IVG deal marks start of fund consolidation in CEE

Industry watchers expect to see more consolidation of property investment funds in Austria and the rest of Central and Eastern Europe following IVG Immobilien's takeover of Vienna-based Hypo Real Invest earlier this week for an undisclosed sum.

According to Christian Ulbrich, CEO of the EMEA region at JLL, the takeover is 'a great move'. "CEE is showing tremendous opportunities for real estate investors and IVG is strengthening their profile as well as their offer with the purchase of that fund. I expect a strong wave of consolidation over the next three years,' he told PropertyEU. JLL did not advise on the deal.

Consolidation in the property sector - of fund managers, agents and property managers - is a growing trend in a market that has not fully recovered from the financial crisis. 'For fund managers this obviously makes sense: research, risk diversification and access to capital are, for example, areas where a consolidation will make sense,' Andreas Ridder, chairman of Central and Eastern Europe at CBRE, told PropertyEU. He also expects more consolidation in Austria, where next January CA Immo will take over Europolis.

The takeover will enable IVG Immobilien to expand its investment platform in the region, which it already counts as one of its core markets. 'In addition to initiating own fund products, this kind of deal perfectly represents how we want to grow in the future - by buying small platforms and developing them,' said Steffen Ricken, a member of the management board for IVG’s institutional funds. 'We will consider similar deals in Europe going forward. As we already have offices in Warsaw and Budapest, for example, it would make sense to optimise them in the future via a deal like this. We will also consider similar deals for markets which we are contemplating entering.'

Hypo Real Invest has focused on Central and Eastern Europe since it was founded in 2008. Its Luxembourg subsidiary launched its HRI Immobilienfonds Nr. 1 in 2009, which currently has EUR 160 mln in assets under management, although managing director Andreas Rosenberger said earlier this year that the target volume is EUR 300 mln.

The deal is expected to close before the year-end, an IVG spokesman said. IVG Immobilien is one of Germany's most prominent real estate companies, with around EUR 22 bn of assets under management.

'In addition to initiating own fund products, this kind of deal perfectly represents how we want to grow in the future - by buying small platforms and developing them. We will consider similar deals in Europe going forward. As we already have offices in Warsaw and Budapest, for example, it would make sense to optimise them in the future via a deal like this. We will also consider similar deals for markets which we are contemplating entering,' said Steffen Ricken, a member of the management board for IVG's institutional funds.