NorthStar Realty Finance Corporation is closing in on a major new acquisition in Europe after its debut purchase last month of a 186,000 m2 portfolio from German asset manager SEB Immobilien for around €1.1 bn.

NorthStar Realty Finance Corporation is closing in on a major new acquisition in Europe after its debut purchase last month of a 186,000 m2 portfolio from German asset manager SEB Immobilien for around €1.1 bn.

The New York-listed REIT is understood to have signed a binding agreement with German insurance company Provinzial NordWest to acquire the Trias portfolio which was put on the market last year through PwC.

The portfolio comprises 38 properties including offices, retail and industrial assets and one hotel in eight countries including Germany, France, Italy, Spain, Portugal and Belgium. Initially marketed for €450 mln, the 250,000 m2 portfolio is believed to be selling for €500 mln after having received bids from a number of players including private equity firms Apollo and Area. The assets were historically managed by IVG, Deka and Internos.

PropertyEU understands that the deal is expected to be announced at the end of January.

NorthStar and Provinzial NordWest declined to comment. C&W is advising NorthStar on the deal.

The deal comes hot on the heels of NorthStar’s debut European acquisition in December. The US investor joined forced with Cale Street Partners, a London-based debt firm launched last year, to fork out €1.1 bn to buy a package of 11 assets, which are well located and well let with an average occupancy rate of 93%.

By investing in Europe, NorthStar is betting on rental growth and further yield compression on the old continent, according to chairman and CEO David Hamamoto.

DEBUT TRANSACTION
Commenting on the €1.1 bn acquisitioned announced so far, Hamamoto said ‘the size and execution complexity of this transaction, spanning seven countries and three currencies, demonstrates the strength of the group’s investment platform’.

‘Our base case assumption is that we retain these high quality assets as we expect rents to grow and cap rates to compress in the coming years,’ he noted. NorthStar Realty, which manages $16 bn of assets, expects to earn an initial leveraged yield of approximately 13%, based on estimated year-one net operating income.

The acquired portfolio, known as SEB Europe Prime Office, was marketed through Eastdil in the second part of last year and raised interest among a number of overseas players including Asian sovereign wealth funds. The transaction volume reflects the current market value of the portfolio, according to vendor SEB Asset Management.

The deal is expected to close in the first quarter of 2015.

‘The great interest by global institutional investors in our Europe Prime Portfolio shows that we have created an attractive investment product. As part of our portfolio strategy, we will continue to act on the international investment market with attractive core and value-add products,’ commented Barbara Knoflach, CEO of SEB Asset Management.

The purchase was carried out with financing from Cale Street, which was set up in July by former Goldman Sachs Whitehall funds head Ed Siskind and Goldman European real estate finance head Ramón Camina-Mendizabal with €1.2 bn of backing from the Kuwait Investment Authority.

The buildings, which are part of the SEB ImmoInvest, SEB ImmoPortfolio Target Return Fund and SEB Global Property mutal funds, are let to strong tenants including BNP Paribas, Ernst & Young (EY), KPN, Deloitte and Cushman & Wakefield.

The assets have an average age of eight years and a weighted average remaining lease term of six years with periodic rent reviews. SEB has retained asset management of the portfolio.

LIST OF 11 ASSETS ACQUIRED FROM SEB
Portman Sq. House, Portman Sq., London - 10,800m2 - €157 mln in value
Condor House, St. Paul’s Churchyard, London - 12,200m2 - €137 mln
Berges de Seine, Quai de la bataille de Stalingrad, Paris - 15,400m2 - €145 mln
Claude Bernard, Bd. Macdonald 160-162, Paris - 11,200m2 - €71mln
Maastoren, Wilhelminakade, Rotterdam - 37,800 - €160 mln
Teleportboulevard, Amsterdam - 23,000 m2 - €88 mln
Via della Chiusa, Milan - 25,000 m2 - €156 mln
Lindholmspiren, Gothenburg - 9,200m2 - €31 mln
Drehbahn/Dammtorwall , Hamburg - 19,400 m2 - €59 mln
Valentinskamp 88-90, Hamburg - 14,800 m2 - €53 mln
Rue de la loi, Brussels - 6,700 m2 - €17 mln