Corestate sells German residential portfolio for €83m

Corestate Capital has sold a 2,260-unit German residential portfolio to a listed international institutional investor for €83 mln.

The transaction brings the total revenue from units sold by Corestate since 2013 to more than €1 bn.

The properties in the latest portfolio it has sold are located in the German states of North Rhine-Westphalia and Mecklenburg-Western Pomerania, and were acquired from a distressed seller in early 2010. At the time of the acquisition, the properties were characterised by a significant maintenance backlog, high vacancy levels and loss of rent. Corestate said that it lowered the vacancy rate from 14% to 7% and cut the delinquency rate from 15% to 5% after restructuring the funding, committing 'massive capital expenditure' toward redevelopment measures, and taking an active asset management approach.

COMMENT
Thomas Landschreiber, chief investment officer of Corestate Capital, commented, 'We focus on creating value in real estate as opposed to passive buy-and-hold strategies. Our asset management platform covers the entire spectrum of real-estate-related deliverables, which made it possible for us to stabilise this distressed portfolio within four years and to successfully reposition it on the market. Investors particularly appreciate our strong focus on the instant realisation of capital growth and the brisk pace in portfolio transactions. Maintaining momentum plays an ever increasing role in today’s market.

'Given the persistently upbeat sentiment on the German investment market, the comparatively moderate entry-level investment volumes, and the low level of interest on the capital market, real estate investments in Germany remain an interesting proposition. Indeed, the German property market benefits more than others from the low levels of interest, which are actually out of step with the economic performance. In turbulent times like these, real estate remains the sole true investment alternative.'

Corestate is a private equity investor based in Zug, Switzerland, and with offices in Frankfurt, London, Luxembourg, and Singapore. The business has invested more than €3 bn in real estate both through direct and indirect transactions since its initiation in 2006. In Germany, Corestate specialises in acquiring under-performing residential portfolios which it subjects to comprehensive asset management to bring the assets back to institutional-quality for resale.