Eurocastle Investment Limited announced that it has signed a definitive agreement with DB Real Estate Investment GmbH to acquire a portfolio of 6 office properties for an all-in purchase price of approximately €500 million. The properties are located in Berlin, Frankfurt, Dusseldorf, Wiesbaden, Eschborn and Sulzbach. The purchase price reflects an unleveraged initial yield on in-place cash flow of approximately 5.5%.
Bruce Snider, Fortress Managing Director, commented, "We are pleased to announce this transaction, which brings us to a total of 840 million of acquisitions this year. We are well on our way to achieving our 1 billion target of new investments for the year."
The properties have an average age of less than 10 years and total 190,600 m². The portfolio has stable cash flows with an average lease term of 7 years and over 80% of annual revenue contributed by major corporate tenants. An initial occupancy rate of approximately 93% gives an opprtunity for future income growth.
Guido Piñol, Fortress Managing Director and Head of German Commercial Real Estate Acquisitions, added, "We are very excited about this portfolio which combines great real estate with long-term cash flows. This acquisition fits our property investment strategy of acquiring high quality commercial real estate let to credit tenants with an opportunity for significant value creation through active management."
Eurocastle expects to initially fund the purchase with a combination of debt financing using existing lines and a committed long-term fixed loan facility secured by the portfolio. The closing of this purchase is expected to occur early in the fourth quarter of 2006.