Multi-asset investment manager London & Capital has established itself as a lead player in pan-European commercial property investment, with the purchase of a portfolio of commercial property in Germany for over €164.5 million. The portfolio has been bought direct from Provinzial, a state owned German Insurance company.
This transaction along with the other deals in hand will take the portfolio, which was launched in March this year, to over €313.4 million by the year end with investors well set to benefit from anticipated capital growth in the German market.
"The Provinzial deal reinforces our focus on top quality properties in terms of tenants, location and long-term rental growth, and it also offers excellent asset management angles," comments Iain Keys, London & Capital's Director of Real Estate Investment. "All six properties contained within the portfolio surpass our selectivity criteria."
It is the Company's investment in its team, including a presence on the ground in Germany, that has resulted in the Provinzial deal. This structure and resource enabled London & Capital to inspect all the properties and agree terms within one week.
The properties all share the same key strengths in that they are newly built, have excellent transport links and locations and outstanding growth potential. All but one of the properties are let for more than ten years, and all six are let to quality tenants. The portfolio acquisition reflected an initial yield of 6.25% delivering an attractive arbitrage above the Euro borrowing rates.
One of the properties is occupied by Rexam Beverage Can production, one of the largest producers of beverage cans worldwide. It caters for energy drink Red Bull's entire worldwide can requirement.
Further commentary by Iain Keys:"Our team has proved that even in a highly competitive market, it can acquire quality stock. Our offer was accepted within four days of identifying the deal, before the competition had even viewed the properties. It is our ability to act swiftly under pressure which means we are optimistic of closing on a number of additional deals in the days and weeks ahead. Naturally, that will enhance the value of the German Real Estate Fund for our clients."
With a number of deals close to completion, the Provinzial deal takes London & Capital's investments across four property investment funds and private client holdings to more than €1.02 billion. With investment flows into the German Fund accelerating, the Company is in a strong position to match investor demand with a strong pipeline of deals and benefit from the anticipated strong capital growth.
Key facts about Provinzial:
- Purchase price: €164.5 million
- Vendor: Provinzial
- Yield: 6.25%
o Frechen - Logistics: 18,401 m², built 1989 (refurbished 1991), with great asset management angles
o Gimbsheim - Logistics: 24,252 m², built 2003
o Recklinghausen - Logistics: 16,663 m², built 2003
o Schwetzingen - Retail Warehouse: 11,760 m², built 2003
o Wolfsburg - Office Building: 7,940 m², built 2002
- All properties are single let, majority new build with leases in excess of 10 years. Low base rents for excellent future rental growth
- Tenants include ATU, Metro Group, Rexam and Hornbach; therefore offering excellent income security
Source: London & Capital