Information on the Target

Round Hill Capital has successfully concluded off-market transactions to acquire two multifamily properties in Greater Berlin, Germany, on behalf of its flagship Core Plus European Housing Fund, ERIF II. Collectively, the acquisitions encompass a total of 259 units, including a 208-home property in Hohen Neuendorf and a 51-unit property in Erkner. Both properties are designed to meet Germany's highest energy efficiency standards, thereby addressing the urgent demand for affordable housing in the region.

These developments, completed in 2024, mainly feature one-bedroom apartments and are strategically situated in locations with excellent connectivity. This acquisition brings ERIF II’s overall portfolio in Germany to nearly 2,000 units, showcasing a robust commitment to enhancing housing solutions across Europe.

Industry Overview in Germany

The German residential market has experienced substantial demand in recent years, primarily driven by urbanization, a growing population, and a limited supply of housing. German cities, particularly Berlin, have seen a significant influx of residents, leading to increasing pressure on the housing market and a heightened demand for multifamily properties.

Berlin, as one of Europe’s dynamic capitals, is attracting both national and international investments. The city’s strong economic performance, coupled with an influx of tech companies and startups, has spurred job growth, intensifying demand for affordable rental units. Furthermore, government incentives aimed at sustainable building practices have spurred developers to invest in high-energy efficiency projects.

The last four years have also seen notable employment growth in Greater Berlin, propelled by new industries such as the establishment of the Tesla factory and the opening of the Berlin airport. This growth is enhancing the appeal of the area for both potential residents and investors.

The multifamily residential sector within Germany is characterized by a stable yield environment, making it an attractive option for real estate investors. The pervasive demand-supply imbalance further underscores the potential profitability of investing in residential properties throughout the country.

The Rationale Behind the Deal

The rationale for these acquisitions lies in the strategic positioning of both properties within rapidly developing markets in Greater Berlin, where demand for rental housing remains robust. Acquiring these assets at a significant discount to replacement cost enhances the investment profile, allowing for strong immediate income generation.

Furthermore, both properties hold the KfW40 certification, guaranteeing high energy efficiency and favorable financing terms, which adds an additional layer of financial attractiveness. The synergy of quality assets in supply-constrained areas aligns perfectly with ERIF II’s investment strategy.

Information About the Investor

Round Hill Capital is a prominent global investment firm specializing in real estate, with a focus on developing and managing residential properties across Europe and beyond. The firm emphasizes creating value through strategic investments in income-producing real estate that benefits from favorable demographic trends.

With an extensive portfolio that includes over 3,000 units across various countries, Round Hill Capital leverages its experienced teams on the ground to identify compelling investment opportunities. The company’s focus on sustainable, high-quality real estate aligns with current market trends, making it a forward-thinking investor in the European residential sector.

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The acquisition of these multifamily properties by Round Hill Capital is, in our expert opinion, a strategic and prudent investment decision. Given the ongoing demand for affordable housing in Greater Berlin, these properties are likely to deliver strong returns through sustained rental income.

Additionally, with Germany's robust economic landscape and the government’s commitment to sustainable construction practices, the long-term outlook for these assets remains positive. The properties' energy-efficient designs not only meet current regulatory standards but also appeal to tenants seeking environmentally responsible living options.

Moreover, the acquisition of these assets during a market dislocation period presents a unique opportunity for Round Hill Capital to capitalize on favorable market conditions. As values in the residential sector stabilize, having quality assets in strategic locations positions the firm well for growth.

In conclusion, this transaction exemplifies Round Hill Capital’s proactive approach to leveraging market trends for sustainable growth in the European residential sector, making it a commendable addition to their portfolio.

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