DEAL IN DEPTH: SEB kicks off new year with slew of sales

Frankfurt-based SEB Asset Management has kicked off the new year with a slew of sales as it edges closer to its goal of liquidating its €4.63 bn ImmoInvest fund by end-April 2017.

In early February, SEB announced the sale of a €420 mln German office portfolio comprising 11 properties to Canadian investor Dundee International REIT. The portfolio, which totals around 137,000 m2, includes properties in Frankfurt, Hamburg and Munich. SEB has not disclosed the yield. The closing is expected to take place by the end of March 2013.

‘Like other open-ended funds that are in liquidation mode, they found a willing buyer for an acceptable price,’ one fund manager, who asked not to be identified, told PropertyEU.

Currently, 12 - or 23% - of Germany’s open-ended public funds, with combined assets of almost €19 bn, are in the process of being liquidated. Some funds, such as DEGI Europa, have to be liquidated by mid-October this year. Others, such as Credit Suisse’s CS Euroreal fund, that holds €4.9 bn of assets, have until April 2017 to wind down.

In addition, there are four frozen open-ended public funds, including an additional two SEB funds: SEB’s ImmoPortfolio Target Return fund is frozen until June this year, with its Global Property fund on ice until 7 December 2013. However, combined, the four frozen funds represent just 2% of Germany’s €82 bn open-ended public fund industry, according to the BVI, which represents the interests of the German investment fund and asset management industry.

SEB appears to be in a hurry to liquidate its ImmoInvest fund as quickly as possible. Last year, it paid out €1.3 bn to investors, the highest payout in 2012 of any of the German open-ended funds being liquidated, an SEB spokesperson told PropertyEU.

‘This underlines the quality of the portfolio as well as our aim of achieving the best possible results in the interest of investors during the dissolution period. We expect to have completed further sales before the next distribution date and that the liquidity generated can be distributed with the next payout at the end of June 2013,’ the spokesperson added. Payments will be repeated at half-yearly intervals.

For Dundee International REIT, the acquisition offered a good opportunity to grow its German portfolio, which currently comprises 294 office, mixed-use and industrial properties which are mainly located in urban centres. Around 64% of its German portfolio is leased to Deutsche Post.

‘Germany continues to present a very attractive investment environment,’ Dundee vice-chairman Michael Cooper said in a statement. ‘With this remarkable portfolio of 1.5 million square feet of high-quality office space, we will continue the transformation of our business, improve the cash flow of the REIT's portfolio and solidify our position as a significant owner and operator of real estate in the German office market.’ Dundee declined to provide further comment.

In addition, the acquisition gave Dundee access to some German markets that are notoriously difficult to crack, Timo Tschammler, a member of the management board at JLL in Frankfurt, told PropertyEU.

‘What strikes me is that this portfolio includes properties in some locations, such as Hamburg and Stuttgart, which are very difficult for international investors to access. Just 10% of commercial real estate deals last year in Stuttgart involved international investors, compared with 15% in Hamburg, while the German average sat at 40%. As such, this acquisition was a good way for Dundee to enter these markets and fits in with the REIT’s general strategy. In terms of profile and location - of not focusing on trophy or core assets and also ‘B’ cities such as Nurnberg - it’s a good allocation with good critical mass, too,’ Tschammler added. JLL did not advise on the deal.

Separately last week, SEB ImmoInvest sold the Grand Hyatt Hotel in Berlin’s Potsdamer Platz to Al Rayyan Tourism for an undisclosed sum. The five-star hotel has 342 rooms. While SEB has not disclosed the yield, typical hotel yields in Germany’s ‘Big Six’ cities, which includes Berlin, are between 7% and 8%, according to Frederic Le Fichoux, head of hospitality for the CEE region at C&W.

Al Rayyan Tourism is a subsidiary of Qatar-based Al Faisal Holding, which has already acquired a Berlin-based hotel from SEB ImmoInvest. The German Sustainable Building Council (DGNB) awarded the Quartier Potsdamer Platz with a silver certificate for sustainable urban quarters in October 2011.