Hamburg-based Union Investment Real Estate has submitted its €2.5 bn sale of the Pegasus portfolio in Germany to Morgan Stanley (MSREF) and IVG at the last market peak in 2007 to PropertyEU's Deal of the Decade Awards programme.
One of the largest portfolio sales ever in Germany, the 53 assets were a mix of office, retail, hotel, parking and storage premises across Germany. The total of 552,000 m2 of rental space generated an annual rent of almost €82 mln per annum.
For Union Investment (which had changed its name from DIFA), the sale was a key element of its strategy to restructure its fund portfolios as it increased investment outside of Germany. The properties were from three different funds - DIFA-Fonds Nr.1, DIFA-Grund and DIFA-Fonds Nr. 3.
In its submission to the Deal of the Decade Awards, Union Investment said that the appeal of the Pegasus portfolio lay 'in its highly diversified cash flow structure resulting from its different types of occupancy'. Office space generated the largest proportion (59%). The distribution of the portfolio was almost entirely geared to Germany's Top-5 property market and other A locations. These accounted for about 86% of the rental income.
The Top 10 properties accounted for 56% of rental space and 68% of rental income. A highlight in the portfolio was the CityQuartier Neues Kranzler Eck in Berlin. The portfolio had a 75% occupancy ratio at the time of the sale and the tenants included Hypo-Vereinsbank, DeTe Immobilien, Bundesagentur für Arbeit, Lindner Hotels, H&M, Beta SYstems, Deloitte, S. Oliver and KPMG.
The sale was completed after a two-stage bid process. MSREF took over a sub-portfolio of 28 properties for €1.36 bn, including the Neues Kranzler Eck. IVG purchased the other 25 properties for €495 mln.
Union Investment said the sale paved the way to create the German and international portfolio the company manages today. 'Pegasus belongs to the first generation of portfolio deals in Europe. It is an excellent example of perfect structuring and of perfect market timing.'
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The submissions period for Deal of the Decade are now closed. PropertyEU has now collected over 120 entries. Our project team is drawing up a shortlist for the different categories ahead of a readers’ vote in the autumn. There will also be a formal jury vote. The Deal of the Decade Awards will be presented during a ceremony in Amsterdam in December.
