The development company Von der Heyden Group (Valletta, Malta) is entering the Ukrainian market and plans to invest $50-100 million in projects for the construction of hotels and offices in Kyiv and Lviv in the next three years…Continue reading
Von der Heyden Group, an international investment firm on the European Real Estate market with a value of over half a billion euro in aggregated invested assets, has opened new offices in Kyiv in Q4 2019 to establish multi-million euro investments in Ukraine. The Group is renowned for being a first mover in emerging markets, creating landmark Class A office buildings, running award winning hotels and delivering superior returns from real estate investment.
The Group, founded in Germany in 1989, will invest around €50 million in commercial and residential properties in Kyiv and Lviv during its preliminary phase, aiming to increase this to up to fourfold in its mid-term portfolio expansion in a favourable market.
“Ukraine’s market is rapidly maturing, as the country continues to strengthen its institutional framework and align its economy with that of the European Union. For these and other positive reasons it tops the Von der Heyden list in offering the right investment opportunities. As we have done in Poland, our Group intends to make a lasting mark in Ukraine by being one of the first international real estate investors.”– Robert Rottinghuis; Chief Executive Officer, Von der Heyden Group
The new offices in Ukraine marks the Group’s further expansion as an international private investment and real estate firm with representative offices in eight countries.
The Von der Heyden Group has appointed a local expert team, formed to expand the Group’s real estate portfolio led by Mr. Dmitry Havrylenko who assumes the role of Chief Executive Officer in Ukraine. Mr. Havrylenko until recently held the postion of National Director and head of the Ukrainian office of global investment management firm, Jones Lang LaSalle (JLL) and has been a valued counsellor to a number of leading professional services and investment firms. Having attracted more than USD 1 bln for Ukrainian companies, the Group’s Ukraine office CEO comes with over 15 years of experience in investment banking, private equity and real estate investments.
Tatyana Yarmolitskaya, a real estate professional with over 15 years of experience in real estate finance, investments and asset management joins the Von der Heyden Group as Investment Director. Until recently Ms. Yarmolitskaya held the role of Head of Capital Markets at the Kyiv office of Jones Lang LaSalle (JLL).
Daniel Parsai, a lawyer by background with specialization in local and international taxation also joins the team as Legal & Tax Director, having worked on a variety of M&A and real estate transactions for multinationals and international institutional clients. Until recently Mr. Parsai held the role of Associate with the tax practice of leading Ukrainian law firm, Arzinger.
TIMAN Investments Holdings Limited (The Company/Group), the Von der Heyden Group Finance Plc’s guarantor, presented consolidated and audited annual accounts for the financial year ended 31st December 2019, reaching a record turnover of EUR 25,883,596, registering an 8.5% increase from 2018. The Company holds for capital growth and income generation, investments in 35 subsidiaries and associated companies around Europe, realising growth in revenues in all its four operating markets at the end of 2019.
The Group reported a net shareholders equity of EUR 44,260,068 (2018: EUR 44,908,977). During the year under review, the Group’s gross profit was of EUR 21,490,877 (2018: EUR 19,194,575), with an operating loss of EUR 2,629,288 (2018: EUR 1,514,709). Such loss reflects the recurring overhead costs of the Group’s structure, which historically is substantially exceeded by dividend income from subsidiaries and capital gains made with its investments.
During the year under review, EBITDA (calculated excluding share of profit from associate) amounted to EUR 3,387,218 (2018: a negative value of EUR 2,222,057), with the reclassification change of IFRS 16 the EBITDA measurement becomes more meaningful in measuring the Group’s performance. After accounting for investment income and finance costs, the Group registered a pre-tax loss of EUR 1,949,469 (2018: EUR 12,994,300 profit).
TIMAN Investments Holdings Ltd. recorded a strong free cash flow position of EUR 6,318,201 as at 31st December 2019, an increase of 66.15% from 2018 which stood at EUR 3,802,604. The Group’s financial performance has, for the second year been positively impacted by its associate Bogenhausener Tor Immobilien Sarl (BTI) having sold its second and last asset, the Blue Tower forming part of the Bavaria Towers office and hotel development in the city of Munich, Germany. The asset was sold in December 2019 to the leading asset manager on the German market Real IS consortium with the main shareholder Bayerische Versorgungskammer. The property was sold at a record yield of less than 3%, registering the highest rate of return on equity for the Group so far in its A-Class real estate portfolio. Though the main impact of the sale in the P&L was reflected already in 2018 due to a revaluation to fair market value at that time, the sale of this asset generated a share of profits, which amounted in 2019 to another EUR 3.1m.
Due to a planned restructuring in operations in light of a more robust market positioning, the Group’s hospitality chain IBB Hotel Collection did not reach the expected profit levels during 2019. The first two months of 2020 registered success in most budget targets across the 11 hotels in the Group. However, the unprecedented events caused by the worldwide COVID-19 pandemic have demanded further restructuring in its hotel portfolio by maintaining, strengthening, and prioritising hotels in markets that generate the most sustainable profitability.
The Von der Heyden Group also recorded a 37% increase in its total assets as at 31st December 2019 recorded at EUR 147,785,446 (2018: EUR 107,485,547). In line with the Von der Heyden Group’s continued growth strategy and as a renowned first mover in emerging markets, it has set up an asset management company with a team of highly skilled real estate professionals operating from its new office in Kyiv, Ukraine. The local real estate and asset management team will serve to launch attractive investment opportunities, working as the Group’s Asset Management arm in Ukraine and starting its first regulated real estate investment fund by the end of 2020. The fund will focus on realising the full potential of Ukrainian commercial and residential real estate market opportunities in Kyiv and Lviv to its investors.
The Von der Heyden Group has also expanded its geographic footprint to Sardinia with the launch of a real estate services arm in one of the world’s most exclusive luxury locations, Costa Smeralda, Sardinia, Italy. Von der Heyden Group Real Estate provides a specialist perspective and bespoke brokerage service in the real estate market to buyers and property owners.
Furthermore, the Group has acquired a 25% stake in a residential co-development project in the Algarve, Portugal, and also plans to undertake its first investment in the Montenegro residential real estate market in 2020.
The gearing ratio of the Group at the end of the year stood at 65.78% as opposed to 54.68% in 2018. The increase is not attributable to higher indebtedness by the Group but rather as a result of IFRS16 coming into force requiring the recognition of leases as liabilities in the Balance Sheet. The gearing ratio without the IFRS16 consideration would have been 51.89%. Furthermore, given that the Group does not grant corporate guarantees for hotel operating or real estate investment and development subsidiaries, the gearing ratio on a non-consolidated stand-alone basis stands at a mere 18.36%.
Chairman of the Von der Heyden Group Sven von der Heyden said:
The recent sale of one of the Group’s biggest real estate investments to date has led to a comfortable position of liquidity during such unprecedented times. This strength enables us to continue to focus on delivering a high return on the Group’s real estate developments and investment opportunities while ensuring a sustainable growth strategy in the restructuring of our hospitality Group, IBB Hotel Collection. The Von der Heyden Group’s capital growth is at the core of our strategy; as our asset management business expands beyond Ukraine, our mission is to continue to thrive for more positive operational results for our stakeholders.
The Group’s CEO Bob Rottinghuis adds: The current pandemic undoubtedly will have a long-lasting impact on (real estate) markets across the globe and the way people work going forward. It shows once more that the wellbeing of employees and their families as well as of business partners is critical at all times. Because of the flexibility of our staff, our business has continued in recent weeks without interruption, for which we are very grateful to them. Furthermore, timing is everything, both in buying and selling assets, as well as in starting new developments and business endeavours. The expansion of our activities and its resulting diversification, yet focus on our strengths, will further enhance our Group’s stable growth path in the remainder of this already unforgettable decade.
Von der Heyden Group, an international investment firm on the European Real Estate market with a value of over 650 mln euro in aggregated invested assets has been granted an asset management license by the National Securities and Stock Market Commission (NSSMC) of Ukraine. The registered license establishes the Group, with a long track record of being a first mover in evolving free markets, as a pioneer to the investment potential that the Ukrainian real estate market offers. The license also marks the Von der Heyden Group as one of the very first foreign-owned real estate investment firms to obtain an asset management license in Ukraine over the last decade.
The license allows the Von der Heyden Group’s new asset management subsidiary to launch a real estate fund aimed at raising capital through the private placement of shares to professional investors with a minimum investment of 250k euro.
Robert Rottinghuis, Chief Executive Officer of the Von der Heyden Group: The economic growth over the past 5 years coupled with the unrivalled locations of Kyiv and Lviv for real estate investments and developments has shown an increasing demand for high quality commercial, industrial and residential facilities. In an unprecedented climate, our fund is designed to be one of the building blocks for institutional investors’ continued adoption of real estate assets in upcoming markets. It provides a unique opportunity to secure competitive target returns and stable cash flows for our Group as well as for our limited partners.
The Von der Heyden Group have established a best-in-class local team with extensive real estate management experience. The fund’s annual net Internal Rate of Return (leveraged, after taxes and fees) is targeted to be in the double digits over the seven-year life of the fund. The Von der Heyden Asset Management Company enables the Group to manage its own sponsored funds as well as that of other institutional investors in light of providing exposure to a rapidly developing and upcoming real estate market.
The Von der Heyden Group Asset Management Company in Ukraine marks the Group’s further expansion as an international private investment, asset management and real estate development firm with representative offices in eight countries.
Dmitry Havrylenko, CEO of Ukrainian office Von der Heyden Asset Management Company tells us about his plans for foreign investments in the Ukrainian real estate market
Von der Heyden Group (VDHG)
Von der Heyden Group is an international investment firm with over 30 years of experience in developing and investing in Class A buildings, residential and hotels projects in Germany, Poland, Spain, Portugal and Malta with the total value of more than 600 mln EUR in invested assets. The main pillars of business of the Group are full cycle classical real estate development, investment in existing assets, real estate consulting and IBB Hotel Collection, an international hospitality franchise.
Entering the Ukrainian Market
In 2020, VDHG established a new branch of business. We became one of the very first foreign-owned real estate investment firms to obtain an asset management license in Ukraine over the last 10 years. This is complementary to the Group’s track record of being a first mover in emerging markets. In Poland, VDHG was one of the first foreign real estate developers and investors who believed in the local market. Today, the group is building the highest buildings in Poznań, the last of four phases as developer and co-investor with the City of Poznań after Poznań Financial Center, Andersia Tower and Andersia Business Center, completed in 2001, 2007 and 2012 respectively. Another recent successful investment was the Blue Tower project at Bavaria Towers in Munich (an A class office building with a total area of 24,000 m2), which was sold at a record capitalization rate for this market. Such examples, two of many, is testament to the success that could be repeated in Ukraine.
In the fourth quarter of 2019, VDHG established an Asset Management Company formed with a local team of professionals in Ukraine and received the asset management license. Today we are creating our first closed-end real estate investment fund, which will combine the Groups’ own investments as well as those of professional investors. Our specialization is to unite 2 markets: real estate and asset management.
Closure of the first round of investments is planned for the first half of 2021. The main focus of the group is assets in the Class A office segment. Although many predict the obsoletion of office buildings, data proves that the Kyiv office market is still significantly underdeveloped and has 1.5-2 times the growth potential in terms of offices saturation compared to other CEE capitals, primarily to be driven by the growth in the IT and logistics sector. Our asset management company is also interested in residential real estate projects in advanced stages of development that can be realized with high-powered local players.
Investing in Ukraine
Our interest in the Ukrainian market is underlined by its underestimated potential and opportunities.
Factors such as economic growth in the last 5 years, a small saturation of a quality office and residential real estate, the formation of a stable middle-class due to growth in IT specialists affect the demand for the quality objects in these segments resulting in a higher yield in comparison to other developed counties.
|Total amount of office options, m2||
~ 2 mln (Kyiv)
> 6 mln (Warsaw)
Amount of direct foreign investments in 2019, bln $
Trends in the world of investments and Von der Heyden’s Liberty Real Estate Opportunity Fund
In the third quarter of 2020 the total amount of global investments was USD 150bln.
This records 50% less than the previous year. Implementations of lockdowns showed no affect in trends in real estate types popularity with 33% of investments being realized in the office sector in 2020 against 35% in 2019.
Our extensive research and findings prove that Real estate continues to be a conservative asset. Our work focuses on Ukraine’s future development, where a favorable scenario will increase the value of local assets. As a result, the potential could reach the level of Warsaw, Prague and Budapest.