Volume 8, Issue 142, March 7th, 2016 Study on German managed-care homes Inside REFIRE highlights need for new construction REFIRE is a specialised report focused on providing market intelligence and back- A new study on the German market for managed care homes high- ground analysis to finance professionals lights the gap between supply and likely future demand, and concludes in German and continental European real that an additional 255,000 beds will be needed by 2030, at a cost of at estate investment. least €25bn. The study forecasts that in fourteen years, i.e. in 2030, a total of 3.6m people in Germany will need some form of managed care. Given Whatever your particular area of speciali- Germany’s aging population, that is about 930,000 more than in 2014. sation, we think you’ll find timely, incisive information within our pages, helping to in- Of these 3.6m, about a third or 1.2m Competition in German fi- form you of the key deals, the numbers, the people will require in-patient care in a nancing now more diverse markets, the players and the people. nursing home. To meet this need there The German market for commercial are currently 13,030 nursing homes with property financing is possibly facing an The areas we focus on are: capacity for 900,000 beds. The differ- imminent trend reversal, with expected ence is going to have to be made up by higher LTV ratios as more alternative fi- US Funds in Europe new construction and refurbishment of nancing instruments increassingly make European REITs existing facilities, concludes the report. their presence felt on the market. page 2 German Real Estate Finance The “Pflegeheim-Atlas 2016” is pub- German Non-Performing Loans (NPLs) lished by the Berlin-based real estate Aareal Bank to increase new Retail Property Funds consultancy Wüest & Partner Deutsch- lending in 2016 after record Mortgage Securitisation land together with research group Otten- profits CMBS/RMBS ströer Immobilienwirtschaft/Region- Property financier Aareal Bank gave its Privatisations alökonomie, and examines in detail on first annual results press conference un- Refinancing a region by region basis (more than 400 der the new board regime headed by Her- Euro-zone Property Financing separate municipalities) where individual mann Merkens in the Frankfurt Messeturm demand for nursing homes and managed in late-February, and announced a record REFIRE has an extensive network of con- care places will emerge in Germany be- operating profit for the year. see page 6 tacts in the field of continental European tween 2025 and 2030. On demographic real-estate finance, which enables us to grounds alone, says the study, up to a New German law to level tax bring you the latest and most relevant news. further 300,000 places will be required by treatment of EU investors However, we always want to know more 2030. This boom in demand is likely to Foreign investors in Germany should be about what’s going on in this dynamic sec- continue through to 2060, after which the alert to the approval granted in February tor, so make sure your company is keeping old baby-boomer generation population by Angela Merkel’s cabinet to a draft law us informed of your moves. Send your me- bulge finally thins out. which would grant foreign investors the dia communications to news@refire-online. In concrete terms, at least 2,550 new same tax status as domestic investors. com for our consideration. nursing homes with 100 beds apiece The move is viewed as a pre-emptive must come on stream by 2030 to meet measure on Germany’s part to avert in- the coming existing demographic de- tervention from the EU. see page 12 CONTENTS in this Issue: mand – a rise of 28% on current supply. Wüest & Partner and Ottenströer esti- Adler-Conwert battle heads DEALS ROUNDUP / from page 3 mate an annual new-build requirement for decisive date March 17th EDITORIAL / page 4 of 17,000 beds, whereas about 14,000 The ongoing saga that is Germany’s wave REPORT - /ROUNDUP page 10 have been coming on stream annually in of consolidation among its listed residen- UPCOMING EVENTS / page 29 recent years. The take-up rate of 85-90% tial property companies may reach its PEOPLE…JOBS…MOVES / has been so high, however, that new de- zenith later this month (at least temporar- SUBSCRIPTION FORM / page 3 mand is going to have to be met by new ily) at a special shareholder meeting con- 4 building, rather than just refurbishment of vened by Adler in Vienna of Austrian-list- existing facilities. Here, however, strong ed Conwert Immobilien. see page 18 2

regional differences have been noted, “Secondly, efforts to specially devel- REFIRE says the report. op housing for older people along with Real Estate Finance The highest additional demand will complementary social services could Intelligence Report Europe be in Berlin at 11,800 contribute to many beds and in Hamburg “Operators should more older people con- with 4,100 additional absolutely think about tinuing to live at home Operating Office places by 2030. Ber- for longer.” Ottenströer REFIRE the long-term and con- Habsburgerallee 95 lin alone has currently sider the possible conver- referred here to a new 60385 Frankfurt am Main, GERMANY 112,500 elderly peo- sion of the property into paper recently submit- Tel: +49-69-49085-785 ple in care, of whom ted to the government Fax: +49-69-49085-804 apartments or a hotel, Email: [email protected] about 30,000 are in with manageable sizes by the ZIA Zentrale managed-care homes. and good urban locations Immobilien Auss- Managing Editor: Most such homes are chuss, the lobbying Charles Kingston being key factors in assets Tel: +49-69-49085-785 about 90% occupied. requiring adaptability” group for the German Fax: +49-69-49085-804 Wüest & Partner CEO real estate industry, Cell: +49-172-8572249 Karsten Jungk pointed out in a tele- which contains ideas and fresh de- Email: [email protected] phone conference that by 2030 there will mands for the construc- tion of 2.9m Subscriptions: be about a quarter of a million people elderly-friendly dwellings by 2030, at a Tel: +49-69-49085-785 aged 80 and older living in Berlin, along projected cost of €50bn. Fax: +49-69-49085-804 Email: [email protected] with 566,000 aged between 65 and 79 Wüest & Partner CEO Jungk esti- years old. About 163,000 of these are mates the required investment volume to Advertising: estimated to likely in need of care. meet the future demand at €25.5bn, or Tel: +49-69-49085-785 Fax: +49-69-49085-804 Munich and Cologne will each need a cost of about €100,000 per bed. With Email: [email protected] a further 2,000 beds, while Bremen, most new supply likely to be provided Dresden and Leipzig will each need to by private capital, investment in the sec- Editorial Advisory Board: Klaus H. Hausen boost their capacity by a further 1,500- tor is still interesting, he says, although Colm O’Cleirigh, B.Arch.Sci. 1,700 beds to meet demand. The feder- a very specific analysis of local market Margarete May, Rechtsanwältin al states with the greatest needs of new conditions is key to avoiding mistakes. David Scrimgeour, MBE Christian Graf von Wedel beds are North Rhine-Westphalia, Ba- Growth in demand overall is likely to Glenn J. Day FRICS varia and Baden-Württemberg. In pro- continue through 2060, but Jungk warns Andreas Lehner portion to its existing supply, the state that much will depend on the balance Stefan Engberg, MRICS of Brandenburg surrounding Berlin will between new nursing homes and suf- Publisher: have the most catching-up to do, need- ficiently adapted housing to meet the REFIRE Ltd., ing at least 50% more beds. needs of elderly people. He points to 49 Sandymount Avenue, Ballsbridge Volker Ottenströer of the research the 1.86m elderly people, or two thirds Dublin 4, Ireland group which produced the report along (71%) of those currently in care, who are with Wüest & Partner commented on looked after in their own homes. Real Estate Finance Intelligence Report Europe the methodology used in compiling the “When planning new nursing homes (REFIRE) is published 22 times a year, at the be- ginning and in the middle of each month, with “Pflegeheim-Atlas 2016” report. “If we the operators should absolutely think two holiday breaks. REFIRE is editorially inde- had simply extrapolated factors such about the long-term and consider the pendent of any selling or investing institutions. In- as existing in- and out-patient care, we possible conversion of the property into formation contained in REFIRE is under copyright protection and is based on sources believed to would have arrived at a figure of 320,000 apartments or a hotel, with manageable be reliable, though their complete accuracy can- additional beds required. However, sizes and good urban locations be- not be fully guaranteed. Neither the information we’ve discounted the figures by 20% for ing key factors in assets requiring later contained in REFIRE nor the opinions expressed therein constitute or are to be construed as con- two reasons, among others. adaptability,” said Jungk. stituting an offer or solicitation of an offer to buy “The first is that a lot of people nowa- The full study is available for down- or sell investments. REFIRE accepts no liability days as they grow older, remain healthy loading at www.wuestundpartner.com/ for actions based on the information herein. longer. So the need for managed care in deutschland. © 2016 REFIRE Ltd. the individual age categories, of 70-80, The figures produced by the Wüest or 80-90, could actually fall.” & Partner and Ottenströer study dif- 3 www.refire-online.com

...... NEWS ROUNDUP

fer in their forecast from another prog- Germany/Financing The study is based on an in-depth nosis issued at the end of last year by Competition in German questionnaire completed in December the Rheinisch-Westfälische Institut financing sees more diversi- and January of 151 influential decision für Wirtschaftsforschung (RWI) in its fication - Study makers among German commercial Pflegeheim Rating Report 2015. The property lenders, giving representative RWI forecast demand for an additional The German market for commercial market coverage of a third of all lenders. 321,000 in-patient beds, and put the cost property financing is possibly facing an The study analysed the segments Private at an enormous €80bn. imminent trend reversal, with participants Equity, Private Debt (traditional loans and A further study, produced last year by expecting higher loan to value ratios as mezzanine capital), Public Equity (shares) Frank Löwentraut, CEO of the Bad Hom- more alternative financing instruments and Public Debt (bonds). burg-based advisory group Aaetas Con- increasingly make their presence felt on Firstly, the study determined that the sult, forecasts much lower demand than the market. bulk of property financing last year was either of the other two. Löwentraut foresees Interest rates are also expected to rise still done by banks or similar institutions an additional demand by 2030 of 120,000 later this year, possibly by up to 50 basis – with around €80bn of financing provid- beds in new-built homes, and a further points, concludes a comprehensive new ed in senior and junior loans. 50,000 in existing properties that will need report, the EY Real Estate Capital Radar Although financing through bonds ac- upgrading and modernising. His total comes Deutschland, presented at a press briefing counted for €8.3bn – twice the volume of to 170,000 new beds over the period. last week by EY Real Estate in Frankfurt. 2014 –, private equity for €5bn, mezza- 4

...... EDITORIAL

With everything so rosy, what big new mistakes are we about to make?

The Quo Vadis event in the horizon that can stop the Ger- of the Berlin-based think-tank Empirica Berlin in February has estab- man juggernaut for the next three taking a more heretical view. lished itself as the premier years? He was talking to his audience over gathering of Germany’s real All the ‘known knowns’ sug- three weeks ago, before the Balkan estate movers and shakers gest that such optimism may not route for refugees into northern Europe in the post-Christmas dust- be misplaced in Germany’s case, got successively stifled by a series of down. At least 350 dele- but what ‘unknown unknowns’ are barbed-wire barriers blocking the on- gates assembled this year hurtling towards us, like a meteor- ward march to the promised lands. Pro- in the elegant surroundings ite from outer space, as we speak? fessor Simons believes we’ve grossly of the famous Adlon Hotel at the city’s Barbara Hendricks, the Minister for over-estimated the amount of new hous- Brandenburger Tor for two days of pre- the Environment, Nature Conserva- ing required in Germany to deal with the sentations, panel discussions, and in- tion, Building and Nuclear Safety (yes, problem. Given the latest developments, formal meetings – along with first-hand that really is her title), addressed the maybe we have. insights into the coalition government’s question of the housing shortage in For a start, he doesn’t believe that any- thinking, as it grapples with the pres- the country’s largest cities. Her depart- thing like last year’s number of mid-east- sures of housing and investment reform. ment acknowledged that 350,000 new ern refugees will continue to flood into The big questions of the day kept re- apartments a year are required to deal Germany, as the population evidently so appearing at regular intervals no matter with existing (i.e. non-refugee) German widely fears. Besides, with more than what the nominal subject under discus- demand for housing. Last year 270,000 1.6m housing units throughout Germa- sion– the housing shortage, the refugee new units were built, so the gap is not ny currently vacant in any event, Simons crisis, and the shape of rents to come in insurmountable – and to hurry things believes we really just need to distribute the commercial property of the future. It along a little, Frau Hendricks had a few what is already there. was absorbing stuff. bon-bons to hand out to many in her If this sounds too simplistic (and it Lars Feld, economics professor at audience, she intimated. does), Simons countered possible scep- the University of Freiburg and one of the Happily to report, moves are indeed ticism by reminding his audience of five Wise Men who at this time of year afoot to provide incentives to builders to previous waves of refugees that came present the ZIA industry lobby group’s create more housing. A new law will grant to Germany in recent years, and how it “State of the Industry” document to builders a special depreciation allowance cannot be automatically assumed that the government, ran the rule over all of 10% in the first two years and 9% in the all will stay. Experience from previous the positives – solid fundamentals, no third year after completion or acquisition waves showed that between 35% and property bubble, near-record unem- of affordable housing, for which the basis 50% actually stayed. There is also a lot ployment, and a rental and a house of assessment is €2,000 per sqm. This al- of confusion about the gender make-up price cycle that would normally at this lowance also applies to building costs of of the new arrivals, and the likelihood stage be reaching its peak. certain appartments in specific areas of that all will have family members queue- That it is not, he said, has partly to less than €3,000 per sqm, so definitely in ing up to join them. This will be less than do with the enormous influx of new in- the ‘affordable’ category. the scaremongers would have us all be- habitants, but also to do with other un- The goal is to provide more mod- lieve, he said, to audible sighs of relief. related factors that muddy what should est-priced housing in the so-called ‘as- Next week the industry shrugs off the be clearer waters – low financing costs, sisted areas’, which include much of the damp and gloomy northern European rising wages and an emotional (for Ger- same turf that would be affected by the weather and descends on Cannes for many, at least) shift towards property Mietpreisbremse or rental cap and other the annual commercial real estate jam- ownership. With Merkel’s government rental restrictions. Initially the deprecia- boree MIPIM. It will (hopefully) be the under siege from political friend and foe tion benefits will only apply for the next first sunshine many of us will have seen alike, and the population gearing up for three years, which is too short a time to for months, and while the sky is hardly revolt, what big new mistakes are we achieve real behavioural change, but it is cloudless, the industry anticipates a fair- about to make, he asked rhetorically. a start and will likely be extended. This is ly undisturbed view out to the horizon. A good question, indeed. For all the good news. With a bumper year behind them, smug self-satisfaction in the German With the collective wailing and German real estate players will be show- real estate industry, on a roll for nearly gnashing of teeth about the unspec- ing up on the Riviera in unprecedented seven years now, we detect a palpable ified but clearly enormous burden of numbers to, as the French would say, frisson of unease ripplling through an future building to house the 1.1 million “laisser les bon temps rouler”. Santé! audience when the next industry leader refugees and their dependents, it was stands up to aver that there is little on refreshing to listen to Harald Simons Charles Kingston, Editor 5 www.refire-online.com

nine debt for €4bn and stocks for €3bn., call that a moderate interest rate move. or C-locations it’s a very different matter. these all still make up a fraction of the Many providers of alternative finance are The same applies to healthcare or volume provided by the classical lend- basing possible price increases on that nursing home assets, or many categories ers. However, all participants DO expect assumption. of industrial property, where Rottke said growth in their respective financing seg- “If we look at the classic banking sec- that only one in five find ready financing ment for 2016 – and a slight increase in tor, we certainly see some very aggres- from classical sourcses – another rea- interest rates, of up to 50 bps. sive and riskier financing amid the - cur son why the alternative finance providers According to the study’s initiator, Pro- rent high competition,” Rottke said. By were finding opportunities to keep the fessor Dr. Nico Rottke, although return comparison to 2007, however, market market liquid. requirements slackened in 2015, they are prices are more risk-adjusted while the The study’s analysis of the bond mar- expected to rise for the coming year. Last amount of equity in deals is higher. ket shows that there are wide variations year mezzanine finance was looking for The study highlights how, despite between bond issues and expected 9.5% and private equity 15.5%, while competition among lenders, many asset yields as the market is still really only return expectations on property-secured categories have difficulty raising borrow- in an early phase of development, said bonds was 8% and listed property shares ings. The safest and most ‘location-tol- Rottke. While the bond market is getting 4.5%. Traditional senior and junior loans erant’ is the residential market. “Here, more professional, issuing power is still are currently averaging only 2.3%. lenders are less fussy about whether the largely restricted to investment grade Rottke says that the market is ex- location is A, B or C”, says Rottke. In levels, or non-rated bonds, which num- pecting an interest rate rise this year, contrast, hotels in A-locations have it rel- ber about 40% of bonds issued. with up to 50% conceivable. “We would atively easy to get financing, but in B- With banks facing more restrictions in

THE PURPOSE OF PROPERTY MANAGEMENT IN THE SEGMENT BASIC RETAIL

The management of Basic Retail pro- because exercising ownership functions, reductions or, in the worst case scenario, perties, namely commercial real estate in most cases, goes hand in hand with at transaction cancellations can result, which offering a high proportion of basic food least the partial assumption of operational could have been avoided through proper essentials and convenience goods, pre- responsibilities. This is a concept which ulti- management. Property Management in sents a number of particularities which mately encompasses a whole range of diffe- compliance with the legal and technical re- arise from the characteristics of this seg- ring responsibilities which, according to the quirements should therefore be the standard ment. contractual terms and conditions, are either course of business. Moreover, comprehen- delegated to the tenant or the owner. The sive documentation as well as a properly The high geographical distribution of pro- professional service provider’s role is to reas- maintained, updated and well-structured perties outside of urban centers, a relatively sure the owner that existing obligations are data room, as is required, can assist in signi- small number of tenants in the individual pro- being met and that the strategic objectives ficantly reducing transaction processes and perties, strong real estate professionalism on concerning the property are being taken into in fending off potential price reductions. the part of the tenants, as well as a limited account. On the other hand, the tenant can number of potential points of contact on the benefit from an enhanced location thanks to Professionally coordinated Property Ma- tenant side as compared to other real estate coordinated property management, espe- nagement can in consequence thus pro- markets, define this asset class. Professional cially as the property is often perceived tect the real estate investor from risks and property management must duly consider by customers as related to the respective unnecessary costs and can furthermore these circumstances. Only then can the real tenant, regardless of the actual owner. positively and sustainably influence real estate investor, as well the users thereof – all estate values. of whom have major influence as concerns The true quality of professional Property real estate value in the segment Basic Retail Management crystalizes at the latest when – enjoy added value. the property is sold. Many investors have Rüdiger Keller learned this the hard way during technical Head of Property Competent Property Management under- due diligence, when one or the other “surpri- Management, GRR Group stands the needs and structures of tenants se” – sometimes even to the point of “Thank www.grr-group.de and is attuned thereto. This is important, goodness!” – is brought to light. Painful price 6

the provision of loans and larger deals in that the rising market could pose a threat dressed the residential market in his re- the pipeline, private equity is set to ex- to the country’s banks in the event of a cent presentation to delegates at the Quo pand including large portfolios and merg- subsequent price correction. It cited the Vadis annual conference, held recently ers & acquisitions. earlier data released by the Bundesbank in Berlin and attended by REFIRE. He The study shows that respondents pointing to prices outpacing both eco- cautioned against wrongly-targeted tax expect positive impacts from the ECB’s nomic and demographic fundamentals, incentives which could lead to market ongoing expansionary policies, as well as especially in the seven biggest cities, distortions and irresponsible speculation the inflow of refugees. “The latter will par- where prices have risen by 40% since in the market, while warning that although ticularly impact the housing market,” said 2010. mortgages are underpinned with a high Rottke. This includes new building activi- Ultra-low interest rates and the arrival proportion of equity, an economic down- ty, as well as a market shift from lower- to of more than 1 million refugees to Germa- turn could lead to price corrections. middle-quality housing as refugees enter ny last year are helping to put further de- However, his overall tone was opti- the housing market at the lower end. mand pressure on property, especially in mistic. “Higher wages and salaries, com- cities. The Bundesbank estimates that the bined with investors restructuring their flood of refugees itself will be responsible investment portfolios to include more real Germany/Study for between 0.5% and 1.0% in rental and estate, continue to have a positive impact Bundesbank cautions on investment price increases over the next on the real estate economy. A bubble of upswing, Moody’s warns on two years. the kind which would pose a threat to the bank threat Moody’s said residential property in- overall economy could only develop if a flation was a credit negative for banks disproportionate number of apartments The upswing of prices in the German with high exposure to residential prop- were built.” Since this is not the case, he residential property market is gaining erty lending because of the risk of a re- said, there is little danger of systemic risk momentum, the Deutsche Bundesbank trenchment. cautions in its current monthly report. Rising property prices have diminished The report is compiled using the bank’s the loan-to-value (LTV) ratio of loans made Germany/Banking own resources, combined with external several years ago, but this positive effect Aareal Bank to increase data from researchers Bulwiengesa, has been outweighed by banks’ aggres- lending in 2016 after record Pfandbrief association VDP, fintech pro- sive expansion of new lending at higher profits vider Hypoport and Destatis, the federal property prices in 2015. “New business statistics office. volumes increased to €244 billion in 2015 Property financier Aareal Bank gave According to the report, residential from €200 billion the previous year,” said its first annual results press conference property in 127 cities cost an average Moody’s associate managing director Al- under the new board regime headed by of 6% more in 2015, after the rise had exander Hendricks. Hermann Merkens in the Frankfurt Mes- weakened significantly from 7.5% to 5.5 Loans where the LTV ratio was above seturm in February, and announced a re- % in 2014, bringing the price dynamics 100% had risen to 16 per cent of total cord operating profit for the year. to the average level of the past 5 years. housing loans in 2015 from 15% a year The Wiesbaden-based bank posted a In the attractive large cities, the growth earlier, Moody’s said. But this could rise profit of €470m for 2015, up from €436m rate was notably lower than the five-year to more than 40% if property prices were for 2014. When adjusted for the profits average at 6.25 %. to retreat to 2010 levels, it said. accruing from the bank’s takeover of New leases for existing units climbed That’s because, should a customer WestImmo from bankrupt landesbank 3.25 % across all cities, a similar in- default, banks typically face higher loss WestLB last year and Corealcredit in crease to last year, while rent dynamics charges for high loan-to-value exposure 2014, the profit rose 13% to €320m. The for new units again weakened consid- than for low LTV exposures. bank benefited from a strong increase in erably. Rent adjustments in large cities “If there were a price correction, which net interest income on the back of unex- were decidedly lower than in the previ- we are NOT forecasting here, a materially pectedly high non-recurring income from ous year, which the Bundesbank states increased amount of mortgages would fall early loan repayments, which more than could be related to the introduction of back into the category of loan-to-value of offset the largely acquisition-related rise new rent control regulation. 100% or more,” Hendricks said. in administrative expenses. Credit rating agency Moody’s wast- Professor Lars Feld, of the govern- The proposed dividend is to rise 38% ed little time in issuing its own warning ment’s Economic Advisory Council, ad- to €1.65 from €1.20 a year ago, a distri- 7 www.refire-online.com

drlübkekelber GERMAN REAL ESTATE

www.drluebkekelber.de 8

bution ratio of 52%, and giving a healthy on Equity before taxes to 12% by 2018. Two regionally important cities about dividend yield of 5.66%. Last year’s Return on Equity – excluding the same distance from Berlin are Neu- The MDAX-listed bank reduced the €150m negative goodwill from the brandenburg to the north and Cottbus, to new lending last year to €9.6bn from acquisition of WestImmo – increased to the south, which also showed strength. €10.7bn, although this far exceeded 12.1% from 11.1%. The adjusted Return Neubrandenburg now costs €1,413 per the initial €6bn-€7bn targets suggested on Equity amounted to 10% in 2015 and sqm on average, up 38%, while Cottbus by Merkens’s long-term successor Wolf the bank has a target of 11% for this year. has risen 36% to €1,458 per sqm. The Schumacher this time last year (as we three Thuringian cities of Erfurt (€1,574 reported in REFIRE at the time). The fig- up 29%), Weimar (€1,568, up 30%) and ures were boosted by a last-quarter Germany/Study Jena (€2,105 up 15%) have shown more surge of €3.3bn in new lending, largely in Eastern German prices, rents, modest growth, as have Halle (€1,053 up western Europe. up by nearly 50% since 2010 11%) and Magdeburg (€846, up 20%) Following higher loan repayments the Cities with falling prices have been bank is expanding new lending again this A useful study published by real estate Chemnitz (€700, down 15%), Zwickau year and targets between €7bn-€8bn, portal Immowelt.de looks carefully at (€566, down 16%) and Plauen (€404, raising its portfolio to €25bn- price developments in down 23%). €27bn. New CEO Merkens (pic- real estate across Ger- Separately, on the residential rental tured, right) said the North Amer- many’s eastern states side, Immowelt surveyed 268,000 apart- ican market was becoming very since 2010, and throws ment listings in 23 eastern German cities interesting for the bank again. “It up a number of surpris- over the same five-year period. Rents in is not that we distrust European ing highlights. three-quarters of the region’s largest cit- markets”, he said. “However, we The study focused ies increased ahead of the 6.9% inflation are certainly seeing a certain tendency on 22 eastern German cities with popu- rate over the period. towards margin stability that we’re just lations of more than 50,000 inhabitants, Berlin led the field with advertised not seeing in Europe.” The US propor- and used prices that were the offered rents up by 40% (to €9.10/sqm/month). tion of new business loans on the bank’s prices for 124,400 properties advertised The strongest growth in advertised rents books is 21%, which the bank wants to over the period on Immowelt’s own web in eastern Germany (excluding Berlin) raise to 30% in the medium term. portal. Immowelt, which has now merged was seen in Dresden, at 20% (€7.10/sqm/ Merkens placed a lot of emphasis in with Immonet, was the second or third month) and Leipzig (€5.90/sqm/month). his presentation on new digital opportu- most popular property portal in Germany In Erfurt (€6.90/sqm/month) and Weimar nities in outlining his vision for the bank over the period along with Immonet, with (€7.00/sqm/month), advertised rents rose for the next five years through 2020. “We both trailing the market leader Immobil- by 19%. Outside the large cities currently seized the opportunities the markets pre- ienScout24. enjoying strong economic growth, rents sented to us in 2015, both in terms of Purchase prices for apartments rose and prices in the remainder of eastern value-adding, non-organic growth and the strongest in Dresden, Potsdam, Ros- Germany have effectively stagnated since attractive new business,” he said of the tock and Weimar, at price rises of be- 2010, often at very modest levels. year past. tween 30% and 50% over the period. In But looking ahead, he said, Aareal’s 15 of 22 eastern German cities, the pric- strategic agenda through 2020 sees a es for apartments have risen at a much Germany/Indices fresh commitment to “protect the base faster clip than inflation (up 6.9%). Union Investment Climate and unlock new revenue potential,” by Not surprisingly the city where pric- Index shows ongoing investor optimising organisation structure, IT, pro- es have risen the most is Berlin, up optimism cesses, deploying equity and developing 88% to an average price of €3,171 per the consulting and structured property sqm. Dresden follows with 49%, where The Investment Climate Index of Eu- financing businesses. Plans for the latter prices now average €1,955 per sqm. ropean Property Investors, managed include further expansion into growing Prices in Potsdam are an average of by German fund manager Union Invest- markets, increasing placements and real- €2,867 per sqm, in Rostock €2,245 per ment, has been a widely-followed ba- ising new, digital business opportunities. sqm, Leipzig at €1,020 and Stralsund rometer of investment sentiment since Merkens said one of the key goals of at €1,957 (with both these latter cities its launch in 2005. The index is based on the new agenda is the raising of Return seeing price rises of 33% in the period.) four indicators: market structure, the gen-

...see page 10 9 www.refire-online.com

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eral environment, location factors and ex- polled believe that the overall willingness plate higher levels of risk.” pectations, each with a weighting of 25% to invest in commercial real estate mar- The research shows 51% of survey The latest reading, based on inter- kets in their respective countries will con- participants believing they will miss their views carried out in December and Jan- tinue to improve or at least not decrease yield targets in the next three years, as uary by market research group Ipsos over the next 12 months. they face continuing high prices and cor- among investors in the UK, France and “Europe is doing well. The overall respondingly low returns. And even tak- Germany, highlights Germany as the only macro-economic picture remains posi- ing a five-year view, one in two of those country of the three experiencing an im- tive. The high level of investment inter- polled see themselves failing to achieve provement in its investment climate. est in Europe, including from overseas the expected return on investment. The just-issued survey shows how investors, is one of the reasons why the The relentless search for returns is investors are still primarily motivated by property investment climate in the main boosting interest in portfolio deals, with returns, even more so than last year, de- European markets is comparatively sta- half of respondents stating they were spite the advanced stage of the property ble, despite toughening conditions,” actively considering purchasing proper- market cycle. Risk appetite has increased said Olaf Janssen, head of real estate ty portfolios – although this was heavily in a market environment showing little research at Union Investment. “At the weighted towards UK (67%) and French signs of anticpating change ahead, say same time, the decreasing availability investors (74%). Only 24% of German the researchers. of prime assets combined with current respondents are interested in potential 86% of the professional investors prices is forcing investors to contem- portfolio purchases.

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Wüest & Partner offers broad market information and advisory services, in addition to traditional valuation and appraisal reports, to all market participants.

Wüest & Partner Neue Schönhauser Str. 20, 10178 Berlin Germany, T +49 30 2576 087-0, [email protected] 11 www.refire-online.com

Key Account Manager for institutional Investors for the Germany-wide Engel & Völkers Network

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Telephone: +49 69 24 75 75 50 Mobile: +49 172 731 90 03 Email: [email protected] 12

...from page 10

While up to a few years ago portfoli- jor European national property markets into effect from 1 January 2018, will com- os with a clear focus on a specific usage for the fifth year in a row, with the index prehensively reorganise fund taxation in type were favoured, since Q4 in 2015 for the country standing at 67.0 points Germany. there is a growing trend towards mixed- (minus 1.3 points). The French index is Under the law as it stands, domestic use portfolios. Janssen commented, still characterised by a comparatively funds are exempt from paying corpo- “Thanks to the current low financing high degree of volatility, which is current- rate income tax on revenue related to costs and ability to allocate substantial ly probably due to the uncertainty caused dividends and real estate, while foreign amounts of capital to a single transac- by factors such as the terrorist attacks in funds are required to pay a 15% tax rate tion, interest in pan-European portfolios Paris in November 2015. on such gains. has received a major boost. What’s more, Similar tax regimes in Poland and overseas investors want to increase their France have been overturned by the exposure to Europe and exploit the inter- Germany/Legislation European Court of Justice, which was est rate window and weak euro to wrap New German law to level tax clearly what prompted Berlin to act. up large deals this year.” treatment of EU investors The new law (InvStRefG) is designed Since the last survey in May 2015, only to replace the old investment tax legisla- Germany has seen a slight upward trend Foreign investors in Germany should be tion, which had to be amended following in its real estate investment climate. The alert to the approval granted at the end the implementation of the AIFM Direc- German national index created by sur- of February by Angela Merkel’s cabinet tive in Germany via the so-called Kapita- veying German investors advanced by to a draft law which would grant foreign lanlagegesetzbuch (KAGB). 0.6 points to 69.9 points, while for the first investors the same tax status as domes- In a government briefing to reporters time since 2013, German investors are tic investors. The move is viewed as a ahead of the cabinet meeting in Berlin, more positive about the climate for real pre-emptive measure on Germany’s part a spokesman summed up the problem. estate investment in their country than to avert intervention from the EU. “Right now, there is unequal treatment of their counterparts in France and the UK. According to the Ministry of Finance, foreign and domestic investors and this With a fall of 3.2 points, the UK suf- the purpose of the reform was to reduce carries significant legal risks stemming fered the biggest decline of any of the complexity, eliminate potential EU-level from the European Union.” countries to stand at 68.3 points. Senti- legal risks and to prevent tax avoidance Under the proposed new law tax rate 164_RZ_ment in FranceRefire_125x87_neu_REAG trailed the two other 01.02.16 ma- 14:43models. Seite 1The changes which will come exemptions for domestic funds will now be abolished, resulting in a 15% corpo- rate tax rate on dividends for all mutu- al funds, irrespective of where they are domiciled. For individual investors, a Professional Excellence complex system for calculating dividend tax rates will be replaced by a fixed ex- REAG is an independent consultancy specialising in real estate. Our professional team in Europe emption rate, ranging from 15% to 80%, provides services to national and international clients primarily in the following fields: depending on the type of fund. In an initial statement on the new pro- • Appraisal posed laws, Thomas Richter, the head • Investment Advisory of Germany’s fund investment associ- • Debt Advisory ation BVI said the amendments were • Technical Services “headed in the right direction”. While the • Environmental Due Diligence changes would ensure that Spezialfonds • Asset Management Support would remain attractive from a tax view- point, he said, “the administrative bur- Contact details: den still needs to be lowered, and needs REAG Real Estate Advisory Group some corrections to some details.” Bockenheimer Landstraße 22, 60323 Frankfurt/Main Tel. +49(0)6924752670, www.reag-dp.com He also welcomed the government appearing to have followed BVI advice

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...to page 15 13 www.refire-online.com

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...from page 12

funds for professionals such as lawyers apartments rose 5.2%. Since 2003, gen- that the gap between the best and worst and doctors (“Versorgungswerke”). Such eral house prices rose by 32%. In the performing funds is widening. preferential treatment of pension funds commercial sector, office prices rose by Of the 175 funds covered by the in- and so-called Unterstutzungskassen, or 3%, with those for retail property rising dex – amounting to a market coverage support pension funds, includes getting by 2%. Office rents gained 1.5%, with of 65% – the best performing funds are a refund on the 15% tax now being intro- retail rents up 0.5%. performing better and the wor st per- duced on domestic profits made in fund Meanwhile figures in from Europace, forming funds are in decline. The hall- investments such as dividends, rental in- the matching platform that is part of mark of the most successful funds was come or the sale of real estate. listed Berlin fintech group Hypoport, timing, active asset managers and a ho- correlate closely with the picture paint- mogenous investor structure, the latest ed by the vdp. At REFIRE we track the SFIX reading shows. Germany/Residential Europace figures closely as it is based However, the key factor affecting per- Vdp, Europace figures con- on data from Hypoport’s own compre- formance is the vintage, or actual year in firm 6% rise in German hensive database of actual prices paid, which the fund was launched, was the residential prices rather than just advertised prices. The main take-home message. Europace platform transacts €35bn an- The findings were presented at a Depending on the source, athough both nually, or nearly 15% of all private sector press briefing recently in Frankfurt, held are in their own way reliable and cor- mortgages. jointly by index group MSCI Deutsch- relate closely with each other, German The Europace data shows German land, and as last year, actual fund ini- house prices rose by 5.9% on average residential property prices rising 5.98% tiators Warburg-HIH Real Estate and last year, with all the signals in the twelve months to Gothaer Asset Management, the real showing a return to strong January 2016. “Prices estate investment subsidiary of the Go- growth through January of for apartments with al- thaer insurance group. this year. most 8% growth rose Spezialfonds with a European focus Firstly the figures in a new stronger than those performed especially strong in 4Q15, report from the vdp Verband for houses again,” said with a 1.4% return, compared to 0.8% deutscher Pfandbriefbank- chairman Thilo Wie- for Germany-focused vehicles, accord- en (the association of Pfand- gand. ing to the IPD/BVI German Quarterly brief-issuing banks) show that prices for In the index’s sub-segments, apart- Spezialfonds Index (SFIX). “The strong German housing rose by 5.9% last year, ment prices gained 7.94% over January recovery in many regions has led to a up from the 5% rise in 2014. Commercial 2014, new single and dual family homes better performance across Europe,” property prices by contrast rose by 2%, rose 3.9% and existing ones 6.32%. Price MSCI vice-president Sebastian Gläs- down from the 3.8% price rises of 2014. growth rose slightly on December, when ner told the briefing. Total annual return According to vdp CEO Jens Tolck- the annual gain reached 5.57% for the to- for European funds was 2.6%, while mitt, (pictured, right), multi-family home tal index. Existing homes fell in value in those for German funds were 4%. values rose 7.8% and rents rose 4%, October and November but returned to But the key message, said Gläsner, making it the top-performing sub-sector. growth in December, gaining 0.23% and was that a fund’s vintage was more “Rents are rising, albeit more slowly, but following it up with 2.17% in January. important than, for example, its sector investors are ready to accept ever lower weighting. He said that the MSCI study yields against the backdrop of the gener- shows that only 35% of funds with a al return environment and missing alter- Germany/Spezialfonds negative return in one year managed a native investment opportunities.” German Spezialfonds return turnaround in the following year. “Once Tolckmitt said the vdp is not expect- 3.4% in 2015 a fund is off the path it is difficult for it ing any let-off in rental levels for the mo- to make a comeback,” he said. The re- ment, with the willingness of investors to German real estate Spezialfonds achieved maining 65% of funds continue to post accept even lower yields a function of their best annual performance since a negative returns “very often also into future monetary policy and their own risk 2009, according to the MSCI SFIX index, the following years”, he added. tolerance. returning 3.4%. German funds performed Discussing this ‘vintage’ effect, Ei- Among the sub-indices, owner-occu- better than those funds with a European tel Coridaß, managing director at War- pied homes gained 4.4% last year, while focus. However, analysis by MSCI shows burg-HIH, said the most successful 16

...from page 15

funds were mainly those that invested The reduction of leverage has also KVGs, serving smaller and more spe- during the global financial crisis. “It is been a key issue, he said, so that al- cialised managers. “We want to invest important to have courage and trust in though Warburg does have funds with with specialists in each field, thus a the manager to go into markets when 50% leverage, “these are now set up pan-European fund does not have that they are down after correction phases,” only for the short-term, and by inves- much of a chance these days,” he said. said Coridaß. tors who if need be can boost their eq- The overall market for Spezialfonds He cited a trend towards smaller and uity level if interest rates go up.” continues to grow rapidly, with 2015 more homogeneous investor groups. Ingo Bofinger, head of real estate seeing the creation of a further 13 new “You need to be quick to get the good at Gothaer Asset Management, said Spezialfonds, adding a further €8.2bn deals – and thus know exactly which “We have been indirectly invested in to bring the new volume up to €68.3bn committee hurdles need to be tak- real estate since 2004, and especial- by year-end 2015. en with the investor,” he said. Coridaß ly funds which have first invested be- According to Gläsner, the market came well equipped with figures for tween 2004 and 2006 are struggling for Spezialfonds, which started only in three of his house’s own funds man- today.” 2000 with €8.6bn, has been growing at aged for three different investors, which Investors have become much more about €6bn a year since 2012, and is had well out-performed the SFIX bench- demanding, compared to 2006 when now (at €70bn) almost the same size as mark. Their strength was anti-cylical in- a lot more unfocused global strategies the original open-ended mutual funds vestment, along with close rapport be- were bought into, said Bofinger. Now- sector which ran into such trouble in tween manager and investor. adays more money flows into service Germany after 2008.

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Germany/Residential tional rental price development bishes and manages German housing sees will primarily be focused on mid- student residences strong demand, price and range locations,” said Beyerle. let to students under rent rises ahead The Catella researchers ex- the Twenty First brand, pect rental prices to continue which now number German residential property is head- to increase, on average, in the 3,500 units. The resi- ed for still further price rises and higher coming years due to urbaniza- dential properties ac- rents, and investors into the sector are tion effects. “The value of resi- quired are located in still being drawn into targeted investment dential properties in city centres such cities as Berlin, into the lesser-known towns and cities and urban districts with excel- Bremen, Kiel, Stutt- outside the most popular urban centres, lent infrastructure has been redefined in gart, Bochum and Essen. according to a new study published by recent years. The residential market will According to Kai Wolfram, (pictured, real estate advisor Catella. remain the focus of market regulation above) managing shareholder at EVIC, The report, which analyses 77 resi- this year, but calm analysis of this issue “The market for student housing real- dential locations across Germany on its reveals that state intervention in rental ly took off in 2015, in part because of investment merits, concludes that in- prices has so far neither been able to DREF’s activities. It is gradually becom- vestors will be investing in force again halt increases nor cause any measur- ing increasingly difficult to acquire good through 2016. able number of investors to pull out of quality buildings in central locations at According to Catella’s influential this allegedly unattractive segment,” reasonable prices. We’ve managed to head of research, Dr. Thomas Beyerle said Beyerle. complete numerous acquisitions on be- in Frankfurt, in a note: “Ongoing strong Catella also forecasts considerable half of DREF and we plan to continue this demand for residential property in met- changes in price expectations in the success in 2016.” ropolitan areas, and in locations with popular mid-range segment in the com- Earlier DREF had said that it had favourable population balance, is under- ing years. High demand from investors, signed an 18-month revolving credit fa- pinned by urbanisation effects and struc- a significant increase in construction cility with UK hedge fund Chenavari turally good economic conditions… The activity, rising average rental prices, Investment Managers to invest into increasing appeal of residential markets and attractive offers for smaller homes the German student accomodation. “In will lead to higher rental prices and a rise in the 50–60 sqm size range, will shape 2015 we invested €135m in student ac- in property values.” the residential markets in German urban commodation facilities in Germany,” said The yield-risk profile for gross yields centres, say the Catella analysts. CEO Felix Bauer. “In 2016, we plan to ranges from Herne at 8.2 %, to Munich at least double the size of the portfolio at 3.4 %. The average of the locations as we ramp up activity across the busi- analysed is currently 5.40 %. The high- Germany/Student accomodation ness.” The facility provides flexibility to est rental prices of €18.39 per sqm are E&V buys €85m student move fast once the firm has selected found in Munich, while the lowest in the housing for DREF brand an attractive value-add opportunity. He locations investigated can be found in noted that speed is a major factor in Herne in North Rhine-Westphalia, at Engel & Völkers Investment Consulting success of achieving investment in the €5.53 per sqm. GmbH (EVIC) has acquired student res- current German market environment. “What is new, and also a testament to idences in Germany with a market value “Demand for good quality residences in changes in market trends, is the distribu- of €85 million for the Luxembourg-based central locations is extremely competi- tion between very good and mid-range student housing investment manager tive,” he added. locations,” explained Dr Beyerle at the Deutsche Real Estate Funds (DREF). The Bauer Group is majority share- presentation of the analysis. This is the DREF appointed EVIC with a man- holder in DREF, while fund manager In- result of two interesting developments date to select, prepare and purchase ternos Global Investors and the family in the German residential market: high properties with a value of up to €200 office Somerston Group have holdings levels of demand in central city locations million. EVIC has access to the nation- totaling 27.5%. Stephan Rind, the for- remain uninterrupted, but capital from wide network of the Engel & Völkers mer CEO of listed German company Co- investors is increasingly flowing into lo- Group, which comprises more than 40 lonia Real Estate surfaced again some cations with substantial growth potential. commercial offices and 300 locations in months ago as a director and 8% share- “In other words, the anticipated propor- Germany. DREF builds, acquires, refur- holder of DREF, but he has since sold his 18

stake and severed his ties with the com- Despite many of the liquidated funds flows, following the year 2002, which pany, REFIRE understands. still in the process of returning funds to saw inflows of €17.3bn. Last year’s full Separately, the Hamburg-based Engel investors, which might be expected to year inflows into the listed sector totalled & Völkers said recently that it is expanding dampen enthusiasm and inflows into the €6.3bn, 37% higher than in 2014 and an its operations by introducing distressed sector, Scope sees the apparent demand equity placement record for the third year debt real estate opportunity funds to meet as still outweighing supply – underpinned in succession. growing demand in Germany. According by the fact that most assets being sold Listed sector inflows were softer in to managing partner Kai Wolfram, “The from liquidating funds are quickly finding fourth quarter, with equity placements market for distressed property loans in new buyers across all risk categories. reaching only €500m, due to a combi- Germany has yet to be exhausted, and Frau Knorr says, “Certain sectors of the nation of challenging markets and major we expect €6bn in transactions across market are already close to overheating. players “caught up in merger hustle,” as Germany in the current year.” The chances of increasing returns from Barkow described it in the report. To establish a foothold in the busi- further capital appreciation are therefore Net inflows into open-ended property ness, EVIC recently hired Thorsten increasingly slim.” funds came to €3.6bn over the year, four Brogt from NPL workout specialists Scope note that, with less and less times higher than in 2014, and with some Hudson Advisers, part of the Lone Star true ‘core’ assets available, open-end- €1bn being placed in the fourth quarter group, where he was a director of port- ed funds are taking increasingly higher alone. Adjusting for repayments of fro- folio management for Germany, Spain risks, moving into project developments, zen funds brings net inflows to north of and the Netherlands. Part of Brogt’s new refurbishments or gambling on reducing €5bn. “Though reaching pre-crisis levels remit will be to structure portfolio and vacancy levels, although not yet taking of up to €15bn annually can be seen as individual sales across Engel & Völkers’ risks on the quality and desirability of the an unlikely scenario at present, public German network of 50 commercial offic- location itself. Not all funds are exposing GOEPFs seem fully back on track,” said es across the country. themselves to these risks – with certain the report. funds operated by the biggest fund man- Germany’s largest listed housing agers such as Union Investment and company Vonovia had issued a €14bn Germany/Funds Deka having in-built limits on the amount takeover bid for Berlin-based Deutsche Rating agency Scope warns they can take in to ensure it can be sen- Wohnen, after the latter announced a on higher risk-taking by sibly invested. merger with smaller peer LEG Immobil- German funds Knorr added, “Many funds are already ien. Both transactions failed, with Deut- shifting their focus onto riskier investments sche Wohnen withdrawing its offer after Germany’s open-ended real estate funds than before. So if the economy heads into the hostile Vonovia bid. Vonovia failed sector took in more than €5bn in new in- a downturn, occupancy rates and fund re- to reach the minimum 50% acceptance vestors’ capital in 2015, up from €2.8bn turns could also come under pressure.” in February, after it succeeded in gain- in 2014, according to figures released by ing control of only 30.4% of Deutsche Berlin-based fund rating agency Scope. Wohnen shares. After several tough years in the sec- Germany/Research tor, which saw many of the German German indirect vehicles see open-ended funds go into liquidation, 50% rise to €18.5bn - study Germany/Listed Companies Scope expects last year’s upward trend Adler-Conwert battle heads to be maintained through 2016, as inves- German indirect real estate investing for decisive date March 17th tors from North America and Asia also vehicles saw inflows at record levels in commit resources to the sector. Liquid 2015, shows a new study by Düssel- The ongoing saga that is Germany’s real estate vehicles are seen as an attrac- dorf-based capital market research spe- wave of consolidation among its list- tive inflation hedge, and still provide bet- cialists Akselrod Barkow Consulting. ed residential property companies may ter returns than relatively risk-free bonds, Indirect vehicles surveyed include list- reach its zenith later this month (at least offering a current average total yield of ed real estate, institutional open-ended temporarily) at a special shareholder 2.4%, which funds association BVI esti- funds (OEFs), and public open-ended meeting in Vienna of Austrian-listed Con- mates as the current return. funds. Closed-end funds were specifical- wert Immobilien. According to Sonja Knorr, director ly not included, say the researchers due Germany’s fifth-largest listed hous- at Scope Ratings, “We do expect to see to lack of representative data. ing group Adler Real Estate and its ally inflows amounting to billions throughout Net capital inflows into the indirect Petrus Advisors is seeking to replace the year, and it is entirely possible that vehicles were €18.5bn, up by 50% on three of four top managers at Conwert some funds will once again reach their 2014, a post-crisis record, and the sec- and add its own nominee, a move which inflow limits this year.” ond best year ever for indirect capital is being rejected by Conwert and its sec- 19 www.refire-online.com

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20

...from page 18 ond-largest shareholder Fidelity Insur- less than half of that (€495m) for Adler ing the proceeds in Germany, where the ance, which holds a 7.8% stake. Adler Real Estate. yields are higher.” Conwert’s Austrian owns 22.4% of Conwert’s stock, and Adler’s issue with Conwert is that it assets (excluding commercial property Petrus 7.8%, but insists it is not looking believes the Austrian company is not subsidiary Eco Business, which Conw- to take over Conwert in a hostile bid. The moving fast enough in disposing of non- ert plans in any event to sell) are thought special shareholder meeting is sched- core assets, particulary retail, and focus- to be worth about €500m, and should uled for March 17th, and Adler needs a ing on what should be its core business have little difficulty finding a buyer. quorum of 75% of the shareholder votes of German residential, which makes up Conwert’s management, Fidelity, and present at the meeting. 80% of its apartment holdings. It also shareholder activist group ISS all plan to Adler owns about 50,000 apartments wants to see Conwert cutting its cost vote against the Adler move, and they in Germany after a couple of years of base faster. accuse Adler of not providing a “compel- rapid expansion through mergers and di- Board member Arndt Krienen at Ad- ling rationale” for change. Conwert has rect acquisitions. Conwert holds 29,700 ler told the Austrian press last week that countered that its full-year 2015 earn- apartments, most of which are in Germa- he believes Conwert’s Austrian assets ings had surpassed its own guidance, ny. However, Conwert has a market cap- are undervalued. “I would be in favour and that it was pressing ahead with its italisation of about €1.2bn, against much of selling the Austrian assets and invest- cost-cutting and disposals programme

Guest Column: Prof. Stefan Stüer, Senior Director of VALTEQ Gesellschaft mbH M&E installations – often unloved but ever more in demand

Mechanical and electrical (M&E) M&E an elementary component of installations are not necessarily comprehensive risk management. among the darlings of building owners and investors. At first glance, this is A further significant factor in the little wonder, as it is very frequently rising demand for M&E services said of M&E that they primarily give can be found in the ever-increasing rise to costs. The common complaint complexity of technical equipment. www.valteq.de is that the installations are expensive This development is attributable in and maintenance-intensive. part to the increased demands on all relevant information related to a standards of living comfort. Cooling building is illustrated in virtual form. On But whether they are popular or facilities are often demanded in even new-build projects, in particular, this not, the demand for M&E-related the smallest of units; heating systems enables the detection and solution of services is increasing, due to a must start up rapidly and water must so many problems long before they number of different factors. One reach acceptable temperatures swiftly. leave the computer. This saves effort important aspect is the requirement The result: larger pipes, more complex and, in doing so, money in the practical for operational safety and operator cabling – greater effort and expense. implementation. responsibility in the field of technical property management. As a result However, M&E should not be viewed This rising demand is also reflected of the tightening of statutory as a necessary evil or as a cost driver. in the order books of M&E service requirements – one only has to think In reality, however, and particularly providers. In some cases, design of the continual development of the within the framework of the upcoming offices are fully booked up for over a Energy Savings Ordinance (EnEV) digitalisation of M&E processes, year or more. In order to ensure that or Drinking Water Ordinance – there intelligent equipment can play a all required measures are completed is also an increasing demand for valuable role in improving the efficiency on time, investors and building owners transparency among investors. It is of building management. For example, should therefore tackle the subject foreseeable that the existing directives Building Information Modelling (BIM) of M&E in good time and seek out a will be intensified even further during will contribute to the creation of an competent partner, such as VALTEQ, the years to come. This makes integrated planning process. With this, as soon as possible.

Sponsored Statement 21 www.refire-online.com

in line with its own planned schedule. members have a total of over 100 years of Germany/Financing It had offered Adler the addition of a experience and expertise in board posi- Helaba, Erste Group financ- fifth director to oversee Adler’s legitimate tions and in the management and restruc- ing Blackstone’s logistic buy interests, but Adler had rejected this. turing of real estate companies.” from Immofinanz Conwert has made clear that it believes Conwert CEO Wolfgang Beck com- Adler plans an outright merger, or to force mented, “Since I took office at conwert Listed Austrian property investor Immo- it to buy Adler’s own housing assets. in late summer of last year during an in- finanz AG exited the logistics real estate Adler’s proposed nominees to replace tensive phase for the company, a lot has sector last year (reported on in REFIRE in three of the existing directors are Dirk changed for the better. The focus on res- November) to concentrate on its office Hoffmann, the chairman of the super- idential property that we have pursued, and retail investments and to renew its visory board of Adler; Hermann Wag- and the sale of properties that are not focus on its key markets, including re- ner, the supervisory board chairman of part of our core business are progress- ducing its exposure to Russia. It sold its German listed DEMIRE Deutsche Mit- ing well. We have launched several pro- more than 1 million sqm logistics port- telstand Real Estate, which has Swiss grammes that will contribute to reducing folio to Logicor, the European logistics family office Wecken as a large minority our operating costs by 20%.” arm of giant private equity group Black- shareholder in common with Adler; and The company also defends its stone for €508m. Wijnand Donkers, the former chairman strong business results for 2015 which The logistics portfolio consisted of of German listed housing giant Deutsche saw funds from operations (FFO) assets in Germany, Hungary, Romania, Annington, now Vonovia, who is linked climbing by 50% last year, the 2016 Poland, Slovakia and Russia. to Petrus Advisors. FFO guidance lifted to €65m, while va- The funding for the deal is now be- Conwert claimed in a press release cancies fell to 6.6% from 10% in 2014. coming more clear. Austria’s Erste Group that, “With these proposals, Adler is clear- The company’s LTV ratio is 48%, com- Bank is lending €91m on a five-year loan ly seeking to gain control of the adminis- pared to Adler’s at 70%, offering more facility for the 12 logistics assets in central trative board and thus of conwert itself.” scope for future growth, it said. Its cost and eastern Europe - Hungary (five as- Defending its own board compilation, of debt at 2.3% is lower than Adler’s at sets), Romania (4), Poland (2) and Slova- Conwert said:“Between them, the board 4%, it also pointed out. kia (1) as well as land reserves. Two assets

PAMERA is now CORNERSTONE Real Estate Advisers

We are your competent contact – and now worldwide Christoph Wittkop Cornerstone Real Estate Advisers Managing Director Country Head » One of the largest global real estate investment Germany managers [email protected] » Over 44 bn Euro of assets under management, including 3.1 bn Euro in Europe1 » 215 institutional investors and clients1 Gunther Deutsch » Strong local presence, with offices in the USA, Europe Managing Director Europe and Asia London Head of Investment Amsterdam [email protected] » Offices, Retail, Residential, Hotel and Light Rotterdam United States Industrial Stockholm Berlin 8 offices Helsinki Dusseldorf » Core and Value-Add strategies (Funds, Matthias Gerloff Separate Accounts, Financing) Milan Frankfurt Asia Paris (from the end of 2015) Hamburg Tokyo Managing Director » A member of the MassMutual Financial Group Madrid (from the end of 2015) Munich Hong Kong Head of Institutional Investment Solutions 1 As at 31 March 2015 [email protected]

Berlin . Dusseldorf . Frankfurt . Hamburg . Munich www.cornerstoneadvisers.de 22

SWISS LIFE ASSET MANAGERS AND CORPUS SIREO LAUNCH GERMAN CORE REAL ESTATE FUND ON THE MARKET

Swiss Life Asset Managers has successfully opened the German core real estate fund “Swiss Life REF (LUX) German Core Real Estate Fund SCS, SICAV-SIF” to third-party investors. By the end of the initial offering stage, the fund recorded capital commitments of over €150 million from instituti- onal investors from Switzerland. The first real estate fund jointly initiated by Swiss Life Asset Managers and CORPUS SIREO has thus been well received by the market. In the medium term, the fund is expected to grow to reach a volume of €1 billion.

In the medium term, at least half of the fund is to comprise residential pro- perty in order to offer investors a fund structure providing stable income. The focus is on properties in metropolitan regions with established markets and sustained positive performance indicators. Swiss Life Asset Managers and Contact person CORPUS SIREO are also focusing on commercial properties for the German core real estate fund. This includes acquisitions in good to very good locations Tim Brückner in Germany’s top seven cities, as well as in prospering B-locations. Managing Director Client Management Financial Insurance companies in the Swiss Life Group invested a total of €300 million Institutions & Investors to build up the initial property portfolio. Furthermore, by the end of the initial offering stage the fund recorded capital commitments of over €150 million CORPUS SIREO from institutional investors from Switzerland. These investors are predomi- Asset Management nantly pension funds and insurance companies. Commercial GmbH Stefan Mächler, Group Chief Investment Officer of Swiss Life, says: “By [email protected] opening this fund we are offering institutional investors together with the Swiss Life Group long-term, attractive investment opportunities in the largest property market in continental Europe.“ ”By doing so we are significantly expanding our fund business in the real estate sector and further strengthening our market position.”

The Asset Management Commercial, Residential and Retail divisions of CORPUS SIREO support Swiss Life Fund Management, domiciled in Lu- xembourg, with management of the fund’s portfolio. Twenty-one property purchases, mainly in the top seven cities and with a total volume of around €335 million, have already been notarised since July 2015. This also includes a commercial property portfolio acquired only recently consisting of 9 pro- perties in major cities such as Munich, Hamburg, Frankfurt, Düsseldorf and

Sponsored Statement 23 www.refire-online.com

Part of the fund: Niederkasseler Lohweg, Düsseldorf

Freiburg, which complements the fund’s promising starting portfolio well. Following this successful acquisition, future acquisition activities will primari- ly focus on the residential property sector with high-quality existing and newly constructed properties in good to very good locations.

Ingo Hartlief, COO of CORPUS SIREO Holding GmbH, says: “With the most recent acquisitions we have placed a significant part of the initial equity provi- ded on the market.“ ”Our pipeline also continues to be full: properties with a total value of approximately €250 million are currently under examination, the largest portion of which relates to residential properties.”

For further information go to www.corpussireo.com

CORPUS SIREO is an award-winning multidisciplinary real estate service provider. The company acts as an asset manager, residential project developer and real estate broker in Germany and nine other European countries. It also acts as a co-investment partner for pan-European real estate investments, is one of Germany‘s top ten brokerage firms and develops an average of 500 residential units every year. CORPUS SIREO has around 560 employees at 11 locations in Germany and Luxembourg and is an independent business unit of Swiss Life Asset Managers (CH).

With companies in Switzerland, France and Germany, Swiss Life Asset Mana- gers has real estate assets under management with a total value of almost €59 billion (as of 30 June 2015). In addition to investments of the Swiss Life Asset Managers

Sponsored Statement 24

in Romania’s Bucharest and Ploiesti are core, stabilised assets to blue chip inves- the water. Our goal would be to initiate still under construction and will be com- tors, the margin was under 150 bps.) transactions that are suitable for Pfand- pleted by Immofinanz, said Erste. Of new lending, 47% was originated in brief refinancing, and to avoid unneces- According to Richard Wilkinson, Germany, followed by UK (18%), France sary risk.” head of commercial real estate at Erste, and the Nordic countries (10% each) and In part because of high deferred tax “The real estate investment market in Central and Eastern Europe (7%). The income, the bank’s consolidated after-tax CEE grew by 19% in 2015, while transac- average LTV on new commitments was profit rose to €230mn, or €1.71 per share. tion volumes have particularly increased 63%. Köntgen said the bank plans to distribute in our core markets Hungary, Romania The bank said it expects to match a €0.43 dividend per share, a dividend and Slovakia and we expect this trend to 2015’s new lending in 2016, although it yield of nearly 7%. (The share price has continue throughout the year.” warned of further margin compression fallen from its IPO price of €10.75 to cur- For the 27 German assets with and rising funding costs against a back- rently about €9.20). 630,000 sqm of gross lettable area, the ground of increasing competition among On the outlook for 2016, co-CEO Frankfurt-based landesbank Helaba is finance providers, particularly non-banks. Arndt said, “A key milestone for 2015 was providing a €250m long-term loan, while On refinancing, the bank expressed PBB’s privatisation, which we achieved it acted as mandated lead manager on its concern that Pfandbrief spreads will through the flotation. At the same time, the overall transaction and provided full increase throughout 2016 in response PBB generated its highest operating underwriting. The German assets are to lower current demand from financial results yet in 2015. 2016 will present leased to 83 different tenants, with the investors at present yields. An increase particular challenges, both in terms of bulk of the properties located in North in pbb’s funding costs would narrow the regulation and the market environment. Rhne-Westphalia. profitability of the loans it made, it said. Nonetheless, we expect good pre-tax However, this could be profits, which however countered by growing its are likely to be slight- Germany/Financing syndication and place- ly lower than the very Pbb Deutsche Pfandbrief- ment business, it said. good figures posted in bank bounces back with Thomas Köntgen (pic- the previous year.” profits, new lending tured, right), pbb’s co-CEO and Treasurer, commented: “We want to The Munich-based pbb Deutsche continue leveraging our structuring ex- Germany/Results Pfandbriefbank, the ‘good bank’ that pertise for more complex – and hence, Kintyre Investments with emerged out of the ashes of the old – and higher-margin – financings, without high- nearly €500m under man- since nationalised - Hypo Real Estate, er risk exposure. In addition, we plan to agement in Germany has posted its best results since its new make careful adjustments to our product beginning as an independent real estate and country mix, to re-flect a changing The Frankfurt-headquartered real estate financing bank. business environment, in line with our risk investor and asset manager Kintyre In- Nine months after its flotation as a pub- strategy. We want to generate additional vestments said it increased its assets lic entity on the stock market, the bank income through a stronger focus on the under management increased by 37% has announced full-year 2015 profits up syndication business, and placements of last year, with 82 individual assets and a 12% to €195m, and a generous dividend financings. We also strive for broader di- gross lettable area of 302,000 sqm. The payout to its shareholders of nearly half of versification in terms of regions and prod- total AUM at year-end was €488m. its net profit. The German state remains a ucts in our funding business.” Adam Pearce, partner at Kintyre In- 20% shareholder in the bank. This “broader regional diversification” vestments, commented on a good year: Pbb raised its new real estate lending could involve the bank making a first for- “2015 enabled us to achieve the planned in 2015 to €10.4bn, a rise of 16% over ay into the US market, in which its prede- expansion of our property and centre 2014. This came from 180 transactions, cessor Hypo Real Estate was an active management businesses in a balanced up from 161 the previous year, with player. manner, enabling us to better provide our €2.3bn being extensions. Average ma- Köntgen’s co-CEO and bank CFO An- clients and partners with a full integrated turity increased slightly to 5.7 years, but dreas Arndt said, “We might make our management model”. average gross margins fell from 200 bps first steps into the US market this year, Notable was the completion of 30 to 170 bps (in some cases, particularly for in a modest way, by dipping our toe in lease contracts over the year, for more 25 www.refire-online.com

Investment locations Germany 2016 Offi ce – rents and yields Strong demand for offi ce properties – particularly from international investors in the top locations – means a further increase in purchase prices. “B” and “C” locations are also seeing this trend, in some cases with a delay. Returns are continuing to fall. But: the gap between the change in rents and purchase prices is becoming measurably bigger.

Kiel

14.50 6.5 Rostock

11.50 7.1 Lübeck

12.00 7.5 Schwerin Wilhelmshaven 11.00 Hamburg 8.50 8.1 6.7 25.00 4.2

Bremen

13.00 5.3

23.50 4.1

Berlin

12.50 Hanover Potsdam 6.8 Osnabrück 14.50 Salzgitter Braunschweig 13.00 11.50 5.7 6.2 6.5 11.00 Magdeburg 14.00 6.50 6.5 5.8 Bielefeld 6.8 11.00 Münster 7.0 14.00 5.9 Gütersloh Cottbus 8.50 Paderborn 6.3 8.50 10.50 11.50 7.1 8.50 6.9 13.50 6.3 7.5 6.6 Hamm Bochum Dortmund 13.50 Halle/Saale 10.50 12.00 Duisburg 6.1 6.8 7.5 Essen Hagen 9.50 8.60 Leipzig Krefeld 7.3 Ratingen 6.8 Kassel Mönchen- Wuppertal 12.20 Dusseldorf gladbach Solingen 6.0 12.50 Dresden 9.00 12.50 6.3 Düsseldorf 6.8 26.00 Neuss 8.7 Leverkusen Weimar 12.00 4.4 Erfurt Cologne Jena 6.1 12.00 Siegen Gera Ratingen Marburg Chemnitz 22.00 7.5 10.50 7.10 Aachen 11.00 6.7 7.9 11.00 14.00 4.5 7.30 7.5 11.10 7.2 9.50 6.2 Bonn 7.6 13.50 7.3 7.5 6.6 Neuss 18.00 5.3 10.50 6.6 Koblenz 38.50 4.3 11.50 14.00 13.00 9.50 7.0 5.8 Frankfurt/M. 6.9 6.8 9.50 Prime rents and prime yields: Wiesbaden Offenbach/M. 6.7 Schweinfurt Mainz Aschaffenburg Darmstadt Bamberg 10.00 2 13.00 12.50 Prime rent in €/m 6.8 6.2 13.00 Würzburg Trier 13.50 6.4 6.5 7.5 Prime yield in % 15.00 11.50 12.00 10.50 6.1 7.1 Erlangen 6.9 7.5 Fürth Mannheim Kaiserslautern Nuremberg 6-month trend: rising Ludwigshafen Heidelberg 10.50 7.2 14.00 9.50 10.00 14.50 5.4 stable Saarbrücken 6.7 6.5 5.9 Heilbronn falling 12.00 Regensburg Karlsruhe 5.8 13.50 13.00 13.50 6.0 6.5 5.9 Stuttgart Ingolstadt

22.80 4.6 11.00 6.0

Ulm Augsburg

15.00 6.1 Munich

33.30 Freiburg 3.8

15.00 14.00 5.8 6.7 Konstanz

2016 Ø prime rent ∆ 2015/2016 Ø prime yield ∆ 2015/2016

A cities 27.30 €/m2 +2.2% 4.20% -45 Bp* B cities 13.85 €/m2 +5.7% 5.82% -21 Bp* As of 1st quarter 2016 C cities 12.35 €/m2 +2.2% 6.53% -14 Bp* Contact: [email protected] D cities 9.98 €/m2 +2.6% 7.16% 0 Bp* Source: Catella Research 2016 * Bp = basis point 26

...from page 24

than 29,000 sqm of retail space, said assets in the largest European cities. It Corestate has just completed its pre- Pearce. On investments, Kintyre trans- has already acquired four properties in viously announced squeeze-out of the acted a volume of €103m for the twelve- Rome, Barcelona and Paris, while further minority shareholders in YOUNIQ, by month period, as joint venture co-invest- transactions are in the pipeline. which the remaining 7.8% of the shares ment partners. For its Spezialfonds “Best Value Ger- are now fully-owned by the Frank- Highlights included the acquisition of many II” and several individual man- furt-based subsidiary Corestate Ben- the 55,000 sqm Markisches Zentrum in dates, BMO bought inner city retail and BidCo. Corestate will then de-list the Reinickendorf in Berlin in November, with retail warehouses across Germany. Equi- company and recapitalise YOUNIQ, be- a gross development value of more than ty placement for the BVG II fund has been fore buying additional sites for new con- €100m. Kintyre also co-invested with completed and it has reached 65% of its struction. Corestate CEO Ralph Win- AEW Europe in a €56-3m eight-asset target investment volume of €550m. For ter has said in the past that its student retail portfolio, as part of a €150m op- an individual mandate, the firm acquired housing subsidiary had underperformed portunistic buying programme on behalf several new residential assets last year in the past due to “management mis- of a US institutional investor. The com- across Germany, with the portfolio for the takes and lack of capital”. The YOUNIQ pany also opened a third German office, German occupational pension scheme shares have fallen heavily since their ini- in Berlin, to complement its offices in valued at €476m at year-end. tial flotation in 2006. Frankfurt and Oberhausen, and boosted BMO described the outlook for 2016 YOUNIQ currently owns 2,500 stu- staff from 10 to 24 members. as “growth in an ever-narrowing market”. dent apartments under management or According to Schöberl, “Despite the construction in Germany and Austria. pressure on prices, we have no intention Last year it opened Austria’s largest res- Germany/Acquisitions of broadening out to include assets in in- idential complex for students and young BMO boosts transaction ferior locations – even if the market is be- professionals (with micro-apartments) in volume by 40% to €585m coming more difficult and some investors Vienna. will need to take a reality check on their The “Linked Living” building with 600 The German unit of BMO Real Estate yield expectations.” apartment on 11 floors is part of the Partners, the former F&C REIT acquired In commercial property, BMO was Messecarree urban development proj- last year by Canada’s Bank of Montreal managing 305 assets with 926,000 sqm ect, near to Vienna University’s Busi- group, boosted its transaction volume in of gross lettable area in 191 separate lo- ness Department, the Austrian Centre Germany in 2015 by 40% to €585m, of cations across Germany at end-2015. It Vienna, the city’s Congress Centre and which €500m was in the acquisition of 21 said it managed to lease out 88% of its the famous Prater amusement park. separate property assets, while 10 as- vacant space last year. More recently Corestate bought a site sets were sold for €85m. In all, transac- in Berlin’s Wedding district to develop tion volume rose by 40% on the previous a high-quality student housing scheme year 2014’s €417m. Germany/Student accomodation with 160 units over seven floors. The At end-of-year, assets under manage- Corestate renews focus on scheme, on the corner of Müllerstrasse ment rose by 16% on 2014 to €1.972bn. student and micro-living and Utrechter Strasse, will include 600 Throughout 2015 the Munich-based segment sqm of retail space. BMO raised €280m in equity commit- According to Thomas Landsch- ments from investors. The Luxemburg-based private equity reiber, Corestate’s CIO, commented, According to managing director Iris group Corestate Capital has been refo- “This asset class represents an attrac- Schöberl, “The year 2015 was charac- cusing its efforts on revitalising its interests tive investment opportunity for inves- terised by further growth for us. We ex- in the student housing market, a segment tors, as the demand for student living panded our core business and intensified it first got involved in many years ago with space runs independently of econom- our pan-European investment solutions its majority stake in listed YOUNIQ Group, ic conditions. Increasing numbers of in co-operation with our colleagues in a student housing specialist. students generate a vast demand for London and Paris.” Late last year Corestate aborted its student living space which cannot be A key launch was the “Best Value planned stock market listing due to what met by public organisations and the Europe I”, a Spezialfonds for German in- it described as “a difficult environment residential market alone. This demand stitutional investors with target volume of for IPOs in Germany’s stock market”, at in combination with an intelligent usage €700m. The fund invests in high street a time of particular market turbulence. concept convinces our investors.“ 27 www.refire-online.com

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Germany/Retail Real Estate German Retail Fund Nr. 1. The property year loans against GRR-managed retail GRR Group refinances, with 1,900 sqm is a dual usage building assets with a minimum WALT of six years continues steady buying of with a supermarket and beverage market GRR manages its own portfolio as well retail assets and was upgraded in 2013. Earlier in Jan- as managing its two retail funds on behalf uary GRR had bought two further retail of third parties. As part of the refinancing The Nüremberg-based GRR Group, centres – a 2,400 sqm Rewe-anchored GRR sold off portofolios valued at €100m which specialises in ‘basic retail’ fund and market in Schöllnach near Deggendorf before re-investing in fresh assets to bring asset management, has been steadily from a Bavarian developer, and a 3,900 its holdings up to over €200m, spread buying new assets for its two institutional sqm retail centre anchored by Kaufland in across 80 individual assets. Overall, in- retail funds. It also recently refinanced a Neustadt an der Donau, also in Bavaria. cluding third party mandates, GRR now large chunk of its long-term outstanding All the assets are being allocated to the manages about 300 properties with a total debt at more favourable terms, setting it German Retail Fund Nr. 1, which is ad- lettable space of 670,000 and a valuation up for further acquisitions. ministered over the Service-KVG IntReal of more than €1bn. This year alone the company has made platform for institutional investors. The company has grown from five em- a couple of new acquisitions. It has just Just before Christmas GRR refinanced ployees in 2007 to over 40 staff today, bought a fully-leased local retail park an €83m loan facility secured by 55 com- which necessitated a move last year to with 3,700 sqm for €5m in Kirn, near Bad pany-owned assets in advance of its ma- Nüremberg from nearby Erlangen. Kreuznach in Rhineland-Palatinate. The turity date. The old loan was repaid to the anchor tenant is food discounter Aldi. previous lender, while the new ten-year The seller was Dutch development group loan was issued by UniCredit Bank AG Germany/Financing Doorhout in ´t Kirn B.V., part of holding in Nüremberg. According to CFO Martin DG Hyp provides €264m company der Trooster Vastgoed B.V, Führlein, “We’ve taken advantage of the financing on Asian JV deal represented in Germany by Immofin current favourable climate to optimise the in Cologne (Waledemar Dlugosch). The asset is for yield on our equity portfolio. By refinancing GRR’s German Retail Fund Nr. 1. we were able to halve our financing costs.” Although the deal was closed at the Further up the road GRR bought a He added that UniCredit became their pre- end of December, details only emerged GRAPH-3 Rewe supermarket in Kassel, also for the ferred lender after it agreed to offer ten- recently about a significant transaction

Total Return Performance GPR 250 Index (€) 150

100

50

GPR 250 Europe

GPR 250 Germany

0 Feb-15 Mar-15 Apr-15 May-15 Jun-15 Jul-15 Aug-15 Sep-15 Oct-15 Nov-15 Dec-15 Jan-16 Feb-16

Source: Global Property Research (www.globalpropertyresearch.com), 2016

Graph of Total Return Performance of Europe and Germany in Euro currency over the past twelve months Page 1 Charts courtesy of GPR Global Property Research 29 www.refire-online.com

which saw both a Jersey-based Armin- Germany/Acquisitions South Korean and ius Advisors and Frank- Finnish Ilmarinen joins a Chinese inves- furt’s Arminius Kapital- France’s Amundi in Frank- tor come together gesellschaft said in a furt office buy to buy Cologne’s joint release that the deal Lanxess Arena marks their entry into a The Finnish pension fund and insurer Il- along with the city’s new business line with marinen has joined forces with French technical centre City stabilised and core as- company Amundi Immobilier to buy Haus, in a club deal arranged by advisor sets, for which they are evaluating further an office property in Frankfurt from JP Arminius. The sale price was €440m, investments. Arminius was advised by Morgan Asset Management in a 50-50 with the seller being a consortium of 77 Drees & Sommer and law firm Kucera, co-investment. The property, at Theodore owners of an Oppenheim-Esch fund. while DG Hyp is providing €264m in fi- Heuss Allee 50 in Frankfurt’s business The equity investors in the deal were nancing for the deal as sole lender. district, is fully let to Commerzbank. South Korea’s Mirae Asset Global In- The 20,000-capacity Lanxess Stadi- Amundi and Ilmarinen bought the vestment and the Chinese group Jun- um, (pictured, above) which adjoins the property for an open-ended fund they son Capital from Hong Kong, with both City Haus, is a multi-purpose indoor are- co-manage, said property advisor BNP investing in Germany for the first time. na built in 1998 at a cost of €153m. It Paribas Real Estate which advised the Seoul-based Mirae is an independent is the largest ice-hockey arena outside seller, along with CBRE. The 31,800 sqm asset manager with a focus on emerging North America, housing the local Kölner office near the trade fair is fully leased to markets equities with $75bn in assets Haie (“Cologne Sharks”) team. Last year Germany’s second–largest bank Com- under management around the globe, 1,506,190 visitors attended 146 events merzbank, which has been in the build- 5% of which are in real estate. It is part in the arena, including 733,433 music ing since 2004 and last year signed a of the Mirae Asset Financial Group, and pop concert fans. The stadium at- new long-term lease. South Korea’s largest investment group. tracts visitors estimated at 450,000 ho- Management of the building, which Family-owned Junson Capital has been tel nights in Cologne, spending about has BREEAM sustainability certification, active as an investor in hotels and are- €600m locally, putting it among the top will be taken over by Paris-based asset nas in Asia and the US. 10 multi-purpose arenas worldwide. manager L’Etoile Properties, which also GRAPH-1

Total Return Performance GPR 250 Index (€) 200

GPR 250 Europe

GPR 250 Germany 150

100

50

0 Feb-11 Aug-11 Feb-12 Aug-12 Feb-13 Aug-13 Feb-14 Aug-14 Feb-15 Aug-15 Feb-16

Source: Global Property Research (www.globalpropertyresearch.com), 2016

Graph of the total return performance of Europe and Germany in Euro currency over the past five years Page 1 REFIRE charts courtesy of GPR, Global Property Research 30

advised the buyers. Amundi Immobilier to 15% by 2020. It has made a number large food retailer and covers the entire last year doubled transactions to around of investments in Sweden, but says that range of food, near food, and non-food €3.6bn, with the total of its assets under Germany is “very strong on its radar”, with needs. Centrally located in small and management rising 39% to €12.9bn. a focus on office and retail properties in medium-sized towns, they cater for de- Helsinki-based Ilmarinen is one of Fin- Germany’s eight largest cities. mand from the surrounding areas not land’s largest real estate investors with served by large shopping centres. assets worth €3.1bn. This latest deal is The Kamen Quadrat is a new centre, the company’s second in Germany, after Germany/Retail real estate opening only in July 2015. It has 7,730 buying the Königstadt Carree, an office Greenman buys third asset sqm of lettable space. Grocery chain and hotel complex in Berlin, late last year. for German retail fund Rewe is the largest tenant with 37% Prior to the Berlin deal, Ilmarinen had of the space, while discounter Netto is bought a 50% stake in a second Brus- The acquisitive Irish property investment the next largest, with 18% of the space. sels office property from Munich-based manager Greenman Investments has Drugstore Rossmann, shoe seller De- Hannover Leasing, who will continue to added a further inner-city retail prop- ichmann, and six other tenants occupy manage the 72,000 sqm Covent Garden erty to its burgeoning the remaining space. office scheme, near the Rogier metro German funds portfolio, According to John station. The property is valued at more buying a retail centre Wilkinson, (pictured, left) the than €300m. Earlier in the year, in an- in the city of Kamen, ebullient CEO of Greenman other deal with Schroder Real Estate, closed to Dortmund in Investments, the purchase Ilmarinen had bought into a company North Rhine-Westpha- is a good fit for the compa- that owns the 100-metre Bastion Tower lia. The transaction was ny’s Greenman Retail+ fund. office complex in the centre of Brussels. a share deal, thought “The anchor tenant, Rewe, Ilmarinen is one of the largest institu- to have been valued at has signed a contract for 20 tional investors in the Finnish real estate close to €25m. years, and the other contracts have terms market, but has begun diversifying its The Kamen Quadrat is a ‘hybrid of ten to 15 years. This makes the centre portfolio geographically through joint ven- centre’, which normally ranges in size an extremely attractive investment in our ture partnerships. Overall the group has between a specialist retail park, or Fach- view. The mix of tenants as well as the about €35bn in assets and plans to boost marktzentrum, and a larger retail centre. exceptional location in the pedestrian its directly-held real estate qota from 8.8% Typically such a centre is anchored by a zone in Kamen’s city centre convinced us to buy this property. Kamen also of- fers the right framework conditions for retail. At 138.0, its retail centrality is way above the German average.” This is Greenman’s third sizeable deal for its Retail+ fund, following its buy of another hybrid centre at nearby Datteln for €26.4m last November, and an earli- er acquisition of the Tribseer Centre at Stralsund on Germany’s Baltic coast for €19m. All three deals were advised on by Berlin law firm Bottermann Khorra- mi LLP, with Dahlke Investment being the broker. Greenman, which is focused entire- ly on the German retail market, in 2014 became the first Irish-owned investment manager to be approved by the Central Bank of Ireland as an Alternative Invest- ment Fund Manager. The firm is, which is Irish-based but also has offices in Lux- 31 www.refire-online.com

The 10th Annual GRI 9-10 MAY DEUTSCHE2016 FRANKFURT

Deutsche und internationale Entscheider im deutschen Immobilienmarkt Connecting German & Global Real Estate Leaders

PARTICIPANTS INCLUDE:

FRANK BILLAND MAHBOD NIA ANNETTE KRÖGER CHRISTIAN BOCK HENRIE KÖTTER Member of the Management CEO & President CEO Head of Strategic Investment Board & CIO NORTHSTAR ASSET CIO & MD Development ALLIANZ REAL ESTATE GEG GERMAN ESTATE GROUP AG UNION INVESTMENT REAL ESTATE MANAGEMENT GROUP ECE PROJEKTMANAGEMENT

PBB DEUTSCHE PFANDBRIEFBANK • VONOVIA SE • BLACKSTONE • BERLIN HYP • HEITMAN KKR • PATRIZIA • BAYERNLB • PROLOGIS • UNION INVESTMENT REAL ESTATE

DISCUSSIONS HANDEL METAMERPHOSE: Retail Metamorphosis INCLUDE: JVS / CLUB DEALS: JVs / Club deals INVESTIEREN IN B UND C: B and C locations EINZELHANDEL IN B LAGEN: Retail in B Cities

+44 20 7121 5087 | [email protected] | www.globalrealestate.org/Deutsche2016

DISCOVER ALL GRI EVENTS Africa Summit • Asia • Brazil • British • CEE • Colombia • Deutsche • Deutsche Wohnen East Africa • España • Europe Summit • France • India • Italy • Mexico • Retail • Russia • West Africa

Since 1998, GRI meetings provide a forum for the world’s leading real estate players to develop valuable relationships, find new business partners, and strengthen their global networks. 32

embourg and Germany, aims to provide Dr. Joachim Arenth, the founder and smaller deals which helped to kick off the Irish investors with an opportunity to in- principal shareholder, says the compa- year. The company’s normal-sized deals vest in real estate funds which own large ny has now concluded over 40 portfolio are between €10m and €250m. A key German food retailing stores and neigh- transactions, now totalling more than strength of the group is its over-3,500 bourhood shopping centres. €2.5bn. Several deals have involved big investor database, says Heinrichs, which In a notable deal last April, Greenman retailers such as Karstadt, Woolworth, helps to target likely partners for unusual paid €95m to take over 29 grocery stores Aldi Süd, and grocery chain Edeka, as or unheralded transactions. from Edeka, Germany’s largest grocer. It well as chemical group Bayer AG. The currently has close to €300m of assets company also advises on M&A, project under management, which it plans to in- management and strategy. Germany/Managed Care crease to over €500m by this summer. Last year JenAcon acted as selling Belgium’s AG Real Estate agent on a number of large deals involv- enters German nursing-home ing Marktkauf, a marketing subsidiary of market Germany/Retail real estate Edeka. In December, Marktkauf sold 14 JenAcon transaction volume Netto stores and an Edeka store to Frank- The real estate division of Belgium’s AG now exceeds €2.5bn furt-based opportunistic asset manager Insurance has bought a portfolio of Ger- GPEP on behalf of its fund manager client man nursing homes for €138m in part- REFIRE met recently with property ad- Universal Investment for about €30m. nership with Cardif Luxe Vie, an insurer visor JenAcon in the Thuringian city of In March last year JenAcon also acted in the BNP Paribas Group. The trans- Jena, which like ourselves, is celebrating as selling agent for a portfolio of a further action was structured as a share deal, its 10th anniversary this year. The Jena twelve Netto discount supermarkets. with the seller being Luxembourg-based and Osnabrück-based JenAcon has cre- CEO Oliver Heinrichs, who leads Threestones Capital Group. ated a strong niche for itself as a broker a 12-member team in Jena, indicated The deal sees AG Real Estate owning of portfolio deals, many of which never that two multi-million euro transactions 80% of the portfolio, while Cardif Luxe fall under the glare of publicity, but over are currently being wrapped up on be- Vie will take the remaining 20%, accord- the years have numbered many-large- half of a private equtiy group and a Ger- ing to the Belgian insurer. The acquisition scale transactions. man family office, as well as a couple of follows AG’s foray into German health- care with a deal for two nursing homes in the Hamburg region at the end of last European Office Property Clock Q4 2015 year. The new acquisitions bring AG Real The JLL Property ClocksSM Estate’s portfolio up to 14 nursing homes Moscow 4:30 Warsaw 4:45 Note located across Germany. Geneva 5:00 Lyon, Oslo • This diagram illustrates where JLL estimate each St. 5:00 Cologne Petersburg prime office market is within its individual rental cycle The homes have 1,614 beds and Kiev 5:30 Frankfurt at the end of December 2015 Athens 6:00 • Markets can move around the clock at different Bucharest 6:00 Hamburg speeds and directions 113 assisted living apartments, and are Dusseldorf 6:00 • The diagram is a convenient method of comparing the Helsinki 6:00 Stuttgart relative position of markets in their rental cycle leased to nine leading healthcare opera- Istanbul 6:00 • Their position is not necessarily representative of Prague 6:00 Munich investment or development market prospects Rome 6:00 • Their position refers to Prime Face Rental Values tors on a weighted average lease term of Zurich 6:00 Brussels 6:15 Lisbon 6:30 Rental Growth Rents more than 17 years. Berlin-based VIAM Paris CBD 6:30 Slowing Falling Budapest 7:00 will be property manager for the portfolio. Milan 7:00 London WE Amsterdam 7:30 Barcelona 7:30 Berlin, Dublin, London City, AG Real Estate, with more than €5.5bn Madrid 7:30 Luxembourg, Stockholm Edinburgh 8:00 Copenhagen Manchester 8:15 of property assets under management, is Copenhagen 8:45 Berlin 9:00 Rental Growth Rents Belgium’s largest real estate group, and Dublin 9:00 Manchester London City 9:00 Accelerating Bottoming Out Luxembourg 9:00 Edinburgh one of the country’s biggest asset man- Stockholm 9:00 London West 9:15 End Amsterdam, Barcelona, Madrid Moscow agers with more than €4bn under man- Munich 10:15 Stuttgart 10:30 Warsaw Hamburg 11:00 Budapest, Milan Geneva, St Petersburg agement for AG Insurance and a further Frankfurt 11:15 Kiev Cologne 11:30 €0.5bn for third parties. Lyon 12:00 Lisbon, Paris CBD Oslo 12:00 Athens, Bucharest, Dusseldorf, Brussels Helsinki, Istanbul, Prague, Rome, The German deal brings AG Real Es- Zurich Source: JLL, January 2016 tate into the managed care home seg- This data is based on material/sources that we believe to be reliable. ment, as competition for core offices and While every effort has been made to ensure its accuracy, we cannot offer any warranty that it contains no factual errors. Neither JLL nor any of its affiliates accept any liability or responsibility for the accuracy or completeness of the information contained herein. retail mounts. The company has tradi- tionally invested primarily in Belgian of- 33 www.refire-online.com

fices and retail, along with warehouses and residential. The company also provides public car park services un- der the Interparking brand, of which it owns 90%. With more than 290,000 parking spaces in 350 cities across 9 different countries, Interparking is a European market leader, serving 85 million customers a year with a staff of nearly 2,000. Its portfolio includes car parks in city centres, airports, train sta- tions, hospitals, commercial and business centres, and tour- ist attractions.

Germany/Listed companies London-listed Phoenix Spree in fresh capi- tal-raising drive

The Jersey-headquartered, London-listed Phoenix Spree Deutschland says it plans to raise Stg£ 38m (about €49m) along with a placing programme to allow it to raise further cap- ital over the coming year. The closed-end investment company has already received confirmation for the lion’s share of the capital increase (Stg£ 33mn) from investment company Liberum, who brought Phoe- Greenman nix to the stock exchange last year. The company said it plans to use the funds raised from the Investments issue to invest in accordance with its strategy of investing in Greenman are sector specific investment fund residential property in Berlin and various secondary German managers. Our sole focus is the German food cities. It will propose a placing programme to raise capital be- retailing asset class, Fachmarktzentren. Greenman tween March 7th 2016 and February 8th, 2017, as and when it manage assets with a value of over €250m located identifies properties that are suitable, it says. Since June 2015, Phoenix has purchased five Berlin resi- across Germany. Our investment strategy delivers: dential properties for an aggregate of €35.8mn which it says • low finance & operational costs will increase net rental income of €1.6mn per year or 10.4 • high annual rent surpluses %. The company can increase rental income by 6% per year • twice annual investor distributions on average, Phoenix partner Mike Hilton says, adding that • flexible investment structures Phoenix is planning comprehensive modernization efforts, so it is not immediately affected by the new rent control regula- • conservative exit models tion in the city. • operational transparency Assets under management consist of 115 properties containing 2,175 residential units, 190 commercial units, 3 www.greenman.com commercial buildings (office, retail), 491 garages/car parking For more information about Greenman and our investment spaces and 40 miscellaneous rental units (e.g. including cel- priorities please contact a member of our investor relations lars, storages, antennas) with a total lettable area of 173,000 team in our Dublin office on +353 1 647 1121 | enquiry@ sqm, located in 22 locations across Baden-Wuerttemberg, greenman.com Bavaria, Berlin, Bremen, Lower Saxony, Schleswig-Holstein Premier Benchmark Property LTD., t/a Greenman Investments and Brandenburg. is authorised as an Alternative Investment Fund Manager by the Central Bank of Ireland under the European Union (Alternative The company’s assets were independently valued by JLL Investment Fund Managers) Regulations 2013. Authorisation at €282.8m as at 31 December 2015, representing a value per number C123941. square metre of €1,635, a gross fully-occupied yield of 5.7%, a net initial yield of 3.7% and a net reversionary yield of 5.4%. EPRA net yield on the assets was put at 4.6%. 34

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