Urban Partners’ real estate investor Nrep has entered into a strategic joint venture focused on the German residential rental market with Frankfurt-based asset and investment manager aam2core Holding AG (aam2core).
The €300m joint venture will cover the selective acquisition, modernisation and operation of rental assets across demographically attractive German cities and fast-growing metropolitan regions, particularly the seven most populous cities. The aim is to create an institutional-grade, sustainability-focused portfolio, achieved through energy-efficient renovations and exploring untapped building rights potential.
The partnership is based on a shared vision to unlock an attractive market opportunity by combining Nrep's sustainable investment and development credentials and aam2core's local operational and market expertise. This approach will help meet rising rental housing demand and offer residents more energy-efficient homes, whilst ensuring that the housing is compliant with tightening sustainability regulations.
The joint venture’s investment strategy will seek to complete the acquisition of properties within the next 18 months, investing €10m – €50m per project. A ‘brown to green’ approach will seek to transform older (1960s to 1980s), energy-inefficient (class D or worse) buildings that are typically comprised of 50 to 300 units. The aim is to modernise to a KfW 55 sustainability standard.
The joint venture has already signed its first acquisition in Cologne, a residential building with more than 5,000m² of rental space and a reserve of building land. In conjunction with a green retrofit of the existing building, an additional 3,000m² of new residential space will be developed.
Rune Kock, CEO of Nrep, said: "The discrepancy between supply and demand in the German housing market remains acute. This, combined with the pressing need to accelerate the green transition of the built environment, has created a strong investment thesis for this type of sustainability-focused residential product. This represents the latest commitment from Nrep’s NSF V Fund, the €3.65 billion value-add fund that targets unmet societal needs arising from urbanisation, including the lack of customer centric and sustainability focused housing in large and growing cities."
Jens Ebert, Member of the Management Board, aam2core, said: “By combining our strengths, aam2core and Nrep are positioning the JV as a driving force in the German residential real estate market, with the potential to quickly achieve scale.”
Paul Hohenstatt, Head of Residential Investments, aam2core, said: “This joint venture combines economic profitability with ecological responsibility and sets a new standard for sustainable investment into German real estate."
Nrep was advised by POELLATH and PwC.
aam2core was advised by A&O Shearman.
Image source - Pexels.
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