Frankfurt School Project

• Tobias, what was your main motivation for founding wait, what. (besides your real estate track record and the proven concept)?

I worked in finance, consulting, and financial services, always 'surprising' clients/investors with unorthodox approaches and outcomes.

My company's thesis is 'Openness → Observation → Opportunity → Outsized Returns'

• What experience did you gain during your real estate career?

My career was mainly in banking, asset, and investment management. I learned how to identify, evaluate, structure, and execute investment ideas.

• Are Tobias Temmen, Christian Feghali & Omar Fathallah the only employees currently?

Yes - however, we work in 'virtual teams', I am currently orchestrating 20+ people.

• Can we contact you outside the FAQ sessions?

Yes, I usually reply within 24 hours via email.

• Task-related questions
1. Confirmation: The case study task emphasizes not modeling fund returns and focusing on an exemplary project. Nevertheless, the deliverable “Client Business Case” requires modeling fund returns (incl. management fees, real estate management costs, projection of future growth, number of properties, etc.) to some extent.

Yes, please only model the project - fund costs are calculated as % of AUM/assets under management.

2. Confirmation: the scope of the project is to develop a framework for selection criteria of locations and properties, to develop an idea of a methodological implementation, and to demonstrate it for a singular project

Yes

3. Beyond that, the PIF foresees other future projects and scaling/adapting the strategy.

No, the fund is the only investment vehicle pursuing the strategy. However, we are asked to recreate a similar fund in the US

• Placemaking-related questions
1. Why do you believe Placemaking is less common in Europe than in the US, where we can see a variety of providers (Jamestown, JBG Smith, etc.)?

Placemaking is very common in Europe, especially given Jan Gehl's work. Most modern cities, such as Copenhagen, Amsterdam, London, and Paris, deploy placemaking interventions. Germany is a laggard in innovation, especially in real estate.

2. How would you assess the risk of Placemaking investments given …
1. Risk increasing factors: business model uncertainty in Europe, initially high CapEx, initially uncertain income

Macro risks in real estate cannot be mitigated; however, sub-strategies like Placemaking (mixed-use, financially sustainable places) outperform other mono-line/mono-risk strategies.

2. Risk decreasing factors: science-proven approach, longer investment horizon, ultimately stable as well as longer income

See above: Openness → Observation → Opportunity → Outsized Returns

Placemaking works, i.e., creating better, most financially stable risk-return profiles.

3. Do you identify BID (business improvement districts) as Placemaking? Primera

We partner with BID firms like

4. What is your approach to the conflict of investing in already developed areas to build on a basic infrastructure while keeping enough potential for further improvements?

We budget for upcoming renovations and adjustments.

5. Entertainment, art, and cultural choices typically signify developed areas. How would you like to improve the existing options? Is the lack or abundance a reason for you to invest?

Yes, as we have the playbook and expertise to activate and create a vibrant area, We will not invest in districts where cultural activities already occur.

6. Do you already have a set of fixed or heavily weighted selection criteria for the location strategy?

Yes, please check https://wait-what.co/pif and https://wait-what.co/pif/acquisition-profile

7. Do you already have a set of fixed or heavily weighted Placemaking transformation measures for value creation?

Work in progress - we leverage experience from our advisors at https://placemaking-europe.eu/ and https://www.placemakingx.org/

8. Is wait, what. already examining potential targets?
1. If yes, which methodologies (e.g. network, data collection, etc.) and criteria (location and property) were used? Yes, please check https://wait-what.co/pif and https://wait-what.co/pif/acquisition-profile
9. To what extent should we use the formula “I = (C + D + A) × S × E” to create value (profits) in our methodology?

Please elaborate on your questions

• Financing & investors
1. Did any LP express its interest in deploying capital (insurances, pension funds, sovereign funds, foundations, fund of funds PEs, family offices, etc.)?

Yes

2. If yes, what do current agreements foresee regarding hurdle rate, management fees, carried interest, etc.?

Unable to disclose, as confidential information - and not relevant to the project

3. Are you currently engaged in state subsidies or other support discussions (e.g. access to data, properties, tax cuts, etc.) with federal or local authorities due to the social returns created by Placemaking?

No

4. On which criteria was the targeted equity ticket of €50m to €250m selected?

Market insights on comparable transactions for larger district development projects

5. What is the targeted total fund size?

The first fund target size is 250m EUR plus 250m EUR leverage.

6. Are there specifically targeted returns and investment horizons?

5-8% cash on cash yield, 10-15% IRR through remortgaging

The investment horizon is long-term, a minimum of 10 years, ideally 30 years.

The exit strategy is 'remortgaging', i.e., taking out debt against realized value creation.

7. Do you expect the usual real estate leverage ratios?

Yes, 50-60% on project level

8. Are there already committed financing agreements?

Yes

9. What is your general risk appetite like? Is your focus on many independent Placemaking objects or do you prefer singular key investments?

The fund aims to build a portfolio of placemaking projects, all connected via the same strategy.

10. Could you imagine acting as a debt provider for other (small) investors in the same place to attract businesses?

PIF can only invest in real estate. We evaluate smaller 'side funds', investing in businesses.

11. Operations

Confirmation: wait, what. aims to be vertically integrated and to develop demanded capabilities (designers, architects, urban planners, landscape architects and retail experts) on an in-house basis to not rely on outsourcing?

wait, what. is the General Partner & Investment Manager - The PIF Team will be vertically integrated and in-house

1. If no, what kind of partnership security do you target?
• Status Quo
1. The case already implies some status quo points, such as changing urban dynamics, economic uncertainties, etc., but you never mention housing shortages anywhere. Is this a point you want to address/improve? Is it a secondary concern, does it play a central role or do you consider improving underutilized areas as USP of your strategy?

Our investment strategy is mixed-use investments, i.e., including residential real estate.

Improving underutilized areas is the USP of our strategy.

2. Who have you identified as a direct competitor?

Some developers integrate placemaking - however only during development, not in asset management.

We found no dedicated Placemaking fund.

• Ideal future-related questions
1. How can retail investors and tenants be attracted and engaged? (What does that look like?)

No yet. In the future, we look into retail fund shares (ELTIFs)

2. Is the 1,000,000 sqm of space and enabling of 10,000 jobs a definitive fact?

No, merely an aspiration

3. Are there other specific non-financial targets?

We aim to address SDG 7, 9, 11, 12 and 13

4. Where would you like to see the fund in a few years? Is there a continued investment and development approach or would you like to invest the majority at once?

Fund 1 is fully invested, and Fund 2 1b EUR is beginning to invest. All funds are open-ended

• How do you define "successful placemaking"? Is it primarily about economic return, social impact, ESG compliance - or all at the same time?

All at the same time: Social impact only lasts with sustainable financial resources

• Are there already pilot projects or favorite locations? That would help us with the financial model.

We have projects in development (Berlin, Hamburg, et al), and our favorite destinations are European urban/metropolitan areas.

Please aim for a mixed-use financial model, with dedicated Placemaking considerations/revenues/costs

• How free are we to choose the example project for the financial model? Do we have to have to take a real location or can we build a theoretical "model project"?

Please feel free to chose between a theoretical model project or Hamburg Herrlichkeit, a retrofit case in Hamburg downtown

In both cases, please use validated assumptions for costs (acquisition, retrofit/development, placemaking efforts)

• Will the fund focus more on new construction projects or conversions? This has a massively on our numerical model.

We aim for 50:50 development vs retrofits - in financial modeling, costs are merely line items that can be left empty if not applicable.

Please keep in mind we deploy capital from an open-end fund, i.e., we do not aim to exit a project but perpetually develop it

• How strong should the focus be on ESG and community effects - also quantitatively? Or is that enough at storytelling level?

We aim for SFDR Art 8 or 9 fund, i.e., sustainability is front and center of our strategy, regulatory enforced.

• Are there any financial restrictions in the project with regard to the initial investment amount?

No, however, aim for financially sustainable returns with an above-market risk-return profile.

• Is there essential geospatial data that is of particular importance for your projects?

Yes, GIS data covering 1) current space utilization, 2) allowed space utilization, 3) surrounding amenities, and 4) 'missing' amenities is crucial.

Example: Current use (1) is an office, but building permit (2) allows for mixed-use. However, the site is only surrounded (3) by parking lots and no (4) parks, outdoor playgrounds, etc.

• What role does social or cultural impact play for you? Do you want to Promote education? Financial participation? Digital inclusion?

Cultural impact scores high in our valuation, as 'Place Identity' is key to sound financial stability. Education, participation et al. are valid impact parameters.

• Which target groups are currently of particular strategic relevance for WaitWhat - both in the existing portfolio and in the desired further development

Please clarify 'target group' - we develop mixed-use real estate, i.e., targeting residents as well as offices, shops, commercial users

• How would you describe the current status of your brand loyalty among younger target groups (e.g. Gen Z, young professionals)?

We launched in Q4 2024, our brand equity is 0

• do you prefer physical, digital, or hybrid formats for a potential project (e.g., pop-ups)? project (e.g. pop-up experience, interactive education platform, cooperation with creative actors)?

All of the above, if the impact exceeds the costs

• Which KPIs or qualitative success factors would be decisive for the success of such a project—reach, engagement, trust, conversion, media response, conversion, media resonance?

As a real estate case, our core metrics focus on net operating income, revenue per sqm, profit per sqm, tenant satisfactory.

Reach, engagement et al. from our social media presence impact marketing spend and customer acquisition costs.

• What are the most essential criteria for site evaluation (e.g., sustainability, infrastructure, economic development)? Are there already defined priorities for the placemaking strategy (e.g., housing, commercial spaces, culture)?

Most important criterion is "economic development potential."

Assume no defined strategy - however, great places require mixed-use strategies.

• Which stakeholders should be involved in the development process (e.g., municipalities, private investors, NGOs)?

Municipalities, citizens (neighbors and future tenants/users) - we are the sole investor. No NGOs

• What is the investment horizon? Exit strategies? After how many years should the areas be resold? Or how does the project generate returns (only through rent)?

The investment horizon is long-term, minimum 10 years, ideally 30 years.

The exit strategy is 'remortgaging', i.e., taking out debt against realized value creation.

No exit through sale is planned.

The investment profile is to create a long-term, sustainable, mid-high investment

• What are the return expectations for the individual projects? Only the benchmark of traditional real estate projects, or is there a desired threshold?

5-8% cash on cash yield, 10-15% IRR through remortgaging

• Are there preferences for existing financing models, or should new ones be developed?

Please focus on existing models, tweak and augment them where you see fit.

• Are there any risks that should be especially considered in the model?

Please anticipate typical real estate retrofit/development risks as well as asset management/placemaking risks.

• What role does digital infrastructure play in site development and the long-term attractiveness of a project?

If evaluated and used correctly, Tech adds to value creation, e.g., tenant satisfaction, shorter planning duration, etc.

Wrongly selected tech, however leads to stranded assets - think smart home apps nobody can use

• How important is the scalability of the placemaking approach? Should the concept primarily be developed for individual pilot projects or directly as a transferable model for various cities?

Scalability is highly relevant, as we aim to invest in all major urban regions across Europe.

Please do not consider different tax regimes.

• What is the status quo regarding site selection, financial playbook, and stakeholder involvement?

We are in due diligence for five sites in Europe; we developed a preliminary financial model, created a risk charter, and began stakeholder involvements at potential project sites - additionally, we formed an advisory board including Fred and Ethan Kent, as well as Hans Karssenberg and members of Gehl (feel free to look them up for placemaking inspiration)

• Fund size and number of projects What is the target volume per fund, and how many projects are envisioned within each fund? This helps us determine the average budget per project and define a realistic scope for sourcing opportunities.

250m EUR, 3-5 Projects - plus 50% leverage, i.e. 500m in total assets

• Development intensity and approach: Do you plan to acquire sites that are already partially developed with existing infrastructure, or are you targeting assets that require significant redevelopment and transformation? This affects the capital allocation and timeline assumptions in our strategy.

Primarily retrofits, i.e., existing buildings for transformation. Developments are opportunistic

• Exclusion criteria for site selection: Are there specific no-gos when it comes to location characteristics, such as minimum city size, land ownership structure, zoning complexity, or infrastructure gaps? Clarifying this helps us design a more targeted and efficient geospatial screening process.

Contaminated areas, overly complex ownership structures, missing access to general infrastructure.

However, given our focus on top urban/metropolitan areas in Europe, please assume Top 7 locations Germany - we currently have opportunities in Berlin, Hamburg and Munich

• Preferred project types and flexibility: Are you strictly focused on mixed-use urban developments, or would single-use projects (such as residential-only or innovation hubs) also fit the placemaking strategy?Understanding this helps define the typology of projects we should include in our location recommendations. (please make a quick research on successful placemaking projects)

Mixed-use urban development, no single-use projects

• Long-term holding vs. project-level exits: We understand that the fund is committed to long-term value creation. Still, are there scenarios where a partial or full exit from individual projects might be considered?

Exit strategy is "remortgaging", i.e.; initial investors are paid back via a senior loan increase.

1. If so, what timeframes or conditions would typically trigger such a decision? This would help us shape our financial model's realistic valuation and terminal value assumptions.

Remortgaging is 5+ years are retrofit/development (see Basel III, IPRE requirements), assume remortgaging after 10 years.

• Evidence for outsized returns: You emphasize outsized returns driven by a unique strategy focused on exponential growth. Could you elaborate on what backs this assumption?

Better places -> Stable rent, lower marketing/brokerage, lower churn/turnover -> higher NOI/profit per sqm + higher valuation factors