Commodus

“We are focusing in on cities rather than national markets,” explains Dr Matthias Mittermeier, founder and Managing Director of Commodus. “That makes our most recent investment in Paris a logical step. Commodus’ decision to invest in Paris was motivated by the sheer amount of potential on the Parisian market when it comes to economic growth, population and culture as well as the general aesthetic of the city. There are good reasons why Paris is considered one of the hottest real estate markets in Europe at the moment. The coronavirus pandemic will do nothing to change the French capital’s appeal either.”

In view of the planned construction work to expand the building, Commodus has concluded a sale-and-lease-back agreement enabling the seller to remain in the building as a tenant for a further twelve months. Once they move out, the property is set to be turned into a modern office building with a sustainability certification. The project involves adding space to the existing  building, which currently comprises a ground floor and two upper storeys. The aim of the project is to find high-quality long-term tenants from the IT or media industries.

The purchase in the French capital is in line with Commodus’ new corporate strategy focusing on Germany’s top seven cities as well as high-growth locations elsewhere in the European Union. “We want to leverage opportunities for value-adding office investments outside of Germany, too,” says Paul Sattlegger, Managing Director of Commodus International Advisory GmbH. “Our international strategy includes comprehensive analysis of key European markets to filter out the most attractive real estate locations with strong value potential. Paris is near the top of this list.” Commodus acquired its first property outside of Germany, a 4,000-square-metre office building in the trendy Atocha district of Madrid, in February.

According to a study compiled by analysts in November 2019, CBRE considers Paris to be the most attractive real estate market in the world, ahead of London, New York, Shanghai and Singapore. The French capital offers over 54 million square metres of office area, more than Tokyo or New York. The Grand Paris project in the run-up to the 2024 Olympic Games is proving particularly popular among international investors. As part of the project, 200 kilometres of new lines are being added to the Paris Métro rapid transit system – more than doubling the current network. A total of 68 new stations are under construction, and dozens of new neighbourhoods are also being planned with a minimum of 600,000 square metres of residential and office space.

Abstract:

• Gross lettable area of approximately 700 square metres in the heart of the French capital
• Work planned to increase area to approximately 970 square metres
• Second transaction outside of Germany following Madrid purchase in December 2019
• Commodus expands growth strategy to European cities

“We see tremendous potential for value growth in the property, which is already benefiting today from a diverse mix of tenants and an ideal connection to Berlin’s public transport system,” says Leonhard Sachsenhauser, Managing Director of Commodus. “The planned optimisation and modernisation of the existing office space and the revitalisation of the retail space open the door to attractive growth prospects for us.”

The existing, flexible rental spaces enable a wide range of office concepts, from modern open-plan offices to traditional single-person offices, making them appealing for a variety of different user groups. In addition to remodelling and modernising the property’s exterior spaces and common areas, Commodus plans to invest in structural improvements.

Built in 1997, the property is located on the corner of Weißenseer Weg (35, 36, 37) and Konrad-Wolf-Straße (60, 61) in Berlin’s Alt-Hohenschönhausen district. The Weißenseer Weg tram stop, located directly in front of the building, ensures an excellent connection to Berlin’s public transport network. Current tenants include retailers, offices, doctors’ surgeries and a fitness centre, with a small portion of the space occupied by an assisted living facility. The main retail tenants are Spielemax, Netto and TEDi. Other tenants include Andres Industries, McFit, Johannisches Sozialwerk e. V. and Stephanus-Stiftung.

Abstract:

• Property located in up-and-coming borough of Lichtenberg
• Home to a wide range of office and retail tenants
• Tremendous potential for value growth through optimisation and modernisation of existing space

In Alexander Weißflog and Lutz Keßels, we have two experienced and accomplished experts in the real estate industry. In addition to making further acquisitions, our aim is to leverage more value-added potential in our existing portfolio and thereby achieve further growth,” says Dr Matthias Mittermeier, Founder of Commodus.

Alexander Weißflog has more than 20 years of experience in the real estate industry, having spent half of those years in management positions. He has extensive knowledge of asset and portfolio management and has worked on both the corporate and investor side for companies such as JLL, Archon Group, Siemens Real Estate and TLG Immobilien. The graduate civil engineer also brings the necessary know-how for the technical challenges in the field of value-added portfolios.

Lutz Keßels has more than 25 years of experience in the planning, development and implementation of construction projects, having most recently gained further expertise in the Am Tacheles project in Berlin with pwr development. His professional roles have included head of neighbourhood development at WBM Wohnungsbaugesellschaft Berlin-Mitte mbH and managing director at Pandion AG. In these roles, the graduated architect was responsible for the development of urban planning concepts and for the implementation of major projects and neighbourhood developments.
The real estate portfolio currently managed by Commodus amounts to more than EUR 1 billion in assets under management (AuM) throughout Germany and is mainly invested in closed special funds. Since 2019, the portfolio has also been invested in an RAIF.

Abstract:

• Alexander Weißflog is the new Head of Asset and Portfolio Management
• Lutz Keßels is the new Head of Project Development
• Planned acquisition volume of approximately EUR 300 million in 2020
• Portfolio totals more than EUR 1 billion (AuM)

“The office property that we have acquired is situated in an up-and-coming micro location close to innovative tech companies and major corporations, as well as a shopping centre,” says Dr Matthias Mittermeier, Founder and Managing Director of Commodus. “What’s more, Tegel Airport – which is slated to undergo redevelopment into a science park for urban technologies and an innovative city neighbourhood in the years ahead – is located just 2 kilometres away.”

The structural and architectural flexibility of the property makes it possible to accommodate a variety of innovative office concepts. Commodus plans to begin modernising and reletting larger units in late 2021. The space on offer is expected to range from open lofts to traditional, subdivided office units. Commodus intends to remodel the interior of the property while also improving the appearance of the exterior spaces and creating attractive common areas.

Built in 1997, the location of the property in Berlin’s Tegel district offers an attractive alternative to more central office locations in the city thanks to its good connections to public transport (Borsigwerke U-Bahn and Tegel S-Bahn rapid transit stations) and major roads (A111 motorway). With the Berlin TXL project already in the works at the current site of Tegel Airport, a new city neighbourhood, a science park for urban technologies and a landscape garden is planned just 2 kilometres away.

Abstract:

• Approximately 7,000 square metres of lettable office space
• Close to tech companies, shopping centre and Berlin TXL project
• Former start-up centre with small-scale tenant structure
• Development prospects through modernisation and reletting

Dr Matthias Mittermeier, founder and managing director of Commodus Real Estate Capital GmbH, says: “We plan to continue to grow and tap into opportunities for value-added office investments within Germany and beyond. Our international strategy involves thorough analysis of key European markets to pinpoint the most attractive real estate locations that have strong potential for value creation.” The newly founded Commodus International Advisory GmbH supports the international growth strategy with corresponding expertise and a strong team. Paul Sattlegger, Managing Director of Commodus International Advisory GmbH, says: “One of the findings of this study drew our attention to Spain. The far above-average and lasting GDP growth, a marked decline in unemployment rates, growing demand for workers and a healthy business climate speak for this booming market. What is more, the quality of life, which is unique in Europe, attracts a strong pool of talent from all over the world.”

In Germany, Commodus has focused so far on office properties in the top seven cities, with increasing attention being paid in recent years to smaller, fast-growing cities as well, alongside mixed-use concepts that combine office, retail and residential space. Commodus currently has about 1.5 billion in assets under management (AUM), primarily in closed-end special funds and, since 2019, one RAIF. The current portfolio encompasses properties in Berlin, Düsseldorf and Hamburg, among other places.

The company’s plans for Madrid involve a contemporary renovation of the building, which dates to 1960. High-end exterior design and a refurbished entrance area are planned to give the property a new look. The lifts and ceilings are also set to receive a facelift as part of the interior modernisation efforts. The goal is to achieve LEED GOLD certification, which applies to highly sustainable buildings.

The property is centrally located in the bustling cultural hub of Atocha, within walking distance from Madrid’s best-known plazas and the botanical garden. There are two metro lines right nearby, and the Madrid-Atocha long-distance train station is only about 500 metres away, served by long-distance and regional trains, all commuter rail lines and metro line 1. This makes Atocha an important transportation hub within the city.

The Spanish economy is developing positively. Figures published by the International Monetary Fund put gross domestic product up by 2.2% in 2019, outperforming the EU average. Spain has also seen ongoing strong demand for office space. According to information from Cushman & Wakefield, uptake of space in Madrid, Europe’s third-largest city, stood at more than 600,000 square metres in 2019. Only about 1.9% of all office space in the heart of Madrid was available, a further decline year over year. The thriving local start-up scene is also expected to further boost demand for flexible and modern office space in the country’s most important office markets, Madrid and Barcelona, in particular.

Abstract:

• First purchase outside Germany is part of an international strategy
• About 4,000 square metres of lettable office space in Madrid’s bustling Atocha neighbourhood
• Extensive renovations to result in a sustainable building with LEED Gold certification

Dr Matthias Mittermeier, founder and managing director of Commodus Real Estate Capital GmbH, comments: “Crucial to the successful exit was our active and comprehensive management of the property. Over the previous years, we have invested in the building stock, were able to reduce vacancies and increase rental income by more than 20 per cent. The current tenant structure with medium- and long-term tenancies facilitates sustainably stable rental incomes.”

Over the past few years, the surrounding district has benefited in particular from the development of the Kö-Bogen shopping centre and subterranean Wehrhahn-Linie tram line. With the construction of Kö-Bogen II and the extension of the pedestrian area on Schadowstrasse, this microlocation will continue to gain over the coming years.

“We would like to retain our two additional properties in Düsseldorf over the medium to long term and develop them further. In addition, we are planning new acquisitions for our RAIF fund ‘Commodus Deutschland Fund II’ in 2020. In the process, the focus is on value-add office properties in the top-seven cities and thus also in the Rhine cities of Düsseldorf and Cologne,” says Leonhard Sachsenhauser, managing director at Commodus.

Abstract:

• Multi-tenant property with a total rental space of 14,200 sq. m
• Rental incomes have been increased by more than 20 per cent
• New acquisitions in Düsseldorf and Cologne planned for 2020

Dr Matthias Mittermeier, founder and managing director of Commodus Real Estate Capital GmbH, comments: “The former AEG site offers us outstanding development potential on a scale that has proven to be unique in the centre of Berlin. Alongside medium-term options such as a contract extension with existing tenants or new tenancies, the 65,000 sq. m plot also offers potential for complete rejuvenation over the long term.”

The office property on Gustav-Meyer-Allee was completed at the end of the 1980s. Over the past few years, institutes of the Technische Universität Berlin, the Fraunhofer Institute, Deutsche Welle, and numerous media and IT companies have established themselves in the neighbourhood. Both building sections on Gustav-Meyer-Allee are fully let and are currently used by the same tenant. The purchase is an add-on acquisition for the 2018 purchase of the first building section.

Philipp Horsthemke, managing director at Commodus, adds: “The ownership structures and the mutual technical/legal dependence of both building sections presented particular challenges for Commodus during the acquisitions. Over the past two years, we have however succeeded in completely overcoming the complexity of the project and thus bringing together both properties under one umbrella in order to increase the respective value of the individual properties for our investors.”

For the most recent transaction, Greenberg Traurig, Wegnerpartner, KPMG, PKF and Drees & Sommer provided advisory support for Commodus.

Abstract:

• Acquisition of the second building section on a former AEG site as an add-on acquisition for a 2018 deal
• Development prospects for new tenancies, rejuvenation and comprehensive modernisation
• Joint venture with institutional capital partners

Our assets’ architectural characters were reduced to the essentials in exemplary style and thus convey their plasticity and potential. A red thematic thread literally runs through the entire design, as well as through the Commodus corporate strategy.

The reduced red sketches, which seem to draw themselves across the building presentations, symbolise the processes we as a specialist for value-add investments use to find properties with high potential and to monitor and develop the entire value chain in a holistic and structured way.

Dr Matthias Mittermeier, managing partner at Commodus, comments: “We have taken over a regionally established company with a long track record and an outstanding team of experts. Together, we want to develop BAYIKO into an independent platform for property buyers focusing on capital investment. Target customers are primarily private investors. BAYIKO should make it possible for these investors to invest in property in a simple and transparent way. We are reducing the hurdles and offering private investors improved access to the property investment market. In times of zero or negative interest, this appears to us to be a promising growth segment.”

The residential construction projects in the current BAYIKO portfolio within the Nuremberg metropolitan region are distributed across the cities of Nuremberg, Fürth, Herzogenaurach and Zirndorf, as well as the city of Schweinfurt. Three projects are already under construction. A further seven projects have received a construction permit or a building application has already been submitted. Over the course of the company’s development, the acquisition of further plots is planned. One of the projects currently under construction is Askren Manor in Schweinfurt. In the former US Army housing complex, a total of 144 homes are being developed with floor additions and a comprehensive refurbishment. The first construction phase has already begun.

Philipp Horsthemke, managing director at Commodus, adds: “BAYIKO covers the project development’s entire value chain from planning and development through to sale. The BAYIKO platform has the potential of becoming the first port of call for private property investors looking for stable investments. We are looking to develop the BAYIKO project portfolio nationally with further property purchases and support this process as a capital partner.”

Abstract:

• Purchase of P&P Wohnbau GmbH as a joint venture with businessman Daniel Günthert
• Establish new company BAYIKO as independent platform for capital investors
• Development portfolio focuses on the Nuremberg area

“We see a lot of appreciation potential in the Nahmitzer Damm property,” explains Dr Matthias Mittermeier, managing partner at Commodus. “The current starting point with well-known former single tenant IBM on board and the new potential for space opens up attractive prospects for us at this location. In a very well-developed Berlin location, we now have one of the few remaining properties in Berlin that facilitate the immediate letting of more than 5,000 sq. m of high-quality office space. At the same time, Commodus is planning to redesign the building into a multi-tenant property to expand the usage potential and increase the building’s flexibility. This new acquisition fits perfectly into the successful Commodus strategy,” says Mittermeier.

The high-quality technical set-up and building quality of the 1986 property offer excellent conditions for further exploitation. Commodus not only plans to transform the interior; it also intends to make the exterior more attractive and create high-quality communal areas. It should be possible for the flexible office space to range from open lofts to classic, separated office units. New terrace areas are just as much a part of the plans as the opening of an access path, thus shortening the route to public transport, as well as a new concept for car and bicycle parking. The park surrounding the building should be made more usable for employees in the future.

The location in Marienfelde (Tempelhof-Schöneberg district) offers an attractive alternative to office locations in central Berlin thanks to its good connections for both private transport (via the B101 and B96 highways) and to the public transport network (S2 station Buckower Chaussee and various bus lines). It takes around 35 minutes to travel to Berlin Hauptbahnhof from Nahmitzer Damm on public transport.

Abstract:

• Around 11,000 sq. m of usable office space, currently around 63 per cent vacancy rate
• High appreciation potential thanks to planned redesign into multi-tenant property and extension of building usage potential
• Vendor is asset manager Amundi RE Italia SGR for its Amundi RE Europa fund

The focus lies on flexible usage concepts that adapt to the quickly changing requirements of innovative companies. Commodus is also examining the possibilities for an annexe or extension to the 1990s property. Alongside the existing attractiveness of the location in an established Regensburg office setting with good public transport connections, Commodus sees a further enhancement to the microlocation with the neighbouring “Königstor” project development.

Regensburg took a leading position during an internal analysis by Commodus to identify the most promising new investment locations. Alongside the top-seven cities that will continue to play a central role in the Commodus strategy, the owner-run investment company has defined two target clusters with high-growth cities as part of a comprehensive internal research project. In the “Rhine–Main cluster”, these are the cities of Koblenz, Mainz, Heidelberg, Darmstadt, Mannheim and Karlsruhe. High demand for office space due to strong economic development, future competitiveness thanks to top-rate research and digital infrastructure, and appeal and retention of talent through high quality of life were considerable factors in the Commodus “Future Growth Cities” analysis. In the “south-east cluster”, into which the current Commodus investment falls, the defined target cities alongside Regensburg are Nuremberg, Ingolstadt, Augsburg and Ulm. Smaller cities are also analysed on an ongoing basis by Commodus and can move into the company’s investment focus should good opportunities arise.

In 2019, Commodus plans acquisitions to the value of 200 to 300 m euros.

Abstract:

• First acquisition within the context of the Commodus “Future Growth Cities” strategy
• Currently fully leased property with more than 4,000 sq. m of usable space in an established Regensburg office setting
• High appreciation potential due to new usage concept for office spaces that become available

Dr Matthias Mittermeier, managing partner at Commodus: “In 2019, we want to inject a further 200 to 300 m euros into the top-seven cities and further high-growth cities in Germany taking into account our Core+/value-add strategy. Thanks to our active asset management, we are able to boost value creation potential and thereby reduce the dependence of our rates of return on general market trends.”

Commodus looks back on a successful economic year. In 2018, Commodus acquired properties to the value of around 200 m euros. Nationwide, the company currently holds and operates properties with an overall value of more than 500 m euros. The company is unlocking sources of capital for new investments via closed-end funds: the closed-end special AIF “Commodus Deutschland Fund II” launched in October 2018 could be closed by year end. Since then, it has been operating under the name “Commodus Deutschland Fund I Annex”. In the first three months following the launch, Commodus has invested in office properties with value creation potential to the value of more than 200 m euros.

Finally, in January 2019, Commodus launched the first fund in line with Luxembourg law with the “Commodus Deutschland Fund II SCSp, RAIF”. This concerns a so-called reserved alternative investment fund (RAIF). “With the Luxembourg structure, we are focusing on an international standard that will make our investment portfolio more attractive for German institutional and international investors. RAIFs are also characterised by a higher degree of flexibility in the arrangement of the fund structure. We as an investment company and our investors benefit from this in equal measure,” explains Mittermeier regarding the motivation behind the choice of the Luxembourg vehicle.

The target investment volume for the new Commodus RAIF for Core+/value-add commercial properties amounts to 400 m euros, with target equity of around 150 m euros. At the start of February, the first closing took place. Mittermeier comments: “We start the new year with a tailwind and were able to collect more than 40 per cent of the announced equity for our new Luxembourg fund in just a few weeks. We would like to thank our investors, including long-term partners and institutional investors, for your trust.”

Abstract:

• Acquisition profile: large German cities with more than 100,000 inhabitants and investment volumes of up to 100 m euros per transaction
• In 2018, new office properties acquired with a value of around 200 m euros
• Commodus launches the first property fund in line with Luxembourg law in the form of a reserved AIF