REAL ESTATE - Eurocastle, the offshore real estate investment vehicle of US private equity firm Fortress, has acquired a 61-property German portfolio from DB Real Estate for €2.1bn.
The firm will fund the deal via a combination of the proceeds of a share offer earlier this year and debt. Debt financing will account for 75% of the purchase.
The DB properties, which sit within the Grundbesitz Invest fund, comprise all that company’s commercial real estate assets. Located in and around Berlin, Frankfurt, Hamburg, Munich and Dusseldorf, they have a collective vacancy rate of 17% and an average remaining lease term of five years.
Initial rental yield on the deal is 5.6%.
Acquisition of the DB portfolio gives Eurocastle a German real estate portfolio worth €5.5bn, much of it comprising privatised social housing.
Meanwhile, a letter to the Carlyle group from retail developer Freeport’s largest shareholder has cleared the way for the private equity firm to acquire it.
Carlyle had been in discussions with Freeport about a possible cash offer for the company. Laxey Partners, which owns 29.7% of Freeport, said in the letter that it was willing to negotiate an "irrevocable undertaking" to Carlyle to accept a cash offer.
Under this commitment, Laxey will not sell or transfer shares, accept rival offers, or attempt to acquire an additional shareholding in Freeport.
The deadline for Carlyle to complete due diligence and make an offer for Freeport – which is cooperating with its efforts – is 29 December. However, in a statement to the regulators, Carlyle said there was no certainty that an offer would be made.
Although the dealmakers declined to comment, a source close to the deal said: "When larger players agree, smaller shareholders usually follow suit."