Corestate sells €135m repositioned German residential portfolio

Independent Switzerland-based private equity group Corestate Capital said earlier this month that it had completed the sale of a German residential property portfolio for about €135m to various institutional and private investors in what it described as ‘part of a repositioning programme’.

The portfolio comprises 2,100 residential units spread across 12 German states. Corestate originally acquired the portfolio in a non-performing, distressed state and has since repositioned it by investing capital in asset management activities.

Commenting on the disposal, Corestate COO Thomas Landschreiber said, “Extremely scattered portfolios represent a welcome challenge for us. With asset management activities we can accomplish value increases as well as solid and long-term rental income. Increase in value, value retention as well as solid and long-term rental income are accomplished through our customised asset management activities. We will continue to create products for our investors, which can serve the high level of demand for stable German real estate.'

Corestate is a management-owned investor and asset manager, with offices now in Zug, Frankfurt, Essen, London, Singapore and Luxembourg and with more than €2.5bn invested to date in Germany. Its approach is essentially opportunistic, but it has been taking an increasingly cautious view on German residential, its main asset class.

Speaking to Swiss investors recently, managing director Steffen Ricken commented, “There is huge competition for good quality, long or medium-term rented assets. But if you look for the quality material in Munich or any of the Big Seven cities it's unbelievably expensive, with average quality around 4.5% or 5% net rental yield which is pricey in Germany compared to two years ago.”