Berlin residential is, for the first time in a decade, priced on operating income rather than transactional momentum. The recalibration has pushed mid-sized developers off the table and opened space for capital that can underwrite 36-month stabilisations without refinancing anxiety. The scheme below is built for exactly that window.

The opportunity

A 4,700 sqm mixed-use scheme pairing residential units with a ground-floor medical-office block (two GP practices and an imaging centre, each on ten-year leases signed at commitment). Currently in advanced planning; permits expected Q3 2026. M24 is funding the ready-to-build gap and staying in through realisation.

Local Berlin developer with a twelve-project track record in the Mitte and Friedrichshain ring. Sponsor has executed two prior schemes with M24-adjacent co-investors; a clean operational record and no unresolved litigation. Sponsor equity is 15% of total capital cost; our stake sits alongside and above senior debt.

Site & submarket

The plot sits in an established Berlin inner-district medical cluster, with a catchment of 140,000 residents and a new U-Bahn extension opening within the hold period. Medical-office rents in comparable positions print €22–€26/sqm/month triple-net; our underwrite takes the mid-point.

Capital structure

SCSp → German propco SPV, senior debt at 60% LTC from a regional Landesbank, sponsor equity 15%, M24 equity 25% (carrying pref + participation). The medical-office income is contractually ring-fenced for debt service from the first lease-up month, meaning senior coverage is secured before residential lease-up begins.

Underwriting

Target ROI 22% at the project level, ~20% net IRR for investors across a 36-month hold. The underwrite is deliberately income-led: residential exit cap rates are assumed flat from today’s mid-4% range, with no terminal-value uplift baked into the base case.

Risks & mitigants

  • Planning timeline — the permit risk is the sharpest single exposure. Mitigated by a pre-submitted consultation, written pre-advice from the borough, and a six-month contingency in the schedule.
  • Medical-tenant covenant — the two GP practices are long-established; the imaging-centre tenant is backed by a national diagnostics chain. All leases step to CPI annually.
  • Exit liquidity — German open-ended funds remain active buyers of medical-office stock, offering a clean forward-sale path distinct from residential exit.

Exit

Dual-track at month 30: refinance-and-hold on the residential portion (yield-on-cost ~4.8%) while forward-selling the medical-office block to a specialist healthcare investor. Combined exit clears target inside 36 months.