German Pension Fund in CEE

Merkur Palota Logo
Central Udvar Logo
mokotowska logo
wilcza logo

A German pension fund wants to expand its indirect real estate investments to Central and Eastern Europe. An existing specialized fund structure in Luxembourg, under the administration of 2IP Institutional Investment Partners, was expanded to include a CEE component. GalCap Europe received a mandate as Investment Manager for this sub-portfolio.

Together with the pension fund and 2IP, a tailor-made investment strategy was crafted and converted into tangible acquisition criteria. After intensive examination of multiple potential targets, the first asset acquired for the portfolio was a renovated inner-city palace in Budapest. The transaction took place off-market. The Merkur Palota (Mercury Palace) is located in the central VI. district of the Hungarian capital, within walking distance to the boulevard Andrassy út and the Opera.  With approx. 8,000 sqm of gross lettable space, the Mercury Palace has been completely refurbished in recent years and now houses, among other tenants, the European headquarters of, Hungary’s most successful Internet start-up. The ground floor is used by a restaurant. The two top floors have a total of eight luxury apartments, all with terraces and impressive views over the historic city.

The second acquisition for this mandate was Central Udvar, a 16,780 sqm mixed-use scheme in the heart of Budapest. Central Udvar is proud to have UNICEF as its largest occupier. In addition, the modern downtown business campus provides office areas for several international organizations and well-known agencies and technology companies. The office functions are seamlessly complemented by Maverick City Lodge, which combines modern design and historical style in the city centre.

The first acquisitions for this mandate in Poland followed soon: Mokotowska 33/35 and Wilcza 46, two historic boutique office buildings in Warsaw City Centre. They comprise ca. 7,500 sqm of office and retail GLA let to reputable tenants such as Museum of Polish History, Adam Mickewicz Institute, State Mining Authority, SMEs Advocate Office and others as well as renowned fashionable restaurants such as Bazar Kocha and Nolita – one of the most prestigious dining places in Warsaw. The limited supply of such properties in Warsaw as well as the growing demand from smaller tenants make it a resilient investment case.

Within a short time, the first investments in the scope of this mandate were successfully completed. Targeted measures in asset management are improving the return profile of the properties in the first year already. Thanks to our high market penetration, new investment properties are continually being evaluated and the further acquisitions are underway.