Prior to an acquisition our Investment Committee ensures a rigorous analysis which is then approved by the relevant fund’s board of directors.
The emphasis of our current real estate (RE) acquisition program is to acquire Central European (CE) office and mixed-use (office + retail) properties which are stabilised and “core” or which are mid-risk or “core-plus” in their return profile that present measurable value-add potential via active asset management.
As we act on both a non-discretionary and semi-discretionary basis together with our private and institutional partners, we have a flexible and broad set of investment criteria. However, for general guidance, we look for properties which display the following characteristics.
|Preferred Geographies||Central Europe: Czech Republic, Slovakia, Poland.
Western Europe: Switzerland.
|Macro-Location||Primary / Secondary cities.|
|Asset Class||Offices / Mixed-use (Office + Retail).|
|Risk/Return Profile||Core / Core + / Core ++|
|IRR Target||10.00% – 16.00% p.a. (Leveraged).|
|Yield Requirement||6.50% minimum (asset-level) yield. In under-rented situations where rental reversion exists, the initial yield may be lower.|
|Micro-Location||Central Business Districts (CBD) locations or established urban and sub-market locations with solid demand and constrained supply fundamentals.|
|Grade||A, A- and B++. For lower grade assets to be considered, they should display differentiating characteristics such as quality of location, imminent civil upgrade works of the surrounding area, change of use conversion potential, site consolidation etc.|
|Price Range||€15 – 90m (GAV) per property. Properties of less then €15m will only be considered on a portfolio basis or if historic or landmark.|
|Size Range||10,000 – 40,000 sqm (NLA) per property. Preference will be given to ‘Business Park’ style configurations providing leasing flexiblity and a campus like environment for tenants.|
|Lease Expiry||Minimum 2.50 years Weighted Average Unexpired Lease Term (WAULT) with a preference for staggered lease expires. However, properties with a shorter WAULT will only be considered where vacant possession is desirable in order to complete a substantial refurbishment.|
|Occupancy||Min 70%, however properties with lower vacancy may be considered in a structured scenario.|
|Rents||Properties with rents in the lower tier for their grade and which present rental reversionary opportunities at expiry will be given preference. All leases must be subject to annual CPI.|
|Asset Management Angle||Preference will be given to opportunities which present upside potential via a combination of lease renewals, vacancy reduction, rental income increase and or base building quality improvement.
|Properties under Construction||Properties under construction will be considered on a forward commitment basis.|
|Purchase Structure||Both asset and share transactions will be considered.|
|Portfolio Transactions||Portfolios of €150 – €350m (GAV) will be considered. Assets may be located across multiple CE geographies.|
|Structured Transactions||In certain cases, master leases, earn-out and vendor rental guarantee structures will be considered.|
|Joint-Venture / Co-Ownership||Joint ownership is considered on a case-by-case basis but only with reputable institutional partners.|