News from 09/10/2008
Level One: Residential property fund insolvent
The asset management company of the Level One residential property fund has filed for bankruptcy with the Charlottenburg district court in Berlin. This was confirmed by the court in a letter to THOMAS DAILY. According to a report in the newspaper Financial Times Deutschland, insolvency papers were also filed for the island of Jersey based holding company and 70 subsidiaries through which approximately 28,000 apartments and a number of commercial properties were acquired. Level One’s biggest creditor is said to be Crédit Suisse. Founded in Austria, Level One has been active on the German property market since 2004. Since then, it has acquired and administered an inventory comprising, according to Level One, nearly 30,000 apartments in more than 30 cities, which makes it one of the largest residential investors in Germany. The apartment acquisitions were focused on Berlin and eastern Germany.
Essen: Cornerstone laid for new ThyssenKrupp-Quartier
The cornerstone has been laid for the approximately €300mn ThyssenKrupp-Quartier in Essen. According to construction plans by the architectural offices Chaix & Morel et Associés in Paris and JSWD Architekten und Partner in Cologne, the firm’s new headquarters is to provide space for 2,500 ThyssenKrupp staff members by the summer of 2010. Bilfinger Berger AG is the general contractor and the groundbreaking ceremony for the project took place back in June, 2007. The new, 20 hectare ThyssenKrupp Quartier will comprise not only the concern's new headquarters, but also other office and administration buildings. Among them, projections are for a multi-functional building with a conference center and food service for the staff, the ThyssenKrupp Academy, a hotel, and additional amenities on a total area of approximately 100,000 sqm.
KGAL: First closed forest fund issued
Another fund initiator, KGAL, is taking a stake in timberland investments. The KGAL fund Timber Class 1 is investing in 625,000 hectares of timberland spread out over the U.S. states of Texas, Louisiana, Georgia and Alabama. The forests are administered by timberland manager The Campbell Group LLC. The volume of the fund, according to KGAL, is at least $30mn and financed completely with equity. Given sufficient demand, volume could be increased to as much as $350mn. The initiator predicts 1% to 7% annual distributions for the fund, which is forecast to run until the end of 2019. Two other German fund initiators that up to now have invested in timberland are DWS and Jamestown.
Market: Henderson predicts 60 basis point revenue increase
For the German property market, Henderson Global Investors expects a revenue increase of another 60 basis points from the middle of 2008 until around the end of 2009, and that beginning in the middle of the coming year times will be favorable for market entry. Michael Englisch, Henderson’s business manager, said, “rising initial revenues are going to create buying options.” All in all, the German market has grown more volatile. Revenue variations have widened from 50 basis points to a span of 100 basis points due especially to the strong activity of foreign investors. In the office segment, the British firm sees a hike in initial revenues from 4.9% at the moment to between 5.4% and 5.6% in such strongholds as Hamburg or Frankfurt and it believes second-rate locations are going to draw back more strongly. Henderson is projecting the best total returns for offices after the conclusion of price corrections in Hamburg, Munich and a number of regional centers. On average, total returns with a magnitude of 7% to 10% are being predicted.
HGA Capital: New Germany fund invests in Hamburg object
HGA Capital AG has launched another closed German property fund: HGA/Bavaria Office Hamburg. Its investment object is a mixed-use office and commercial building in the Bavaria-Quartier near the HafenCity. The property, completed during the first half of 2008, has approximately 9,300 sqm of office, 1,300 sqm of retail and 1,100 sqm of storage space, as well as 180 parking spots. As of September 1, 2008, 88% of the office space - occupied primarily by the renewable electricity supplier “Lichtblick” with some 7,100 sqm-, 92% of the retail and 40% of the storage space were rented. HGA Capital quotes the investment volume at €41.4mn, of which €25.4mn is equity. The fund’s lifetime is projected at 15 years. The initiator is predicting returns starting at 5.25% annually, rising to 5.5% in 2021 and to 6.0% in 2022. Participation is possible for a minimum of €10,000 plus 5% agio.
Eyemaxx: €450m planned for eastern European hotel projects
The Austrian developer Eyemaxx Real Estate wants to build several hotels in eastern Europe. By 2011, facilities worth €450mn are to be constructed in Russia and the Ukraine. In Kiev, a hotel complex with 250 beds and an adjoining office building is planned. Jon Pirtle, the managing director for hotels at Eyemaxx, told the Austrian newspaper Wirtschaftsblatt that the investment volume amounts to approximately €120mn. Commencement of construction is scheduled for 2009 and completion for 2010. Preparations for a €185mn project comprising a hotel and a shopping center in another Ukrainian metropolis are underway. Hotel projects in Moscow, Serbia, Croatia and Sarajevo are under review, Pirtle stated. He said that his goal is the development of properties with and/or for institutional investors. “Although the financial markets have become more complicated,” Pirtle commented, “there are still enough institutional investors who have money for good projects and who want to invest it.”