CLS expands in Germany with €152m office deal

The transaction entails a gross asset value of €152.2 mln, excluding costs. This represents a net initial yield of 6.3%. 

The properties comprise 89,521 m2 of multi-let office space, with a current occupancy rate of 89%. There are 157 tenants, with a weighted average unexpired lease term of 3.3 years.

The portfolio generates a net rent of €10.1 mln per annum and the top five tenants, representing 28% of contracted rent, comprise Bosch Group, Panalpina World Transport, Alpine Electronics, Level 3 Communications and The State Government of North Rhine-Westphalia.

CLS will buy 11 of the 12 properties through the acquisition of two existing Züblin subsidiaries, and the twelfth will be a direct property purchase. International law firm Taylor Wessing advised CLS on the acquisition.

The cash consideration, net of the net assets acquired with the corporate acquisitions, is €148 mln. The acquisition, which will be financed from internal resources, is expected to be refinanced in part with bank debt in due course, and is expected to complete in the third quarter of 2017.

Fredrik Widlund (pictured), chief executive of CLS, said, 'This acquisition is a significant step towards our stated goal of increasing our presence in Germany. It will add significantly to cash flow and is in line with our strategy of identifying properties in well-located, non-prime areas of major European cities providing highly diversified tenant bases, with scope for us to drive value through local asset management opportunities.

'The decision to acquire this portfolio reflects our confidence in the broader German market, and many of these sites are located in cities where there is a structural shortage of office supply.'

CLS owns and manages commercial real estate in the UK, France and Germany. Following this purchase, and other acquisitions and disposals since January 2017, the German assets will comprise 31% of the group's portfolio, up from 23% at end-216.

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