'Vaue-add out, core property in' - Corestate

European property investment manager Corestate Capital has reported rising investor demand for core and core+ properties across the board, at the increasing expense of value-add assets. 

Nils Hübener, chief investment officer of Corestate, said: 'Our clients keep telling us that they continue to have an increasing demand for exactly what we can offer them with our current pipeline of over €4 bn: profitable and sustainable real estate investments.

'However, the current focus is due to the crisis shifting from value-add properties to the core and core+ segments, which is what we are currently focusing on.'

Results down
The Luxembourg-headquartered firm unveiled muted Q1 results this week with aggregate revenues down to €51.7 mln from last year's €58.6 mln, and Ebitda of €20.9 mln, nearly half the previous year's €38.7 mln. Net income was also halved year-on-year from €26.3 mln to €14.3 mln.

According to the firm, the Covid-19 pandemic has been causing significant shifts in the transaction market with increasing momentum since the end of March, resulting in the temporary loss of revenues from warehousing, alignment capital and performance-based fees.

Assets under management in the real estate core business rose organically by around 2.2% to €24.8 bn in the first three months of the year; Corestate managed assets totalling €28 bn at the end of March 2020.

Lars Schnidrig, CEO of Corestate, said: 'After getting off to a promising start to the year, the crisis hit us - like many other companies - unexpectedly hard. In a very short time, we shifted from an active growth course to consistently limiting entrepreneurial risks.

'The effects on the transaction market are already reflected in our earnings strength in the first quarter. At the same time, we have launched a comprehensive package of measures in recent weeks aimed at securing our liquidity, cutting costs and reducing warehousing. This puts us on solid and future-proof footing.'

Significant volatilities
The firm reported 'significant volatilities' in the retail, hotel and micro-living segments but 'hardly any significant impacts to date' across its residential, logistics and office holdings.

'We expect the transaction and financing markets to return to normal in the fourth quarter,' Schnidrig affirmed. 'Even though we had to withdraw our financial outlook in view of the current high level of uncertainty, we will continue to be clearly profitable with our operating business this year.

'I am also very confident that catch-up effects from postponed transactions will have a clearly positive impact on our results after the crisis comes to an end,' Schnidrig concluded.

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