CLS Holding plc has announced that it has acquired through a subsidiary an office building in Hamburg for a total net consideration of €16.0 million inclusive of all costs.
The property, known as Fangdieckstrasse 75-75B Lurup, comprises 12,968 m² of office and retail space, together with 127 car parking spaces. The building is multi-let with Linde Gas AG being the main tenant occupying 31% of the space with 11% currently vacant. The property was constructed in 2001 to a high standard.
The existing rental income is €1,197,924 and estimated rental value of the property once fully let is €1,333,360. The current rent generates an initial return on equity of 13.5% and on a fully let basis 17.2%, whilst the cash return on equity based on a completed loan facility at a fixed rate of 5.75% is 9.3% with the existing rental income and 13.1% on a fully let basis.
Executive Chairman of CLS, Sten Mortstedt, commented, "This investment in a recently constructed building offers attractive initial returns and significant potential for increase in value through further lettings and yield compression.
The German market has performed strongly and hence it has become more difficult for CLS to acquire properties meeting our financial criteria. However we have a well established team and we are confident that we can continue to find attractive investments despite the increased competition."