conwert Immobilien Invest SE, which is traded on the Austrian ATX, is expanding its presence in Germany further through the acquisition of a comprehensive portfolio of residential properties. For a total of €178.8 million, including acquisition costs and planned investments in the next three years amounting to €32.9 million, the company, which is specialized in the portfolio management of residential properties, is taking over a total of 4,016 units, most of which are located in the core markets of Berlin, Leipzig and North Rhine-Westphalia.
"With this transaction, we are strengthening our presence in the attractive and highly stable German market for residential properties and are underlining our strategic focus as a long-term portfolio manager of highly profitable residential properties," said Johannes Meran, Chairman of conwert’s Administrative Board.
Up to now, the portfolio with a rental space totaling 265,815 m² was owned by GE Capital Real Estate Deutschland, a division of the US conglomerate General Electric, which with this transaction is selling its entire portfolio of residential properties in Germany for strategic reasons. The properties will fit well into the existing German portfolio of conwert.
“Further growth in our German core markets will allow us to make more efficient use of our existing management structure without significantly increasing our cost base,” said Johannes Meran.
The rental income from the properties, which currently stands at around €13.5 million, will increase consistently through the investment of €33 million over the next three years. The actual portfolio net cold rent yield is 8.7% or factor 11.6x after investments and hence is calculated conservatively.
Through this acquisition the German conwert portfolio will increase by 17% to around 27,500 units and a rental space totaling 2 million m². The average yield of the entire conwert portfolio will thus increase to around 6.2% as a result of the transaction. In the first quarter 2013, it amounted to 6.0%.
Furthermore, the portfolio has a very strong cash flow profile. The acquisition will contribute around 4.3 million of FFO I (Funds from Operations before sales) in 2014 after completion of the transaction – with additional potential in the coming years. This equates to a FFO yield of 9.4% on acquisition.
The transaction should be completed in the third quarter of 2013 and the new portfolio fully integrated by the end of the year.