KKR buys majority stake in German residential asset manager Velero

KKR buys majority stake in German residential asset manager

Global investment firm KKR announced the acquisition of a majority stake in Velero Immobilien AG (Velero), an asset manager focused on the purchase and management of German residential real estate, from its founders who will remain co-investors.

Part of the transaction is the acquisition of a portfolio with around 7,500 residential units currently managed by Velero.

”Going forward, with the support of KKR, Velero will transform from a pure asset manager to an independent, fully integrated housing company by acquiring the residential portfolio the company currently manages for an institutional investor. Velero and KKR have signed binding agreements on portfolio acquisitions over a total of around 7,500 units,” said in the statement.

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“We are very excited to have KKR’s support as we enter into the next stage of our evolution. With our market experience and comprehensive knowledge of the portfolio to be acquired, we will deliver best-in-class service to our tenants. Furthermore, together with KKR, we will continue our growth trajectory,” said Sascha Giest and Thomas Lange, Co-Founders and Co-CEOs of Velero.

“We are delighted to set the foundation for the creation of a high-quality, diversified housing company that will benefit from the dynamics in the German real estate sector. We now look forward to expanding the platform together and further improving the quality of living for tenants and the environmental footprint of the portfolio,” said Jan Baumgart, Head of Real Estate Germany at KKR.

Velero was established in 2015 by Sascha Giest and Thomas Lange, as an asset manager for institutional investments in residential real estate. Since inception, the company has focused on assembling the portfolio, investments in existing properties and value enhancement through active asset management.

The properties of Velero are predominantly located in mid-sized cities in the Rhine-Ruhr area like Duisburg, Essen and Hagen with excellent access to the infrastructure network as well as in swarm cities Magdeburg, Dresden and Halle/Leipzig and their catchment areas.

These markets are expected to show solid growth in the future as they will benefit from sociological, political and economic factors, according to KKR.

KKR will support Velero in executing its strategy with know-how and financial support. ”In addition to growing the portfolio through further acquisitions, Velero and KKR plan to continue to invest in the asset quality, outside areas and playgrounds as well as into sustainable ecological improvements. The overall goal is to reduce vacancy, all while ensuring affordable rents.”

“The acquisition is yet another proof for the importance of Germany in KKR’s investment strategy. It also marks a significant step in further expanding our local presence. With Velero we create a dedicated platform for further investments in the German residential rental housing market,” said Christian Ollig, Partner and Head of KKR in Germany.

The transaction is expected to close by year-end 2020. KKR will make this investment from its Real Estate Partners Europe II fund. Financial details of the transaction were not disclosed.