Engel & Völkers
Kai Wolfram
‘The residential property market is now a sellers’ markBarkowet and residential portfolios are very rare,’ Kai Wolfram, managing director of Engel & Völkers Investment Consulting.
Engel & Völkers Investment Consulting GmbH (EVIC) has acquired student residences in Germany with a market value of €85 million for the Luxembourg-based student housing investment manager Deutsche Real Estate Funds (DREF).
DREF appointed EVIC with a mandate to select, prepare and purchase properties with a value of up to €200 million. EVIC has access to the nationwide network of the Engel & Völkers Group, which comprises more than 40 commercial offices and 300 locations in Germany. DREF builds, acquires, refurbishes and manages student residences let to students under the Twenty First brand, which now number 3,500 units. The residential properties acquired are located in such cities as Berlin, Bremen, Kiel, Stuttgart, Bochum and Essen.
According to Kai Wolfram, managing shareholder at EVIC, “The market for student housing really took off in 2015, in part because of DREF’s activities. It is gradually becoming increasingly difficult to acquire good quality buildings in central locations at reasonable prices. We've managed to complete numerous acquisitions on behalf of DREF and we plan to continue this success in 2016.”
Earlier DREF had said that it had signed an 18-month revolving credit facility with UK hedge fund Chenavari Investment Managers to invest into the German student accomodation. “In 2015 we invested €135m in student accommodation facilities in Germany,” said CEO Felix Bauer. “In 2016, we plan to at least double the size of the portfolio as we ramp up activity across the business.” The facility provides flexibility to move fast once the firm has selected an attractive value-add opportunity. He noted that speed is a major factor in success of achieving investment in the current German market environment. “Demand for good quality residences in central locations is extremely competitive,” he added.
The Bauer Group is majority shareholder in DREF, while fund manager Internos Global Investors and the family office Somerston Group have holdings totaling 27.5%. Stephan Rind, the former CEO of listed German company Colonia Real Estate surfaced again some months ago as a director and 8% shareholder of DREF, but he has since sold his stake and severed his ties with the company, REFIRE understands.
Separately, the Hamburg-based Engel & Völkers said recently that it is expanding its operations by introducing distressed debt real estate opportunity funds to meet growing demand in Germany. According to managing partner Kai Wolfram, “The market for distressed property loans in Germany has yet to be exhausted, and we expect €6bn in transactions across Germany in the current year.”
To establish a foothold in the business, EVIC recently hired Thorsten Brogt from NPL workout specialists Hudson Advisers, part of the Lone Star group, where he was a director of portfolio management for Germany, Spain and the Netherlands. Part of Brogt's new remit will be to structure portfolio and individual sales across Engel & Völkers' German network of 50 commercial offices across the country.
