AXA IM - Real Assets has created a new German business parks joint venture with Sirius Real Estate, a leading operator of branded business parks providing conventional space and flexible workspace in Germany. The joint venture, which will be known as Titanium, was formed following AXA IM - Real Assets’ acquisition, on behalf of clients, of a 65% stake in a diversified seed portfolio of five properties valued at €168m from Sirius Real Estate.
Subject to suitable investment opportunities, the JV partners may grow the portfolio including through the acquisition of larger stabilised business park assets with strong tenant profiles and portfolio acquisitions. Investments will be sourced through the local investment platforms of AXA IM - Real Assets and Sirius Real Estate. Sirius Real Estate will continue to provide operational management services to the joint venture.
The five assets in the 191,000m² seed portfolio are located Berlin, Mainz, Nurnberg and Bayreuth. These are strong high demand business park markets, in good regional areas which are key consumer, logistics and manufacturing hubs that also benefit from strong economic fundamentals, in terms of population growth and employment levels.
The portfolio primarily comprises offices, industrial and storage spaces with a balance for other uses. The assets are almost fully let to a healthy combination of relatively large tenants with good covenants and to SMEs (under shorter leases), offering a stable cash flow from long term anchor tenants that is complemented by the higher-income from the conventional and flexible workspace offerings. In addition to these sustainable income streams, there is also an opportunity to capture rental reversion on the smaller units that generally have shorter lease terms and more regular tenant rotation. Additionally, the assets in Berlin offer further expansion potential due to attractive land reserves and the possibility to refurbish existing buildings.
John O’Driscoll, European Head of Transactions at AXA IM - Real Assets, commented: “This transaction allows us to invest in an attractive portfolio of assets and provides us with immediate scale in this important asset class in Germany, geography that we are actively growing in. This transaction also enables us to establish a long term joint venture with Sirius Real Estate, a leading operator and investor in branded business parks in Germany. We look forward to working with them on this portfolio and on future opportunities. The portfolio is expected to deliver sustainable and growing income streams while also offering the potential for value creation through asset management. The assets are well let and located in strong urban areas where supply is being taken out of the market for other uses as structural drivers including urbanization and changing consumer habits are accelerating demand.”
