Dream Global-SWF JV purchases Vienna office for €189m

Toronto-listed REIT Dream Global has partnered with an Asian sovereign wealth fund to acquire an office building in Vienna for €189 mln.

The investment volume for the acquisition of the Rivergate property on the banks of the river Danube reflects a net initial yield of 5.2%, 'with upside potential through leasing and annual indexation', according to Dream Global.

The REIT secured a 5-year, interest-only mortgage at a 55% loan-to-value rate to help fund the deal. Dream Global will also earn asset management fees from the joint venture.

Rivergate comprises 53,300 m2 of space across two towers connected by an enclosed atrium located adjacent to Handelskai station. It was built in 2010 and was the first property in Austria to receive LEED Platinum certification.

The occupancy level is 95% with a weighted average lease term of 7.3 years. Major tenants include the City of Vienna and a variety of international companies such as Thales, Global Blue, Grant Thornton, Sky, Mars and Skandia.

'We are excited about our expansion into the highly attractive Vienna market, which has long served as a strategic gateway to Central and Eastern Europe for many multinational companies,' said Jane Gavan, CEO of Dream Global REIT. 'This acquisition with a new joint venture partner reinforces our reputation as a local European investor with a robust acquisition pipeline and strong management platform. We see Rivergate as the ideal investment for our first venture outside of Germany.'

Refinancing
Dream Global also announced that it had refinanced the term loan credit facility obtained for its initial properties. The new, interest-only facility with Bank of America Merrill Lynch totals €244.1 mln, has a five-year term and bears a variable interest rate equal to the aggregate of the three-month Euribor and margin of 225 basis points. At the current Euribor rate, the interest rate under the new credit facility equates to 2.25%.

Dream Global REIT owns 1.3 million m2 of office, industrial and mixed use properties across Germany and Austria.