Netherlands-based BXR Real Estate Investment has completed one of the largest residential portfolio transactions in Germany so far this year by acquiring a 59% stake in the listed Danish Tower Group.

Netherlands-based BXR Real Estate Investment has completed one of the largest residential portfolio transactions in Germany so far this year by acquiring a 59% stake in the listed Danish Tower Group.

The deal follows the financial restructuring of Tower Group in which BXR entered into a DKK 162 mln (EUR 23 mln) underwriting agreement for the majority stake in the company that has a market capitalisation of DKK 292 mln (EUR 39 mln).

Tower Group's sole business is the management of a residential portfolio with some 9,900 units including ancillary commercial units in Germany. The main portfolio locations are Berlin (42% of all residential and commercial units), Wuppertal (27%) and other cities in North Rhine-Westphalia (26%).

The real estate portfolio was largely assembled via single asset and small portfolio transactions between 2006 and 2009. It currently comprises 9,200 residential units, 700 commercial units and 2,850 parking and other units with a total lettable area of some 674,000 m2.

Due to the general downturn in the real estate market the company had suffered a series of operating losses, leading to a highly constrained liquidity situation. Tower Group decided to seek a new investor willing to inject fresh equity into the portfolio for the purposes of modernisation and lowering the level of vacancy which was at 12.1% at the end of 2009.

The complex capital restructuring involved five German banks acting as senior lenders, six Danish banks holding junior loans, and further subordinated bond owners, as well as Danish institutional and private shareholders,

Cushman & Wakefield (C&W) introduced BXR to Tower Group in May 2009 and its Corporate Finance department in Germany advised BXR with regard to the real-estate-related due diligence and corresponding business plan. Dewey & LeBoeuf were legal advisers to BXR. KPMG was responsible for accounting and tax issues and Arcadis handled technical due diligence.