“On the one hand, yields on government bonds have fallen steadily, with the yield on 10-year German bonds in negative territory for much of 2019. Net inflows in 2019 were only exceeded in 20.Īs Frank Netscher, analyst at Scope, puts it: “The 3.8 percentage-point spread between yields on open-ended real estate funds and German government bonds has very rarely been so wide.
Germany’s open-ended retail real estate funds saw record inflows in 2019 as the gap widened on the spreads between government bond yields and returns from the property market, as new data published by Berlin-based rating agency Scope shows.Īs a comparison, the average yield on 14 open-ended mutual real estate funds over the past 15 years has always shown a positive differential, or premium, over German government bonds, with this spread, or “excess return” only widening since 2013. “They say getting to the first billion is the hardest,” said McEvoy. Greenman’s plan now is to grow its assets under management to €3 billion by 2027. The company is on Aviva’s Self Directed Investment Option platform, which means it can take a minimum of €15,000 from pension investors. Investors must invest a minimum of €125,000.
The vast majority of its investors are Irish. The long term investments tend to have a yield of about 6 per cent. It isn’t keen on making “a quick buck” by buying properties and selling them within two to three years. The company, which employs more than 60 people in Ireland and Germany, also manages the properties. Greenman limits its debt gearing to 50 per cent, and spends anywhere from €5 million to €70 million on each property. The company made its latest investments - the purchase of three retail parks for €90 million - through its Open fund, a regulated fund set up in 2014. Many are in developments that are already operational and occupied, though some deals are done on properties that have yet to be built. The investments tend to be local neighbourhood centres, anchored by chains such as Aldi, Edeka and Rewe. The company was set up in 2005 by the financial advisers Peter O’Reilly and Johnnie Wilkinson, who started to invest in properties right across Germany. It’s not an office tower in Dusseldorf or Frankfurt but it is an asset that is tight and secure for investors and that’s what we’ve been doing since day one,” McEvoy said. “It’s not the sexiest asset in the world.
In the four weeks that Germany was locked down in March 2020 Greenman’s rent collection levels dropped to 86 per cent but shot back up to 91 per cent within the month. “Investors like to put their money into the country because Germany will get out of any downturn the quickest,” he said. James McEvoy, head of acquisitions at Greenman, said it chose Germany as an investment market because of the stability of the economy. The company’s tagline is: “There are 84 million people in Germany. “All of our investments are in Germany and all in retail centres anchored by German supermarket chains.” “Our strategy is simple,” said Catherine Choo, the company’s chief information officer.
For Greenman, a real estate investment fund manager, the pandemic reaffirmed its strategy, so much so that late last year it made three more investments which brought its assets under management to more than €1 billion. When Covid-19 descended on Europe in March 2020, retail landlords, forced to renegotiate leases and give payment freezes, were probably wondering why they entered the sector in the first place. Focus on German shopping centres anchored by food chains is at heart of Greenman’s Covid recovery