BFG Immoinvest

Set up in 1989 BFG Immoinvest is one of the younger German open-ended funds. To date it has invested in 34 properties across Germany and 13 properties abroad. BFG Immoinvest is part of the Credit Lyonnais Group, with the French bank holding 50% plus one share of the fund management company. Aachener und Munchener Versicherungsgruppe, a major German insurance group, holds 25% plus one share and the trade union investment company holds 25% minus two shares. In terms of asset spread the fund has placed 80% of its investments in offices, 12% in retail space and 6% in warehouse and service space.

A key focus when selecting investments is the tenant. As a matter of policy the fund tries to avoid too much exposure to any one tenant. For development projects BFG Immoinvest requires pre-lettings to be in place with actual tenants and it will not accept rental guarantees from developers. For the financial year 1996/7 more than 98% of the fund’s properties were let.

Like other open ended funds BFG Immoinvest has been very selective with its investments in East Germany. The fund has only bought one office building in Magdeburg.

Looking beyond the German borders, BFG Immoinvest has acquired properties in London, the Benelux countries and Austria. In terms of investment value the fund has invested 15% of its property assets in other European markets outside Germany. BFG Immoinvest has not set itself a fixed target for its foreign holdings: the fund looks at investment opportunities on a case-by-case basis. In this context it is worth noting that investments in the United States are also being considered as are investments in Eastern Europe. Here, however, BFG Immoinvest is waiting for the economies to stabilise and purchasing power to increase before making firm commitments.

The London investments include No7 Millbank which the fund has bought from a private German investor. Located near the Houses of Parliament the office block is let to the Department of the Environment, parliamentary offices and Lloyds Bank. The fund also owns 70-80 Oxford Street, W1, a mixed scheme with retail and office space comprising around 7,500 m2. The London investments also include an office building in the West End.

In the Netherlands BFG Immoinvest has so far bought five buildings, three of which are located in The Hague. One of the investments, comprising offices and service space, is currently under construction and is pre-let to a public energy company on a 15-year lease. To take advantage of the strong market conditions in Brussels the fund has acquired three properties in the Belgian capital. All are fully let.

Last year’s new investments took BFG Immoinvest to Luxembourg – the first time that an open-ended fund had invested there. A five-storey office building of about 1,250 m2, let to the Luxembourg government, was bought to reflect an initial yield of 6.7%.

The international investment activities continued in the current financial year. In Vienna BFG Immoinvest bought the Rennwegcenter, a mixed-use scheme comprising 12,250 m2 of offices let to Bank of Austria and retail units, for DM 70m. Like all property purchases by foreign buyers this transaction is still subject to approval by the Austrian authorities.

BFG Immoinvest intends to actively manage its properties. In this context sales of some of the schemes which were acquired in the early stages of the fund’s activities are not ruled out. With the exception of a cinema complex in Freiburg, BFG Immoinvest has avoided investing in management-intensive properties such as hotels or leisure facilities. The reason is the difficulty in finding an alternative use for such properties if the market changes or if the operator fails.

A return of 5.2% in the year to 31 May 1997 puts the fund in fifth place in the league table of open-ended property funds. Comparing the performance over the past five years BFG Immoinvest shares top place with HANSAimmobilia with a yield of 39.6%. The shares are distributed by the branch network of BFG (Bank fur Gemeinwirtschaft), agencies of the various members of the Aachener and Munchener Versicherungsgruppe as well as a network of independent brokers.

Financial Year ended 31 March

DM million	ALIGN=”CENTER”>1997	ALIGN=”CENTER”>1996
Total assets	ALIGN=”CENTER”>2247.3	ALIGN=”CENTER”>1371.7
Property investments	ALIGN=”CENTER”>1472.9	ALIGN=”CENTER”>1002.6
Liquid assets	ALIGN=”CENTER”>955.6	ALIGN=”CENTER”>365.1
Property income	ALIGN=”CENTER”>73.0	ALIGN=”CENTER”>42.3
Income from liquid assets	ALIGN=”CENTER”>23.1	ALIGN=”CENTER”>18.9
Net income	ALIGN=”CENTER”>101.2	ALIGN=”CENTER”>70.6
Value per share (DM)	ALIGN=”CENTER”>102.33	ALIGN=”CENTER”>101.05
Dividend per share (DM)	ALIGN=”CENTER”>4.30	ALIGN=”CENTER”>4.30