre tax and net of fees). Investors can also opt to receive an annual payout of 5% of the amount invested for each of the seven years. At the end of the syndicate investors will receive a pre tax return from sale proceeds of 12% per annum free of any profit sharing, while any profits in excess of that level will be shared on an 80:20 basis between the investor and CMC Capital.
"We have experienced an incredibly strong demand for our German commercial property syndicates from the Irish investment community," said Derry Crowley, Director with CMC Capital. "The Irish investor follows the property market closely and they clearly see that there are considerable returns to be generated from German commercial property."
"Our new German commercial property syndicate will allow Irish investors to gain exposure to the recovering German economy in a safe, prudent and hassle free manner. We will look to build on the success we have already enjoyed with our other syndicates and continue to target commercial properties with a bias towards the retail and office sectors located in desirable urban locations throughout Germany. Another investment criteria we will look to secure is that the properties purchased are pre-let to blue chip tenants and have an average rental yield of 6.5%," he added.
"We have noticed there is a high level of repeat demand from our existing investors for these syndicates, which testifies to the great success we have already enjoyed. We expect that trend will continue for the latest syndicate and there will be a great deal of interest in this proven investment vehicle," Mr. Crowley concluded.