Uni-Invest unleashes battle for tenants in Dutch office market

Office rents in the troubled Dutch office market are expected to fall further following a battle unleashed by property owner Uni-Invest.

The Dutch landlord was acquired last year by private equity firms TPG Capital and Patron Capital in a high-profile CMBS work-out.

Following the takeover, Uni-Invest received a €50 mln injection to revamp or re-designate outdated buildings or demolish them altogether. As a result, Uni-Invest, which has been renamed Merin since this week, is in a position to bring rents in line with the market, the company’s new CEO Bas van Holten said.

Patron and TPG acquired the Uni-Invest portfolio of 200 B and C class offices early last year at a 40% discount compared with their valuations. Most other owners of offices outside A locations are highly dependent on current rental income to pay interest on the loans with which the acquisition of the buildings were financed.

Recent figures from Dutch brokers organisation NVM indicate that average rental prices in the first half of 2012 barely moved, but it is difficult to identify the role of incentives in these figures.

The limited decline in office rents so far is noteworthy given the high vacancy levels, especially at the lower end of the market. PropertyEU’s sister publication PropertyNL puts the vacancy level at about 7.5 million m2 out of 50 million m2, or 15% of the total.

Last week, Dutch adviser DTZ Zadelhoff warned that vacancy levels could rise by more than 30%.

Commenting on the name change, Merin's COO and CFO Pieter Roozenboom said it marked the beginning of a new era for the company. 'We have initiated a cultural change: our research has shown us that need to work more closely and better with our tenants and that is what we are doing.'