GERMANY - Corestate Group has confirmed an emerging investor appetite for non-core investments in Germany by raising fresh capital for its existing German Commercial Fund.
The Switzerland-based private equity investor originally launched the fund in 2006 to invest in secondary properties in Germany. Having invested most of the original capital, it has secured additional commitments from new investors.
The fund now has approximately €160m to deploy in "special situations" and on "high-quality assets with value-add potential".
The value-add strategy will concentrate on income-producing assets in large urban areas of western Germany where the economic fundamentals are strong. It can also look outside Germany, to retail sector investments in Austria and Switzerland.
The successful capital raising follows the recent appointment of Phillip Burns - formerly a managing partner at Terra Firma Capital Partners - as chief executive of Corestate.
Burns said: "We are very pleased to complete our latest equity raise for the German Commercial Fund, for which we have seen a strong level of support from a number of new investors.
"Capitalising on our strength in active asset management, investors have shown an increasing understanding of the necessity to deliver value-add to deliver attractive returns."
Corestate has made a number of investments in Germany recently, including the acquisition of a €25.5m office and retail building in Hanover.
"Secondary locations with strong tenants are under-priced in the German-speaking countries, and banks are very hesitant to provide debt for these types of assets.
"As a result, Corestate is witnessing significant opportunities to acquire properties below the radar of the larger institutions. We anticipate a third closing of this fund in summer 2011."