Patrizia Immobilien AG has succeeded in launching a new fund that is unique in Germany. Together with an institutional investor, Patrizia is launching a residential real estate fund to invest in a combination of existing and asset repositioning properties as well as project developments.
With the 'Patrizia Wohnmodul I', Patrizia is opening its core business, since the fund covers the entire range of the company's expertise in value enhancement.
Aside from purchase, asset and property management, the 'exit strategy' includes plans for block sales as well as individual sales by means of residential property resale. The partner for this fund is a well-known pension fund, which has agreed a start volume of 100 million in equity.
Patrizia itself is also involved with a significant amount in Wohnmodul I. The first investments in the new fund have already been made.
"Our new fund is a real product innovation", said Wolfgang Egger, CEO of Patrizia Immobilien AG.
"With our new type of fund concept we are broadening the investment horizon in two respects. The first is that project developments and asset repositioning portfolios can also be bought. The second is that apartments can be sold during the investment phase, either by means of block or individual sales.
"The co-investor thus has the advantage of being able to purchase real estate that promises higher anticipated returns. The would-be higher risk associated with these purchases can be managed with the help of Patrizia's years of experience and real estate expertise.
"For investors, the cover fund eligibility of their investment and the mode of assessment for real estate investments are guaranteed. In addition, it is possible - under the right market conditions - to improve total profitability by means of added value from sales.
"With our new fund concept, we are making all of the value leverage in the real estate value chain available to our co-investors," said Egger.
"Over duration the fund will provide a total return of about 50% higher than that of classic core real estate funds.
"The risk-return-ratio is very attractive for such a stable asset class such as residential real estate."
With the new fund concept, Patrizia is implementing its future strategy to increase the amount of equity it invests by means of co-investments. The objective is a sustained increase in assets under management.
"In terms of organization and personnel, Patrizia is now structured in such a way as to enable us to take on the management of new real estate assets worth around 1 billion," Egger states.
As a fully integrated real estate investment house, Patrizia can perform all services in-house through its own employees. In this way, the profit share of the service business will increase considerably. At the same time, this leads to a stabilizing of business development and an improved risk diversification.
"In the medium-term we will generate 50% of our operative revenue from services".
Source: Patrizia Immobilien AG