Munich-based asset and portfolio manager Domicil Real Estate AG bought one of the largest micro-apartment portfolios in Germany on behalf of Danish pension fund PFA and for its own portfolio. The seller was a fund of AviaRent Invest, and the price was put at over €252m.
The portfolio consists of 13 separate properties, consisting of 1,480 separate units with a rental area of 42,000 sqm, including 426 car parking space Twelve of the properties will be allocated to the PFA portfolio already being managed by Domicil, while one residential building in Frankfurt is being held back for Domicil’s own book. The deal marks PFA’s first investment into the micro-living sector.
The properties are centrally located in Frankfurt am Main, Hamburg, Dieburg, Cologne-Deutz, Weimar, Munich, Hanover, Berlin and Bonn. The largest property in the portfolio is the "Hühnerposten" apartment building in Hamburg with a total of 353 units. With a total of 479 units and three properties, Hamburg is also the largest local component of the portfolio, followed by Cologne-Deutz, Frankfurt and Hanover.
Andre Schmöller, chief investment officer of Domicil, said: "With the purchase of the 'MikroQuartier I' portfolio, PFA is significantly expanding its involvement in the German residential real estate market, and taking a long-term approach with an investment horizon of around 20 years. Increasing mobility among young professionals and students will continue to lead to high demand for temporary housing solutions in the future.”
He added, "We will also contribute our dedicated residential real estate expertise to the management of these properties, for example in order to improve occupancy rates with a view to the post-Corona period and to optimize the portfolio economically."
Domicil’s core business is the privatization of medium and large-sized residential portfolios throughout Germany, with sales to tenants and investors. It has been able to build on huge mandates, such as the initial mandate from PFA three years ago, and others including a €200m residential fund for BayernLB subsidiary Wealthcap, to develop its own housing portfolio.
Luxembourg-based AviaRent is a non-listed fund manager mainly focused on on nursing homes, micro-apartments and daycare centres, with a ‘sustainable and ethically sound’ emphasis. Following the sale to Domicil, the company quickly followed up, this time with a sale of ten senior residences to Swedish company Hemsö Fastighets for more than €90m from its Care Vision I fund.
Most of the properties are located in big German cities in Lower Saxony (5), with one each in North Rhine-Westphalia, Baden-Württemberg, Brandenburg, Saxony and Schleswig-Holstein.. The properties have a total GLA of 59,000 sqm and about 900 beds. The average lease term is 11 years.
As the deal involves nine different contracts with nine separate nursing home operators, it’s not surprising that the buyer is Hemsö, who have been steadily building up their portfolio over the years under the very competent leadership of Jens Nagel since entering the German market in 2011.
Hemsö now owns and manages community properties worth about €1.1bn in Germany’s elder care sector, with senior residences accounting for the bulk of this. It now owns 65 care facilities with about 6,200 beds, as well as 460 senior apartments, making it one of the biggest players in the sector.
CEO Jens Nagel said in December that Hemsö in Germany had transacted more than €224m, at ‘attractive’ multiples of less than 18 times annual rental income on average. In the last few years the company has been following in the footsteps of its Swedish parent by selectively branching out into other ‘social infrastructure’ assets, such as schools or municipal buildings. It normally partners up with Quadoro Doric Real Estate in Offenbach for completing its transactions.
