• 2020 Real Estate Investment Trends in Europe

    Thanks to low interest rates and bond yields in many European countries in the negative territory, real estate investments are expected to retain their appeal to investors if we compare them to other asset classes. Despite political tensions and economic growth stagnation, there are a few real estate investment trends for 2020 that will be appealing for investors.

    A new approach to property selection

    The competition among real estate investors is on the rise and with it, the need for a creative approach to property selection is one of the most important aspects to bear in mind. Scott McGillivray, David Werner, Ofir Eyal Bar, and other popular investors are thus forced to focus on niche-level opportunities. Markets like data centers, senior housing, cell towers, hotels, multifamily buildings and retail are just a few of the areas where 2020 could be a fruitful year.

    Live-work-play

    Most urban areas are popular for being live-work-play lifestyle heavens and residents tend to want easy access to housing, 24-hour amenities and walkable commutes. Due to the economic development in the suburbs, we now see that not just major city centers are providing this way of life. According to a PwC report, real estate investors should expect more communities to embrace the 24-hour lifestyle since the trend does not show any sign of slowing down.

    ESG issues on top of the list

    Environmental, social, and governance (ESG) issues are now more important thanks to more millennials investing in real estate. The latest numbers show that more than half of millennial real estate investors believe ESG policies are impacting their investment decisions, much more than just 11% of the boomers and 25% of Generation X.

    The investors surveyed noted business ethics as their main ESG concern, followed by corruption, health and safety, responsible supply chain practices, energy use, and waste management issues.

    Senior housing properties

    With the biggest share of old people out of all continents, Europe will have to face a serious issue during the next decade. By 2029, baby boomers aged 75 will reach their retirement and as a result, they will be in need of new housing options. Senior housing is currently one of the most viable investment prospects for 2020 in Europe. Handling the aging population will be one of the greatest European challenges and real estate investors are already putting their money at work in order to provide housing solutions for the elderly.

    Summary

    These are just four of many other trends that might prove to be effective in 2020. The move towards specialization, potential rent control laws, the focus on community, and ESG issues could influence heavily what types of real estate investments will turn out to provide the highest return. With so many uncertainties on the horizon, investors will need to prove flexibility in the face of unexpected events. So far, the water is calm, but a continuous surge in political uncertainty could evolve in poorer economic performance and the real estate market will be in an uncomfortable situation.

  • Aspen Group Secured Important Deals in The Netherlands and Germany

    Up until now, it seems like 2019 will be another fruitful year for Aspen Group, the publicly traded real estate company, which managed to secure two important deals in The Netherlands and Germany. Registered on the Israeli stock exchange and with over 30 years of experience in real estate, the company currently owns over 375,000 square meters of yielding properties, rented out to over 260 tenants, at approximately 95% occupancy rate.

    Aspen Group is currently valued at NIS 400 million and it’s engaged in the acquisition, initiation, rental, management, and improvement of rental properties that include offices, services, commerce, industrial, and logistics buildings located mainly in Germany, Israel, and The Netherlands.

    Logistic center sold for €50 million in The Netherlands

    In mid-May, the company announced that it managed to sell a logistics center in the city of Almelo for about €50.6 million, recording a pre-tax profit of €6.3 million, giving free pre-tax cash flow and related expenses of approximately €24.6 million. According to the information available on the Group’s website, Aspen acquired the property back in 2012 for €25 million and invested another €9.5 million for renovation and expansion of the lessee – Timberland – on an adjacent land division.

    With Tsofit Harel as CEO and Ofir Eyal Bar as one of the main partners, the company holds 14 rental properties in The Netherlands after the sale, all located mainly in the office area. Based on a note issued by the company, it continues to look after other opportunities in order to expand its property portfolio in the country.  The company’s CEO welcomed the deal, and praised the importance of the realization:

    “We also completed the sale of the logistics center leased to Timberland in the Netherlands – an important realization that left the company with significant capital and cash flow. We will continue to work to improve the company’s portfolio of assets and to identify business opportunities in Israel and abroad.”

    Office building sold in the Stuttgart area of Germany

    The record for profit was set a second major transaction, when Aspen Group managed to secure another important deal for the year, after signing an agreement to sell an office building located in the town of Fellback, Stuttgart, Germany. The transaction took place in exchange for €48 million, leaving the company with a record €8 million in profit, pre-tax and other related expenses, and €18 million in free cash flow.

    Purchased back in 2014, the sold property covers 19.9 square meters and involved a partnership with Shlomo Insurance Company. Leased to the State of Baden-Wurttemberg, the property had a book value on the eve of the sale at approximately €36.5 million.

    Given the existing partnership, Aspen Group holds 70% of the property company, while Shlomo Insurance Company has the remaining 30%. Tsofit Harel, the company’s CEO praised this second deal, as well:

    “We have identified the property as having significant potential, and alongside growth in the German office market we have achieved an attractive return on investment.”

    We can conclude that 2019 had been a fruitful one for Aspen Group, which managed to end the first quarter with a 12% increase in revenue to NIS 64 million, and also a 19% net profit growth as compared to the same quarter a year ago. Both Germany and The Netherlands are expected to be in the focus of the company, favored by better economic conditions. As Southern Europe seems to be exposed due to high levels of debt-to-GDP, these two countries should benefit from sustainable debt levels and thus the real estate market might continue to expand at a consistent pace.