Degi sells EUR 600 mln German portfolio to Oaktree

German property fund company Degi Deutsche Gesellschaft fur Immobilienfonds has sold a portfolio of 12 properties in its home market to companies or funds managed by US private equity firm Oaktree Capital Management.

The sale of the portfolio, known as 'Homer', is worth about EUR 600 mln and came at the end of a competitive bidding process launched in the third quarter of the year. The acquisition marks a significant expansion of Oaktree's German property platform and that of its co-investor Colonia Real Estate, which has a 4.8% share. On completion of this transaction, Degi said it will have halved the vacancy ratio of its Grundwert-Fonds fund to 5.9% in less than six months.

The sale of the Homer portfolio followed hard on the heels of the EUR 2.43 bn disposal of Degi's Spring portfolio at end-September as well as new investments in Helsinki and Rome and marks the transformation of the Grundwert-Fonds unit into a European property fund. Around 61.3% of the fund's assets are now located outside of Germany.

In the future, the fund - which will be renamed Degi Europa at the beginning of next year - aims to hold 70% of investments in European economic centres and the remainder in Germany. Further property purchases in Paris, Prague and Budapest are planned. Its investment strategy is focused on high-quality properties in selected locations and the fund enjoyed a one-year return of 4.2% as of October 31, 2007.

'With its more European profile, the product now stands for a property-focused investment with a stable return and a significantly upsized proportion of foreign earnings,' management board spokesperson Barbel Schomberg said in a statement.

Catella Corporate Finance acted as consultants to Degi. Earlier this year Catella managed the EUR 2.43 bn Spring portfolio for Degi.