TPG-Patron's Dutch vehicle in first add-on deal

Private equity firms TPG and Patron have affirmed their continued interest in the discounted Dutch real estate market with the acquisition of an office portfolio for just a third of the previous acquisition price.

The three offices totalling 43,000 m2 were acquired by the pair's Dutch vehicle Merin from the Morgan Stanley P2 Value fund.

Merin is one of the largest commercial real estate companies in the Netherlands with a portfolio comprising about one million m2 throughout the Netherlands. Although the company did not reveal the financial details of its latest acquisition, PropertyEU Research has established from reliable sources that the investment volume was €46.3 mln. This translates to about €1,070 per square metre.

Two of the acquired buildings are leased to telecom group KPN: Röntgenlaan 75 in Zoetermeer (16,296 m2) and 159 Flight Forum in Eindhoven (11,525 m2). In Utrecht, Merin is now also the new owner of Domus Medica (Mercatorlaan 1200, 15,231 m2) which houses organisations in the healthcare sector.

P2 had acquired the three assets when they were delivered in 2007 for a total of €136 mln. Domus Medica was valued at the time at €44.1 mln; the Zoetermeer office was valued at €55.3 mln and Flight Forum at €36.4 mln. That means that the current price paid by Merin is one third of the original purchase price. The assets were valued at €110 mln on P2's books in September 2012.

TPG and Patron acquired Merin, then called Uni-Invest, in 2012 in one of the first CMBS restructurings in Europe of the present cycle. It was also the first acquisition by the Merin business since 2008, demonstrating the improved financial position of the firm, according to TPG and Patron.

Merin and its owners see further opportunities to continue to grow the portfolio over the coming years. The latest Dutch transaction underscores Merin’s ability to source and execute significant transactions in challenging market conditions, they said.

'Our strengths are our speed of execution, the expertise of our real estate platform and our ability to deploy a relatively large amount of equity. This year, we have already achieved significant improvements in our existing portfolio and in the Merin asset management organisation as a whole. We have recently formed an acquisition team to take advantage of the opportunities we are seeing in the market, and are very pleased to have achieved our first success already,' said Merin CEO Bas van Holten.

ING Real Estate Finance provided new financing for the acquisition and the existing lender Westdeutsche ImmobilienBank will continue to lend against one asset. Merin was advised by Stibbe, Van Doorne, Berwin Leighton Paisner and BOAG. CACEIS Bank Deutschland GmbH, the seller of the properties on behalf of the Morgan Stanley P2 Value fund, was advised by Jones Lang LaSalle, DTZ Zadelhoff and Loyens & Loeff.