Deutsche Asset One, a Dupuis Investment- und Asset Management company focusing on residential real estate in Germany, has been commissioned by Union Investment to set up an open-ended special investment fund investing in residential real estate across Germany. Union Investment and Deutsche Asset One have signed an outsourcing and consulting agreement, which hands over responsibility for investment and asset management for the portfolio to Deutsche Asset One. The fund is a special investment fund formed through a pure equity club deal with German institutional investors. The first investment tranche totals €170m, with expansion planned after the investment of the initial capital commitments.
The aim of the partnership is to set up a well-balanced residential real estate portfolio consisting of existing properties and new projects. As part of the portfolio strategy, investment funds will be split across A cities, B cities in metropolitan regions and selected C cities in Germany with particularly above-average spending power and anticipated population growth. “We already have investments worth hundreds of millions of euros in the pipeline which are currently undergoing due diligence checks,” said Thilo von Stechow, Managing Partner of Deutsche Asset One. “The mixture of cities and the combination of existing properties with new projects allows us to achieve a well-balanced portfolio structure with higher rent yields compared to a portfolio encompassing just new project investments or A cities. In addition, the value of these existing properties can be enhanced through proactive portfolio management. We are marrying potential for cash dividends with long-term value creation.”
“Despite the rise in real estate prices across the board, the residential investment market still offers long-term opportunities and should be a permanent presence in the real estate portfolio of any German institutional investor,” von Stechow added. Many major German cities are seeing an upturn in their economic development, which is reflected in a wide range of parameters. In a residential real estate report for Germany in 2016 published by CBRE and Vonovia, for instance, Berlin, Augsburg, Braunschweig, Hanover, Leipzig and Dortmund were all among the top ten in terms of rental growth. Leipzig, Berlin, Freiburg, Karlsruhe, Braunschweig and Dresden were all among the front-runners when it comes to the increase in employment rates, too. A number of cities have also seen their populations rise significantly over the past five years, including Leipzig, Augsburg, Freiburg and Mainz.
