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Quite obviously, a fund manager has to be able to handle currency hedges, property valuations and liquidity management. But he also needs in-depth knowledge of the properties and the work done by his team in order to enhance the fund performance. A look at a workday of Mario Schüttauf shows just how diverse the responsibilities of a fund manager of hausInvest are.
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Tuesday, 22 April 2014,
Airport railway station, Frankfurt
Mario Schüttauf has already put a lengthy meeting behind him as he disembarks from the express train in Frankfurt in midday. Yet the hausInvestFund Manager radiates a sense of focus rather than fatigue. In fact, even a smile would not be out of place because his meeting in Düsseldorf went quite well. The asset manager of the "Kö 92a" property had good news for him: For the first time in 15 years, the commercial building on Königsallee, Düsseldorf's high-street avenue, is fully occupied again.
However, the 39-year-old manager has very little time to rejoice over the successful letting drive in Düsseldorf. The meeting is barely concluded when his date planner reminds him of the next one, this time in Frankfurt. He takes a cab to the railway station. 73 minutes and five phone calls later, his train pulls into Frankfurt's airport railway station. Leather briefcase tucked under his arm, Schüttauf dashes up to the taxi rank.
"A property is a living organism – and I prefer to see for myself how each one of them is doing. "
Mario Schüttauf, Fund Manager
Börsenstrasse 2-4, Frankfurt
His destination lies right next to the stock exchange in one of the most coveted locations in town. Outside the entrance to the five-storey building, ornamented with columns and balustrades, Schüttauf meets his colleague Maria Schulz from the marketing department. She supports the real estate team in the marketing of floor plate. For more than a year, a unit of 1,300 square metres has been vacant at the prestigious office and commercial building, home to the private bank of Rothschild and the Syzygy advertising agency.
This is supposed to change.
Mr Schüttauf, what are the letting guidelines for this property on Börsenstrasse? We do get quite a number of requests for information concerning these offices. But we do not take this matter lightly, because it is important to get the tenant mix just right. For reasons of competition, for instance, we would not like to take in another bank. Our real estate management staff are have therefore joined us in a pinpoint effort to find a suitable tenant or to help incumbent tenants to expand their footprint within the building.
Rent rates in this location are at a premium. What sort of tenant are you trying to attract that would pay rent this high? Our tenant of choice would be a law firm, a consultancy firm, or a rating agency. But we are open to other options, too. The main thing is that everything is in harmony. That is why we changed our approach. We decided to let the vacant space via an open mandate: Any estate agent may suggest a tenant to us. At the same time, we decided to play a bigger part in the marketing effort by creating our own brochure and homepage that highlight the benefits of the building.
Increasing the value of a building by making the Fund an active marketing player: This is a model that has already proven successful with the Classicon building on Leipziger Platz in Berlin, another hausInvest asset. When the main tenant moved out, our team put together a voluminous marketing sales kit under the headline "Turn it into Your Property," which included a virtual tour of the premises on a tablet computer. Afterwards, each unit was separately let, with specific client requests satisfied.
Did the new approach meet with success? The Classicon scheme is fully occupied today. We also managed to increase the rental income because smaller floor plates command higher rent rates than larger units. So we create genuine value by achieving higher occupancy rates. It enhances the valuations of our buildings, and thereby the Fund performance. Here is an example: The Schillerhaus property in Frankfurt, which we bought for 72 million euros, had a void rate of around 15 percent. We quickly raised its value by making a dedicated effort to restore full occupancy: In early 2014, we sold it for 80.4 million euros. As recently as 2013, our Germany portfolio showed an occupancy rate of 84.3 percent. Today, the rate is close to 90 percent.
Having toured the premises and conducted a few meetings, Mario Schüttauf, a graduate in business management and one of the fund managers of hausInvest since 2007, takes a short break. Seated on a bench on Goetheplatz, he sips a cup of coffee while browsing several business papers. Getting up after his short breather, he stretches and sets out on foot for Frankfurt's financial district.
How many hausInvest properties do you personally visit per year? I could not give you an exact figure, but me and my team spend the entire year inspecting a large number of properties in order to get as extensive an impression of our portfolio as possible. A property is a living organism – and I prefer to see for myself how each one of them is doing. I should add that it is just so much more fun to meet fascinating people face to face.
What are the chores awaiting you on an average day at the office? Me and my two colleagues in senior management handle the many regulatory issues that concern our work. Over the past two years, for instance, the Investor Protection and Functionality Improvement Act (AnsFuG) has played a prominent role, and the same is true for the Capital Investment Act (KAGB). Buying and selling property is another major aspect of our work: As soon as our colleagues who handle the actually transactions have concluded their preparations, we review the entire proposal and prepare the decision for the Management Board.
You have been focused on sales for some time now. Why is that? The prices in leading office property locations such as London or Frankfurt are very high at the moment. So we are exploiting the market cycle to realise outstanding margins. It is a good way to boost the performance. At the same time, we keep looking at interesting properties for sale, provided that site, price and rent roll are in harmony. An excellent case in point would be the acquisition of "Neue Direktion Köln."
Japan Center, Frankfurt
500 metres farther south-west, the certified business administrator arrives at one of the best known buildings in Frankfurt's financial district. The red granite façade of Japan Center, 115 metres tall, is brightly lit by sunlight. Directly next to the parklands of Taunusanlage, the high-rise with its overhanging roof, which lends a touch of the Far East to it, contrasts nicely with the shiny bank towers. The building is shared by the management consultancy firm of McKinsey and the European Central Bank (ECB).
The ECB only signed a lease for about three years. What made you decide in favour of such a short lease term, considering that you tend to negotiate long ones? The departments of the European Central Bank now residing at Japan Center are scheduled to relocate into to Eurotower once its refurbishment is complete. This may well be after three years, and then again it might not. One must also take into account that the ECB is expanding, so chances are that we will benefit from that. Moreover, this is an absolute blue-chip tenant. Its good name will help to entice other companies to consider the property.
Commerz Real, Wiesbaden
Mario Schüttauf has returned to headquarters in nearby Wiesbaden together with his colleague. The next meeting is dedicated to the issues of forward exchange transactions and liquidity management. The first item on the agenda is quickly dealt with: By investing in foreign currencies, hausInvest protects its foreign property values – worth approximately 3 billion euros – against major exchange rate changes, be they up or down. The next topic to be discussed is liquidity.
"We attach great importance on detailed knowledge of our properties and on tackling challenges head-on and focused, rather than dodging them. "
Mario Schüttauf, Fund Manager
Are you satisfied with the liquidity of the Fund? Yes, absolutely. Our benchmark is a value equivalent to 15 percent of the Fund assets – and we never exceed or undercut this target by more than a percentage point. We invest exclusively in call money and time deposits to be on the safe side. This way, we always have the necessary funds on hand to pay customers who wish to return their fund shares and at the same time we always have the wherewithal to seize lucrative purchase opportunities.
Are you currently facing increased withdrawals? Ours is a cyclical business – and the whole debate concerning the safety of real estate funds in recent years has not spared us, of course. The total Fund asset total has dropped from approximately 10 billion euros to 9.3 billion euros since 2012. Still, we never experienced liquidity issues, and concluded ever year since the Fund was launched in 1972 with a positive return on investment. This position of strength makes us confident that the Fund will be back at 11 billion euros in two years' time.
What is your strategy to achieve this? We strongly expanded our marketing effort on the sales end. In this context, we focus on retail clients, most recently by running a commercial right before the eight o'clock news. The idea is to support the serious commitment of the roughly 3,000 sales partners of hausInvest.
Gym of the FTV Frankfurt 1860 in Frankfurt
It may be the end of his workday, but one more strenuous task awaits Mario Schüttauf before he will return to his wife and daughter. He pays periodic visits to the gymnasium of a fencing club of long-standing tradition in order to pursue one of his hobbies – time permitting.
What excites you about fencing? Fencing helps me to release energy. Some of the skills you acquire in this sport can actually be useful in your professional life, too.
Does that mean your job is a constant battle? (Mario Schüttauf laughs.) No, but you need a similar sense of purpose and a keen focus on essentials. You cannot win in fencing unless you remain completely focused throughout each three-minute round, and place as many hits as possible. Competing on the fencing floor has parallels to our line of work. We attach great importance on detailed knowledge of our properties and on tackling challenges head-on and focused, rather than dodging them. It is the only way to secure a great long-term fund performance in the best interest of our investors.