Paribus seeking fresh partners to capitalise on fund holdings

One company that is now actively looking to engage with institutional investors with a view to lowering its asset holdings is Paribus Group, the Hamburg-based fund company best known for its investments in real estate, railway logistics and private equity.

REFIRE spoke to Dr. Georg Reul recently, managing director for Paribus' KVG (capital management) and portfolio management holdings. The group has grown organically over the years in initiating and managing closed-end funds targeted largely at private individuals and small investors. A big boost to the AUM came with the absorption of several of the old insolvent Wölbern funds into the portfolio, which now is valued at about €1.3bn in Germany and western Europe, mainly the Netherlands.

Over the years Paribus has saved many such funds, many of which had been running for a while, and so the asset profile in the funds can be quite old, frequently with maintenance and re-letting backlogs. Reul explained that the Paribus strategy is now to lead many of these assets or small funds to institutional partners, local or foreign, either for rebuilding or re-positioning in a direct sale, or along with Paribus as co-investor.

"We have a lot of attractive and well-let properties under management which could serve as a starting property for a larger pool fund, or could be bundled together with a couple of other properties to create a new fund", said Reul. He sees a 4.5% distribution as being realistic for core or core-plus properties, with full inflation indexing.

Paribus' holdings are offices (75%) and residential properties, and many of the properties are now at the end of or beyond their originally-conceived 10-year fund life, so will need a little TLC or further capex to inject fresh life into them, and make them Article-8 compliant under EU taxonomy guidelines.

Many of the older funds in the Paribus collection are prevented by their statutes from undertaking new capex, and will in any event require new investors to relaunch the assets, or be taken over completely by Paribus (alone or with new investors) for the next phase of their existence. This has already happened in a number of cases, with Paribus investing on behalf of the investors, the fund is prepped for sale, and the subsequent profit divvied up among the original investors.

Reul highlighted the recent early contract extension for a further ten years of the 37,000 sqm BSH Research Centre (Bosch Siemens) in the Spandau district of Berlin, in which investments in the conversion of the energy supply to geothermal and solar were agreed with the sole tenant, BSH Hausgeräte GmbH. The property belongs to a closed-end Paribus fund set up in 2011. Colliers, who helped broker the deal, described it as the largest single office lease agreement in Berlin in 2023. "If there's one thing we've learned to do very well at Paribus over the years, it's letting, letting, letting", said Reul.

Reul says that Paribus' own in-house KGV management facility would be a good option for German investors to set up their own AIF, with a Luxembourg fund facility more suitable for non-German investors. Paribus has more than thirty properties, of which five have been completely freshly leased or re-leased, two others have signed green leases, apart from the BSH extension. At least four big properties have immediate sales potential.