GERMANY - Property investor VastNed Offices-Industrial wants to expand its German office portfolio up to €500m, the firm has announced.
The company’s German portfolio has now hit €90m thanks to a recent acquisition - a €37.2m office building in Frankfurt expected to produce a net initial yield of 5.5%.
"Half a year ago, we decided to also focus on the German market," said Tom de Witte, chief financial officers at VastNed.
"The rents are still low there, while the economy is growing at an attractive rate. Frankfurt, for example, has a lot of empty office space, but it isn’t up to scratch, and much of it will probably get demolished," he added.
VastNed Offices-Industrial at an earlier stage purchased two properties in Dusseldorf so De Witte expects the German portfolio to grow to €400m within five years.
Its new asset in the Neue Borse area in Frankfurt’s business district, comprises of 13,000m2 office space complemented by 185 subterranean parking spaces.
According to VastNed, two-thirds of the building is occupied by tenants, of which AC Nielsen is the largest with 56% of the space. The Royal Bank of Scotland Factoring is its second-largest tenant.
Moreover, the seller – local developer Hortus Real Estate – has guaranteed the rent for four years, bringing the total rental income to €2.1m a year, VastNed said.
Given the market value of the parking spaces, the rental level is €150 per square meter on average, it added.
VastNed Offices is a listed company €1bn property fund with comprising of 170 properties, and investing mainly in prime location offices in the Netherlands, Belgium and Germany.
VastNed Offices-Industrial reported a rise of its total investment results of 143.5% to €49.8m in 2006 but its net returns were 0.4% down on the previous year, to 7.9%.
Occupancy rate of Offices-Industrial rose by 2.1% to 83.9%, a trend that is also likely to continue, suggests the firm.
The company said it will focus on acquiring properties in the liquid offices markets, with an investment volume of €200m, it stated.