Tristan's Episo to sell German assets for €200m

European Property Investors Special Opportunities (Episo), the 2008 vintage fund advised by pan-European real estate investment manager Tristan Capital Partners, is to generate proceeds of over €200 mln from the sale of a Leipzig office complex and a portfolio of Berlin residential properties that it has repositioned to appeal to core institutional investors.

Episo has sold Forum am Brühl in Leipzig’s historic city centre to Lonestar's Berlin and East Germany specialist investor TLG Immobilien in a transaction that prices the office complex at an initial yield of 6.7%.

The fund has agreed the disposal of a portfolio of Berlin apartment blocks comprising 1,807 residential units. The buyers are Berlin-based residential housing groups Gesobau, Stadt und Land and WBM.

Episo acquired all of the assets with Caleus Capital Investors, an operating partner that has collaborated with Tristan funds on multiple transactions in Germany.

All parties agreed to keep specific financial terms of the two deals confidential.

Rui Tereso, partner and head of portfolio and asset management at Tristan said: 'We identified the potential for these properties with our partner when there was limited liquidity for Berlin residential and for real estate assets in second-tier erman cities, particularly in the east of the country.'

Funds advised by Tristan currently own €700 mln of real estate in Germany.

Tereso added: 'We like the fundamentals of the German real estate market and have a total pipeline for our funds of more than €500 mln of potential real estate Investments.'

Episo acquired Forum am Brühl in late 2011. The 26,500 m2 property consists of five connected buildings located in front of Leipzig’s central station and close to the university. The building also has parking for 222 vehicles. The business plan involved negotiating new leases with key tenants including Deutsche Bahn, Drees & Sommer, SBK Siemens Betriebskrankenkasse and Wüstenrot Bausparkasse.

This has resulted in a weighted average lease term for the property of more than five years and an occupancy rate of 99%, compared with about 80% at the time of its acquisition.

The fund assembled the Berlin residential portfolio in 2010 and 2011 through three purchases of apartment blocks in housing estates located in the city’s Neukölln, Reinickendorf and Mitte districts. The properties incorporate 100,000 m2 of residential space, and 82 car parking spaces.

The business plan involved a €17 mln refurbishment programme that has resulted in an increase in rents to market level and a current occupancy of 98%.

Episo was advised by Taylor Wessing and BNP Paribas Real Estate on the sale of Forum am Brühl in Leipzig, while Noerr and Pestlin & Co are the fund’s advisers on the Berlin residential portfolio transaction.

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