Swiss-based central European property investor Empira is preparing to launch a major senior debt fund focused on Austria, Germany and the Benelux, PropertyEU can reveal.
The fund, called Empira Real Estate Finance Fund 6, is currently in the pre-marketing phase with a view to officially launching it in December, Empira’s chairman Lahcen Knapp told PropertyEU in an interview.
‘We are looking to raise equity commitments of about €600 mln, which will also be the volume of the fund given that we will not be using leverage,’ he said.
The vehicle – structured as a SICAV-RAIF with a 7-year term and domiciled in Luxembourg – will be focusing on loans secured by existing residential and office real estate assets. It will seek to generate a cash-on-cash return of 5%, according to Knapp.
Based in Zug, Switzerland, Empira is an independent fund management company fully owned by its partners. The firm currently manages roughly €7.1 bn of assets mostly in central Europe and is looking to increase its portfolio to reach €10 bn by year-end 2023. Its investors are exclusively institutions in the DACH area. ‘We have about 110 institutional investors, mostly from Germany, and we are the largest debt fund manager in German speaking Europe,’ added Knapp.
The firm is also active on the equity front. Over the next weeks, it expects to announce the launch of its first micro-living fund focused exclusively on German real estate. Dubbed Empira Urban Living, the vehicle will be seeded with a portfolio of nine assets in top locations in Germany’s largest cities of Hamburg, Munich, Frankfurt, Cologne and Düsseldorf. It aims to raise equity of €250 mln which with leverage should provide the fund with a volume of €500 mln over time.
‘The fund will invest in project developments for the construction of small-scale residential spaces, which incorporate smart living concepts as well as a gastronomy concept,’ Knapp said. This is not as easy as it sounds in Germany, as the residential sector is heavily regulated, he added. ‘German law makes investment in the entire micro-living concept more problematic because once the asset includes amenities, it becomes a commercial asset similar to a hotel and the residents cannot obtain a residency permit, which is a big problem. This is why we are developing very small housing units – effectively micro-living assets – under German residential law. We have managed to assemble a seed portfolio where we already have permits and we have just completed our first development in Berlin which was a real success. We rented out 140 apartments in less than six weeks.’
Empira began promoting its fund products to the wider European investor market last year. As such, the group recently hired Christopher Andersson as managing director and head of Nordic Client Relations and is currently looking to open an office in Stockholm to manage operations in the Nordic region. Empira already has offices in Luxembourg, Germany, the US, UK and Austria.
Knapp: ‘We have recently decided to widen our investor base to include European investors while our investor base was previously exclusively from Germany. We are seeing high demand for our products especially from Scandinavia and this is why we expect to hire new people and have an office up and running in the region in the very near future.’
