BUWOG, a wholly owned residential property subsidiary of Austrian listed group Immofinanz, has acquired a portfolio of apartments in the central German city of Kassel.

BUWOG, a wholly owned residential property subsidiary of Austrian listed group Immofinanz, has acquired a portfolio of apartments in the central German city of Kassel.

The purchase price of €45.8 mln reflects a gross return of 9.16%.

The 1,190 assets, with total lettable space of 88,483 m2, are situated in three locations in the south-western part of the city.

The portfolio has a low vacancy rate of 2.5% and a stable tenant mix with low fluctuation. The average rent of €4.05 / m2 is below the market average for Kassel and therefore indicates upward potential as well, BUWOG said.

Nearly three quarters of the portfolio are accounted for by the Kassel-Waldau location near the centre, nearly one quarter by Kassel-Oberzwehren, the small remainder by Kassel-Eichwald. Rental revenues reach a total of €4.2 mln per year.

'Our acquisition strategy differs from those of numerous competitors in that we are not focused on the biggest, but on the best markets. For us the decisive criteria are the upward potential for rents and the opportunity to grow further at one location,' said BUWOG managing director Alexander Hoff. 'The Kassel portfolio was an excellent buying opportunity with high yields and sound pricing, and for that reason we are also exploring other potential acquisitions in the city'.

The acquisition is part of Immofinanz's strategy to increase BUWOG's holdings in strong markets in Germany and in Greater Vienna while selling assets in Upper Austria to prepare for a spin-off of the residential business.

BUWOG has made two other acquisitions in Germany so far this year. The company purchased 1,916-asset residential portfolio in Berlin and a 900-asset portfolio in northern Germany.