Opportunist investors leave room for those prepared to sweat
Cerberus, Blackstone and co are selling German assets but smaller investors – such as Barcelona-based BMB Investment Management – are still buying. The company’s first fund is focused exclusively on Berlin. "This city is one of the most amazing arbitrage opportunities around," says Alberto Matta, formerly with BNP Paribas in London, and one of BMB’s co-founders "You can find yields of 8% in certain parts of Berlin, and that yield might be based on a rent of €5 or €6 per square metre, per month. Rents can’t stay that low, so we’ve got a combination of positive carry and significant upside."
That magic formula isn’t just there for the asking. BMB started ramping up its €100 million fund (40% equity, 60% debt) in March and has since looked at over 200 buildings – visiting each and every one – but buying only 60 of them. It still has to invest about 20% of its capital. "We’re almost there but it’s been a painful, time-consuming process. Still, in our opinion, cherry-picking is the only way to create value right from the start," says Matta.
German law states that rent can be increased by up to 20% during any three-year period.