Kingstone launches affordable housing fund in Germany
Kingstone Real Estate has launched a €500 million open-ended institutional real estate fund that will invest in affordable housing in Germany, focusing on the main metro regions across the country.
“Creating affordable housing is, and will continue to be, one of the most pressing tasks in the years ahead,” said Tim Schomberg. managing partner and co-founder, Kingstone Real Estate. “Our newly launched fund will be offering a product that will potentially satisfy the ESG requirements of institutional investors. Such residential investments, assuming index-linked rents, offer a low vacancy risk, high value retention and predictable income streams over the long term.”
The plan is to invest in energy-efficient new-build housing construction. At least 60% of the investment volume is earmarked for subsidised housing, and it will also include senior-living accommodation and social infrastructure as an add-on component.
The fund’s focus will be on metro regions and conurbations across Germany, as well as centres and cities within the catchment area of metropolises. It will have a projected fund volume of €500 million, with equity capital to account for €250 million. The fund’s net cash-on-cash annual return is expected to average between 4% and 4.5%.
The initial seed portfolio is in the final stages of due diligence and negotiations. “We are currently reviewing a variety of assets and will soon announce our first acquisitions,” said Schomberg. “We are also open to additional offers from property developers and other sellers.”
A first institutional investor already committed an amount in the high double-digit millions to the fund. HansaInvest Hanseatische Investment-Gesellschaft will act as the fund’s third-party AIFM. The fund is being advised by Kingstone Residential Investments, a subsidiary established together with Pallino Real Estate.
“We have strong relationships with experienced property developers who are about to complete and sell properties,” said Klaus Niewöhner-Pape, member of the advisory board, Kingstone Residential Investments. “We are also familiar with the complex nature of public funding programmes in Germany, and know how to secure the maximum in eligible funding for any kind of project. By taking advantage of low-interest development loans and long fixing periods, we will largely avoid the volatile interest rates of debt funding.”
The Kingstone Bezahlbares Wohnen Deutschland fund meets the requirements of Article 8 of the Sustainable Finance Disclosure Regulation. In addition to the green focus on “sustainability in new-build construction,” the fund concentrates specifically on the social aspect. The goal is to provide affordable rental homes by securing a high share of publicly subsidised investments.
