ORCO takes over Berliner GSG (DE)

The ORCO Property Group, together with the Morgan Stanley Real Estate FUND V (MSREF V) is to take over the state-owned Gewerbesiedlungs-Gesellschaft mbH. With about 800,000 m² commercial and light industrial space the GSG is the biggest provider of commercial property in the German capital and is presently owned by the Investitionsbank Berlin (IBB). The transaction has a volume of about €400 million and is a milestone in the development of ORCO Germany and Berlin. The shares in GSG will be acquired through a joint venture between the ORCO Property Group and MSREF V (Morgan Stanley Real Estate Funds V).

In last week's sitting the Berliner parliament approved the Senate's bill of 20th March 2007 for the sale of the state-owned GSG. As parent company of GSG the way is free for the Investitionsbank Berlin to accept the notarial offer from ORCO Property Group and MSREF V to buy GSG. Implementation still remains subject to antitrust legal agreement.

"The acquisition of GSG is a one time chance for the joint venture between ORCO and MSREF V to further develop its property portfolio. Moreover we are taking-over an experienced asset manager. GSG has important resources (infrastructure) to share with us. In the future, it will work as an integral part for the whole group to support our expansion strategy", says Rainer Bormann, CEO of ORCO Germany. "GSG perfectly supplements our existing business fields. At the same time, GSG will benefit from the expertise and network of the ORCO group that operates on an international level. Through this acquisition ORCO emphasizes its long-term commitment to the German capital. Additionally, it is our view that the involvement of Morgan Stanley is a further indication of the attractiveness and future sustainability of the Berlin location".

With its 800,000 m² of commercial, light industrial and stacking ground as well as 1,200 tenants GSG is the leading provider of business premises in Berlin. The GSG employs a very specialized team with many years of experience. The success of GSG will be substantially measured on retaining existing tenants and reducing the high vacancy.

In this respect, the joint venture between ORCO and MSREF V is planning a more efficient renting management and to focus on a property-specific marketing strategy to further develop the "Höfe" continuously. In addition, successful measures (Hof-Kurier, Hof-Treffpunkt, Hof-Kolleg) adopted by GSG to qualify SME's and to support start-ups by providing targeted business consulting offers in the foundation phase will be maintained and expanded considerably.

We will further encourage the co-operation with scientific institutions and research institutes that are already or will be GSG tenants. A first step in this direction was to secure the status of Technische Universität Berlin (TU) in the TIB (Technologie- und Innovationspark Berlin) by signing a document before a notary public with which we committed ourselves to concluding a new rental agreement until 31st December 2044 based on today's rental and adjustment conditions. Thus, any risks relating to the term of the agreement could be eliminated and the joint venture between ORCO and MSREF V has emphasised that it is highly interested in the TU remaining in the TIB. In the near future, further co-operation projects and initiatives are planned.

Further comprehensive investment in the building assets and in the know-how of the company are planned to strengthen the position of GSG in the market.

Through the acquisition of GSG together with MSREF V the German asset base of ORCO will be built-up significantly; in addition, project development enters A 1 locations in Berlin with an investment volume of at least 500 million Euro in the next three years. This amounts to about 50% of the current project development investment volume. As a result, ORCO Germany counts as one of the biggest property developers in Germany.

Highlights here are the FEHRBELLINER in the heart of the city, a juxtaposition of historical building substance, town houses for families an

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