Crystal Building benefits from the municipality’s development concept

The office complex comprises around 14,000 m² of rental space spread across two buildings with eight and 13 floors respectively. The complex includes 302 parking spaces, 36 of which have electric charging facilities. The Crystal Building is currently around 80 % let. Targeted investments in modern reception areas, seminar rooms, a cafeteria and fitness facilities will enhance the property and make it fit for the future. The repositioning is taking place against the backdrop of a comprehensive urban development concept that will significantly enhance the area in the south of the city, where the property is located, over the next few years. Among other things, the concept envisages the conversion of outdated office space into apartments. The associated reduction in office space supply makes the location all the more attractive for modern, future-proof office properties.

Dr Patrick Züchner, Chief Investment Officer of Aukera, says: “With the financing of the Crystal Building, we are focusing on an office property with a stable rental situation, an experienced investor and developer, and a clear ESG-oriented modernisation strategy. The transaction offers a balanced risk/return profile and fits in perfectly with our investment approach.”

Cees Rodenburg, Founder and CEO of Cero Invest, adds from the perspective of the real estate investor: “With the Crystal Building, we’re creating a modern, sustainable workplace. As in our other projects, we focus on optimising buildings, improving their sustainability and giving them a strong identity.”

Attractive risk-return profile for investors

Aukera’s new debt fund has a target volume of EUR 500 million and is aimed at institutional investors from German-speaking countries. HUK-Coburg Asset Management GmbH has participated as an anchor investor with a commitment of EUR 50 million. The fund exclusively grants senior secured loans, usually whole loans, with a loan-to-value ratio (LTV/LTC) of up to 75 % and target IRR returns of 6 to 7.5 % p. a. The preferred loan amount is between EUR 10 million and EUR 20 million. The concept combines predictable returns with a conservative risk profile.

New opportunities for debt funds

According to the German Financial Supervisory Authority (BaFin), commercial property loans with a volume of around EUR 100 billion will expire in 2025/26 alone. In view of higher interest rates and stricter regulation, many of these can no longer be extended in the traditional way via banks. This opens up attractive opportunities for institutional investors to fill this gap via professionally managed debt funds. “We expect the deal flow for various types of use in Germany, the Netherlands and Austria to remain high for the time being. This applies to both refinancing and traditional acquisition financing,” explains Dr Patrick Züchner.
Aukera was advised on the transaction by BJTK Law and NewGround Law. CMS Legal and De Vastgoed Financiers acted as advisors to Cero Invest.

Fund grants whole loans, including selected bridge financing

The pool fund is targeting institutional investors in German-speaking countries. It expressly does not provide mezzanine capital or preferred equity, does not use back leverage (additional borrowing on the fund structure), but focuses solely on senior secured loans. These are usually whole loans. The fund is particularly open to selected bridge financing such as bridge-to-exit or bridge-to-green. The loan-to-value ratio (LTV/LTC) is up to 75%. Aukera states the target IRR per transaction of 6 to 7.5% p.a., depending on the risk profile of the respective financing. This corresponds to a margin of 350 to 500 basis points above the interest rate swap.

Maximilian Cosack, Head of Private Asset at HAM, says: “After carefully observing the real estate financing market, we conclude that a commitment to Aukera’s fund fits perfectly into our real estate debt portfolio of approx. EUR 700 million AuM. Intense talks with the management of Aukera have created a very stable basis of trust on which we build our commitment. The current market phase at the beginning of the next real estate cycle makes us optimistic to have picked the right asset class and the right fund product from a professional partner at the right time.”

The European Central Bank (ECB) has reduced its key interest rate by 25 basis points, bringing the deposit interest rate down to 3%. This move comes in response to easing inflationary pressures: the inflation forecast for 2024 stands at 2.4%, and at 2.1% for 2025. ECB President Christine Lagarde acknowledges the progress made but remains cautious.