GERMANY - DEGI, a German provider of open-ended real estate funds, said one of its funds had sold near €3bn worth of properties in Germany, including Eurotower, the current seat of the European Central Bank (ECB) in Frankfurt.
DEGI said the buyer of 37 properties worth €2.45bn and currently held by its Grundwert-Fonds, but which does not include Eurotower, is Whitefall Funds, a property investment unit of Goldman Sachs.
At the same time, Eurotower, which is worth €430m, has been sold to RFR Holding, a New York-based developer. While all of Eurotower is currently rented to the ECB, the bank plans to move into its new headquarters in Frankfurt’s east end by the end of the decade.
These latest transactions follow DEGI’s announcement last February revealing it would cut Grundwert’s German exposure to around 60% of property assets.
"The transactions will not only be beneficial in terms of return. With a streamlined property portfolio, the fund will also become easier to steer," Bärbel Schomberg, DEGI’s chief executive said at a news conference in Frankfurt.
According to DEGI, Grundwert now owns 25 properties whose total market value is €2.28bn, of which German properties account for 58% of that volume followed by properties in the Netherlands (16%), the UK (14%) and Italy (12%).
In the previous business year ended September 30 2006, Grundwert-Fonds’ returned 2.3% but when asked what the fund’s return would be for the current year, Schomberg gave no estimate.
Though targeted mainly to retail clients, the German open-ended real estate funds industry is worth more than €70bn, having attracted some institutional money, particularly from small banks.
Last February, DEGI also announced all of its property funds – retail and institutional – would invest €2bn in new properties in the mid-term. But Schomberg could not be drawn on whether the surge of liquidity from the near €3bn transaction would impact on DEGI’s investment plans.
DEGI’s institutional funds, which are also targeted at pension schemes, currently have a volume of €1.1bn. In late April, a new institutional fund was launched which specialises in European shopping centres and other specialty stores.
According to DEGI, part of Allianz Global Investors, the fund aims to take in €1.5bn in assets over the mid-term.