With a portfolio transaction featuring five German properties and a value of approximately €450 million, DEGI Deutsche Gesellschaft für Immobilienfonds mbH is putting in place the preconditions for increasing the proportion of foreign properties in the GRUNDWERT-FONDS as part of the fund's strategic realignment. The fund's management aims to increase the fund's European foreign component to 40% in the medium-term, and is already examining investment options.
The sale of this portfolio comprises five commercial properties in and around Frankfurt, Duisburg, Munich and Kiel, with a total area of 142,144 m². The properties are being transferred to real estate companies in which the GRUNDWERT-FONDS will have a 25% economic interest, and thus participates in the earnings and appreciation of the properties concerned. Following completion of this transaction creates additional liquidity of approximately €395 million.
DEGI enters new line of business
The properties form a diversified initial portfolio for the Australian REIT Allianz Global Investors European Property Trust, which as from 14 July 2006 will be listed on the Australian Stock Exchange (ASX). UBS AG, Australia Branch acted as sole underwriter, book runner and lead Manager. UBS AG, Australia Branch and Merrill Lynch International (Australia) Limited are jointly advising Allianz Global Investors Real Estate Australia Limited as responsible entity of the Allianz Global Investors European Property Trust on the transaction. In order to avoid any conflict of interests, no entity of Allianz Group is involved neither in financing nor in the IPO.
Short-term plans include expanding the portfolio outside Germany. DEGI will act as portfolio manager of the Trust, asset manager of the initial portfolio and has been appointed to source additional future acquisitions. This is the first time that DEGI is offering institutional clients its expertise in managing property portfolios independently of fund products; DEGI has access to a network of local specialists for property management. "Portfolio and asset management for third parties is a line of business that ideally complements our existing business model, since we can contribute our core competences in terms of research, acquisition and indeed property management to optimum effect", says DEGI's Managing Director Malcolm R. Morgan.
German market - attractive option for foreign investors
The timing is auspicious for getting into the German property market and with this initiative, the Allianz Global Investors European Property Trust is anticipating an upturn in the German property market. The Trust aims to benefit directly from a diversified portfolio in Germany and from the real estate and market-related expertise of DEGI. "We face a win-win situation. DEGI not only can move forward with the strategic realignment of its fund, but continue to participate in Germany's market development with the remaining economic stake", Morgan explains.
Details of the properties involved:
- Shopping center 'Sophienhof', 41,733 m², Sophienblatt, Kiel
- Office building 'Athlon Place', 29,749 m², Solmsstrasse, Frankfurt a.M.
- Office building 'Railion Park', 26,429 m², An der Masurenallee, Duisburg
- Office building 'Elsenheimer Forum', 21,778 m², Elsenheimer Strasse, Munich
- Office building 'Kronberger Hang', 22,444 m², Am Kronberger Hang, Schwalbach a. Ts. (near Frankfurt a.M.)