MAGAZINE: DEAL WATCH 2013: Chasing higer yields

Cross-border property investors are slowly ramping up activity in Europe’s smaller markets in search of higher yields

Following a now-familiar pattern in Europe’s real estate industry, another major residential property transaction in Germany helped confirm the country’s status as a safe haven market in April. Germany accounted for 60% of the total volume of large deals recorded by PropertyEU Research in April 2013.

The German volume of €3.6 bn was inflated by the acquisition of 32,000 housing units by an institutional consortium led by listed German residential property investor Patrizia Immobilien for €2.4 bn. The consortium’s acquisition of 92% in the owner of the portfolio, GSW, from BayernLB equates to 40% of the overall volume of €6.1 bn tracked in April (PropertyEU’s research is based on European real estate transactions of €20 mln or above in which the financial details were reported or could be ascertained from other sources). The GSW transaction was the largest European transaction of the year to date, involving no less than 27 investors - all from Germanspeaking countries. They included 14 pension funds of professional associations, eight insurance companies, three savings banks and two pension funds. The prize they captured was also very large: at-end December 2012, GBW group owned 32,000 residential and 300 commercial units located in Bavaria. In 2012, the portfolio generated a rental income of €149.5 mln. The ‘Big Three’ (Germany, the UK and France) so monopolise our deal data list for April 2013 that it is not until the seventh-largest transaction by volume that we encounter another country. That deal involved Hines acquiring the New City office complex in Warsaw for €150 mln. As Poland is widely regarded as a core market by cross-border investors, the transaction is hardly unexpected. Underlining the cross-border nature of the deal, Dutch Bank ING provided funding for the acquisition of the two-building complex. One has to scroll down the data list another five places to come to a deal in a location other than the ‘Big Three’ and Poland.

DOUBLE DUTCH
The transaction in question involved Victory Advisors taking its second punt on Dutch offices, a core market seen by many as suspect due to high vacancy. The Luxembourg-registered privately held investment and advisory firm, Debtwire originally reported, acquired a portfolio of offices located in B locations in the Netherlands from UBS Euro Value Added (EVA) Real Estate for €85 mln. Aareal Bank financed the transaction, which was very much on the added-value rather than core side of the spectrum. The 84,000 m2 portfolio comprises office properties in Amsterdam, Schiphol, Capelle aan den IJssel and Arnhem, and a warehouse in Hoofddorp.

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PropertyEU Magazine June 2013 no. 5