BNP Paribas Real Estate Investment Management and Cording Real Estate Group have teamed up to launch a value-add German real estate fund.

The €150m Real Value Fund will acquire and improve assets and has already bought Media Tower in Düsseldorf’s Media Harbour.

The fund is structured as an open-ended Spezialfonds for German institutional investors and designed to capitalise on the significant appetite among investors for core assets.

“Traditional core real estate increasingly fails to meet the return expectations of institutional investors because of movements in real estate prices,” said Reinhard Mattern, chairman of the management board at BNP Paribas REIM Germany.

“For that reason, there is a great interest in non-core properties that can be developed into core properties.”

Rodney Bysh, joint CEO of Cording, said: “We believe there is a compelling opportunity in the value-add segment for specialist real estate managers with a local presence and understanding of the market.

“Over time, many core properties have become value-add buildings with vacant space and renovation needs. We acquire these kinds of properties and apply our proven management approach to reposition them”.

The “manage-to-core strategy” will be applied to the 64-metre high Media Tower which has 18 floors and approximately 9,000sqm of flexible space.

Completed in 2006, the property is approximately 50% occupied after the expiry of some leases, with the average remaining term of the remaining leases only 2.8 years.

Cording will reposition and renovate the property in a bid to increase cash flows and capital value.

Both BNP REIM and Cording have been expanding their German businesses in recent years. The former acquired iii-investments in 2013 while the latter bought property manager MGI and then merged its German arm with Marstall Verwaltungsgesellschaft.