KGAL presses ahead with commitment to residential assets

KGAL Investment Management has acquired the Rheingold residential complex in Wiesbaden-Schierstein for the KGAL/HI Wohnen Core 2 special fund in an asset deal, as part of fund manager’s increasing drive to boost its residential assets under management. The seller was Luxembourg-headquartered insurance group Athora Real Estate, with the exclusive sale handled by NAI apollo.

Completed in 2017, the fully-let 15,500 Rheingold residential complex has 178 residential units, and is close to the Schierstein Harbour leisure area and is located in the renowned Rheingau wine region. The development has strong appeal particularly to residents who work in and around Frankfurt. The location has excellent local public transport connections as well as a direct link to Frankfurt Hauptbahnhof via the Rheingau line.

André Zücker, Managing Director for Real Estate at KGAL Investment Management, said: “Through this acquisition and the recent sale of the Four West portfolio, we are continuing to optimise and enhance our residential portfolio. The sector will be a key focus of our ongoing strategy and we are looking at a wide range of opportunities."

Based in Grünwald, south of Munich, KGAL has about €7bn of real estate assets under management in eight European countries, together with aircraft and shipping funds. While it manages about €5bn in commercial property, it is currently investing heavily in residential, where it already has about €600m of assets, and looking to expand. 

Its KGAL/HI Wohnen Core 2 Spezialfonds has €550m of investment volume, managed by Hansa Invest. The fund was set up in 2008, when residential was NOT the popular asset category it is viewed as today, so has seen solid capital appreciation since then. It has since sold one portfolio out of the fund, six months ago, returning an IRR yield of more than 15%. The latest Wiesbaden investment is seen as a top up re-investment, pending future projects.

Separately, KGAL’s public open-ended funded KGAL Immosubstanz said it is still short of raising the full €50m it had planned as initial equity since kicking the fund off a year ago, but was sticking to its plan to raise the full amount by the end of this year, a more modest goal than the revised €100m but more realistic given the coronavirus pandemic. The fund had a rocky start last year due to difficulties signing up the proposed ten order platforms for the fund’s distribution, but things seem to be getting back on track with eight sign-ups, including the critical Sparkasse network.

KGAL has also postponed a €50m investment in a hotel and office complex which it was close to signing in February, pending what it views is likely to be a re-pricing of assets in the hotel sector.