November saw the launch of two big pan-European open-ended residential funds – the first from Patrizia, and the second from Swiss Life, who is leveraging the power of the Deka distribution network to sell its fund via the German savings bank network.
Patrizia’s “Living Cities Residential Fund” is an open-ended fund with a ‘core’ strategy with €650m in seed asset and ambitions to grow to over €1bn in assets by next year. It is targeted at institutional investors. Patrizia says several new as well as existing global institutional investors from Europe and Asia are already committed, with several others in the due diligence pipeline.
The fund, which will have a 35% LTV, will be targeting Europe’s most exciting metropolitan areas. It draws on Patrizia ’s proprietary European Cities Ranking model to focus on long term buy-to-hold strategies which will include 20% of the fund being invested into the increasingly sought after “‘Living”’ residential category including co-living, retirement and student housing.
Sebastian Dietert, the responsible fund manager at Patrizia, commented: “The composition of the current Living Cities portfolio reflects the essence of this fund, namely to provide stable income with a long-term capital growth prospects in strong micro locations. In addition, we have a pipeline of approximately €1.5 billion in additional acquisition targets thanks to our strong local expertise.”
The fund’s seed portfolio was assembled through a series of separate transactions, of which the most recent is the purchase of a German residential portfolio, which is 99.5% let. The nine-building portfolio provides 1,198 apartments all let to the private sector across a total rental area of 96,500 sqm in six of Germany’s leading cities. Other prominent assets in the portfolio are in Munich’s West End, Copenhagen, Amsterdam and Rotterdam, which will be delivered to the private rental market next year at the latest.
Meanwhile, Swiss Life has launched its Swiss Life European Living open-ended mutual fund under German law via its KVG arm. The fund is targeted at German private investors and is aiming for a performance of more than 2%, using the German BVI calculation method.
According to Tina Störmer, CEO of Swiss Life Asset Managers in Germany, “European Living is our first pan-European residential property fund for private customers. Its aim is to generate stable income on a long-term basis and manage opportunities and risks responsibly. This new product therefore also follows our company’s guiding theme of independent living.”
The Swiss Life fund is investing in mid-priced residential properties in European metropolitan regions, but says it is also open to investment in properties geared towards different user groups such as students, young professionals or commuters.
The first purchase for the fund is the acquisition of a German residential portfolio with a total of 533 residential units, located around Duisburg, Düsseldorf, Frankfurt, Cologne and Wuppertal, and is effectively fully let.
On the fund’s distribution, Christine Bernhofer, the COO of Swiss Life Asset Managers in Germany and CEO of Swiss Life KVG, said, “The cooperation with Deka for marketing European Living represents a win for both sides: We are combining the real estate and fund expertise of Swiss Life Asset Managers with Deka’s strong product expertise and close-knit sales network. Investors in the fund also benefit from excellent access to properties via Swiss Life Asset Managers’ local real estate units in the key European property markets.”
Swiss Life European Living is the second open-ended mutual property fund Swiss Life KVG has launched in the space of three years. At the end of 2016, it launched its first mutual property fund, Living and Working, which reached a volume of more than €500m within two and a half years. By August 31st 2019, the fund had returned 3.3% per annum.
