AEW completes €345m City Office Fund with Berlin acquisition

AEW’s City Office Germany Fund is now fully deployed after it bought the “B5”, an office-led building in the Wilmersdorf district of central Berlin’s City West area. The acquisition followed a final equity raise from institutional investors, with the Fund now having €345m of assets under management.

The eight-storey building, which is located at Blissestraße in Berlin-Wilmersdorf and is 99% occupied, comprises about 15,900 sqm of multi-let office space across four interconnected buildings.Originally built in 1971, half of the building is currently undergoing a comprehensive refurbishment by the vendor to improve the quality of space which is already being pre-let to a single tenant. Of the overall lettable area, 80 per cent accounts for office space with the remaining 20 per cent used for retail located on the ground floor. AEW said the investment offers the Fund scope to drive significant value enhancement through the active asset management of space, through releasing space and growing existing rents, while also offering stable long-term cashflows from pre-let arrangements already in place on the office space that is currently under refurbishment. Matthieu Samaran, Director of AEW's Düsseldorf investment team, says: “We consider B5 to be a rare investment opportunity in terms of the quality of space, location and future tenant mix. Properties of this kind are not traded often in today’s market and upon completion of the refurbishment at the end of 2019, we believe our investors will benefit from an attractive value uplift. ”Lars-Henning Pylla, Fund Manager of AEW City Office Germany, added: “We consider Berlin to be one of Europe’s most dynamic real estate markets and are therefore pleased to complete the Fund’s investment allocation in this top-tier city. In less than two years, we have demonstrated our ability to assemble a well-diversified German portfolio of institutional quality assets which provides our investors sustainable income with opportunities for value growth over the coming years.”

Just last December we reported here in REFIRE how AEW had further expanded its German investment management platform with the acquisition of Hypoport Invest from its listed owner, the Berlin-based Hypoport, for an undisclosed sum.

The €62bn AEW said that the deal added a German regulated management capability (AIFM) to its pan-European investment and asset management platform. AEW, which represents the real estate asset management platform of Natixis Investment Managers, manages over €29bn of real estate assets in Europe on behalf of a number of funds and separate accounts.

The manager said it has transferred its existing team and business to the new subsidiary, which has been rebranded AEW Invest.

“Germany is one of Europe’s most important real estate markets and, as with the wider platform in Europe, a key element to ensuring we can continue to grow operations is to be able to offer our clients a full range of services,” said Rob Wilkinson, CEO of AEW.

The acquisition of this business takes us from being a pure asset manager to a fully regulated alternative investment fund manager, building on the momentum already achieved by Stephan Boenning and our team in Germany.”

Since 2014 AEW has established a number of funds in Germany including Europe Value Investors and City Retail and has raised more than €1.5bn of equity from over 40 German investors over the period. As well as these funds, AEW currently manages a number of separate account mandates on behalf of German institutions.