Vivacon sells German assets worth EUR 180m

German residential property company Vivacon has announced the sale of 3,900 apartments worth EUR 180 mln to a Scandinavian investor. Vivacon said the transaction underlined the continuing interest international investors have in the German market despite the current uncertainty in the equity markets caused by the subprime crisis.

The units, which have a total area of 245,000 m2, are located predominantly in North Rhine-Westphalia, in Northern Germany and in Berlin. The sale will generate initial annual ground rent of EUR 1.5 mln for Vivacon and increase the company's annual secure ground lease income to EUR 13.5 mln.

Commenting on the deal, Michael Jung, CEO of Vivacon, said: 'We were able to sell a real estate portfolio under ground lease terms, which demonstrates the growing acceptance of our ground lease concept with international real estate investors'. Under the terms of the agreement, investors acquire only the buildings and the respective rental income. Vivacon remains the owner of the land for up to 198 years.

'The advantage for investors is that they do not have to finance the ground,' explained Jung. 'Our ground lease contracts are 100% German CPI linked.'

Vivacon has sold more than 12,400 units this year, leaving it with a portfolio of 5,400 units. Vivacon expects to realise a net income of EUR 54-58 mln this year, compared with net income of EUR 45.9 mln in 2006.