Integrated property manager OMEGA Immobilien is issuing its first alternative real estate fund, thereby expanding its scope of business to include the management and distribution of real estate fund vehicles. To this end, a new asset management company has been established: OMEGA Immobilien KVG. “Having our own KVG to take care of our investment management projects is a logical step forward for our business strategy“, explains Martin Herkenrath, executive director of OMEGA Immobilien.
First alternative real estate fund invests in Rhineland
The first specialized AIF (Alternative Investment Fund) of OMEGA, called “OMEGA Immobilienfonds Rheinland I”, is a fund vehicle for both professional and semi-professional investors. The fund management strategy is based on investor equity of €100 mln and an overall investment volume of up to €200 mln. Borrowed financing will not exceed 50 percent and the planned fund period is 10 years. The minimum subscription amount for each investor of the new fund is set at €10 mln.
Starting in the first full business year following complete investment of the capital the fund will yield an annual dividend of 4.5 - 5% on invested equity and an IRR of at least 6% after deduction of fund costs and before taxes. Martin Herkenrath explains the details of the fund: “Our pipeline of properties that are eligible for purchase substantiates the key profit indicators. We can invest directly and call up earmarked capital. Our attractive pipeline of properties valued at €50 mln makes this possible – and we will continue to significantly expand this pipeline until the first closing in the first half of 2016.”
The geographic focus of "OMEGA Immobilienfonds Rheinland I" lies on Cologne, Düsseldorf, and Bonn, as well as selected communities in the affluent conurbations surrounding these cities. Martin Herkenrath outlines the fund strategy: “We want to invest primarily in mixed-use residential, office and retail properties, but also strictly retail assets, (for example shopping centres) and strictly residential buildings.” The acquisition strategy of OMEGA benefits from an explicit niche market, buying properties that are too large for most private investors and too small for most institutional investors. “The individual asset volumes lie between €3 - 12 mn. This enables us to take advantage of good acquisition opportunities while keeping the investment risks low”, says Mr. Herkenrath.
OMEGA follows three investment strategies down the line
Alongside the current Fonds Rheinland I fund, OMEGA also plans to create more alternative real estate funds with a regional focus on high demographic growth regions across Germany. The investment company will offer three types of fund vehicle: 1) strategy-oriented funds 2) single-asset funds/single-portfolio funds and 3) funds for individual clients.
With its strategy-oriented funds OMEGA invests in properties with a regional focus on demographic growth regions or specific micro-locations across Germany with predictably good future prospects due to their power of attraction and regional centrality.
The single-asset funds and single-portfolio funds invest in properties with good development potential under a meticulous operative and strategic asset and property management.
OMEGA also works together with individual clients to design a customized investment strategy for their fund. Then, based on this strategy OMEGA searches for and acquires the desired property. Martin Herkenrath explains the plan: “We propose possible investment strategies to individual investors and then decide together which to implement. The acquisition advantages we bring to the table, with the aim of achieving high returns and value retention through sustainable property management, play a decisive role in our strategy”.
OMEGA real estate funds profit from property management expertise
“Investors in the real estate funds of OMEGA will profit from 15 years of experience of OMEGA Immobilien Group in all aspects of asset, property and transaction management”, says Mr Herkenrath. Taking care of every detail of the property on the ground, always with a focus on long-term value growth of the asset, takes top priority. “We take care of the individual assets and portfolios of our clients on-site from the perspective of an owner”, adds Mr Herkenrath.
The supervisory board of OMEGA Immobilien Kapitalverwaltungsgesellschaft mbH is manned by certified experts from the real estate industry and investment managers with many years of experience with institutional investors:
- Dr. Knut Riesmeier
- Hermann Aukamp
- Detlef Kuhlen
Fund parameters:
- Assets: around 20 residential/commercial real estate, retail and residential properties
- Fund period: approx. 10 years
- Investor equity: €100 mln
- Total investment: up to €200 mln
- Financing: share of borrowed capital max. 50% incl. ancillary expenses
- Dividend: 4.5 to 5% p.a. on investor equity
- Targeted IRR: at least 6%
- Minimum subscription sum: €10 mln
Source: OMEGA Immobilien
