Warburg launches new €400m German office fund

German asset manager Warburg-HIH Invest Real Estate has set up a new open-ended fund to invest in core and core-plus office properties across Germany. The new Deutschland Selektiv Immobilien Invest II fund, which plans to raise at least €400m, will target properties “in selected fast-growing cities”.

Assuming a minimum fund volume of €400m and a gearing ratio of no more than 50%, Warburg said the dividend yield was expected to equal 4%. Institutional players may invest in the fund by acquiring equity interests of €5m or more.

According to Alexander Eggert, managing director of Warburg-HIH Invest, “The fund will invest in core and core-plus properties worth €20m euros or more in cities characterised by a fast demographic and economic growth.”

“The selection of location and asset relies on a multi-variable procedure that considers the inflow of young population cohorts as well as the concentration of strong technology companies or the local demand for office accommodation,” said Eggert. Cities such as Bremen, Bonn, Darmstadt, Dortmund and Dresden are identified as typical growth cities of interest to the fund. An add-on option permits investments into other types of use up to a limit of 30% of the total assets, the manager added.

Warburg-HIH Invest said the predecessor fund, with over €200m capital commitments, has generated an average dividend yield of 11.7% annually.

Carsten Demmler, head of capital management at Warburg-HIH Invest, said that, since the company’s investment strategy is still delivering excellent performance for its investors, “when we continue to believe in the long-term promise of the investment policy, we decided to launch another vehicle with no maturity cap.”