BulwienGesa
Tobias Kassner - BulwienGesa
According to Kassner, “International investors accounted for the bulk of it. Their market entry has caused the sum total committed in "Unternehmensimmobilien“ portfolios to multiply. Accordingly, the record-breaking transaction volumes recently seen in the asset class of "Unternehmensimmobilien“ is closely linked to the intense market presence of international investors.”
Insurance group Swiss Life has swooped to buy BEOS AG, Germany's leading investor in mixed-use industrial real estate, for an undisclosed price. The move is designed to support Swiss Life Asset Managers' third party business and increase its attractiveness to new institutional customers, who have been showing increased appetite recently for investing in Germany's light industrial sector.
The Berlin-headquartered BEOS, which was founded in 1997, employs 150 staff across its multi-disciplinary teams in offices in Hamburg, Frankfurt, Cologne, Munich and Stuttgart. It manages more than €2.6bn of industrial property assets with a mixed-use lettable area of 2.6 million sqm on behalf of its institutional investors in all of Germany's larger cities for a variety of mid-sized tenants. Revenue in 2017 was €30m.
According to Stean Mächler, CIO of Swiss Life, "BEOS will support us in our goal of growing Swiss Life Asset Managers' business of third party asset management, with the transaction underlying our ambition to further build on our position as the leading European property asset manager. BEOS has considerable long-term growth and profit increase potential which will help us to grow sustainably in a competitive market.
Swiss Life said in s statement that BEOS would continue to be run as an independent unit, with all staff and offices remaining unchanged. Supervisory board members Ingo Hans Holz and founder Stephan Bone-Winkel will remain at the helm and continue to oversee the company's co-investments along with their parallel funds activitities.
BEOS launched its first industrial real estate Spezialfonds in 2010 with a volume of €400m, followed by a second for €700m in 2012 and a third in 2015 for €1.1bn.
While light industrial funds have been long established in the US and UK, they are a relatively new phenomenon in Germany, where the category "Unternehmensimmobilien" has only recently been attracting serious foreign investor interest. The asset category includes – in addition to classic 'light industrial' - converted properties, often historic buildings, which need complete refurbishment and often structural alteration to make them fit for purpose as commercial properties (so-called transformation properties, as they are described in German).
Since 2015 the surge of interest and investment in the sector has seen cap rates decline steadily from 8.0% to 6.3% at end-2017, with markedly less volatility.
According to Tobias Kassner, head of industrial and logistics at research firm BulwienGesa, which has just published a new study on the sector, “Despite the volatility, the German market has shown a dynamic performance in recent years. A look at the overall investment potential, however, makes it safe to says there is plenty of growth potential left.”
Last year the share of transactions claimed by the industrial real estate sector rose to 12% of all logistics transactions in 2017, the first time it had crossed the two-digit mark, and twice its share of as recently as 2015.
Portfolio acquisitions, particularly by foreign investors in metro areas, have helped spur growth in the sector. In 2017 both the transaction total and the market share of portfolio sales climbed to a new high-water mark of about 42%. Over €1.2bn were invested in portfolio acquisitions, more than the year-end totals of 2015 and 2016 combined.
According to Kassner, “International investors accounted for the bulk of it. Their market entry has caused the sum total committed in "Unternehmensimmobilien“ portfolios to multiply. Accordingly, the record-breaking transaction volumes recently seen in the asset class of "Unternehmensimmobilien“ is closely linked to the intense market presence of international investors.”
Another feature of the German market is the marked preference of German companies to own their own physical assets. Martin Czaja, CEO of Beos AG, commented on the link between property ownership rates and transparency: “In the same sense that international investors have made swifter progress in terms of transparency, they are also more experienced in our asset class. A look at the ownership rates alone suggests as much: While 70% of the companies in Germany own their real estate outright, the ratio is no higher than 40% in the United Kingdom, only 30% in the United States, and just 20% in Asia. Indeed, the German „Unternehmensimmobilien“ market would not have taken off the way it did without international investors.”
BEOS itself was a founding member of the so-called Initiative Unternehmensimmobiien, a grouping of eleven real estate companies committed to promoting the category of industrial property in an international context. Fellow members include Atos/Corestate, Aurelis, Cromwell Property, Garbe Industrial, Geneba, GSG Berlin, Investa, Segro, Siemens and Sirius Real Estate.
