Patrizia KAG unveils first of 10 new funds

Patrizia Immobilien Kapitalanlagegesellschaft (KAG), the capital investment unit established recently by German real estate company Patrizia Immobilien, on Tuesday played down concerns about the German residential market shortly after it announced its first residential fund - the first of 10 new funds it plans to establish in the next few years.

Two months after Patrizia Immobilien Kapitalanlagegesellschaft was approved by the German Financial Supervisory Authority, the Patrizia German Residential Fund 1 has already acquired EUR 30 mln worth of residential properties in Munich and is working on further acquisitions in Hamburg, the Rhine-Main region and in Berlin. The fund has an investment target of EUR 400 mln - half from institutional investors and the rest from bank financing.

On Tuesday, Financial Times Deutschland reported that US private equity group Cerberus is planning to sell off its residential portfolio in Germany after returns on its investment failed to materialise. Several other foreign real estate investors have also been disappointed by lagging returns from the German market, the paper said.

Michael Vogt, managing director of Patrizia Immobilien KAG, told PropertyEU that the fund's approach was totally different to that of many foreign investors. 'We are in this for the long term and profit from rental income rather than selling properties in two to three years. We are not looking for the big portfolios of EUR 400-500 mln that could include good, medium and low-quality properties.'

Patrizia uses its own rating system to select properties on the basis of the economic and demographic profile of the location, the condition of the buildings, the quality of tenants, the infrastructure and the rentability. 'We don't invest in Eastern Germany or in areas with high unemployment,' he said.

Vogt said spinning off Patrizia Immobilien KAG had enabled German property company Patrizia to expand its range of services to include specialised real estate funds for institutional investors. Describing the residential fund as the first 'brick' in a wall of a number of funds catering for different property segments - such as offices, logistics - and investor risk profiles, Vogt said a European residential property fund would be launched before the end of the year. In the medium term, Patrizia intends to launch a total of 10 funds in cooperation with local partners active in the targeted sectors.

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