Capital Bay targeting high-growth B-cities for new German resi fund
The Berlin-based company Capital Bay GmbH is launching an open-ended special AIF for residential property, targeted at German institutional investors. The “CB Wohnimmobilien Deutschland” fund will focus on residential properties in the top 7 German metropolitan regions and in selected German cities with more than 100,000 inhabitants.
The fund made an initial investment of €260m in 1,900 residential units in central locations in the cities of Hanover, Dresden, Fürth, Erfurt, Lübeck, Kiel and Nuremberg. They are described as "in the affordable rent category" and generate direct cash flows, in line with Capital Bay's stated strategy of "developing a broadly diversified residential property portfolio with stable distributions and returns and a core-plus risk profile."
The fund has now followed up the initial deal by buying a further portfolio of around 300 residential and 20 commercial units in Bavaria and Saxony, mainly in Dresden and Nuremberg. The seller of the portfolio with a total rental area of about 20,000 sqm and a vacancy rate of below 5%, is the WIDe Wertimmobilien Deutschland Group, based in Ebermannstadt. The price was put at "in the low eight figures"
According to Capital Bay, the calculated rents in the fund are around 20% below the current market level and in the sale an average of two factors were deducted from the purchase factor, in contrast to standard market practice.
According to Torsten Doyen, managing partner at CB Capital Management GmbH, “Our target IRR of 4.1% is therefore extremely valid and would also withstand market corrections. In the fast-growing cities in particular, there is not enough new residential construction to meet the demand and most of it is taking place in the upper rent and purchase price segment due to the high costs of development and construction. Demand for apartments with affordable rents will therefore significantly outstrip supply in the future, too.”
The administrating investment company is HANSAINVEST Hanseatische Investment-GmbH.