Listed property company TAG Immobilien has acquired a 3,000-asset portfolio in various locations in former East Germany.
Listed property company TAG Immobilien has acquired a 3,000-asset portfolio in various locations in former East Germany.
Hamburg-based TAG is paying €70 mln for the portfolio of 2,860 residential units and 57 commercial units. The vendor's identity was not disclosed.
The properties are located in cities including Rostock, Dresden and Berlin where TAG already has branches. The largest individual locations are Cottbus with 416 units and Chemnitz with 660 units. TAG also has a strong local infrastructure in place at these two locations. The total rentable area is 170,000 m2 over 12 locations, with total annual rental income of around €8.6 mln.
The buildings are mostly renovated and offer development potential given the vacancy rate of 12.6% and the fact that they were purchased from complex ownership circumstances. TAG intends to invest €3 mln in the as-yet un-renovated part of the inventory in the years ahead and increase the annual rent to well over €9 mln per annum.
Overall, the acquisition increases TAG's inventory of apartments to more than 70,000 units, boosting its operating cash flow and long-term FFO.
Rolf Elgeti, CEO of TAG, commented: 'This purchase underscores one of TAG's key and strategic competitive advantages. The portfolio itself is relatively widely scattered, which reduces the pool of potential buyers. However, it is scattered to locations where we already have a presence. This allows us to leverage our local expertise for the acquisition while also using our rather dense network of banks in the region for financing. Beyond this, there are further economies of scale on the administrative side, so we can handle this entire purchase with our existing team.'
