Union Investment has ambitions to build up a €1bn “midscale” real estate fund and has acquired two hotel projects in Poland to act as a seed portfolio.
The UII EuropeanM fund will invest in core and core-plus assets worth less than €100m with moderate rent levels and sustainable cash flows.
Union Investments’s UII GermanM fund already pursues a similar strategy but has been limited to Germany.
“UII EuropeanM is a logical strategic addition to our range of products for institutional customers,” said Wolfgang Kessler, a member of the management board of Union Investment Institutional Property.
“The risk-return profile of the fund is designed to make it possible to exploit investment opportunities in European real estate markets that are not covered by a traditional core profile.”
Union Investment has agreed to acquire two hotel projects in Kraków and Katowice for €86m from developer UBM.
When completed in 2021, they will have a total of 527 rooms and will be leased for 25 years.
The Ibis Styles-branded hotel in Kraków will have 259 rooms and 166 underground parking spaces, and the Mercure hotel in Katowice will offer 268 rooms and 70 parking spaces.