Aachener Grund-Fonds Nr.1

Fund commentary

Investment rationale

Aachener Grund-Fonds Nr. 1 is an open-ended German real estate investment fund designed to provide regular income and appropriate capital appreciation through property investments. The PRIIP document classifies it in risk class 3 and recommends a minimum holding period of 5 years, while the prospectus describes a conservative risk policy and notes that units are generally subject to only low fluctuations in value. It is aimed primarily at church-related institutional investors and generally only sold to Catholic Church asset holders, with exceptions only for closely related institutions and not private individuals.

Investment strategy

The fund’s stated objective is regular income from rents and liquidity investments together with continuous appreciation of its real estate assets. It invests mainly in German commercial properties, especially retail and office buildings for trade, services and administration, with a focus on established inner-city 1A retail locations at selected sites in Germany; mixed-use residential/commercial buildings may also be acquired, and project developments are permitted although the main emphasis is on existing buildings. Permitted direct real estate exposures include residential rental properties, commercial properties, mixed-use properties, land under development up to 20% of fund assets, undeveloped land intended for imminent development up to 20%, certain other property rights up to 15%, and heritable building rights; no single property may exceed 15% of fund assets at acquisition and properties above 10% individually may not in aggregate exceed 50%. Liquidity assets may be up to 49% of fund assets and can include bank deposits, money market instruments, eligible securities and certain fund units; bank deposits with a single credit institution are limited to 20%, at least 5% must be available daily for redemptions, and foreign property investment is permitted in principle including Switzerland up to 30%, although the April 2026 prospectus states that only domestic property was being acquired. Derivatives may be used only for hedging, including interest-rate and currency hedging, but the February 2026 KID states that derivative transactions were not being used; the fund generally distributes income annually after the annual report, and the PRIIP recommends a 5-year holding period.

Investment philosophy

• The investment universe is primarily direct German real estate, especially commercial properties such as retail and office buildings for trade, services and administration, with a focus on established inner-city 1A retail locations; mixed-use residential/commercial buildings and project developments are also permitted.

• Property selection is based on economic and location-related opportunities and risks, with emphasis on sustainable earning power and diversification by location, size, usage and tenants; the fund may also use real estate companies, though this is not strategically intended except where legally permitted.

• The portfolio is managed for the long term and optimized through modernization, restructuring, conversion, regular rent adjustments or sales, with existing buildings forming the main investment focus even though buildings under construction and development projects are allowed.

• The fund incorporates Article 8 ESG characteristics: at least 60% of the total value of all properties must, on an overall scoring basis, meet at least 50% of the manager’s defined ecological and/or social criteria, including CO2e intensity, end-energy intensity, public transport access, water management, waste management and barrier-free access.

• Risk controls include a 15% limit per property at acquisition, a 50% aggregate cap on properties each above 10% of assets, maximum liquidity of 49%, minimum daily liquidity of 5%, currency risk capped at 30% of fund assets, borrowing generally up to 30% of property values plus short-term credit up to 10% of fund assets, and derivative use restricted to hedging purposes.

Management team

The documents name the managing directors of Aachener Grundvermögen as Dr. Frank Wenzel and Nathalie Winkelmann. An investment committee may advise on property acquisitions and sales.

The asset manager

The fund is managed by Aachener Grundvermögen Kapitalverwaltungsgesellschaft mbH, based in Cologne at Oppenheimstraße 9, 50668 Köln. The company was founded on 12 March 1973 and acts as the capital management company under the KAGB for this real estate investment fund, which itself was launched on 30 May 1974 for an unlimited term. Aachener Grundvermögen is a wholly owned subsidiary of Aachener Siedlungs- und Wohnungsgesellschaft mbH, Cologne, whose group companies are active in residential construction, property management, land management, building supervision and real estate fund administration; the shareholders named are the archdioceses and dioceses of Aachen, Essen, Cologne, Münster, Paderborn and Trier. The company also manages the Aachener Spar- und Stiftungs-Fonds, the Aachener WohnImmo-Fonds and 16 special AIFs.

Strengths

The fund is distinguished by a narrowly defined long-term German property strategy centered on established inner-city 1A retail locations and commercial real estate, rather than a broad pan-European or global property approach. It combines direct real estate ownership with a conservative framework, including a stated conservative risk policy, limited use of leverage and derivatives only for hedging. The investor base is highly specialized, as units are generally sold only to Catholic Church asset holders or closely related institutions, and units are registered in the holder’s name and require prior consent for transfer. It also embeds a formal Article 8 ESG property screen requiring at least 60% of total property value to satisfy the manager’s ecological and/or social scoring threshold, while the April 2026 prospectus states a management fee of 0.4% a year and a depositary fee of 0.04% a year; these are separate fee components, not the total cost of ownership.

Risks

The PRIIP document places the fund in risk class 3, and the prospectus states that investors can lose part or all of their invested capital, although no additional contribution obligation exists. The documents identify substantial real estate-specific risks, including acquisition due diligence risk, rental default and vacancy, refinancing and leverage risk, development and construction risk, valuation risk, public-law and regulatory risk, environmental contamination, building defects, location deterioration, tenant credit deterioration, and risks linked to heritable building rights and real estate companies. Liquidity risk is a central structural feature because assets are predominantly invested in real estate; redemptions are subject to minimum holding and notice periods, the company may suspend issuance and redemptions, may split off illiquid assets into side pockets, and in stress scenarios may have to sell properties below appraised value. Additional named risks include interest-rate, inflation, currency and concentration risk; counterparty and custody risk; derivative risk if used for hedging; operational, legal, political and transfer risk; and sustainability risks such as physical climate damage, transition costs, social and governance issues, with foreign-currency exposure generally limited to 30% of fund assets and liquidity holdings capped at 49%.