EQT Real Estate’s debut property fund is over 50 percent invested after it purchased two office assets in Frankfurt for a combined price understood to be in excess of €100 million, PERE has learned.
The first asset is the ATRICOM building, which comprises 450,000 square feet of office space, and is based in the Neiderrad district of the city. The property was constructed in 1990 and has 30 tenants, with a 40 percent vacancy rate. The second is Le Buro, which is located in the Neu-Isenburg district of Frankfurt. The office property measures up at 240,000 square feet and was constructed in 2002. It currently has eight tenants and is 80 percent occupied.
Frank Forster, director for Germany at EQT said: “Atricom was built to very high specifications for its vintage, and was structurally well maintained. It provides an amazing skeleton upon which EQT can transform the asset with amenities, technology and a new look, to future proof it for incoming occupiers.”
Forster said that EQT was intending to refurbish both buildings and bring them up to date with modern sustainability standards through its in-house asset management team. Forster added that sustainability was a key theme running through all of EQT’s investments made via its debut fund to date.
The seller is thought to be German property company Mars PropCo.
It is understood EQT will be seeking a mid-high teen return on the investment, in line with the overall performance target of its fund, called EQT Real Estate I.
EQT Real Estate first entered the German real estate market last September when it acquired a business park in Cologne. EQT’s latest move means that the fund is understood to have purchased in excess of €400 million since it raised its first tranche of equity back in July 2016.
In June this year, EQT announced it had closed the vehicle after collecting €420 million from a variety of sources, including pension funds and insurance companies in Europe, the US and South America, as well as family offices in the Middle East. PERE understands that Keva, the Finnish pension fund; Morgan Stanley Alternative Investment Partners, the multi-manager arm of Morgan Stanley Investment Management; and Stockholm-based firms Investor AB and Nordeal Bank all invested in the fund.
EQT launched the closed-ended value add vehicle in 2016 with an original €500 million target and reached a final close in 12 months. The fund has a life span of 8-10 years and an internal rate of return target that was understood to be in the 16-20 percent range. At present, it is understood that the fund is performing to its returns expectation.
The fund’s investments to date are two Paris office buildings for a combined €84 million; a business park in Cologne for €188 million; a residential development in Stockholm for an undisclosed price; and the most recent double deal in Frankfurt.
The fund is continuing to deploy its capital in line with its value-add strategy, with a particular focus on Paris, Stockholm and other German cities such as Munich, Berlin, Hamburg and Dusseldorf. The fund is also actively looking to invest into the Nordics, the UK, Italy and Benelux.
Over the last 18 months, EQT has been growing out its team, adding seven executives to bring its real estate division up to 14 professionals based in London and Stockholm.