BEB+ Immobilien
Andre Leiminger, CIO, BEB+ Immobilien, Berlin
Andre Leiminger is the Chief Investment Officer of BEB+ Immobilien GmbH. BEB+ is a full-service real estate company active in the residential, office and hotel segments. Its interdisciplinary team works across existing portfolios, addressing operational requirements, ESG-related measures and tenant or operator needs. Against the backdrop of rising liquidity-driven transactions, BEB+ also evaluates opportunities in the secondary market, where assets often become accessible outside the usual transaction channels.
The German residential property market is tighter than ever before. In many cities, demand for housing significantly exceeds supply, while new construction has come to a standstill. Although capital is available, access to suitable properties has become a real bottleneck for institutional investors.
At the same time, the capital requirements on the owner side are increasing. Higher interest rates, energy efficiency renovation requirements and regulatory requirements mean that many portfolio holders need liquidity. However, direct sales often do not materialise, partly because buyers and sellers are far apart in terms of price: the former factor in increased financing costs and future ESG investments, while the latter base their calculations on previous market values.
In this situation, transactions are increasingly shifting to a level that is hardly visible in the direct market. Investors are increasingly divesting themselves of shares in real estate funds and property companies, in some cases below their balance sheet value, in order to release capital in the short term. These discounts, known as liquidity premiums, are not an indication of weak real estate, but rather a reflection of the capital pressure on the investor side.
This brings to the fore a structure that has long been overlooked in the German market: a significant proportion of real estate is held in vehicles whose shares are tradable. Those who take advantage of these structures gain access to portfolios that are virtually unattainable in the traditional transaction market. The acquisition of shares thus opens up an additional avenue for acquiring assets. Against this backdrop, the focus is shifting to an approach that has previously only been perceived as marginal in the market.
What does share acquisition mean?
This market situation has given rise to an approach that plays hardly any role in the traditional transaction process: the acquisition of shares in the structures in which properties are held. Many residential and mixed-use portfolios are not freely available on the market, but are held in fund vehicles or investment companies that can be acquired without the property itself being sold.
The acquisition of shares follows a simple principle. You do not acquire a property, but a stake in the company that owns the property. The legal owner of the property remains the same, only the group of shareholders changes. For the buyer, this means entry into a real portfolio, including documentation history, cash flows and management structure.
Because these shares are not publicly marketed, price levels arise that may deviate from the reported market value. Sellers sell shares to generate liquidity; buyers use this moment to enter the market. The discount is not due to a loss in value of the property, but to market mechanics: shares are less fungible than properties.
The acquisition of shares thus opens up access to real estate assets that are not offered on the open market. It is not a new product class, but a different form of market participation.
Why are these price advantages arising, and why now?
The price discounts that occur when acquiring shares are not the result of declining property quality, but rather a reflection of the situation on the seller side. There are three developments behind this that have overlapped in recent years.
Firstly, liquidity requirements have increased: Higher interest rates, upcoming energy-efficient renovations and regulatory requirements are increasing the capital requirements of many portfolio holders. However, direct sales often fail due to differing price expectations, so investors are selling holdings to free up funds.
Secondly, many of these portfolios have operational potential: Moderate vacancy rates, modernisation requirements or energy efficiency improvements can often only be implemented to a limited extent in traditional fund structures. Buyers with the relevant asset management expertise can leverage value in a targeted manner here.
Thirdly, market mechanics favour indirect access: While buyers and sellers often fail to agree on a price in the direct market, holdings are traded at values determined by supply and demand. This results in entry prices that are sometimes significantly below the reported market value, without any change in the condition or quality of the properties.
How does this translate into performance?
The return on the share purchase is not generated at the time of purchase, but rather through the further development of the portfolio. Many portfolios deliver stable distributions from the outset, while operational measures such as reducing vacancies, improving energy efficiency or more efficient management gradually increase cash flow.
If market prices subsequently normalise, this reinforces the effect. Performance is therefore not generated by short-term valuation movements, but by a combination of entry advantages and active management.
This approach is attractive to institutional investors because it provides access to real value without relying on traditional buying opportunities. Capital can be allocated within existing structures, risk remains controllable, and the impact on the portfolio is immediately noticeable. In the residential segment in particular, working with existing properties also offers clear ESG leverage: the CO₂ reduction per euro invested is often higher here than in new construction.
Outlook
A look at international markets shows that this form of access has established itself in the long term. In the USA, trading in interests in real estate vehicles has been a central component of institutional strategies for years. The German market is still in its infancy, but is gaining in importance.
For investors who understand the mechanics and operate with realistic expectations, this presents a rare opportunity: to acquire assets, develop them further and benefit sustainably from their potential in an exceptional market situation.