BNP Paribas Real Estate Investment Management Germany has teamed up with Cording Real Estate Group to launch a new real estate Spezialfonds.
The Real Value Fund has a target equity volume of €150 mln and invests in “value-add” properties, which can be significantly increased in value through asset management. It has already secured commitments from institutional investors for more than one third of the target volume and acquired the first asset, Media Tower in the Dusseldorf Media Harbour.
Reinhard Mattern, chairman of the management board of BNP Paribas REIM Germany, said: “Traditional core real estate increasingly fails to meet the return expectations of institutional investors because of movements in real estate prices. For that reason there is a great interest in non-core properties that can be developed into core properties. Our Real Value Fund uses a manage-to-core approach and, therefore, is able to unlock the latent value of a property”.
Mattern is, therefore, confident that additional capital commitments from new investors will be received in the coming months to the open-ended Spezialfonds.
For the Real Value Fund, BNP Paribas REIM Germany is partnering with the Cording Real Estate Group, a very experienced investment adviser and asset manager with extensive expertise and a proven track record.
Rodney Bysh, Joint CEO of Cording Real Estate Group, said: “We believe there is a compelling opportunity in the value-add segment for specialist real estate managers with a local presence and understanding of the market. Over time, many core properties have become value-add buildings with vacant space and renovation needs. We acquire these kinds of properties and apply our proven management approach to reposition them”.
This manage-to-core strategy will be applied to the fund’s first asset, Media Tower in Dusseldorf. The 64 m high property is one of the tallest buildings at the Media Harbour with 18 floors and approx. 9,000 m² of flexible space. This includes 400 m² of restaurant space on the ground floor, 7,600 m² of office space on the upper floors and more than 800 m² of storage space on the lower floors, as well as 115 parking spaces.
Completed in 2006, the property has completed its first-use cycle and is currently only approx. 50 % occupied after the expiry of some leases, with the average remaining term of the remaining leases only 2.8 years. The tenants are diversified and most of the lease agreements are indexed, which provides a secure, continuous cashflow.
Cording will reposition and renovate the property, which will provide the opportunity for a significant increase in cashflow and value through leasing the vacant space.
The property is conveniently located with good access to motorways as well as to local public transport. As a part of the gradual development of the Dusseldorf Media Harbour since 1989, one of the top locations in the city, the property is in a sought after location with strong demand from creative, high growth companies. The vacancy rate of the office space in the area is only 7 %. Urban development continues and several real estate projects in adjoining areas are in the planning or building phase.
Source: BNP Paribas Real Estate and Cording Real Estate Group
