In an illustration of how institutional players could move into the UK market – once a decent level of rental stock is in play – two German companies have announced a second joint venture to buy residential stock.
The partnership also provides an example of how a financial institution can team up with a property management specialist, to enter the private rented sector in some scale. ZBI currently manages around 17,000 homes across Germany, with a total investment of around EUR1.5bn.
Last year, Deutsche Investment and management company ZBI created an investment fund which spent around EUR160m on housing in the Berlin area. Spurred on by the success of that fund, the pair are now starting a second fund, which will invest around EUR200m in and around Berlin.
The new fund expects to deliver investors an average 5.5% return, over an expected 10 year term. The pair will consider up to 25% new construction, and are prepared to look at forward funding new developments.
“We look forward ton continuing this successful model of partnership property,” siad Dr Bernd Ital of ZBI. “The cooperation between ZBI and Deutsche Investment guarantees a safe and efficient management of the fund for our institutional investors.”
At Deutsche Investment, the decision to undertake a second fund was off the back of a good pipeline of projects identified as the first fund was invested. “A balanced risk-return profile of all investment properties in the fund will provide a a low volatility,” said DI’s managing partner Florian Mundt.