France's FdR buys German resi assets for €240m

French REIT Foncière des Régions' Immeo unit has signed an agreement to acquire a portfolio of 3,400 residential units in Berlin and Dresden for around €240 mln, including taxes.

The deal represents an average value of about €1,200 per m2, the company said. Generating €15 mln of annual rents, the portfolio will generate a gross yield of 6.3%.

The acquisition, which is expected to be finalised by July 2014, will be financed partly through bank debt and partly through a capital increase to be carried out by Immeo.

'With this transaction, FdR confirms its strategy to strengthen its position in the German residential sector,' the company said, adding that the market offers value creation potential as reflected in the regular increase of rents and in the capital gains in the long term.

FdR, which has been active in this market since 2005, is looking to strengthen its presence in the residential sector of cities such as Berlin, Dresden and Leipzig.

In late 2013 the company invested €351 mln in four German residential portfolios representing a total of 4,000 residential units, largely located in Berlin (78% by value) and Dresden (21%). The assets were acquired on the basis of an average gross yield of 6.5%.

FdR announced earlier this year that it is seeking to refocus its core business on offices with two diversification activities: German residential real estate and hotels. In the housing sector, the company is separating its French and German business activities. The German business activities will be acquired by Foncière des Régions and other major shareholders in its residential arm, FDL. Foncière des Régions is a majority shareholder in FDL with a stake of 59.7%, followed by Crédit Agricole Assurances (15.1%), Cardif Assurance Vie (13.7%) and Generali (8.9%).

As a result of the move, FDL will be refocused on French residential property and its property assets will decrease from €3.3 bn to €800 mln.