Morgan Stanley Real Estate Investing is buying a €1.1bn German residential portfolio from BGP Holdings.
Both the business and assets of Luxembourg vehicle BGP Investment are being bought by Morgan Stanley Real Estate Investing.
BGP Holdings, originally a joint venture between Babcock & Brown – which liquidated in 2009 – and GPT, owns 16,000 residential units in Berlin, Kiel, Rendsburg and Cologne.
BGP Investments last year asked JP Morgan to explore the option of a German listing for the spin-off, according to Australian media reports at the time.
Rod McGeoch, chair of BGP Holdings said: “The sale of the portfolio is a highly commendable outcome, given the starting point in 2009 of a company with no value and negative equity, to now being able to realise nearly €600m on behalf of our patient shareholders.
“The transaction marks the end of a long and at times difficult journey to restore value to the BGP portfolio and is made all the more commendable in light of current market volatility.”
McGeoch said “volatile and unpredictable market conditions” had added a further layer of complexity to the task of selling the assets.
The firm, he said, had focused on its German residential portfolio, increasing asset values by renovating properties and cutting vacancy, as well as increasing rents.
“At the same time we have disposed of under-performing retail, commercial and light industrial properties, as well as selling many of the less prospective residential units,” he said.
He said the portfolio had been made up of as many as 250 different special purpose vehicles.
The transaction is expected to complete by year end.