German Investor Creates $1B Fund Targeting US Apartments

The asset management arm of Signal Iduna Group is teaming up with U.S. firm Bell Partners, which will manage the properties acquired by the new fund.
Nicholas Brinckmann, Managing Director, HANSAINVEST

Nicholas Brinckmann, Managing Director, HANSAINVEST

Hamburg, Germany—Hansainvest Hanseatische Investment-GmbH, the asset management arm of Signal Iduna Group, is creating a real estate fund specifically to invest in residential real estate in the United States. The fund—to be known as HANSA US Residential—will be geared towards institutional investors who want a stake in core American residential properties.

The target fund volume is $1 billion, with plans for equity of about $500 million. According to HANSA US Residential, the distribution yield for investors is forecast at 4.5 percent. The fund will be traded under the legal form of a German real estate special fund in accordance with the German Capital Investment Code (KAGB).

HANSAINVEST, the fund manager, will partner with Bell Partners, an apartment investment and management company focused on U.S. multifamily communities, to operate the acquisitions made by the new fund. Currently, Bell has more than 60,000 units under management, offering expertise in property operations, construction, accounting, risk management and market research. Bell is also one of the largest apartment renovators in the United States.

A Bell investment entity will invest in the fund as a co-investor. “This will enable us to be aligned and have common interests shared by the investors and our local partners,” noted Nicholas Brinckmann, managing director of HANSAINVEST.

He explained that the fundamentals are still right for long-term investment in U.S. apartments. Also, “the legal framework makes it possible to increase rent for residential real estate in the U.S. at much more regular intervals than here in Germany. From the perspective of investors, this is a great benefit,” he told CPE.

Though overseas investors aren’t quite coming to U.S. real estate assets as briskly as in 2014 and ’15, partly because of the strength of the dollar, they’re still interested. According to the 2016 survey by the Association of Foreign Investors in Real Estate (AFIRE), 85 percent of respondents say their belief in the viability of the U.S. real estate market didn’t change over last year, although 80 percent of respondents said it was “very” (35 percent) or “somewhat” (45 percent) difficult to find attractive U.S. real estate investment opportunities.

Also, noted AFIRE, the U.S. multifamily and industrial sectors tied for first place as preferred property types among non-American investors. Retail moved from fourth place to third, compared with 2015, office moved from third to fourth and hotels remained last.