BERLIN-Three groups have recently formed Episo Berlin Sarl, a joint venture assigned to invest up to $410 million in local multifamily assets. The groups include Episo LP, a fund co-advised by AEW Europe and Tristan Capital Partners, and Caleus Capital Investors.

The venture will focus on residential assets with more than 250 units that provide a significant value-add potential in respect of rental increase and refurbishment, according to an AEW statement. The venture has already made its first investment in 800 residential units in the Tegel neighborhood of Berlin.

Caleus is a Berlin-based real estate investment management company founded and led by Ulrich Weber and Patrick Reich. The company invests alongside its partners in order to fully align interests, said Ric Lewis, CEO of AEW. “They will provide full asset management and transaction expertise for the joint venture and are responsible for executing the day-to-day asset management tasks,” he said in the statement.

AEW officials said the German markets are of great interest today, with residential, office and retail properties in demand. However, the slowing economic recovery and large debt are forcing companies to focus on secure, income-producing assets, the company told investors and journalists at a seminar held recently in Munich during the ExpoReal property trade fair.

Mahdi Mokrane, head of research and strategy at AEW Europe said at the seminar that the pace of economic recovery is slowing dangerously with most economists pointing to last spring as the peak for Europe. “Although deflationary forces are taking hold and risk aversion is mounting again, real estate would still have an immediate appeal for investors, were it not for the lack of suitable product, the wall of debt looming ahead and the headache caused for asset allocators by the Solvency II regulations,” Mokrane said. Prudent investors should either stay on the sidelines or buy real estate assets with secure rental income, even though the demand for these properties, relative to the available supply, makes for relatively “sharp” yields, Mokrane said.