SUCCESS STORIES
Case Studies: Real Project. Real Impact.
Epicore IM focusses on combining highly localized expertise, deep-rooted connections to key stakeholders and local decision makers, with an extensive track-record of asset management and complex development management mandates, as well as restructurings & turn-arounds, to provide a holistic service offering.
Office-to-Residential Conversion
Epicore IM is committed to help shape a sustainable urban landscape and actively supports local councils with their development plans. Düsseldorf Seestern is a prime example of a tertiary office location which is struggling due to macro trends. Surrounded by residential areas, Seestern is deemed as the largest urban residential opportunity in Düsseldorf.
This office-to-residential re-development is a prime example of the vast depth of resources and expertise that Epicore IM offers:
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Restructuring of the capital stack including refinancing of the outstanding depth, sourcing of development financing which support planning-, zoning- and development-risks
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Evoking a change of planning & zoning to allow residential-use
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Execution of building works, lead by our dedicated in-house team
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Conversion of a High-Rise
Deal Type
Acquisition of an equity stake in an office high-rise, > 25.000 m², 15 stories
Location
Düsseldorf, Seestern
Business Plan
Change of planning & zoning to residential use, capital stack restructuring, conversion to > 250 build-to-rent units
Transaction:
Risk:
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Non-performing & under-managed asset, held in a GCC Fund
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Acquisition of an equity stake, asset valuation c. €30m
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Vacancy c. 50%
Risk:
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Planning & Zoning – Slight change / exemption from local zoning plan required, as well as building permit for full residential use
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Financing – No further equity available for funding of the workstreams necessary to evoke a building permit (change of planning & zoning), hence refinancing required that (i) covers full outstanding senior and (ii) funds 100% of the costs to gain the building permit
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Costs & Budget – Conversion costs of c. € 3,330/m² are budgeted including contingency
Execution and Returns:
01
High-rise specific regulatory building requirements such as fire-safety, sound proofing due to location, etc. have been fulfilled, allowing for exemption from local zoning and fast-tracked building permit.
02
Financing was secured through a consortium of local savings banks that are prepared to refinance the outstanding senior loan, as well as finance 100% of the funds required to gain building permit, on the condition that Epicore IM remains as local partner throughout the project.
03
Quotes from contractors are currently being reviewed and are c. 7% under budget, further costs savings expected by maintaining the parking garage structure.
Energy-Efficient
Refurbishments
Guided by our internal values that underpin every decision, Epicore IM places energy-efficient refurbishment of residential and commercial housing stock at the heart of the asset and development management practices.
With sustainability now being a prerequisite for product liquidity and a driver for rents, Epicore IM’s business plans ensure value-maximization for all portfolio assets & development projects.
Rhein-Ruhr Portfolio
Deal Type
Acquisition of a granular portfolio of 136 residential units, > 10.400 m², across 14 assets
Location
Düsseldorf, Krefeld, Mönchengladbach and Duisburg
Business Plan
Energy-efficient refurbishment, from ø E to B, rent increase, individual unit exit
Transaction:
Risk:
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Portfolio of c. 140 units spread across 8 assets in good micro-locations
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Acquired for c. 7% GIY
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Initial vacancy rate ≈18 % (risk of further increase without intervention)
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Significant under-rent, rent increase possible according to §558 BGB
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Buildings dated 1960–1980 with energy ratings E–F and deferred maintenance
Risk:
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Planning & Zoning: Complex approval and permitting situation across multiple municipalities & varying requirements that were not fulfilled at acquisition (e.g. missing planning approvals)
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Building Quality: High ancillary costs due to inefficient management & maintenance backlog
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Costs & Budget: Budget of c. €320 /m² was derived from TDD for ESG related modernization costs
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Letting & Exit: Market heterogeneity across locations required tailored leasing and pricing strategies
Execution and Returns:
01
Detailed asset-by-asset strategies and bundling to form market-aligned blocks of ≥25 units each.
02
Substantial refurbishments including heating systems and insulation.
03
All-in costs in-line with budget, contingency not required
04
Rent increases through §558 BGB, including allocation of modernization cost levy and lease-up allowed for >60% rent growth.
05
Operating costs lowered by c. 20 % through improved facility & property management and service-charge reconciliation.
06
Disposals executed via partial block sales and individual-unit privatizations, generating opportunistic returns across of c. 30% IRR across a 3-year business.
Office Repositioning Value-Add
At the heart of the Epicore IM’s identity remains the revitalization of residential & commercial assets, with particular expertise in refurbishments & complex conversions.
Redevelopments of existing stock - particularly of high-rise buildings - present a distinct set of challenges. With dedicated in-house teams and extensive experience, Epicore IM is well-equipped to conduct thorough risk assessments prior to acquisition and to ensure precise, efficient execution of all construction works.
Redevelopment of a High-Rise
Deal Type
Acquisition of a dilapidated office high-rise, > 11.000 m², 14-stories
Location
Düsseldorf, Tertiary Office Location
Business Plan
Complete redevelopment, lease-up and exit at stabilization
Transaction:
Risk:
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Significantly dilapidated property comprising of a 14-storey high rise and two 8-storey podium buildings
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At acquisition: Vacancy c. 50% (imminent risk of full vacancy) & short WALT
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Severe technical deficiencies: major HVAC system failure, structural damage to the underground parking garage, general neglect across the entire asset
Risk:
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Building defects – Whereas significant deficiencies were known, risk of further damages and increased costs through the building age and high-rise structure
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Exhaustive technical due diligence in collaboration with Drees & Sommer and DEKRA allowed for comprehensive overview of defects and associated costs
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Budget of c. €5m was derived from TDD with conservative contingency added
Execution and Returns:
01
Effective re-leasing strategy allowed for lease-up in line with market conditions.
02
All-in costs in-line with budget, contingency not required.
03
Opportunistic returns were achieved over a business plan period of c. 2 years.
04
Targeted repair and upgrade of complex individual issues within the heating, ventilation, and air conditioning systems.
05
Structural refurbishment of underground garage, optimization of the floor plates & modernization of all units across the complex.
06
Smooth disposal process including vendor DD & successful disposal to Kristensen Real Estate.