DeAWM launches €500m debt fund after record year

Deutsche Asset & Wealth Management (DeAWM), the alternative investment management arm of Deutsche Bank (previously known as RREEF), has closed its first senior commercial real estate debt fund, raising €500m.

The investment manager said it will structure the vehicle as a German Spezialfonds, and will write loans against German real estate – both in the commercial and residential sectors. The fund will invest in facilities that have loan-to-value ratios of up to 60% and are secured against office, retail, residential and logistics assets across Germany, while loan maturity would range between three and 10 years.

The group did not reveal any details on who the investors are, other than saying it used its Alternative Asset Management arm in the UK to raise the capital. However, insurers and pension funds have been backing similar debt funds in this cycle, with iii-investments of Munich being an early real estate debt fund to structure as a Spezialfonds on behalf of a German pension fund in 2012 when it was awarded a mandate to launch a €200m debt vehicle.

“The capital raise demonstrates the increasing demand for real estate loans as an alternative to corporate and government bonds,” said Andrea Vanni, head of European real estate debt investments for DeAWM. “The fund close also represents a further milestone for the expansion of our real estate debt business.”DeAWM has €1.27tr of assets under management globally, with €37.1bn invested in core, value-add and opportunistic real estate, real estate securities and property debt.

A recent statement by Deutsche Bank itself on the dealings of its DeAWM subsidiary said that DeAWM bought and sold €3.6bn of property for its German real estate investment funds in 2014, a rise of 65% to a record volume. Most of the transactions involved buildings in Germany. It bought buildings valued at about 2.4bn and sold about €1.2 billion euros of properties. The corresponding figure in 2013 was €2.2bn, unchanged from 2012.

The 2014 deals included the acquisition of Frankfurt’s Palais Quartier mall, office and hotel complex, valued at about 800 million euros, which was Germany’s biggest single-property sale of 2014. It also bought the Rondo One office building in Warsaw from BlackRock for its institutional clients.

DeAWM also carried out numerous deals for its open- and closed-ended funds, popular with thousands of private savers. These included buying five properties for €528m and selling four for €585m in its two open-ended real estate funds Grundbesitz europa and Grundbesitz Global. Its latest open-ended fund, Grundbesitz Fokus Deutschland is currently evaluating several potential investments, it said. The group also sold one property out of its closed-end fund business for €173m in 2014 and bought residential property worth €25m.

According to Georg Allendorf, the genial, bow-tied co-head of European real estate at DeAWM, “2014 was a record year for us with extraordinary market opportunities. Institutional investors in particular need appropriate real estate investment opportunities and favour German special funds for that purpose.”

Just recently DeAWM also took advantage of strong Asian interest in London to sell the Tower Place office property to Chinese insurer Ping An for €427m, bagging a 15% premium on the property’s assessed value of €370m in September last year. The building was sold from the Grundbesitz Europa fund, where it had been the single largest asset; it had been bought in 2003 for about €320m at the time. The 35,000 sqm building near the Tower of London, designed by Norman Foster and built by Tishman Speyer, is fully occupied with consulting group Marsh & McLennan as the principal tenant.