After a one-year holding period, Union Investment Real Estate AG (formerly DIFA) has made a significant profit on the sale of the Santa Fé II office property, part of the UniImmo: Global open-ended real estate fund, to Mexican investor Fibra Mexicana de Immeubles.
The Santa Fé II office property
The net proceeds achieved were around €1 million above the last market valuation for the property of €42 million and a total of some €7.5 million above the original purchase price. After costs and taxes, the property delivered a total return of 17.2% p.a.
"This sale saw us leveraging the property's short-term value gain to optimum effect for the fund," says Dr. Reinhard Kutscher, member of the Management Board of Union Investment Real Estate AG.
At the time of acquisition in April 2006, 30% of the building's lettable space was vacant, but contractually covered by a rent guarantee. Located in Santa Fé - an established overspill location in the west of Mexico City - the office property was virtually 100% let when put back on the market one year later. The sales process was overseen by CBRE Mexico.
"Actively managing real estate assets in emerging markets such as Mexico and Chile and entering into transactions with domestic investors requires being fully engaged in the marketplace," adds Kutscher.
Union Investment Real Estate AG has held fund investments in Latin America since 2005 and the regional portfolio now totals seven high-quality properties and interests, including a 30% stake in Mexico City's landmark Torre Mayor tower on Paseo de la Reforma.
The recent entry into the Santiago de Chile market in January 2007 is part of a strategy of broader diversification for the company's Latin America portfolio. Following on from Mexico City, Monterrey and Santiago, Union Investment Real Estate - the only German fund management company active in the region to date - intends to tap into other stable investment markets in Latin America that offer attractive prospects for its funds.
Source: Union Investment