Investment Strategies

Custom Investment Strategy

Custom Investment Strategies

We offer investors access to a variety of investment opportunities such as real estate and credit situations. Our in-depth expertise in both these markets gives our investors access to opportunities off the beaten track, such as the purchase of distressed real estate. In this context, we are one of the few asset managers in Germany to hold a BaFin license to provide payment services.

Our activities revolve around following clearly defined strategies, a systematic and transparent representation to investors, and a returns-oriented approach. With our know-how, we consider ourselves a risk manager and trustworthy and professional partner to our clients.

Active Value Creation

Real estate investment returns are made up of three potential components: positive market development that brings higher prices (passive value appreciation), a regular flow of returns through rental income, and active measures aimed specifically at increasing the property’s value. Our investment platform offers a range of investment opportunities in a variety of risk classes, from traditional ‘core plus’ strategies, which focus on stable, yield-oriented investments, to ‘opportunistic’ approaches.

Co-Investment and Entrepreneurial Commitment

We are open to assuming a portion of the real estate investment as a co-investor, thus aligning our interests with those of the main investor.

CORE PLUS STRATEGIES

A ‘core plus’ strategy includes investments in all types of commercial real estate in good to medium locations. It typically involves a buy-and-hold strategy with a holding period of more than ten years to enable continuous distributions to investors. Value growth is achieved by optimizing lease terms and investing in the building itself.

MANAGE TO CORE & VALUE ADD STRATEGIES

By definition, ‘value add’ commercial real estate investments have the potential to increase in value. They typically have cash flow from rental income, which is significantly optimized on both the revenue and cost side during the management phase. Value is created through intensive hands-on asset management. Such measures typically include stabilizing the rental situation, upgrading the property through structural changes, and developing and implementing reuse and repositioning concepts. To optimally monetize the value appreciation, we aim to return the properties to the market once they are stabilized.

OPPORTUNISTIC STRATEGIES

Opportunistic properties are those with high potential for value appreciation. They are mostly found in peripheral B or even C locations where market cycles can reach a low point; thus, they are highly speculative. The buildings usually require extensive renovation. Rental conditions are substantially below market level. Such properties are often characterized by significant vacancies, relatively low credit ratings of existing tenants, and an unfavorable tenant mix. Economic urgency and market inefficiencies are among the situations when such real estate can be acquired for an especially low price. In summary, opportunistic properties are undervalued and in need of renovation in very difficult markets. These properties carry the greatest risk, but also the highest potential for appreciation.

These investments are geared towards high upside potential that can be achieved through building upgrades and higher occupancy rates over a generally short holding period of 1 to 4 years. With a debt ratio of more than 75%, investments in opportunistic properties should achieve a superior return greater than 10% because of the comparatively high risk for investors. The primary goal of an opportunistic strategy is to generate profit on the property’s resale. In order to achieve these profits, however, extensive renovation work is required before the property can be repositioned on the market.

MANAGING SEPARATE ACCOUNTS & TRANSFERRED ASSETS

Individual mandates typically begin with a new capital allocation or transfer of an existing real estate portfolio in conjunction with the release of a new investment budget. Our services include asset transfers, asset management, and individual client solutions from ‘core’ to ‘value add’ strategies.

WHOLE LOAN

Whole loans can be useful when financing processes need to be accelerated. This allows property owners and project developers to obtain the mezzanine and debt they need from a single lender, which simplifies and speeds up the review process.
The overall view of the financing structure and the wighted average cost of debt interest can reduce the overall costs with a comparatively high loan-to-value ratio, since the borrower can in some cases substitute more expensive "subordinated" mezzanine capital with less expensive senior or junior capital, and "only" has to negotiate with one lender. The advantage for lenders is that they get extensive collaterals also for the subordinated loan.

MEZZANINE

When financing new projects or existing properties, equity can become a decisive factor. Mezzanine financing can be an advantageous supplement or even alternative to equity, especially for property development. Between equity and debt, it replaces parts of the borrower's equity requirements. For lenders, mezzanine loans offer a balanced risk/return ratio.

DISTRESSED DEBT & NON PERFORMING LOAN STRATEGIES

A non-performing Loan (NPL) strategy involves investments in non-performing loan commitments, in our case largely in real estate or ship financing.

Banks offer non-performing loans on the capital market in order to reduce their credit risks, relieve balance sheets, and generate additional liquidity.

Investor strategies range from short-term solutions, such as partial repayment of the loan (discounted pay-off), refinancing, or private sale of the loan collateral, to medium-term solutions such as maintaining control over the loan collateral through power of attorney and settlement of the remaining debt, management of the insolvency process, foreclosure or resolution of tax, financing or legal problems, or to long-term solutions such as restructuring the loan and holding it to maturity (hold-to-maturity).

FINANCING PROFILE