Over €2b of office properties come to market across Europe

Office assets for a total value of over €2 bn have been put on the market with Union Investment’s €1bn Aqua portfolio representing the largest package on the block.

Hamburg-based Union Investment Real Estate confirmed last week that it has put a multi-country office portfolio on the market to take advantage of the current strong demand for European property.

Market sources put the value of the portfolio, known as Aqua, at between €900 mln and €1 bn. It consists of 17 office properties held by various Union retail and institutional funds and includes assets in the cities of London, Paris, Vienna, Helsinki, Frankfurt, Munich and Rotterdam.

The assets provide a total of 278,000 m2 and generate around €60 mln in annual rents.

'The portfolio consists of assets which Union Investment would have divested in single transactions over the short- to mid-term… mainly for portfolio strategic reasons,' a Union Investment spokesman said.

He noted that the current market environment offers good opportunities to bundle single assets into a portfolio and thus appeal to other investor groups. In 2014, Union sold assets worth around €750 mln in 19 single deals, compared with average annual disposals of €1 bn.

The deal would mark one of the first multi-country portfolio deals in Europe since the crisis and is likely to appeal to US investors looking to build a platform on the continent.

It follows a similar transaction by NorthStar in late 2014, when the US REIT made its European debut with the purchase for around €1.1 bn of a 186,000 m2 European package from asset manager SEB Immobiliën. The company followed this up in January with the acquisition of the Trias portfolio from German insurance company Provinzial NordWest for €500 mln.

In Italy, some €300 mln of office properties have been put up for sale. Fondi Immobili Pubblici (FIP), a state-owned fund managed by Investire Immobiliare Sgr, is believed to be in talks with US investor Kennedy Wilson for the sale of a portfolio of Italian office buildings in a government-let deal worth between €250 and €300 mln.

The deal, which is being negotiated off market, includes a dozen offices in northern Italy which were not included in the recent sales by FIP to Blackstone and Cerberus.

Blackstone bought five FIP office buildings in Milan (2), Genoa, Turin and Como for about €160 mln. In a separate transaction, FIP has sold another sub-portfolio consisting of three army barracks in Bari, Rome and Bergamo as well as a number of other smaller assets across Italy to US private equity group Cerberus for around €250 mln.

Investire Immobiliare, part of Banca Finnat Euramerica, is also understood to have hired Jones Lang LaSalle to sell the remaining assets not included in these transactions on an asset-by-asset basis.

Launched in 2004, FIP was the first real estate fund to be created by the Italian government as part of a major privatisation effort and owns around 400 buildings across the country. The assets for sale are located mainly in northern Italy, in the regions of Lombardy, Piedmont, Liguria and Friuli-Venezia Giulia, as well as in the Lazio and Tuscany regions with some located in the south - Abruzzo and Apulia.

They are home to public administration offices including public pension funds INAIL, INPS, the ministry of transport, the Internal Revenue Service, the Customs Agency, the police, the ministry of labour and the Territorial Agency. All the properties are leased with a master lease agreement to the Agenzia del Demonio, the country's public real estate agency, with a contract running to December 2022.

In San Donato Milanese, near Milan, broker Cushman & Wakefield is believed to have received a mandate to sell Torre Beta, a 12,000 m2 office scheme let to oil and gas giant Eni and worth around €30 mln.

Other office towers for sale include Astro in Brussels, which is being marketed by Spanish property company Luresa with a price tag of €160 mln.

The 107-metre high office tower has received a dozen bids with the winning party expected to be selected as early as next week. The property is expected to trade for a record low yield of 4.5%.

Luresa bought the scheme in 2008 for about €100 mln from a consortium of Dutch lender SNS Property Finance (now nationalised bad bank Propertize) and developer Hugenholtz Property Group Belgium (HPG).

The 33-storey building consists of 36,000 m2 of office space and 250 parking spaces. Located on the edge of the Leopold district, the property is fully leased to the unemployment administration office with a 25-year fixed lease.

Elsewhere, an international consortium has put Lisbon’s Torre Ocidente on the market with a price tag of over €70 mln. The four owners - Caixa Geral de Depósitos Group, Iberdrola Inmobiliária, CBRE Global Investors and Sonae Sierra - have hired Cushman & Wakefield to market the scheme which gained full occupancy earlier this year. Its tenants include Lilly Portugal, Sonae Sierra, Luso Technip, Leo Pharma, and Servdept.

Completed in 2011, the asset provides 29,000 m2 of gross space over 14 floors. It is located next to the Centro Colombo retail centre, a major shopping destination in the Portuguese capital, and its twin Torre Oriente, which was bought by Union Investment Real Estate in 2010 for its open-ended real estate fund UniImmo: Global. The deal marked Union Investment's debut on the Portuguese real estate market.