KanAm buys in south Germany for new €500m real estate fund

German asset manager KanAm Grund has launched a real estate fund, the "Fokus Süddeutschland Fonds", to invest in southern Germany and hopes to raise €500m from institutional investors. KanAm said it had already bought an in asset Frankfurt am Main for the fund and was in the process of acquiring another property in Stuttgart.

KanAm did not disclose how much capital had been raised, but the two transactions are understood to require close to €100m of equity.

The first acquisition was a shopping centre in the pedestrian zone (Königsteiner Strasse 9-13) in Frankfurt’s Höchst district on the site that used to house a Hertie department store, with a ground area of 9,000 sqm, including a 244-space multi-storey car park. The centre is currently 99%-leased to seven separate companies.

The Fokus Süddeutschland fund will look to generate annual returns of 4% to 5% by concentrating on Germany’s strongest economic regions in the Munich-Stuttgart-Frankfurt triangle. These three states (Bavaria, Baden-Württemberg and Hesses) are the regions with the highest income levels and lowest unemployment figures in Germany.

The southern cities of Munich, Frankfurt and Stuttgart accounted for about 44% of the office space portfolio and around 61% of the investment volume of Germany's so-called Big 7 last year, while for retail, seven of the ten most significant locations are in southern Germany, including Mannheim, Nuremberg and Freiburg, KanAm said.

KanAm Grund said its fund management team conducts a qualitative and quantitative analysis in order to pick suitable properties in its target region. It has 16 defined target markets which it continually examines on the basis of 39 indicators. It can invest in office, retail, hotel and residential sectors.

In July, KanAm's Leading Cities fund bought the Nerviens 85 office building in the Brussels business and government district, its twelfth asset for the fund across five cities – Hamburg, Paris, Brussels, Frankfurt am Maina and Munich. The Brussels property has 9,300 sqm of lettable space, and is 93% let to a variety of European business associations.

The KanAm Grund Group has handled a transaction volume of more than $30 bn (€26 bn) since it was established in October 2000 on behalf of German and international investors. The group was reorganised last year in a bid to broaden its appeal to clients outside Germany and those requiring a wider range of investment vehicles.

Last year, the company restructured itself into three divisions: an open-ended fund, a special institutional fund, and an arm for international investment and asset management advice.