Sonar Real Estate GmbH (Sonar) succeeded in boosting the volume of its assets under management to EUR 3.3 bn in 2023, a 10% increase on the previous year. The firm also facilitated transactions with a total volume of EUR 370 million for its joint-venture partners and clients in 2023. These included around EUR 352 million of acquisitions and EUR 18 million of sales. The largest single transaction was advising an Anglo-Saxon client on the purchase of a logistics portfolio with properties in 18 German locations, including Frankfurt, München, Stuttgart, Köln, Duisburg, Dresden, and Troisdorf. Reflecting this positive trend, Sonar’s staff numbers across the company’s five offices grew from 44 to 51 in the same period.
The purchase of an existing office campus at Zielstattstrasse 42, 44 and 48 in Munich is an example of one major acquisition in 2023. The property consists of three buildings, constructed between 2001 and 2004, on a site of around 7,900 sq m. It provides a total lettable area of approximately 21,000 sq m. The anchor tenant is the Japanese pharmaceutical group Daiichi Sankyo. This was one of the year’s largest transactions in the Munich office investment market.
A mixed-use project in Stuttgart-Vaihingen, for the real estate special fund (SIS) of the Stuttgart Insurance Group, was completed by the vendor and freehold ownership was transferred. The property is fully let on a long-term lease and, with the acquisition of “the niu Kettle” hotel operated by NOVUM Hospitality, it represents the fund’s first investment in the hotel sector. Sonar Development also began construction of a hotel, to be operated under Deutsche Hospitality’s “Zleep” brand. The building was topped-out in November 2023, with completion slated for the end of 2024.
Sonar took over the asset management team and the client instructions of the Berlin-based CILIX Asset Management GmbH during last year. This also involved the integration of a property management unit. Since then, Sonar is able to offer commercial property management services for selected asset management instructions.
Sonar was instructed by a number of different investors to let five properties, with a total lettable area of around 115,000 square metres and including some 31,300 square metres of vacant space. The company also concluded or agreed extensions to leases on approximately 95,300 square metres of accommodation. The largest new letting was on 21,250 square metres in a logistics property in Fritzlar, Hesse, to a Volkswagen subsidiary. Sonar acted in its capacity as asset manager of the property, which belongs to the portfolio of a fund managed by Tristan Capital Partners (Tristan). During 2023, investments totalling EUR 55.5 million were made for a variety of works in the areas of revitalisation, tenant improvements and maintenance.
Sonar also acquired a stake in Substnz Real Estate Debt (Substnz), which has offices in Hamburg, Frankfurt and London. The company is actively supporting Substnz in sourcing and underwriting loan transactions. In the current phase, this service is primarily focused on Anglo-Saxon investors wanting to invest in the real estate debt segment in the German market and therefore requiring an experienced local partner.
Sonar, with partners, launched the RE.START initiative and is bundling its activities in the areas of non-performing loans and workout. In collaboration with companies in other disciplines, lenders are supported in the necessary restructuring of financing and assets/projects as well as in the identification of new investors.
Christoph Wittkop, Managing Partner and CEO of Sonar, comments: “Although 2023 was dogged by a high degree of uncertainty in pricing and a paucity of transactions, it nevertheless threw up some early opportunities, of which we cautiously took advantage. From an organisational perspective, for example, we have used the past few months to further progress the digitalisation of our workflows and our property-specific ESG strategies. We have also developed a robust sustainability strategy that will serve as a guide for future corporate decisions.
“Taken as a whole, we consider ourselves well positioned to identify and realise opportunities in the event of an expected market recovery or in ‘special situations’. This applies in particular to the value-add segment, in which there will be significant demand for our technical asset management and development skills. What’s more, we are convinced that German and international investors will switch their investment and asset managers, so we see further potential for ourselves here.”
