Zaga Capital Partners secures €500m for German resi strategy

Zaga Capital Partners has raised €500 mln in equity for its German residential-for-rent investment strategy. 

Marco Zarges and Antonio Galea

Zaga Capital Partners has raised €500 mln in equity for its German residential-for-rent investment strategy. 
This includes a first close of its Zaga German Real Asset Opportunities II Fund, securing €210 mln in commitments, along with substantial prior investments from its founders and anchor investor.
The Fund is launching with a seed portfolio of 14,000 residential units valued at €1.4 bn, primarily located in Western and Northern Germany. These properties were acquired off-market over the past two years at a discount of over 40% to peak market values, providing immediate income for investors.
Zaga plans to deploy further capital quickly, with an identified pipeline of about €3.0 bn in additional assets, of which €400 mln is already secured or under review.
This strategy offers an attractive entry into the German residential rental market, which boasts strong fundamentals such as a significant supply-demand imbalance, a strong rental culture, long tenancies, and consistent rental growth that has historically beaten inflation.
Through a partnership with a Net Zero service provider, Zaga plans to upgrade properties to high energy efficiency ratings (EPC A-C) without requiring additional funding capital. This involves using AI for heating optimisation and installing modern heat pumps and solar technology.
Marco Zarges, owner and founding partner of Zaga Capital Partners, said: “This first closing, achieved against one of the most challenging fundraising environments in recent memory, marks an important milestone for our platform. Our strategy is built around taking advantage of the structural megatrends shaping German real estate, with German residential-for-rent, a highly defensive and structurally undersupplied market with compelling entry pricing, the first step in this strategy.”
Antonio Galea, owner and founding partner of Zaga Capital Partners, added: “The combination of a de-risked and strongly performing seed portfolio, a secured pipeline and an active manage-to-green strategy provides a differentiated platform to deliver resilient and attractive returns. Securing further institutional backing at what we believe is one of the most compelling points in the current cycle reinforces both the strength of our operating model and our ability to continue scaling the portfolio in a disciplined manner.”
UBS Investment Bank is acting as financial advisor for the fundraising.