BNP Paribas and Cording launch new value-add German fund
BNP Paribas’ real estate investment arm has teamed up with Cording Real Estate Group to launch a new value-add German fund, with a target equity volume of €150m.
The new Spezialfonds, which is an open-ended fund structure for institutional investors to invest in Germany, has already secured commitments for more than a third of the target volume.
The fund has also acquired its first property, Media Tower in Dusseldorf. The 64 metre-high property is one of the tallest buildings at the Media Harbour, but is only 50% occupied, after the expiry of some leases, with the average remaining term of the remaining leases only 2.8 years.
As asset manager, Cording will reposition and renovate the property, which will provide the opportunity for a significant increase in cashflow and value through leasing the vacant space.
The fund managers said the deal was representative of the type of property the fund was looking to buy.
Reinhard Mattern, chairman of the management board of BNP Paribas Real Estate Investment Management Germany, said: “Traditional core real estate increasingly fails to meet the return expectations of institutional investors because of movements in real estate prices. For that reason there is a great interest in non-core properties that can be developed into core properties. Our Real Value Fund uses a manage-to-core approach and, therefore, is able to unlock the latent value of a property.”
Rodney Bysh, joint chief executive of Cording Real Estate Group, added: “We believe there is a compelling opportunity in the value-add segment for specialist real estate managers with a local presence and understanding of the market. Over time, many core properties have become value-add buildings with vacant space and renovation needs. We acquire these kinds of properties and apply our proven management approach to reposition them.