Allan Saunderson is managing editor of Property Finance Europe and a contributor to GlobeSt.com.
BERLIN-Vienna-quoted conwert Immobilien has bought three property companies from Germany's Colonia Real Estate comprising 1,016 Berlin apartments for €67 million. Kronberg International also took part in the transaction, purchasing a minority share of 5.1% . CRE said the purchase price was above book value, at an entry yield of over 7%.
CRE is Germany's third largest listed residential property company and the portfolio it is divesting comprises 937 residential and 79 commercial units, built in 1900-1920s. The consortium will also take over existing financing of the real estate portfolio totaling €50 million. The closing should be finalized by the end of September.
"We were able to reduce the vacancy rate (of the portfolio) from 11.4% to less than 6% in a relatively short time. Today's sale is a further signal for a recovery of the transaction market and a steadily increasing demand for residential real estate," noted Stephan Rind, CEO of Colonial Real Estate.
The property portfolio totals 76,600 square meters, of which 90% are apartments and has further earnings and value enhancement potential. An average purchase price of €875 per square meter was achieved featuring entry yields of over 7% and vacancies of below 6%.
Conwert CEO Johann Kowar commented: "Berlin is one of the focal points of our investment activity and a place we are further expanding our commitment. The acquisition of .. represents an attractive expansion of our portfolio."
He added that the deal is a clear-cut indication of an upswing in the investment market: "The development of residential property markets is stable, and the willingness of banks to finance projects implemented by solidly profitable companies has significantly risen recently. Besides maintaining our very successful sales business, where we continue to achieve high selling margins, we will once again increasingly take advantage of acquisition opportunities in Austria and Germany."
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