KanAm targets 5% return with €500m south German fund

The Frankfurt-based real estate fund manager said its latest core vehicle would be focused on buying office, retail, hotel and residential assets in the three main cities in Germany’s most affluent region. 

KanAm has launched a property vehicle to invest across a number of sectors in southern Germany and has targeted a total capital raise of €500 million from institutional investors.

The Frankfurt-based real estate fund manager said it would be aiming to generate annual returns of around 4 percent to 5 percent via the fund, Fokus Süddeutschland. The vehicle’s main focus, it said, would be the region’s largest cities, Munich, Stuttgart and Frankfurt.

The firm has already acquired a first asset for the fund, a 90,000-square foot high street retail property in central Frankfurt, and is understood to have set its sights on a second in Stuttgart.

KanAm has not divulged either how much capital it has raised so far for the fund or how much the two assets cost, although it was understood to be around €100 million. However, the firm did say that it hoped to achieve its €500 million target fund raise within two years.

The fund manager said its “qualitative and quantitative” research – which involved measuring investments using 39 separate variables – had found 16 target markets which it was continually monitoring in the hunt for assets. The priority though would be office, retail, hotel and residential assets in the region’s three main cities.

A spokesman for KanAm said it was focusing on southern Germany because just over one third of the country’s population resides in the southern states Bavaria, Baden-Württemberg and Hesse. Moreover, these three regions also have the highest income levels and the lowest unemployment figures in Germany.

Last year, KanAm restructured itself into three units in order to broaden its appeal to international institutional investors: open-ended fund management; special institutional funds; and international investment and asset management advice.

As of December 31, 2016, the firm had €8.7 billion of real estate assets under management. Two third of its assets are based in Europe, while around 30 percent is in the US with a small percentage in Australia.