DIC Asset AG, a Frankfurt-based investor specialised in German commercial real estate has started to implement its second institutional real estate fund, 'DIC High Street Balance', with a planned investment volume of approximately 250 million.
The retail fund will invest in Grade A commercial properties in downtown locations and pedestrian zones of middle- and high-order centers in Germany. Investors will benefit from attractive distributions of around 5% annually. In analogy to its first institutional fund, DIC Office Balance I, current fund volume: around 350 million, DIC Asset AG acts as co-investor in its own right as it holds a significant stake of 20% in the fund. This arrangement ensures the permanent congruence of initiator and investors interests. The overall planned volume for these two DIC funds is around 700 million, to be achieved in the coming two years.
As with the previous fund, DIC Asset AG will make its demonstrable investment and real estate management services available for this second fund: In addition to its investment income, the company generates regular and stable revenues from real estate management rendered. The resulting FFO contributions are growing steadily. Having totalled nearly 3 million in 2011, they will rise to around 4 million in 2012.
In setting up the fund, DIC exploits its long-standing letting and investment experience in the retail trade, and thereby ensures a high-quality composition of the fund portfolio. Great contacts to a number of leading retail multiples in Germany (including P&C, Görtz, Saturn, TK Maxx, H&M) help to identify high-quality tenants. The entire portfolio under DIC's management adds up to 260,000 m² of retail space with around 330 retail tenants. 23% of the rental income is attributable to the management of retail space and retail properties. The take-up in this use segment shows a long-term median of around 30,000 m² per year (new letting contracts and renewals). The vacancy rate of the retail space is only 5%.
With equity commitments by five German institutional investors, well respected player among others as of pension funds and insurance companies, in place, more than 90 million in equity are already available for investments with the launch. With a planned equity rate of around 45%, these first equity commitments will permit investments worth 170 million from now. The acquisition of two retail properties in Dresden and Mannheim, involving an acquisition volume of approximately 25 million, has already been realised. Just like with the first fund, the Warburg-Henderson subsidiary IntReal (International Real Estate Kapitalanlagegesellschaft mbH) serves as investment service company.
Source: DIC Asset AG