Executive Summary
Bouwfonds Investment Management B.V. (“Bouwfonds” or “the Sponsor”) has formed Bouwfonds Germany Residential Institutional Fund C.V. (the “Partnership” or the “Fund”) to pursue a focused and disciplined real estate investment strategy to acquire a diversified portfolio of rental housing properties with stabilized cash flows in 11 EU-defined metropolitan regions in Germany. Bouwfonds expects that all of the institutional investors that invest in the opportunity described in this Memorandum will do so by acquiring interests in the Fund. The Fund will benefit from the proven investment capabilities of Bouwfonds Real Estate Services Deutschland GmbH (“BRES Deutschland”), an affiliate of Bouwfonds. BRES Deutschland will locate and manage properties for the Fund pursuant to asset management agreements between BRES Deutschland and affiliates of the Fund.
Bouwfonds has caused affiliates of the Fund to acquire a [EUR 150 million] portfolio of rental housing properties prior to the time institutional investors are admitted to the Fund. The acquisition of this portfolio will help demonstrate our ability to identify and acquire properties and will mean that the Fund owns income-producing assets from its inception. The Fund will target an internal rate of return net of fees to institutional investors of 8%, with Fund debt levels targeting 65%. The Fund expects each investment to be held for ten to twelve years. The Fund is seeking capital commitments totaling approximately EUR 300 million, of which affiliates of the Sponsor will commit 15% (up to EUR 45 million).
Investment Strategy
The Fund’s strategy is to acquire, reposition, manage and liquidate a diversified portfolio of rental housing properties in 11 selected EU-defined metropolitan regions in Germany. It is expected that the Fund will benefit from improving rental market fundamentals in the residential sector, from the timing of investments and divestments and from Bouwfonds’ and BRES Deutschland’s management.
The Fund will maintain a conservative investment approach and will be moderately leveraged with approximately a 65% loan-to-value ratio. Approximately 90% of the Fund’s capital used to acquire investments will be invested in core assets (residential rental properties with stabilized in-place cash flows). The remainder of the Fund’s investments will be in value-added real estate. Value-added real estate presents the potential to create additional value through physical upgrades, property-repositioning strategies and experienced property management. The Fund will focus on the purchase of properties at a discount to replacement cost in geographically diverse markets. The Fund’s geographic focus will be on sub-markets with above-average barriers to entry, where undeveloped land to build new housing is either difficult to acquire or expensive to purchase. Bouwfonds expects the Fund’s portfolio of properties to represent 11 EU-defined metropolitan regions.
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