REAL ESTATE – DB Real Estate, the property fund arm of Deutsche Bank, has sold six properties worth €500m from its core German fund to Fortress, the US private equity investor.
A spokesman for DB Real Estate said the properties were sold either at “market value or above it”. CB Richard Ellis advised Fortress on its purchase of the properties, which are office buildings located in Berlin, Wiesbaden, Düsseldorf as well as Frankfurt and its suburbs.
The divestment is part of DB Real Estate’s ongoing restructuring of the German fund, called Grundbesitz-Invest. Last spring, DB Real Estate sold €500m worth of properties from Grundbesitz-Invest to a pension fund in Quebec. Another €300m worth of properties from the fund went to REIT Asset Management of the UK.
The restructuring follows a turbulent time for Grundbesitz-Invest. In mid-December, DB Real Estate was forced to close the fund for three months after word of a write-down of its properties caused a wave of panic-selling among investors. In the two days prior to the shutdown, the first ever for a German open-ended property fund, outflows from Grundbesitz-Invest totalled €600m.
In the write-down, conducted by independent surveyors, the value of Grundbesitz-Invest’s holdings were reduced by an average of 5.7%.
As a result of the property divestments but also further investor redemptions, Grundbesitz-Invest’s assets have dwindled to €3bn from €5.4bn when DB Real Estate re-opened it in early March.
Fortress’ acquisition of the DB Real Estate properties is its second biggest in Germany’s commercial property market. Last year, the private equity investor paid €2bn for German properties previously owned by Dresdner Bank, which is part of bancassurance giant Allianz.
Fortress has also acquired no less than 100,000 flats around Germany. It plans to float part of its €7bn German portfolio next month on stock exchanges.