Union Investment, ZBI raise €620m for core resi fund

The two German real estate firms say they have completed the largest ever fund raise for an open-ended residential vehicle in their homeland.

Union Investment has raised €620 million on behalf of a residential real estate fund set up with fellow German RE firm ZBI.

The partnership said it would be targeting affordable residential assets, which have the potential for growth, throughout Germany. A person familiar with both firms said Union and ZBI were aiming to generate a 2.5 percent return for investors, in line with the benchmark for German open-ended real estate funds.

Due to ZBI’s asset management expertise, the two firms also said they would consider investing in development projects and assets requiring refurbishment on behalf of the fund, Unilimmo: Wohnen ZBI Residential.

Both firms said the capital raise was one of the largest ever for a German open-ended real estate fund.

Union Investment and ZBI have already acquired a number of assets via the fund, including a €132 million portfolio comprising 260 properties and approximately 2,500 residential units in Düsseldorf and Gelsenkirchen.

The partnership also bought a 70 percent stake in a €113 million portfolio of assets in smaller cities such as Bochum, Essen and Duisburg, in the state of North Rhine-Westphalia. The seller was a mixed group of US and UK investors and the portfolio comprised 150 properties, containing around 2,500 residential and commercial properties.

“With its initial portfolio, the fund is very well positioned to leverage opportunities in the German residential real estate markets,” said Reinhard Kutscher, chairman of the management board of Union Investment Real Estate.

“We are delighted to have got off to such a good start, both on the marketing side and with regard to acquisitions.”

Union Investment currently has assets under management totaling around €31.8 billion in its open-ended retail real estate and specialized funds.