Warburg-HIH Invest launches German new multi manager fund
Warburg-HIH Invest Real Estate has launched a new multi manager fund, which it intends to grow to at least €150m, according to Prof. Dr. Felix Schindler, head of research at Warburg-HIH Invest.
‘The fund of funds is designed to appeal to smaller institutional investors, such as foundations, churches and smaller pension funds,’ Schindler told REFIRE. ‘Around 60% of it will be invested in Germany, with the rest being invested in countries such as the Netherlands, France, Austria, Benelux countries, Spain, CEE and the Nordics. It even has a remit to invest in the UK, although we want to see what happens with Brexit first.’
Investors are required to commit a minimum of €500,000. The aim is to create a mixed fund of funds, according to Schindler, although initially it is more likely to invest in single asset funds in Germany and mixed ones elsewhere. ‘We’d definitely be interested in pan-European logistics funds, for example,’ he said. ‘We started capital raising at the beginning of the year and hope to make the first investment within the first half of the year.’
According to Mirco Himmel, deputy head of asset management market at the M.M.Warburg & CO bank, the latest offering is also likely to appeal to the endowments segment and savings banks, ‘specifically those who wish to cover their entire real estate ratio in a single product but achieve the best possible spread at the same time’.
‘Our objective is to set up a broadly diversified real estate fund with the risks profile core/core+ and an annual dividend yield of 3.5% to 4%,’ said Christian Kramp, head of multi-manager business at Warburg-HIH Invest. ‘By combining our investment approach with our multi-stage process of auditing investment managers and target funds we seek to ensure that each property allocation is optimised for our investors,’ he added.
However, not all asset classes will make the cut, at least initially, Schindler said. ‘In the first stage, we won’t invest in funds that focus purely on hotels or serviced apartments, whether we’re talking student housing or senior living, due to the operator risk.’
This year, Warburg-HIH Invest is shifting its strategy to add value-add properties into the mix, setting up dedicated business unit for them: ‘Pension funds, insurance companies and superannuation schemes are increasingly asking for investment opportunities characterised by a higher return profile,’ said Hans-Joachim Lehmann, managing director of Warburg-HIH Invest and in charge of the transaction management unit. ‘With this in mind, we intend to invest €300m in office assets with optimisable tenancy situations over the next two years. Our objective is to achieve an IRR of between 7% and 12% through the strategic development of such properties.’
Last year, Warburg HIH-Invest’s transaction volume in Europe was €2.67b, of which €2.31b was in Germany. Acquisitions accounted for €1.7b, with the group ratcheting up €985 of disposals. By year-end 2018, the company’s AUM totalled €8.2b. This implies a year-on-year increase by 22.3% (2017: €6.7b). The portfolio of the AIF management company (German KVG) comprises 56 investment funds. The total return across all funds averaged around 8% in 2018, unchanged from the previous year. (ssk)