"OCITY" new fund for real estate development in Luxembourg
In partnership with CREAHAUS and ESPACE INVEST, MIMCO Capital announces the launch of the new fund "OCITY". The Luxembourg real estate development SICAV targets large scale investment opportunities in Luxembourg, primarily in residential and office real estate.
Due to its strategic location in Europe, its outstanding political and economic stability (triple A), as well as its first-class infrastructure, Luxembourg benefits from a very dynamic real estate market with a population growth unique in Europe and a continuous rise in prices.
"The many advantages of Luxembourg are no longer to be demonstrated! According to the IMF, it is the 1st country with the highest GDP per capita in the world in 2019. According to the CSSF, it also holds the 2nd place worldwide in investment fund management with more than AUM 4.700 billion in 2019 or the 7th position of the most resilient economy in the world according to the FM Global Resilience Index.", underlines Christophe Nadal, co-founder and CEO of MIMCO Capital.
Furthermore, the Grand Duchy's attractive tax environment enables to attract new investors every year, particularly wealthy individuals, making it a first choice for real estate investments.
Christophe Nadal adds: "Despite the context linked to the current health epidemic, we can note that the market in general remains dynamic. The Luxembourg market benefits from a very strong demand and the offer is not in adequacy, which reinforces our conviction that the investment opportunities in the Grand Duchy will continue to be attractive for a few more years. It is therefore the right time for us to launch OCITY.".
A focus on the residential and office real estate market
With its local presence, OCITY considers a strategy of investing in real estate assets with the aim of becoming primarily residential and office development projects or properties offering restructuring opportunities.
Every year, around 12.000 new residents come to Luxembourg and since 2010, the population has grown by 20% (BCEE). Despite a construction sector that has seen a doubling of the number of people employed over the last 20 years, the construction of new housing is not keeping pace with the natural growth of the population, close to 2%/year. According to STATEC, approximately 3.000 housing units are delivered each year, while demand is more than double.
"The Luxembourg housing market continues to grow, however, and the purchase price of housing in Luxembourg continues to rise with a 14% increase in the first quarter of 2020 compared to the same quarter of the previous year. In Q1 2020 alone, an increase of 3.8% was observed. The Grand Duchy is thus at the forefront of the European Union countries with regard to the evolution of property prices. By way of comparison, Portugal records for the same period an evolution of 10.3% when the EU reports an average of 5.5%." (Eurostat), mentions Laurent Olmedo, administrator of CREAHAUS.
As far as office real estate in Luxembourg is concerned, both the occupancy rate and the marketing of office space for both private and institutional clients are significant and for the 6th consecutive year, the number of newly rented office spaces has exceeded 200.000 sqm in the Grand Duchy. As a logical consequence, the availability of office space has never been so low in ten years (Luxemburger Wort).
"However, we are observing an obsolescence of part of the office stock in Luxembourg, which should be renovated over the next 5 to 10 years in order to comply with the latest regulations. This represents a major opportunity for our activities in the Grand Duchy.", says Frédéric Reichling, administrator of ESPACE INVEST.
An investment strategy in the most attractive areas of Luxembourg
The fund invests directly in real estate transactions located at strategic crossroads and close to dynamic economic areas, ideally in Luxembourg City or its immediate surroundings. "With regard to our fundamental research criteria, we give priority to sectors with established density, potentially with a high occupancy rate and a high level of purchasing power.", explains Christophe Nadal.
Today, the founding partners are combining their strengths and experience to adapt to new challenges and ensure value creation in fast-growing, evolving markets. The positioning of MIMCO Capital and the strategic partnership with the CREAHAUS and ESPACE INVEST groups thus make it possible to develop rare, large-scale and high-quality real estate operations.
"With its in-depth knowledge and experience of the national real estate market, OCITY strives to anticipate needs and carefully selects development operations in order to meet demand requirements perfectly.", says Bernard Olmedo, also an administrator of CREAHAUS.
Investing in real estate development operations or buildings to be restructured with a strong potential for value creation
The main objective of the new OCITY fund is to achieve capital growth in the short to medium term by capitalizing on existing investment opportunities in the Luxembourg real estate sector.
In order to maximize value, the fund will offer investors exposure to diversified and quality real estate transactions covering in particular the Luxembourg market with so-called "Value Added" assets offering potential for value creation. "We only invest in real estate transactions or properties to be restructured that present a real potential for value creation. Thanks to our common reputation and our recognized skills in the real estate industry, we benefit from arbitrages made by international investment funds, banks or family offices, private owners, but also from opportunities through bank liquidations, auctions and estate sharing. This allows us to offer our investors a truly privileged, exclusive and quality sourcing.", says Bernd von Manteuffel, also co-founder and CEO of MIMCO Capital.
This strategy is in line with the one already implemented by MIMCO Capital with Mercureim and Everest One, two funds focused on revitalizing real estate in the German market, but also with the one of the BUILDIM fund, which is more focused on real estate development in Luxembourg.
Integrating socially responsible considerations into investment analysis
The evolution of the population's needs and expectations in terms of more environmentally friendly buildings is now driving demand and paving the way for the amplification of a currently insufficient real estate offer in Luxembourg, which is why OCITY takes a responsible approach to its investments.
"Our objective is to offer our investors access to the best possible investment opportunities. By responding to the challenges of the real estate sector in terms of responsible investment, we are ensuring that we add value to all our investments.", reports Michael Reichling, also an administrator of ESPACE INVEST.
A demanding acquisition policy
The OCITY fund is an investment vehicle in the form of a bond issue and depending on the strategy, the average holding period of the acquired transactions will be between 24 months and 48 months. The opening of subscriptions for this first fund compartment is scheduled until 31 December 2022 and the recommended investment period is 36 months.
"The target size of the fund is 300 Million euros for this first compartment. OCITY has brought together a round table of prestigious investors to give the fund an immediate acquisition capacity of more than 100 Million euros for the first year."
A first acquisition for a total amount of nearly 52 Million euros is being finalized on behalf of OCITY in the east of Luxembourg City between Kirchberg and the airport.
"We are taking the decision to control our annual acquisition rate with the strong desire to be more efficient and demanding in the selection of investments.", explains Christophe Nadal.
For professional investors in Europe
OCITY is a Reserved Alternative Investment Fund (RAIF) and is exclusively aimed at professional investors within the meaning of Directive 2014/65/EU - MiFID II and well-informed investors within the meaning of Luxembourg regulations. Subject to the European Directive on Alternative Investment Fund Managers (AIFM), it will be offered to professional investors in France, Luxembourg, Belgium and to Luxembourg well-informed investors.
This typology of funds is suitable for investors seeking performance and value redistribution of closed funds as well as a return on very high value-added operations.
The OCITY SICAV can be housed within Luxembourg life insurance contracts in the form of FID or FAS.
This fund is aimed at a clientele of family offices, asset managers, IFAs and private banks. Investors should be aware of the risks of capital loss and seek advice from approved professionals.
The launch of this new fund is at the heart of the strategy of MIMCO Capital, CREAHAUS and ESPACE INVEST to extend their positioning on investments in Luxembourg. We are at your disposal for any further information you may require.