New fund launch to tap into highest-yielding German property companies

The Hamburg-based boutique Vilico Investment Service GmbH and KVG Hansainvest have jointly launched a distribution-oriented equity fund "Immobilien Werte Deutschland", to tap in to the highest-yielding German dividend-paying real estate companies.

This is the first time a UCITS fund is being offered to private and institutional investors that focuses on investing in the most profitable real estate companies active in the German market. The fund provides a highly liquid, daily tradable alternative to often illiquid open or closed real estate funds, as well as hard-to-access real estate direct investments.

"In order to bundle the most attractive equities in Immobilien Werte Deutschland, we analyse around 70 listed real estate companies operating in Germany and select the 20 stocks with the highest sustainable dividend yields and projected increases in net asset value," said fund manager NFS Capital AG about the investment process .

Here’s how it works. The weighting of the individual securities is based on the proportion of their market capitalisation in the total market capitalisation of the fund portfolio (at least 1.5% / max 10%). The portfolio is reviewed and adjusted semi-annually. Up to 10% of the portfolio can be invested discretionally to take advantage of profitable special situations, said the fund manager.

The values ​​allocated to the current portfolio comprise the subsectors of residential (51%), commercial (21%), asset management (12%), development (6%) and other (10%), and have an average market capitalization of €4.5 billion. The average dividend yield on the portfolio is 4.60% before fund costs, while average funds from operations (FFO) is around 6%.

According to Stefan Bülling, managing director at Vilico Investment Service, "With Immobilienwerte Deutschland, we’re offering investors a regulated special fund with which they can participate in attractive annual dividend distributions and the future share price development of the most successful German real estate stocks."