Top 5 deals in week 12 (17-21 March 2008)

German real estate investment company KanAm Grund heads the ranking of top deals for week 12 as it agrees to buy four Class A office buildings in Moscow from a consortium led by Otkritie Financial Corporation and Deutsche Bank for an investment volume of EUR 900mln.

Following up on a previously announced deal, a consortium of Deutsche Bank's RREEF funds, Milan-based Pirelli Real Estate, Generali and the Borletti Group signed a binding agreement with Arcandor (former KarstadtQuelle) to acquire a 49% stake in Arcandor's Highstreet portfolio. Market rumours suggested that the consortium is paying more than EUR 500mln in cash for Highstreet, but the price could be adjusted with the closing of the deal expected by the end of May. The consortium is also assuming EUR 3.5bn of debt secured against the Highstreet properties.

Top 5 deals

1) Otkritie, Deutsche Bank JV sells 4 Class-A offices in Moscow

2) RREEF-led consortium clinches Arcandor deal

3) Protego acquires EUR 452m shopping centre in Helsinki

4) Fintecna buys ASL portfolio in Italy for EUR 203m

5) Kelleher to sell half of prestigious Dublin property for EUR 165m

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1)

Otkritie, Deutsche Bank JV sells 4 Class-A offices in Moscow
Date published: 17 March 2008

A consortium led by Otkritie Financial Corporation and Deutsche Bank has agreed to sell four Class A office buildings with a total 101,000 m² of space in Moscow's central office district Paveletskaya to the German real estate investment company KanAm Grund Kapitalanlagegesellschaft mbH (KanAm Grund). The properties are earmarked for KanAm open-ended fund KanAm grundinvest Fonds. The project developer is Otkritie-Real Estate.

KanAm Grund will take ownership of the buildings upon completion in mid-2009. Under the terms of the agreement, the sales price will be calculated with reference to the actual leases signed. The transaction may be worth up to $900mln, Otkritie said in a statement.

'We are delighted to work with KanAm Grund on their first major transaction in Russia', said Vadim Belyaev, CEO of Otkritie Financial Corporation.

Otkritie F.C. formed an international investor syndicate in June 2007 with members including Deutsche Bank, private investment firm Starr Investments Cayman and two US-based funds, Old Lane and Artha Capital, to fund the project, which is located next to the Paveletskaya train station linking central Moscow with the Domodedovo international airport.

Construction finance is jointly provided by Deutsche Bank and Bank Austria. Project advisers are Lovells and Deloitte; while Austrian construction company Strabag is the general contractor. Jones Lang LaSalle and Knight Frank have been appointed co-leasing agents for the four office buildings which are expected to be fully leased before completion. The site will offer parking facilities for 1,000 cars.

'We remain very positive about the Russian market and continue to be very active with our investment and lending businesses there and across the CIS. This transaction is further testament to the ongoing development of the real estate investment market in Russia and the broadening of the investor base there', said John Nacos, managing director Deutsche Bank, head of Commercial Real Estate, EMEA and South Asia

'After an intensive analysis of the real estate market in Moscow for the past two years, we are very happy that we are the first German open-ended real estate investment fund to invest in Moscow. Due to the professional work of all participants involved in this transaction we were able to complete this transaction within only three months', commented Matti Kreutzer, managing director of KanAm Grund.

Otkritie Financial Corporation is a leading Russian financial institution servicing institutional, corporate and individual investors. Otkritie operates in the ten largest cities in Russia and through its representative offices in London, Frankfurt and Limassol. Otkritie-Real Estate was founded in 2003 to develop commercial real estate in Moscow and Russian regions. At the beginning of 2008 the total market value of its projects is over $1.5bn. In January this year Otkritie-Real Estate signed an agreement for a strategic partnership with Strabag.

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2)

RREEF-led consortium clinches Arcandor deal
Date published: 19 March 2008
A consortium of Deutsche Bank's RREEF funds, Milan-based Pirelli Real Estate, Generali and the Borletti Group has signed a binding agreement with Arcandor (former KarstadtQuelle) to acquire a 49% stake in Arcandor's Highstreet portfolio. Goldman Sachs' Whitehall Funds retains its remaining 51% interest in the German department store portfolio.

Italian insurance giant Generali has joined the RREEF-led consortium and has a 22.34% stake in the investment via its SICAV fund, Generali Real Estate Fund (GREF). Pirelli RE has a 24.66% share of the investment, while RREEF has approximately 49% and Borletti around 4%. Market rumours said that the consortium is paying more than €500mln in cash for Highstreet, but the price could be adjusted with the closing of the deal expected by the end of May. The consortium is also assuming €3.5 bn of debt secured against Highstreet’s properties.

The transaction values the entire portfolio, consisting of 164 properties and a total leasable area of 2.1 million m2, at €4.56bn. The consortium has also signed a binding agreement with Whitehall for a joint control and joint management of Highstreet. Pirelli RE will act as asset manager for the portfolio, jointly with Whitehall. The transaction is subject to regulatory and antitrust approval, as well as obtaining consent from existing lenders in connection with the change of control of the borrowers.

In a separate statement, Arcandor said that the total value of the Highstreet deal and a separate contractual agreement with the previous joint venture partner Whitehall comes to about EUR 800mln. The Essen-based will lease back the properties from the new owners.

Arcandor set up the Highstreet investment company two years ago and sold a majority stake to Goldman Sachs for a cash payment of EUR 3.7bn. In December it announced it had signed a letter of intent with the RREEF-led consortium regarding the sale of the portfolio. The German retail group also said it was working together with joint venture 'to create a unique European department store portfolio'. Arcandor added it was seeking to buy a stake of up to 25% of the Italian department store chains La Rinascente and the French Printemps, in exchange for a 25% interest in its premium segment to be transferred to the consortium.

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3)

Protego acquires EUR 452m shopping centre in Helsinki
Date published: 17 March 2008

Protego Real Estate Investors has acquired the Kamppi Shopping Centre in Helsinki on behalf of the Nordic Retail Fund from Boultbee for EUR 452.5mln. Reported as the largest single asset transaction in Europe this year the deal reflects a net initial yield of 4.5%, increasing to circa 6.0% in 2012.

Kamppi Shopping Centre comprises over 140 shops, 26 restaurants, a bowling alley and a nightclub. The centre’s total area is 40,000 m² and annual visitors number 30 million. Located in Helsinki's city-centre it has attracted a broad selection of international and Nordic retailers such as, Benetton, Marimekko, Nike, Mango and Guess. According to Steve Boultbee Brooks, co-owner of Boultbee, the centre has generated annual turnover of EUR 190mln. Cushman & Wakefield advised Protego while Boultbee was advised by Michael Elliott.

David Turner, European investment director at Protego, commented: 'The property provides a host of asset management opportunities which, with our joint venture partner EFM, will be implemented over the next few years. The purchase underscores the Fund's long term commitment to the region, where it has quickly established itself as one of the leading shopping centre investors. Our aim is to acquire additional assets of a similar quality in the Nordic region over the next 12 months.'

Hugo Llewelyn, head of investment at Protego, added: 'The strategy of our Nordic Retail Fund is to acquire dominant shopping centre assets of the highest quality, where there are real opportunities for strong rental growth and active asset management. Kamppi has all these attributes. Combined with this, we were able to purchase the asset 'off market' at an attractive yield, at a time when prime retail in Finland is at the top of many institutional investors' European buying list. The fund now owns more than EUR 1.1bn of prime shopping centres in Finland and Sweden, with a target GAV of up to EUR 1.5bn.'

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4)

Fintecna buys ASL portfolio in Italy for EUR 203m
Date published: 17 March 2008

Italy's state-owned real estate firm Fintecna Immobiliare has acquired a portfolio of former ASL properties across Italy's Liguria region for a total EUR 203mln. The real estate company was vying with the Malacalza Group in the bidding to acquire the assets, which were recently put up for sale with a price of EUR 168mln. The portfolio includes 390 properties in Genoa and other Italian cities which the Italian public health company ASL decided to sell to fund its EUR 130mln debt in the Liguria region.

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5)

Kelleher to sell half of prestigious Dublin property for EUR 165m
Date published: 17 March 2008

Irish property developer Garrett Kelleher is selling half of the former Department of Justice building in central Dublin to clients of Dolmen Securities for EUR 165mln, making it the largest Irish property deal so far this year, according to the Irish Independent newspaper.

Kelleher's Shelbourne Property Group initially acquired the building at 75 St Stephen's Green in 2004 for EUR 52.3mln, before spending millions refurbishing it and moving the company's HQ into the penthouse.

Kelleher holds a 25% stake in Dolmen, which is also a tenant in the building. Other tenants include Riverdeep, Avoca Capital, Maples & Calder and US hedge fund administration company Hedgeserv, which recently leased the remaining space in the building for EUR 700 per m².

Dolmen is setting up a qualified investor fund to make the acquisition, requiring a minimum investment of EUR 250,000. They will raise EUR 24mln in equity from investors who will get a 50% stake in the property, with Kelleher reinvesting another EUR 24 mln. The building generates approximately EUR 7.2 mln in annual rent, giving it an initial yield of 4.3%. Dolmen projects the six-to-seven year investment to generate an annual pre-tax return rate of 12.8%.