DIC teams up with KKR on German property platform

German property firm Deutsche Immobilien Chancen-Group has joined forces with private equity firm KKR to launch a German commercial property platform with a core, value-add and opportunistic focus.

German Estate Group (GEG), as the Frankfurt-based platform will be called, will be headed by DIC Asset’s CEO Ulrich Höller, and invest its own capital as well as third-party money.

As part of the deal, Deutsche Immobilien Chancen-Group will transfer its operational business to GEG, which includes a team of about 40 professionals. GEG will also manage the project developments MainTor (Frankfurt) and Opera Offices (Hamburg).

The creation of GEG is a continuation of KKR’s commitment to Germany, where the firm has deployed over $4.4 bn of equity across 15 companies since 1999. It also marks an important step for KKR’s real estate platform, which was launched in 2011 and has since committed over $1.6 bn of equity to 26 real estate transactions in the US, Europe and Asia.

The private equity group will in future operate exclusively through GEG with regard to office and retail investments in the German market.

Ulrich Höller, the newly-appointed CEO of GEG, will resign as CEO of Deutsche Immobilien Chancen-Group. KKR will be represented on the supervisory board of GEG by Johannes Huth, head of KKR Europe, Africa and Middle East and Ralph Rosenberg, global head of KKR Real Estate.

‘This is an exciting step forward in our real estate strategy in Europe,’ commented Rosenberg. ‘With this new platform, we will be able to accelerate our access to investments in Germany across the risk spectrum, offering more solutions to our clients globally.’

'We have proven over the years that we have a first in class team for the commercial real estate activities in Germany,' Ulrich Höller said. 'With KKR as a partner, we are confident we will build a leading position for GEG in its relevant market segments.”

As part of the joint venture, DIC’s operational business will be transferred to GEG, including 40 staff. DIC’s existing MainTor (Frankfurt) and Opera Offices (Hamburg) projects will continue to be owned by DIC but will be managed by GEG. In addition to its venture with KKR, DIC still holds a 33% stake in its listed S-DAX parent company, DIC Asset AG. Previously, DIC has formed other alliances in its home market, including ventures with both Starwood and Morgan Stanley.