Union Investment, the German investor, has awarded Deutsche Asset One, a real estate investment unit of Berlin-based firm Dupuis Investment and Asset Management, a mandate to create an open-ended fund to invest an initial €170 million in German residential.
Frankfurt-based Union Investment said the special investment fund was formed through an equity club deal with German institutional investors.
The firm said investment will be split across “A cities, B cities in metropolitan regions and selected C cities” with particularly above-average spending power and anticipated population growth.
Thilo von Stechow, managing partner at Deutsche Asset One, said the vehicle had investments worth “hundreds of millions of euros” in the pipeline undergoing due diligence.
“The mixture of cities and the combination of existing properties with new projects allows us to achieve a well-balanced portfolio structure with higher rent yields compared with a portfolio encompassing just new project investments or A cities,” he said.
“The value of these existing properties can be enhanced through proactive portfolio management. We are marrying potential for cash dividends with long-term value creation.”
Despite the rise in real estate prices across the board, the residential investment market still offers long-term opportunities, he said, with the sector meriting a “permanent presence in the real estate portfolio of any German institutional investor”.
Last week, Union made its first US urban retail foray through the purchase of a minority stake in four retail buildings in a joint venture with TH Real Estate, which will hold a majority stake.