Eurocastle, the closed-ended fund focused on the German commercial real estate sector, has purchased a large property portfolio from Deutsche Bank's property unit for an all-in price of EUR 2.1 bn. The sale involved a total of 61 commercial properties primarily in and around five large German cities from the open-ended fund DB Grundbesitz Invest.
Eurocastle, the closed-ended fund focused on the German commercial real estate sector, has purchased a large property portfolio from Deutsche Bank's property unit for an all-in price of EUR 2.1 bn. The sale involved a total of 61 commercial properties primarily in and around five large German cities from the open-ended fund DB Grundbesitz Invest.
The properties, with a total of about 840,000 m2 of leaseable area, consist mainly of Class A offices in Berlin, Frankfurt, Munich, Berlin, Dusseldorf and Hamburg. Some 83% of the portfolio is currently let with average lease terms of 5 years. The initial rental yield is about 5.6%.
Deutsche Bank said it will return EUR 200 mln in profit to investors of the DB Grundbesitz Invest fund. The deal is likely to be finalised by next March. Last year the bank froze the fund to stop investors withdrawing their money in what was at the time the first lock-up of a fund in Germany.
Eurocastle Investment Ltd. is a Guernsey-domiciled unit of Fortress Investment Group in America. It said it will fund the purchase with equity raised recently through an institutional offering of its ordinary shares and long-term, fixed rate debt financing. The debt financing will amount to approximately 75% of assets at an average yield of approximately 4.6%.
Following completion of its 2006 commitments, Eurocastle will own approximately EUR 5.5 bn of German commercial real estate with total leasable space of 2.5 million m2. By rent, the portfolio will consist of approximately 59% office, 17% retail, and 8% bank halls. Geographically its portfolio is concentrated in the Frankfurt region (33%); Munich (12%); Dusseldorf (6%); Hamburg (7%); and Berlin (6%).
