AEW launches first German office fund

European fund manager AEW Europe has launched its first dedicated German office fund, it announced on 22 June. The group raised €118m from a number of unnamed institutional investors in the first close for the City Office Germany fund. AEW Europe is targeting total equity commitments of up to €250m which, with gearing, will give it €500m to invest.

‘We see a market opportunity here, focusing on the core-plus segment,’ Marc Langenbach, head of fund management and separate accounts, Germany at AEW, told REFIRE. ‘It is our first dedicated office fund in Germany. We want to be in locations that will develop in the future, so we’re targeting the ‘Top 15’ markets, including Wiesbaden, Mannheim, Leipzig and Dresden, where several companies have said recently that they plan to open offices and factories. Due to demographics, some cities like this will grow and become more core than they are today.’

The first deal for the fund has already been signed and is expected to close soon, Langenbach said, declining to provide further details. The fund has a target IIR of 6.5% to 8%, in line with previous AEW Europe funds. Typical deals will be between €20m and €70m, he said. Langenbach expects the fund to be fully-invested within 18 months.

‘The fund could invest in standing assets in core-plus locations which we expect to mature over coming years, forward-funding schemes or buildings with some vacancy, where we can increase the returns,’ Langenbach said. ‘However, standard value-add repositioning is not targeted with this fund.’

AEW Europe had €60b of AUM globally as of end-March 2017, of which €26.6b is in Europe. AEW Europe is the real estate asset management platform of French asset management group Natixis Global Asset Management.