Alstria buys VastNed office portfolio in Germany for EUR 85m

German REIT Alstria Office has signed an agreement to acquire a German office portfolio from VastNed Office/Industrial for EUR 85 mln.

The portfolio comprises three office properties of which one is located in Dusseldorf and two in Frankfurt. The total lettable floor space amounts to 42,700 m². The book value as per end March 2011 amounts to EUR 102.9 mln.

Alstria said the value-add portfolio generates a passing rent of around EUR 6.8 mln per annum, reflecting an initial yield on cost of around 7.6%. However, the rental income is set to drop to EUR 4.5 mln in 2012, following the termination of a number of existing leases. The total vacancy rate in the portfolio as of 1 January 2012 will be 41%. The transaction is expected to close within the third quarter of 2011.

'Following the execution of this transaction, we will have invested the funds raised in the last capital increase, in line with our announcement in March', said Olivier Elamine, CEO of Alstria. 'We think it's the right time to take up some more operational risk and benefit from the strong tenant demand supported by the sustainable growth of the German economy. The assets we have acquired offer substantial value creation potential, which will be unlocked by Alstria’s proven asset management expertise.'

VastNed Offices/Industrial said the disposal stemmed from a strategic review carried out earlier this year, which found that its German assets 'may find a better place in a different portfolio.' The German offices were also considered non-core to by Nieuwe Steen Investments (NSI), which is in the process of merging with VastNed Offices/Industrial.