Optimum launches fourth German real estate fund

Boutique real estate investment management firm, Optimum Asset Management, has launched its fourth German real estate fund. German Real Estate Fund IV (GREF IV), which will acquire a diversified portfolio of residential and commercial properties in Germany, with a focus on Berlin.

The fund’s remit will be to add value to well-located residential and office assets near major infrastructure and employment hubs, primarily in Berlin, but also with select investments in high-growth, supply-constrained cities such as Hamburg, Dresden, Leipzig, Cologne and Düsseldorf. The target fund size is between €250m and €300m before gearing.

‘We already have between €40m and €50 m in soft commitments for the first close,’ Alberto Matta, founder of Optimum Asset Management, told REFIRE. ‘Half of our investors are European, including Italian, German, Swiss and UK institutions with the rest coming from North America and, to a lesser extent, Asia Pacific and the Middle East.’

This fund will be a similar size to Optimum’s previous German funds. ‘We tend to target smaller deals between €10m and €40m, which are below the radar of large institutions and too large for private buyers,’ Matta said.

Around 45% of the fund will be invested in resi, another 45% in offices and the remaining 10% in condo conversions. Matta expects the fund to make its first investment in the second quarter.

‘We are truly at home in Germany,’ he said. ‘We have invested successfully here for over a decade, and the factors that attracted us at the beginning still ring true today. Germany’s diversified market structure and the current re-urbanisation of large cities create opportunities for residential investment. This, combined with the significant gap in residential supply and demand due to the growing population in major German cities, means we continue to see the significant opportunity to create value in this market,’ he added.

GREF IV is Optimum’s fourth German real estate fund with a focus on optimising mispriced and mismanaged residential and commercial assets and the group has completed over €1bn of real estate transactions in Germany since 2006. The firm’s track record includes Property I, the Berlin-focused real estate fund, which was fully realised in 2014, achieving an IRR of 19%. Optimum’s Property II (2011 vintage) and Property III (2014 vintage) are centred in Berlin and Potsdam, with additional properties in Dresden forming part of the Property III portfolio. Property II and Property III have reported a total return of 250% and 149% since inception, respectively. Realised assets have achieved an IRR ranging from mid-teen to 30+%.