Union secures seed portfolio for new fund targeting €1b

Union Investment said on Wednesday that it has agreed to acquire two hotel development projects in Kraków and Katowice as the seed portfolio for a new special fund, UII EuropeanM.

The midscale hotel properties, which will provide a total of 527 rooms and are leased under 25-year rental agreements, were acquired from developer, vendor and future operator UBM for a total of €86 mln.

The assets are scheduled for completion in autumn 2021.

Union's new fund invests predominantly in the four commercial use types of office, hotel, logistics and retail, focusing on midscale properties in Europes. Midscale properties are mainly characterised by prices in the double-digit million range, functional and timeless architecture, and moderate rent levels with sustainable cash flow. The fund follows a core and core plus strategy overall, which includes secondary locations, and has a target size of approximately €1 bn.

'UII EuropeanM is a logical strategic addition to our range of products for institutional customers. The risk-return profile of the fund is designed to make it possible to exploit investment opportunities in European real estate markets that are not covered by a traditional core profile,' said Wolfgang Kessler, a member of the management board of Union Investment Institutional Property.

For several years now, Union Investment’s UII GermanM special fund has provided investors with a similar vehicle, but focused on the German property market.

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