COROS emerges from Commodus with fresh ambitions for urban development

REFIRE met recently (online) with the top management of COROS, previously known as Commodus, for a catch-up after our last meeting a couple of years back. The company has recently re-branded itself and it was time to find out what has changed since we last met.

Several things were immediately apparent. The company has grown under its founder and CEO Dr. Matthias Mittermeier, one of the few members of the staff it seems to us who is probably older than thirty. They have a really young team, and the company, despite the bricks-and-mortar nature of its business, has even more the feel of a startup about it. Which is impressive, given the portfolio of projects the company has already realised.

All those nearly 30 highly-qualified real estate-trained young executives, including managing director Leonard Sachsenhauser, exude the burning zeal of proptech entrepreneurs, and an entrepreneurial approach seems to be ingrained in the young company's DNA. It's definitely a source of pride as the company takes on more complex developments, generally focused on creating the kind of living and working environments that young urban workers themselves are drawn to. "The need to form and create things, and really make things happen" is how Mittermeier described the common denominator of those who work at COROS.

Mittermeier put the company's mission and vision into perspective. "The renaming of Commodus to Coros is the logical result of our dynamic development process over the past years. We initially started around five years ago with a small founding crew, focusing on asset and investment management. Since then, we have not only expanded our investor base and added project development to our operating business, but have also broadened our geographical reach internationally.

“In the process, our vision has broadened and we have grown into a young and dynamic team with a new self-image. We want to consistently implement success-critical future topics such as sustainability and the design of liveable, urban spaces with innovative utilisation concepts in our projects."

The goal, he says, is to create sustainable added value in urban spaces for the urban society and Coros' partners. "The future city will be green, communicative and colourful - and we want to actively shape this development," he says.

Coros has developed well over a billion euros worth of projects with its institutional partners, which included several occupational pension funds. It invests in mixed-use value-add and core-plus properties in city locations. To date it has launched three institutional funds focused on the office/mixed-used sector in urban spaces in Germany, and has also developed a project each in Paris and Madrid.

Mittermeier said he is keen to expand the fund investor base, where institutional investors currently make up about 50% of the COROS portfolio. A recent important milestone was the partnership with Canadian group Ivanhoé Cambridge to buy the heritage Alte Post Quartier in Berlin's Neukölln district, a 16,000 sqm mixed-use revitalisation project with offices, residential and leisure facilities. Both companies are committed to inner-city urban renewal and sustainable mixed-use developments, so the partnership made natural sense. As well as being a co-investor, COROS will act as the asset and development manager and oversee the project.

Tapping in to the capital available to companies like Ivanhoé Cambridge, who share the same commitment to such urban projects, is high on the COROS agenda. "For us to help shape these cities, we do require certain investment volumes", says Mittermeier

Through its takeover two years ago of the Nuremberg-based Bayerisches Immobilien Kontor (Bayiko), COROS aims to expand that existing platform to create more urban residential space and boost the attractiveness and affordability of housing to those who want to become owners.

COROS is targeting investment of about €400m in the current year. Munich is high on the list of favoured destinations (along with Berlin and Hamburg), and COROS has just signed a deal to buy its first asset in the Bavarian capital, the Gustav office complex in the Neuperlach district to the south of the city. Leonhard Sachsenhauser described the property as having "an inviting campus character" and said COROS planned extensive investment in the asset through modernisations as well as an upgrade through a specially-developed ESG concept.

"The building structure is flexibly usable, thus enabling modern and innovative working environments. Supplemented by the excellent public transport connections at the nearby Neuperlach train station, our plans can really ensure the future viability of this thriving location."

Head of Development Lutz Keßels described the political and social complexity of realising one of the company current biggest projects, a massive development at Humboldthain in Berlin, near the neighbourhood of Gesundbrunnen. A whole new urban quarter is being developed on a site the size of nine football fields, with the express integration of the public's input to define the key elements of the project, a former factory site of the old German electrical company AEG.

This will be a multi-year project on what will be a key pillar of Berlin's science and technical landscape, building on the existing campus's historical industrial legacy and its current tenants' involvement in scientific research and development. Everything about the project involves state-of-the-art thinking across the whole ESG spectrum, just for starters.

The Humboldthain project has its own website, which invites participation from Berliners and others. Find out more at: https://www.quartier-humboldthain.berlin/

Mittermeier describes the process as to how COROS got the mandate for the development as a long, winding route starting with a closed fund's involvement with a neighbouring property and after a 2-year incubation period, finally resulting in the deal for the full project. Not untypical for the kind of scrutiny that the company subjects potential value propositions to in promising urban hot-spots, he said.

Projects are financed partly from a private-equity Luxembourg closed-end fund which can invest on a discretionary basis and which gives COROS the ability to negotiate quickly and from a position of strength, a definite competitive advantage. The company sees itself as an "Investment Manager Principal", rather than as an operating partner for the big private equity players such as Blackstone, Apollo, Angelo Gordon, Benson Elliot and others. It's clear that this independent approach is an important aspect of the company's new identity, and one that Mittermeier feels can be a strong motivating factor in defining the company's differentiated offering.

The closing of the company's last fund in 2020 at the higher end of volume expectations has accelerated the likely launch of a new follow-on fund which might be of particular interest to London-based investors, Mittermeier said. He argues that a good German platform with pan-European competencies can be every bit as effective in allocating investment. COROS already works with London-based investors mainly from endowments, foundations and multi-family offices, looking for superior yields. COROS returns are significantly higher than a typical German core-plus investor, he says.

COROS is setting itself very high standards, both in the complexity of the developments it increasing trusts itself to handle, and also in its ambitious plans to reproduce those standards in Europe's most attractive major cities. Very glad to have picked up the threads again with an exciting company, and we look forward to reporting on the flowering of COROS’s ambitious projects.