Finnish-Swiss JV buys Berlin office building for €130m

Schroder Real Estate has acquired an office building in Berlin for €130 mln for a joint venture set up by Immobilien Europa Direkt and Finnish insurer Ilmarinen.

The Victoriastadt Lofts has 68,500 m2 of office and storage space and is almost fully let on long-term leases, with major tenants including Deutsche Post and statutory pension insurance scheme Deutsche Rentenversicherung. The weighted unexpired lease term is 6.5 years.

Ilmarinen said it had acquired a stake of around 50% in the property. Immobilien Europa Direkt is an open-end real estate fund managed by Schroders and backed by Swiss institutional investors.

The purchase is the third German acquisition for the Finnish insurer since it entered the market at the end of last year. Ilmarinen bought the Köningstadt Carree hotel and office complex in the German capital in a 50:50 joint venture with a French institutional investor, before acquiring a major office complex on Frankfurt’s Theodor Heuss Allee together with asset manager Amundi, also on a 50:50 basis.

Ilmarinen portfolio manager Mikko Antila said: ‘Berlin has further strengthened its position as one of Europe’s strongest real estate markets. In addition to high investor interest, this is also reflected in growing rental demand for office space: vacancy rates for office premises have declined to a record-low level, which has clearly started to put upward pressure on rents.

‘All in all, Berlin is currently an attractive investment location for Ilmarinen, which seeks long-term return and security for its investments.’

Sascha Harms, managing director of Schroders, said: ‘This property is a strategic investment for us in Friedrichshain. We are expecting growth and further development in the district for the next five to 10 years. The Ostkreuz area is a dynamic market, the infrastructure is good and continually being extended, which will increase its value in the long term.’