REAL ESTATE – The German government plans to sell €500m worth of its own real estate annually as part of a rationalisation programme, the head of the federal agency in charge of the properties says.
The government’s properties include 58,000 flats nationwide, military training areas, ageing office buildings and various ministries. The portfolio is valued at around €10bn.
But in a newspaper interview, Hans Hinrich Schroeder-Hohenwarth, the new head of the Bundesanstalt für Immobilienaufgaben, said he had been given the task of selling 83% of the total portfolio.
“This means that each year, we plan to sell €500m worth of real estate, starting, ideally, with that which is losing money,” he told the Financial Times Deutschland.
Of the government’s flats, Schroeder-Hohenwarth said the agency would offer 55,000. He added that the agency would consider using German Real Estate Investment Trusts to sell the properties, if, as assumed, the government legalised the vehicles next year.
Schroeder-Hohenwarth noted that a key motivation behind the planned divestments was that income from rents did not suffice to cover the costs of maintaining the properties. He added that the government’s ministries, which are valued at €1.4bn, were not part of the planned divestments.
Anglo-Saxon private equity firms, including Fortress, Guy Hands’ Terra Firma and Cerebus, have bought hundreds of thousands of flats in Germany, many of which have were formerly owned by state and local governments.
Classic short-term investors, these firms do not plan on holding on to the properties but instead sell them when they can realise a profit. Fortress, for example, plans to float part of its multi-billion euro German property portfolio on the stock exchange by the beginning of 2007.
Separately, DekaBank said it had appointed Matthias Danne as its new board member with responsibility for real estate. Danne joins DekaBank from building society BHW, where he was part of that firm’s board until last February when BHW was sold to Postbank, a retail bank.
Danne replaces Fritz Oelrich, who will now serve as DekaBank’s chief financial and risk officer.
DekaBank also said that its core German fund, called Deka ImmobilienFonds, had sold another property in London’s West End. The ‘Times Place’ office building was acquired by the fund in 1997 for €41m and sold to UK insurer Legal & General for €123m.
The divestment was Deka ImmobilienFonds third in just under a month and part of its ongoing restructuring.