Benson Elliot snaps up distressed German resi portfolio

Benson Elliot Capital Management, the UK-based private equity real estate fund manager, has exchanged contracts with a number of subsidiaries of Speymill Deutsche Immobilien Company (SDIC), to acquire the Tor residential portfolio on behalf of Benson Elliot Real Estate Partners III. Financial details were not disclosed.

The transaction involves the acquisition out of receivership of over 3,000 residential units and ancillary commercial units, in 80 properties in Germany. Debt funding for the transaction has been secured from Landesbank Berlin.

The transaction, directed by special servicer Hatfield Philips International and receiver Ernst & Young working in conjunction with the borrowers, represents one of the first enforced sales of a defaulted CMBS loan in Germany. The principal balance of the Tor loan was EUR 187 mln as at year-end 2011.

'We’re at the beginning of a long, slow unwind of a period in which property portfolios were hurriedly assembled and aggressively financed,' said Trish Barrigan, Benson Elliot Senior Partner. 'The Tor portfolio may be one of the first defaulted CMBS portfolio loans to be resolved - it certainly won’t be the last.'

The Tor portfolio assets are located in prime metropolitan areas, with three quarters of the properties situated in Berlin, Frankfurt, Munich, Hamburg, and Cologne. The largest concentration - over 60% of the portfolio - is situated in the capital, Berlin. The properties range from individual buildings to residential complexes, comprising a total area of just over 230,000 m². Portfolio occupancy at year-end 2011 was 91%.

Philipp Braschel, Benson Elliot Principal and head of Investment in Germany, said: 'Good quality residential properties in Berlin and other strong and growing German cities are among the most sought-after real estate assets in Europe today.'

The Tor acquisition follows Benson Elliot's 2010 acquisition of the 700-unit Silvertower residential portfolio in Berlin.

The Tor portfolio was assembled in 2006 by SDIC, the former AIM-listed residential holding company, through a series of acquisitions. The portfolio was subsequently debt financed through a CMBS loan (the Tor loan), part of the Mesdag (Charlie) B.V. issuance which closed in April 2007. The Tor loan, the largest loan in the securitisation, was transferred to special servicing in November 2010 following a loan payment default.

Benson Elliot was advised on the transaction by Olswang. The special servicer and receiver, Ernst & Young, were advised by Ashurst, Cains, In-West and Ernst & Young Real Estate.