AEW preps €250m fund for Germany “big seven” hunt

The Paris-based private equity real estate firm is halfway towards its total equity target of €250m for the offices-focused fund, which, with leverage, would see it amass an investment kitty of €500m. 

AEW, the Paris-based private equity real estate firm, has launched a fund for investments in Germany’s “big seven” cities, it announced today. The City Office Germany property fund has attracted around €118 million from a number of undisclosed institutional investors already.

The capital raise means the firm is almost halfway towards it total equity target of €250 million, which would deliver an investment capacity of €500 million assuming a maximum loan to value of 50 percent.

AEW’s said its strategy for the fund was primarily acquisition of office assets in Germany’s seven leading cities, Munich, Berlin, Stuttgart, Dusseldorf, Cologne, Hamburg and Frankfurt. However, the firm added it would also consider investing beyond those cities providing they are forecast to experience strong rental growth.

“German office markets are experiencing robust tenant demand with limited supply of quality space, in part due to the conversion of office assets to alternative uses,” Sebastian Grobe, investment manager at AEW in Germany.

“We will seek to deploy capital into locations that are underpinned by strong and growing economic fundamentals, and have secured a pipeline of opportunities which are under exclusivity,” added Grobe.

“The City Office Germany fund complements AEW’s existing European funds and we expect to continue demonstrating our ability to source attractive investment opportunities for our clients and to generate value, in what is an increasingly competitive investment market,” said Marc Langenbach, head of fund management and separate accounts, Germany at AEW.

AEW’s most recent fund raising activity in Europe came in March when it raised an additional €290 million for its Europe City Retail fund. The fundraise meant the firm had collected more than €415 million in total, surpassing its original investment target of €400 million.

The firm said at the time that, due to significant levels of demand for the fund, it was already in discussion with a number of investors and expected to increase the equity commitments up to €800 million over the next few years.