Alstria Office buys German office portfolio

Hamburg-based Alstria Office REIT is buying a portfolio of five office properties in Germany from insurance group Huk-Coburg and its subsidiaries. The transaction volume is EUR 53 mln, or EUR 1,791 per m². The properties will be leased back to the German insurer for an annual lease of EUR 3.3 mln. The deal reflects a net initial yield of 6.22 %, and a gross yield of 6.6%.

The transaction is subject to cartel office clearance but closing is expected sometime in 2008. Alstria said the transaction will be financed through the existing credit facility at a 55-60 % loan to value ratio.

The properties are located in Hamburg, Berlin, Dusseldorf, Cologne and Detmold. The total lettable is approximately 29,590 m2, of which 57% will be leased back by Huk-Coburg or an affiliate company of the insurance group on five to ten year leases. About 40% is leased to third-party tenants, which includes Deutsche Bank and Datev.

'This is the third sale-and-leaseback transaction that we execute since we have converted to a REIT two months ago. The exit tax benefit has again allowed both parties to improve the financials, demonstrating the unique competitive advantage of REITs. Given the limited numbers of REITs in Germany this provides us with a unique competitive advantage for future acquisitions,' said CEO Olivier Elamine.

Following the execution of this transaction, Alstria will have invested more than EUR 470 mln in German office properties this year, added CFO Alexander Dexne.

Alstria was advised by Freshfields Bruckhaus Deringer. Huk-Coburg was advised by Linklaters and Catella Corporate Finance.

Alstria office REIT is an internally managed Real Estate Investment Trust (REIT) focused on acquiring, owning and managing office real estate in Germany.