GERMANY - Property advisory firm MGPA, which made its first foray into the German Spezialfonds market last year, is planning a first close for an Asian real estate Spezialfonds in the second quarter.
Christian Schulte Eistrup, managing director of European capital markets at MGPA, said: "We have been invested in Asia actively through opportunistic vehicles for many years, but we also saw very interesting transactions with lower risk/return profiles and did not have the right fund for that - so we decided on a German Spezialfonds."
He said MGPA had found increasing interest among German institutional investors to diversify their holdings into Asia, adding that changes to the investment law in 2008 had made this diversification easier.
"The Spezialfonds vehicle was the only one that made sense for the German market, as it offers a certain degree of comfort, and investors know the format," he said.
Schulte Eistrup said MGPA had so far been "very pleased" with the response to the launch and that the company expected a first close some time in the second quarter - "a quick time scale in this environment, where it is challenging to raise capital".
The target size of the fund is €500m or more in equity, with a 40-50% loan-to-value ratio and a target return of 10-12%, with a 5% per annum distribution.
The Spezialfonds is focusing on core-plus to offer a good risk/return profile and will favour assets with "attractive yields and/or value-enhancement potential over ultra-core," Schulte Eistrup said.
Alexander Tannenbaum, managing director real estate at Universal-Investment, said Asia was a "very interesting" market because of demographic factors and anticipated economic development.
"Investors are looking into this region for diversification, but, whereas a few years ago they would have accepted a manager that maybe had invested in Asia once, they are now looking for someone onsite," he said.
He added that there was a definite trend towards increasing diversification in indirect real estate portfolios, which meant investors needed local asset managers with onsite knowledge of certain regions.
For more on Germany's Immobilien-Spezialfonds market, see the May/June edition of IP Real Estate magazine.