Swedish groups Akelius, Cityhold make fresh German investments

News from Swedish investors in Germany highlight how the Nordic country’s leading investors are expanding their footprint across both the residential and the commercial sectors. Residential investor Akelius invested over €270m last year in residential real estate – mainly in Berlin at over €130m – and sees that level topping a further €300m this year.

Akelius says it is increasingly focused on portfolios with a volume of €50m upwards, while this year it’s extending its reach into secondary cities beyond its usual beat. Last year the group bought apartments in Berlin and Hamburg (€55m), as well as in Munich, Cologne, Düsseldorf, Frankfurt, Mainz and Wiesbaden. Akelius has now bought over 16,000 residential units since 2006.

Meanwhile Cityhold Property, a wholly-owned subsidiary of Sweden’s AP Funds I and II, has dipped its toe into the German market for the first time with the purchase of a centrally-located freehold office building in Munich with15,000 sqm of lettable space. The seller was a Spezialfonds of IVG Institutional Funds. The property in the Nymphenburger Strasse was built in 2003, and is multi-let to a mix of blue-chip tenants, with average unexpired leases of seven years. The annual yield is 5%, which is the whole fund’s overall average target return.

Cityhold was established in 2011 with the specific mandate of investing in core European office buildings worth about €50m and above, to add diversification to its parents’ real estate allocation, now worth €48bn in total. The UK was the group’s first priority, and having invested half its current allocation of €1.2bn in three London properties in 2012, Cityhold said it is now looking to diversify geographically by using the other €600m to buy buildings in Munich, Hamburg and Paris.

According to Per Sjoberg, Cityhold Property’s CEO, Germany is now looking very attractive to his group, notably because of its stability and lower levels of debt. “Munich – and Germany as a whole – is a very stable and low-risk real estate investment because of the low volatility, which fits in perfectly with our investment criteria… Moreover, finance costs in Germany are much lower than elsewhere – for example, the UK.”

As to its future investment pipeline, Sjoberg said there was no rigidly-fixed timetable for Cityhold’s acquisition programme because they were looking for the right opportunities and strategies. “We are looking primarily for offices in markets that are transparent and liquid, with modern buildings in good locations with good transportation links,” he said. “And we are looking for high-calibre tenants.”