Thursday, April 14, 2022

IC and HPM growing together

IC Immobilien is taking its time with the complete take-over of HIH Property Management. Among other things this is intended to make the change easier for the employees. In other respects the managing directors Markus Reinert and André Vollbach also set store by slow growth.

By Florian Hartmüller
Immobilien Zeitung 15/2022 from 14.4.2022

"Two partners have finally been able to link up after a long period of waiting," explains Markus Reinert. He has been the CEO of IC Immobilien Holding since 2015, and for a few months now he has also been a managing director of HIH Property Management alongside André Vollbach. Last year IC had acquired 51% of the shares in HPM from HIH Real Estate. The remaining 49% are set to follow in 2023. Until then HPM is operating as a joint venture.

"We were often competitors, the strategic orientation was identical in recent years," explains Reinert. By bundling resources and financial wherewithal, among other things it is now easier to shoulder investment requirements. The merger is "not just a good step for us, but also for the market". Together IC and HPM have about 500 employees who look after assets under management of between 23 and 24 billion euros. These are accounted for by more than 800 properties with a total of some 9 million square metres of leasable space, with each company contributing about half. The joint venture thus ranks among the three largest property management providers in Germany according to Reinert. Quality not size is of "the highest priority", however. "We are very down-to-earth, and our objective is to grow continuously and in the long term, with the gradual acquisition of new customers."

The largest customer of HPM, with about 60% of the mandates, is HIH Real Estate, as Vollbach explains. Following the complete take-over by IC the corresponding mandates are to be retained. The remaining 40% are accounted for by Generali and Real I.S., among others.

IC regards itself as a "full service provider" with property management as its core business according to Reinert. In this line of business the company had exclusively been active as a third-party manager, working in equal parts for German and for international customers. Among the clients are Amundi Asset Management, for whom IC manages 20 properties in Germany, as well as Meag and Wealthcap. The complete range of services on the part of IC, which also includes asset management, leasing management and project management for example, is also to be offered to the clients of HPM in the future.

Reinert says both companies intend to utilise 2022 to jointly deal with all the topics associated with the take-over. Each company is contributing "in more or less equal parts" about 250 staff to the total number of employees, although only about 130 staff at IC are employed in the field of property management in the narrower sense. Some structures will be maintained in parallel for a number of months, however.

"We want to maintain the levels of motivation on the part of the teams and not create any unease in the companies," explains Reinert. The first months have shown "that we have very definitely made the right decision". Thus, for instance, there has hardly been any fluctuation in this time. And in view of the current lack of specialist staff nobody is to be released. "It is not our intention to lose one single employee." On the contrary, in the first quarter of 2022 IC has recruited ten employees, and HPM as many as 15, as Vollbach adds. Additional employees are being sought.

The joint venture has eight offices in major German cities and in Chemnitz. In what was formerly Karl-Marx-Stadt only IC Immobilien was represented prior to the merger, and it was from here that the company looked after the lion's share of the market in eastern Germany with a team of 25 employees. HPM also contributed a branch office in Cologne. In 2023 it is intended to amalgamate the offices which are still duplicated at all the other locations. Until then an analysis is to be conducted as to how everything can be best reorganised. One important area in which Reinert is hoping for further progress thanks to the take-over is the field of ESG. "A pilot project is currently being conducted in about 50 properties of HIH Real Estate," explains Vollbach. Here smart meter-capable gas and electricity meters are being installed; these not only record consumption but also transfer the data digitally. In the long term the corresponding technology is to be deployed in other properties managed by the joint venture.

In addition to the take-over there have been other innovations at IC in recent months. Thus, for instance, since March 2021 there has been a strategic cooperation with Cushman & Wakefield (C&W). In this manner Reinert wishes to address the "high demand" for property and asset management on the part of international investors. These often wish to have one provider for a portfolio which encompasses properties in several countries.

The idea behind the partnership is that Cushman & Wakefield is addressed in the framework of a bidding process and IC then assumes the management of the German properties. "We have passed the acid test," says Reinert. Thus there are already two mandates from "renowned international companies". One of these involves 50 properties belonging to an insurance company. Of these 40 are located in Spain and the Netherlands, and ten in Germany. In this respect Cushman & Wakefield is taking care of the properties abroad, IC those in Germany. With the second mandate there are two properties in Germany.

To date IC has exclusively managed properties in Germany, but Reinert is considering "risking the cross-border move". If this comes about it will involve properties in the DACH region and probably mandates in Switzerland rather than in Austria. The CEO expects that the assumption of the corresponding mandates by IC will take place in 2023 at the earliest. With regard to another topic Reinert has also looked abroad. He expects a downturn in business when it comes to new leases as a consequence of the war in Ukraine. "We will have to prepare ourselves for somewhat difficult years." In crises the demands made by investors on property and asset management tend to be greater, however, he says. "Then it is a question of intervening to a greater extent and trying to retain value or even increasing this where possible." In this area Reinert expects a "more positive effect", however.

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