TAG Immobilien AG (TAG) acquired a residential property portfolio with 1,503 housing units in Saxony at a purchase price of €37.8 million. The properties are distributed among the university cities of Freiberg, Chemnitz and Dresden.
The rentable area is approximately 85,000 m², the current rent at around €3.7 million per year. The portfolio, which was acquired by way of an asset deal, has a vacancy rate of nearly 13%, as the structural condition of the property - most of it from the 1970s and '80s - is only partly renovated. TAG will therefore be able to exploit the value-add potential, which exists especially in Chemnitz, through investment and modernization measures in the years ahead. Its existing good local infrastructure puts TAG in a position to manage and develop the inventory efficiently.
In addition, at the end of August 2014 a portfolio in Dessau in Saxony-Anhalt with 270 extensively renovated units and an area of approximately 17,000 m² was purchased for €11.3 million. The inventory has undergone continuously and optimal maintenance since its renovation in 2000/2001, is equipped to a high technical standard, and has no vacancy. The transfer of ownership is scheduled for October 1, 2014, and of the portfolio located in Saxony for November 1, 2014.
Martin Thiel, Chief Financial Officer of TAG, commented on the acquisitions as follows: "The regional concentration of the new inventory fits perfectly into our existing management structure in these eastern German states. Both portfolios were acquired at multiples of 10.1 or 10.7 at a very good price. Funding will initially be covered by our own funds and will soon be refinanced at attractive conditions with long maturities. Both acquisitions demonstrate that, despite the selling opportunities we've noted, there is still growth potential in the market to further increase TAG's operating cash flow and FFO."
Source: TAG Immobilien