Warburg-HIH Invest Real Estate has announced plans to launch its first residential investment fund, Warburg-HIH Deutschland Wohnen Invest.
The vehicle is a new open-ended special AIF fund focused on German residential properties and dedicated to institutional investors such as regional lenders and savings banks. It will target an investment volume of €400 mln and plans to generate returns of 3.25 to 3.75% every year. The minimum subscription amount is €5 mln. The fund has already secured around €150 mln of equity commitments.
’Residential investments will have a sustained stabilising effect within the portfolio. After all, it was the German housing market that proved extremely stable even during the Covid-19 pandemic. With that in mind, we offer this component to our investors as sector-specific diversification for their investment strategy in the real estate segment,’ said Carsten Demmler, managing director of Warburg-HIH Invest.
The fund’s investment focus is on new-build housing developments in fast-growing residential locations inside metro regions and in stable standalone regions. ‘What counts as important selection criteria in this context, in addition to demographics and economic trend, are local infrastructure and convenient access to the workplace. Existing properties can complement the portfolio if quality and returns match the fund's objectives. Cities potentially eligible for acquisitions are, for example, Aachen, Bamberg, Bonn or Berlin’s gravy belt. But we will not prioritise investments in the ‘Big Seven’ cities,’ commented Demmler.
The first acquisitions for the fund are expected for the second quarter of 2021, being already contractually secured.
’Due to its sustainable investment strategy and the ESG guidance of Warburg-HIH Invest, the new residential investment fund will invest in modern energy-efficient residential projects. Publicly subsidised housing will also be a component of the portfolio. By integrating subsidy programs of the government-owned KfW banking group and regional subsidy programs we will generate secure long-term rent revenues for our investors,’ commented Alexander Eggert, managing director of Warburg-HIH Invest.
