Corestate acquires 'stressed' portfolio in Germany

Swiss investor Corestate has acquired a German commercial and residential portfolio from a 'special situation'.

The buyer and vendor agreed not to disclose the investment volume but Corestate said that the market value came to about CHF355 mln (€290 mln).

The portfolio was purchased at an average rental yield of 9%, which Corestate said was expected to compress over time as the underlying assets were improved by asset management.

The commercial assets are located in metropolitan areas such as Berlin, Bonn and Freiburg and comprise six office buildings, which are let to a German blue-chip company. Corestate said that the buildings yield steady cash flows and are characterised by 'debt restructuring and redevelopment potential'.

The residential assets consist of 6,000 units which are located across major cities in North-Rhine-Westphalia (NRW).

The buildings were acquired out of a forced administration and have already been recapitalised. However, the assets are characterised by a maintenance backlog and require a substantial amount of capital investment, the buyer said.

Ralph Winter, founder of Corestate Capital: 'This transaction perfectly fits our investment strategy as Corestate is ideally positioned to recapitalise debt and equity and reposition single assets to unveil intrinsic values of the underlying real estate.

'Although non-core in its risk profile, debt financing for the portfolio was readily obtainable from various lenders who value our active asset management approach and track record in asset turn-arounds. Our club deal approach shows that there is significant investor interest even in transactions in the range of €300 mln and above.'

Corestate, he added, had decided to expand its investor relations team by hiring further expertise 'to realise club deals in a volume of €1 bn and more'.