LBBW kicks off new fund management business with €90m Sidon portfolio

The Stuttgart-based Landesbank LBBW has launched its own real estate fund management business, and set up subsidiary LBBW Immobilien Investment Management GmbH (LIIM) to steer the new venture aimed at German semi-professional and institutional investors.

The idea is to offer the bank’s institutional customers a full range of real estate investment opportunities, in addition to just financing. LBBW is one of Germany’s leading financing banks for commercial property.

Its first product is the “Germany Diversified Core+” Spezialfonds, which has already bought a portfolio of five office properties. The fund’s managers say that future investments will focus on office and commercial buildings at central urban and submarket location in large and medium-sized German cities, with the fund targeting around €400m in volume.

The first portfolio bought is the Sidon portfolio, valued at about €90m, which consists of five office properties located in Baden-Württemberg (Stuttgart and Karlsruhe) and North Rhine-Westphalia (Düsseldorf and Ratingen); the seller is an institutional investor. The portfolio was marketed by Colliers International in a structured bidding process. P+P Pöllath and Arcadis advised LBBW.

LBBW will use its proprietary scoring model to identify the current most interesting macro-locations for the fund’s investment on a yield-risk basis, it said. The Service-KVG mandate for the fund is being handled by the Hansainvest Hanseatische Investment-GmbH platform.

Separately, LBBW Immobilien Development sold two residential projects with 509 rental units or 22,600 sqm living space in Frankfurt-Niederrad to Invesco Real Estate. The assets are being built concurrently with 203 condominiums in the Mainwald residential quarter and are to be handed over at the end of 2020. 321 of the units are furnished apartments that are earmarked for temporary leases. LBBW had acquired the project on the site of the former Woolworth headquarters from 6B47 and FGI early this year.

It is Invesco’s first residential deal as part of its €3.7bn core pan-European flagship strategy. Invesco senior director for fund management Jon Pierce said Germany has an established residential rental market, providing solid market fundamentals, but a material undersupply of modern residential products in key gateway cities. “We expect this to result in upward pressures on rental levels and consequently drive NOI growth for our strategy; potentially leading to stable accretive long-term income for our global investors”, he said.