ADO Properties S.A. (the “Company”) has entered into agreements to purchase 1,001 units in Berlin, of which 885 are residential and 116 are commercial units. The acquisitions were structured as share deals in which ADO Properties acquires approx. 95% of the shares in several German entities from international fund and private investors. The purchase price for 100% of the acquired assets amounts to €137 mln. Closing of the transactions is expected to occur at the end of October 2015. Approximately 70% of the portfolio is located in the districts of Prenzlauer Berg, Kreuzberg, Neukölln, and other central districts with high rental growth potential. The rest of the portfolio is mostly in the north of Berlin in the district of Pankow. The properties in the central Berlin districts are predominantly Alt-Bau buildings from the turn of the century and the assets in Pankow were built in the 1990’s.
The acquired residential portfolio has an in-place rent of €6.5/m²/month and vacancy rate between 2.3% for the Pankow portfolio and 3.3% for the inner-city locations. The Company expects new letting rents between €7.2/m²/month for the Pankow portfolio and €8.8/m²/month for the inner-city locations. Four buildings of this portfolio with 35 units are planned for privatisation. The commercial portion of the portfolio has an in-place rent of 8.2/m²/month and a vacancy rate of 12%.
The total annual net cold rent from the portfolios at purchase amounts to €6.4 mln. The Company estimates that the portfolios will contribute to our annual FFO1 (from rental activities) based on our targeted LTV of 50% in an amount of €4 mln at acquisition. The Company expects no material impact on NAV per share at acquisition and due to the characteristics of the acquired assets and their micro-locations we see good growth potential in the future.
Rabin Savion, ADO Properties CEO says: “We are looking very positively at the acquired portfolios as they fit very well into our strategy set forth and we see strong accretion potential to our existing portfolio. We have identified substantial improvement opportunities suitable for our unit investment program as well as interesting privatization projects.”
Source: ADO Properties
