Boom in light industrial sees Helaba Invest snap up BEOS fund

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Frankfurt-based investment firm Helaba Invest has bought the open-ended real estate special fund, AIF BEOS Corporate Real Estate Fund Germany I (CREFG I).

The transaction is valued at over €500m and was structured as a share deal, in which the investment manager bought fund units on behalf of its new investors, rather than by buying the assets themselves. The fund has 21 commercial properties throughout Germany, which will continue to have Berlin-headquartered industrial property specialist BEOS as the asset manager.

BEOS, an early pioneer in corporate and light industrial real estate in urban locations, was itself bought out by Swiss Life Asset Managers in May this year, at a time when it had €2.6bn of assets across several highly popular funds.

The CREFG I portfolio, with 919,000 square meters of land and around 565,000 square meters of lettable space, consists of mixed-use commercial properties in established prime German locations and growth regions.

Around 98% of the properties are leased to companies with strong credit ratings, many of which are small and medium-sized enterprises. The weighted average remaining lease term is 4.7 years.

Since the launch of the special fund in 2010, investors in CREFG I have received an annual average total return of around 13.0%, Helaba Invest said. The sale marks the exit by former investors of CREFG I before its term expiry.

Helaba Invest Management Board member Ulrich Lingner commented: "We are very pleased that in the interest of our institutional investors we were able to assert ourselves in the bidding process for the portfolio. The transaction shows that the secondary market is becoming increasingly important in the specialist fund segment as well."

Michael Schneider, managing director of IntReal, which remains the service KVG for CREFG I, said the firm is pleased to continue administering the fund on behalf of its new and future investors. "I assume that in future we will see even more comparable deals via the transfer of real estate special fund units, which - as is the case with retail funds - will increasingly establish themselves," he said. "The benefits to both the fund manager and investors are very compelling. This exit alternative should always be checked as a fixed option."

A study by Colliers International shows that more than €2.6bn was invested in corporate real estate and industrial parks this year through mid-November (including the two recent large portfolio deals Helaba Invest/BEOS and BEOS/Aurelis), as much as in the peak years of 2015 and 2016 combined.

Gross yields of 5.7% and a scarcity of products in other areas of commercial real estate are attracting an increasing number of core investors to the light industrial sector, according to Colliers. As the production base of German Mittelstand, the sector is perceived as a sustainable investment even by risk-averse investors.