Occupancy rates at German open ended funds in further rise

Germany's eighteen open-ended real estate funds have been busy doing their housekeeping since the whole sector found itself back on a stable footing in the aftermath of the liquidity crisis and the introduction of new regulations guiding the sector.

Latest figures released by rating agency Scope show that twelve of the eighteen have further raised their occupancy rates as of the end of April, to a level which for practical purposes could be viewed as full occupancy, reflecting Germany's buoyant economic environment.

The top perform was WestInvest InterSelect, which increased by 4.23% to a rate of 94.3%. The average lease quotient is 95.3%, slightly up on 2017's figure of 94.5%.

Scope puts the high rate of occupancy down to 'portfolio cleansing', whereby fund managers have been explicitly selling assets with high vacancy rates, while at the same time buying new assets that are close to fully occupied, and even prematurely extending lease contracts to lock in stability.

The range of occupancy rates among the eighteen funds is currently 89.7% to 99.9%. An occupancy rate of 97% is generally considered "full occupation". This rate tends to apply to some of Germany's smaller funds, such as Deka-ImmobilienNordamerika (up 0.04% to 99.9%) and KanAm's Leading Cities Invest (up 1.2% to 98.9%). Among larger funds, UniImmo: Deutschland has 97.8% occupancy (up 0.4%) tops the list, with UniInstitutional German Real Estate (down 0.4% to 98.7%), grundbesitz Fokus Deutschland (down 0.3% to 98.1%) and WestInvest ImmoValue (up 0.35% to 97.05%) all above the 97% threshold.

The biggest riser was WestInvest InterSelect, which jumped 4.2% tob94.3%, ahead of UBS (D) Euroinvest Immobilien, which rose 3.7% to 93.8%, and Deka-Immobilien Global with a 1.6% rise to 96.4%. The biggest loser and the worst performer was grundbesitz global from Deutsche Bank, which dropped 0.9% to 89.7%.

Scope comments that there is barely any further scope for further occupancy maximisation, and expects the stable situation to continue through year-end. Anything above 93% in Scope's view is a positive, as assets with lower occupancy rates both yield less and generate higher costs, with corresponding negative effects on their ratings.