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weekly investor newsletter Volume 11 | Issue 407 | 14 September 2015

TOP STORIES INSIDE THIS PIE WEEKLY: INSIDE ❱❱〉

€200m stake in Spain’s Colonial placed quickly

Logicor exclusive on €550m Immofi-nanz logistics

Grand City German housing in €151m raise

US Apollo eyes €330m German Eurocastle assets

French Corum buys more in NL, office at 7.83%

Liquidating KanAm German fund clears €2.3bn loans

Germany’s Patrizia to announce first French buys soon

French housing rents in unprecedented decline - Clameur

US medical REIT MPT enters Spain

Starwood European debt arm plans £300m raise

DTZ/Cushman complete merger, with clients at heartReal estate advisors DTZ and Cushman & Wakefield completed their merger, unveiling a new corporate logo under the C&W brand. “Our commitment to our clients is at the heart of all we do, and you can expect a strong bias for action,” said Chairman and CEO Brett White.

Euro REIT renaissance has further to run – EPRA CEO European REITs have undergone a renaissance in the last three years, and this has further to go, says the CEO of European listed property association EPRA Philip Charls.

Rates, rents give positive 2yr outlook for Euro listed RE Low interest rates, rental growth and rising asset values support a positive two-year outlook for investors in listed property, JP Morgan Chase Analyst Tim Leckie said at the EPRA conference.

Hudsons Bay-SPG German Kaufhof JV plans RE strategyThe German Kaufhof department store joint venture between Canada’s Hudson’s Bay Co and giant US REIT Simon Property Group will partly follow a real estate strategy, CEO David Simon said.

France’s Ardian targets €2bn with new property armFrench alternatives investor Ardian has launched a real estate arm and hired former Société Foncière Lyon-naise CEO Bertrand Julien-Laferrière to lead its drive to €2bn of assets in five years.

Foreigners help double Italy CRE inflows to €3.6bnFirst half Italian property investment jumped 106% to €3.6bn, with foreigners at 73% and Milan taking 59% of total inflows, says realtor BNP Paribas Real Estate. Yields should fall further.

STOCKS: Losses ease; Sweden, Germany outperform European property shares edged lower lower in the week to 4 Sept. as China’s plunge slowed. Sweden and Germany outperformed EPRA Developed Europe, which slipped 0.97%.

Polish tycoon Hajdarowicz boosts property focusPolish listed KCI has secured a building permit for an office project in Kraków, southern Poland, as its head, media-cum-real estate tycoon Grzegorz Hajdarowicz, boosts its focus on property.

Lone Star said seeking €2bn for Paris Coeur DéfenseOnly 18 months after paying €1.3bn, US private equity group Lone Star is looking for €2bn for its Coeur Défense office complex in Paris, the largest single office block in Europe, says Le Figaro.

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Core €200m stake in Spain’s Colonial placed quickly Spanish industrial group Villa Mir sold around €200m of its core 25% equity stake in listed property group Colonial, taking its to some 15%. But the capital was completely placed quickly with smaller shareholders, Colonial CEO Pere Vinolas told PIE.

“We got the news of the sale at our dinner last night during the main course, but by the dessert the entire amount had been placed,” Vinolas told a briefing at the EPRA annual conference. He added to PIE later that the sale had been by Villa Mir. The firm, founded and led by a former Spanish Finance Minister, took a core shareholding in late 2013, prompting other equity inves-tors to come in and allowing Colonial, at the time still struggling with a high debt load, to completely restructure its capital. This occurred in the first months of 2014, and Colonial resumed ‘busi-ness as usual’ for the first time since the global financial crisis. “Because this placement happened between the main course and desert, it shows just how strong the Spain story is,” Vinolas added to PIE.

Spain’s largest listed property company with around €6bn of assets, Colonial has not taken REIT/SOCIMI status since it still has a massive tax carry forward from prior years, and so can offer tax efficiency at corporate level, Vinolas added. This also means that much of the initial share price rise happened prior to the rush of Spanish REIT/SOCIMI launches last year. The Colonial share was lower Thursday in line with market weakness but has been trading generally between €0.60 and €0.68, on average around a 15% premium to net asset value. This climbed to €0.57 from €0.47 in 2014. In the refinancing at the end of 2013, many of the main new equity partners bought in at around €0.43, which may have prompted some profit-taking now. ■ pie

Logicor has exclusive on €550m Immofinanz logisticsLogicor, the European logistics unit of US wealth manager Black-stone, has entered exclusivity on the acquisition of the €550m logistics platform of Austrian listed Immofinanz, according to lo-cal media.

Last month, Immofinanz, which invests mainly in Austria, Ger-many and CEE, announced the sell-off of its logistics unit Log.IQ to focus on value-creating growth in retail and office. The segment covers 36 assets with about 1m sq.m. of rentable space as well as various development projects in western and eastern Europe. Most properties are located in Germany, while others are situated in Po-land, Hungary, Slovakia, Romania and Russia. Local media report-ed this week that Logicor is in exclusive talks on the portfolio.

Immofinanz is the largest listed commercial real estate investor and developer in central and eastern Europe, managing over 470 properties valued at €6.8bn. Over the last year its share price has been hit by the Russian exposure, mainly shopping centres in Moscow, for which it has had to make extensive rent concessions to retain tenants amid western economic sanctions. It spun off its housing unit Buwog last year, and fended off a partial takeover bid in April from Vienna peer CA Immo and its core shareholder, the Russia-based O1 Group. CEO Oliver Schumy took over in May from long-time predecessor Eduard Zehetner. It reported a 17% rise in operating profit for 2014/15 but a €361m net loss, mainly due to writedowns in Russia.

Logicor has bought several larger portfolios recently. The latest deal was the acquisition of 19 logistics assets in France and Ger-many from the Goodman European Logistics Fund. The purchase price was not disclosed but was estimated by experts at over €300m. ■ pie

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Grand City German housing firm in €151m capital raiseGerman listed housing company Grand City Properties launched a capital increase Thursday raising €151m in fresh equity to fund growth. Its share jumped as much as 5% on Monday, against the market, before ending 3.3% higher. It was last 2.7% lower after the announcement.

Based in Luxembourg, Grand City Properties said its board re-solved Thursday to increase

total share capital by up to 950m new ordinary shares which are being offered at €15.9 per share which will raise around €151m in total. It said the shares were quickly placed with investors. The price was set early Thursday on the basis of an accelerated book-building process. The new shares bear dividend entitlement pari passu with the existing shares, the company said. Subscription rights of existing shareholders were excluded.

The company said it intends to use the net proceeds from the capital increase to fund its growth strategy. GCP specialises in investing in and managing turnaround opportunities in residen-tial real estate in Germany, primarily in densely populated areas, and has expanded fast in the last 18 months. Its strategy is to im-prove properties through targeted modernisation and intensive tenant management, and then create value by raising occupancy and rental levels.

For the six months ending 30 June GCP boosted adjusted EBITDA by 51% to €74.6m from 1H14, while net profit rose 60% to €195.3m. Total equity at the end of June amounted to €1.64bn and as of July it managed some 66,000 housing units. The company is rated Investment Grade by S&P and Moody’s (BBB, Baa2). ■ pie

US Apollo eyes fmr €330m German Eurocastle assetsThe German cartel office is examining US private equity group Apollo’s acquisition of the Bridge German office portfolio. Previ-ously owned by the Eurocastle unit of New York’s Fortress Invest-ments it is reported being sold for €330m by UK manager Valad Europe.

Market insiders said Apollo Global Management will pay €330m in a share deal for the package, reported German specialist newspaper Immobilien Zeitung. The portfolio was originally part of Deutsche Bank’s open-ended property fund grundbesitz-invest, then went for a reported €482m to Eurocastle, the listed com-mercial real estate group controlled by Fortress. The firm handed it back to the bank in the wake of the global financial crisis.

Valad Europe last year won a repositioning and workout man-date to sell the six Bridge assets, part of the Windermere X CMBS structured by investment bank Lehman Brothers one year before its demise in 2008. The portfolio includes the 44,300 sq.m. Gal-luspark in Frankfurt, entirely leased to German railways Deutsche

Bahn and the 48,000 sq.m. Alt Moabit 91 in Berlin. Other assets are located in Düsseldorf, Wiesbaden and Sulzbach. IZ said one of the offices, a 40,000 sq.m. building in Eschborn near Frankfurt may be sold separately. It is leased to telecoms firm Vodafone, which will however move out soon. ■ pie

French Corum buys more in NL, office at 7.83%French private real estate investment manager Corum has ac-quired a further asset in the Netherlands as it diversifies to take advantage of different market cycles. It paid €32m for an office property in The Hague at an entry yield of 7.83%.

Corum Asset Management launched its Corum Convictions SCPI fund in 2012 with the aim of creating a diversified portfolio through an opportunistic investment strategy. It said this makes the vehicle unique among SCPI funds in investing across the Eu-rozone and property asset classes. The latest acquisition is a 16,300 sq.m. office building, purchased from Dutch asset manager Merin and rented to telecommunications group KPN on a 10-year lease.

The property is the fund’s third acquisition in the Netherlands, following a planned Novotel Amsterdam in July for €46m and a 6,400 sq.m. retail building in Nijmegen in June at 8.09%. “The Netherlands is now the third biggest country for us in terms of investment volume and it benefits from a favourable market cy-cle,” said Corum MD Renaud des Portes de la Fosse. Corum Convictions also owns assets in France, Germany, Belgium, Spain and Portugal. ■ pie

Liquidating KanAm German fund clears €2.3bn loansFollowing the sale of the £200m-plus London office of Thomson Reuters in Canary Wharf, German fund manager KanAm said it has cleared all €2.3bn loans in its grundinvest German open-end-ed fund in liquidation.

The fund paid back 35 loans totalling €2.3bn and now has no further outstanding debt, said Frankfurt-based KanAm in a state-ment. The sale of the 30 South Colonnade office in London to to Chinese tourism and airlines operator HNA also provides the ba-sis for the highest redemption tranche paid out to investors so far, at €3 per share. Since the start of liquidation in February 2012, the fund has paid out a total €1.1bn. KanAm said it sold proper-ties worth €3.9bn in 32 transactions, representing 61% of total holdings. Planning to dispose of the entire portfolio by end-2016, it said new leasing agreements in remaining assets will allow fur-ther divestments. The remaining portfolio encompasses 20 assets in six locations in six countries with a market value of €2.16bn.

At the beginning of the year, KanAm added asset management to its range of products which it said already manages $1.4bn across North America and Europe. The move is part of a reposi-


tioning as it liquidates former open-end funds. These funds, as many others in the sector, ran into trouble over redemptions, and had to be frozen in the wake of the financial crisis and then liqui-dated, in part due to uncertainties over new laws. ■ pie

Germany’s Patrizia to announce first French buys soonGerman listed property group Patrizia is likely to announce its first acquisitions in France later this month in both residential and commercial real estate, according to PIE sources. It sees potential for further purchases in the French market.

Patrizia has had an office in France for more than 12 months, reviewing the market. The acquisitions, expected to be announced in late September or early October, will add an important new market to its field of activities. “France has been somewhat lag-ging in the Patrizia portfolio,” one informed source told PIE, de-clining to be named. “But the asset pricing in that market is look-ing more attractive now both in residential and commercial property.”

Since the global crisis, the Augsburg-based Patrizia has trans-formed itself into a third-party property manager mainly but not completely focused on rental housing. Its structure today thus looks very different from that concentrated on owning and priva-tising German housing pre-crisis, though one source said the shift was prefigured in its original blueprint for its development. Apart from its domestic market, Patrizia is now active in the Nordic re-gion, Netherlands, UK, Spain and now France. Its target for man-aged assets by year end is €16.5bn.

Patrizia’s most high profile deals in recent months included the purchase in May, together with Taiwanese insurer Fubon Life, of the world-renowned Madame Tussauds waxworks museum in London for £349m. In early summer it sold the Südewo portfolio of German housing to Deutsche Annington, since renamed Vonovia, which, the source told PIE, brought its investor consor-tium a return of around 11% annually for each of their three years of ownership. Patrizia’s advice had been that the price, which the source did not reveal, was an acceptable market level. Investing institutions in the consortium have reallocated proceeds to other Patrizia products. ■ pie

French housing rents in unprec-edented decline - ClameurFrench private sector housing rents have fallen this year, increas-ing the risk of supply shortages, says monitoring body Clameur. New controls in Paris could prompt some investors to sell residen-tial property holdings.

Private sector housing rents were down 1.4% year-on-year at end-August, according to Clameur’s latest study, creating an un-precedented situation. Although rents were 0.9% lower in Febru-

ary, declines in winter have until now always been followed by increases in spring and summer. Rents rose by an average 1.1% annually in 2007-2015, less than inflation, after increasing at a 4.0% rate in 1998-2006.

Rents fell in 17 of the 20 biggest cities at end-August and rose only modestly in the other three. “We are seeing a big crunch in these cities,” said Clameur Director Michel Mouillart, a Paris uni-versity professor and real estate specialist. “The risk of a severe shortage in the supply of private rental housing is increasing in cities that are already suffering from clear market imbalances like Paris and Lille, as a result of insufficient private construction over many years.”

The introduction of rent controls in the French capital last month could exacerbate this problem. The new regime caps rents at 20% above a median reference rent. “Rental returns are likely to decline markedly, prompting landlords to restructure their in-vestments. Property owners - mainly listed companies - who could see rental income decline by up to 30% at the top end of the market will prefer to make a capital gain now rather than holding on to this type of asset,” said Mouillart. Clameur calcu-lates that 19.8% of new leases will be affected by the new controls and rents on these properties could come down 21.4%.

Price monitoring web portal MeilleursAgents recently reported that lettings more than 20% above the relevant reference rent de-clined to 29% in August from 46% in January-July, but said the number of rental properties on the market held steady after the introduction of the new controls.

Paris rents were down 1.8% lower in August at €24.80 per sq.m., falling only slightly more rapidly than the national average, Clameur said. Rents dropped 5.2% in Marseille, 3.6% in Lyon and 2.0% in Lille, which is also planning to introduce rent con-trols. Clameur also noted that landlords are becoming more reluc-tant to invest in renovations. ■ pie

Turkish investors open €120m mall, ECE to manageTurkish investor consortium Afyon Girişim has opened the Park Afyon mall in Afyonkarahisar, a city with over 200,000 inhabit-ants in western Anatolia developed for €120m, says Hamburg-based ECE which will manage the asset.

The mall is ECE 11th shopping centre under management in Turkey. The firm said in a release that it was responsible for plan-ning the mall concept and is now centre manager. The asset offers 45,000 sq.m. GLA on four floors with 160 stores, with 60 brands making their debut in the city. They include fashion retailer H&M and a Carrefour supermarket. Also housing a department store, an electronics store, a cinema with eight screens, the mall is located in the city centre of Afyonkarahisar on the site of the for-mer bus terminal. Some 700,000 people live in the catchment area, ECE said.

“As businessmen of Afyon, putting local capital and labour to-gether, we embarked on an investment which will add value to


our city,” said Afyon Chairman Ömer Aktan. “We are fully confi-dent that Park Afyon will contribute to the economic, social and cultural progress of our city, boost the importance of Afyon in the region offering nearly 1,400 job opportunities and be one of the key projects in our city.”

Added Nuri Şapkacı, deputy general manager of ECE Türkiye: “With its perfect location and easy accessibility, Park Afyon will be the pioneer in the city... In our 15th year in Turkey, we are delighted with the opening of such a great project in such an im-portant city of Anatolia.” ■ pie

US medical REIT MPT enters Spain with AXA RE, pensionParis-based AXA Real Estate has bought a plot in Valencia, Spain, to build a 36,000 sq.m. hospital pre-let to local provider IMED. It is partnering with a US pension fund and new partner Medical Properties Trust, an American medical REIT.

Saying the move strengthens its pan-European alternative real estate strategy, AXA RE added that will develop the 4,300 sq.m. plot into a full-service hospital for 150,000 patients a year. The transaction is the first with MPT, an Alabama-based REIT fo-cused on net-leased healthcare facilities. The partnership will tar-get healthcare primarily in western Europe and the Nordics. AXA did not identify the pension fund in the partnership.

Hideki Kurata, Head of Alternatives & Special Situations at AXA Real Estate, commented: “As a sector, healthcare is under-pinned by robust demographic and social fundamentals and…AXA Real Estate is in a position to capitalise on strong market sentiment and attractive returns.” He added: “AXA Real Estate currently manages over €2.5bn of alternative assets, all of an op-erational nature including healthcare facilities, hotels, data centres and forestry assets, primarily in Europe. Our partnership with MPT will prove invaluable as we continue to source healthcare properties which will allow us to continue to strengthen our alter-natives platform.”

AXA Real Estate Investment Managers is a wholly-owned sub-sidiary of AXA Investment Managers with over €60bn of assets under management. ■ pie

Starwood European debt arm plans £300m equity raiseThe listed Starwood European Real Estate Finance controlled by US Starwood Capital, plans to raise some £300m in fresh equity to finance new loans across Europe and effectively double its port-folio to almost £600m.

Starwood European REF has issued a prospectus for up to 300m new shares over the next 12 months. The company, which has made or committed to loans totalling £297m in the UK, as well as the Ireland, Finland and the Netherlands, is targeting an

initial £50m of new capital by the of this month. Echoing US private equity firm Starwood’s broad base of international invest-ments, the listed unit makes loans and invests in debt across the real estate capital structure - from senior to mezzanine, as well as other debt instruments. It focuses on all major property sectors and has made loans for hotels and office towers in London, retail in Finland, logistics in the Netherlands and retail and residential in Ireland.

In its prospectus, the company noted the growth of alternative lending and property loan origination across Europe, citing im-proving lending conditions in Spain, Italy and the Netherlands. It expects most of the portfolio to be in the UK, with other invest-ments within the EU. The company expect supports from its range of international investors, including leading shareholder Quilter Cheviot with 11.17% of its issued share capital. Other large shareholders include Schroder Investment Management and SG Private Banking. ■ pie

Dutch CTP buys Romania package from PrologisDutch developer CTP is to purchase four Romanian warehouses with a total lettable area of over 100,000 sq.m. plus 36 ha of land from Prologis as it continues to expand its presence to take advan-tage of favourable conditions. No price was given.

The acquired warehouses have occupancy of over 80% with tenants such as Cargo Partner, Geodis, Gefco and Quehenberger. “This is the right time to invest in Romania with over 4% GDP growth projected for 2015, and a market of around 20m inhabit-ants” said Remon Vos, CTP CEO, in a statement. “Bucharest and other cities in Romania offer educated and available workforce at competitive prices. Romania has significantly improved the infra-structure, including the road network, over the past years and these improvements look set to continue.”

The Dutch operator estimates its assets in Romania now exceed €250m with a lettable A-class industrial area of 3m sq.m. It plans to expand its portfolio to 5m sq.m. by 2020. ■ pie

Euro REIT renaissance has further to run – EPRA CEO European REITs have undergone a renaissance in the last three years, and this has further to go, says the CEO of European listed property association EPRA Philip Charls. The more business-ori-ented European Commission should also help foster quoted property firms, potentially freeing up institutional rules to allow more exposure.

“The value of IPOs raised last year saw real estate punching significantly above its weight relative to other industry equities sectors and 2015 is likely to record further robust inflows,” Charls told a press briefing at the annual EPRA conference in Berlin.


MICHAEL SCHÖNACH SPEAKERChief Executive Offi cer, Northern Horizon Capital, CopenhagenAn investment manager focused on real asset strategies in northern Europe, Northern Horizon Capital manages funds and segregated mandates with over €1bn AUM. Hr. Schönach joined as group CEO in 2012. He previously managed Citycon’s €1.5bn mall business, held senior roles at Catella and was an investment banker at Deutsche Bank and JP Morgan. An Austrian national, he grew up in Finland and graduated in fi nance there and in the US. He has participated in over 30 European M&A and debt/equity capital market transactions with a value of over €20bn.

RALF KEMPER SPEAKERHead of Valuation & Transaction Advisory, Germany, JLL DeutschlandGlobal real estate services group JLL employs over 48,000 staff in 70 nations, and in Germany is one of the largest realtors by turnover. Appointed to his present post in April 2015, Hr. Kemper has been with JLL Ger-many since 2002 and since 2007 is Team Leader Portfolio Valuation Advisory, a department that currently employs around 100 staff in Frankfurt, Berlin, Hamburg and Munich. Reporting to JLL Germany CEO Dr. Frank Pörschke, he qualifi ed with Business Economics BA with a real estate specialisation.

THOMAS HOELLER SPEAKERSenior Advisor, Corestate Capital, ZugFounded in 2006, Corestate Capital is a specialist private equity real estate investor. With over 30 years’ expe-rience in international real estate, Hr. Hoeller is responsible for product development and capital raising. He was a board member at TMW and, after the takeover by Prudential Financial in 2003, he acted as MD, CIO and head of business development for Pramerica. Prior to that, he headed Metro America, a subsidiary of Cana-dian Metro International, and built up the international RE desk for Bourdais in Paris.

ANNA ZABRODZKA SPEAKERCentral and Eastern Europe Economist, Moody’s Analytics, Prague Offi ceMoody’s Analytics, a unit of Moody’s Corporation, is a leading global provider of data, analysis, modeling and forecasts on national and regional economies and credit risk. Ms. Zabrodzka is the key analyst for Germany and Poland respon-sible for macroeconomic baseline and scenario forecasting, and narrative development. She also provides commen-tary and research on the Eurozone and CEE for the Dismal Scientist website. Before joining Moody’s, she worked for the ECB, focusing on monetary policy operations and money markets.

BRYAN ROBERTSON SPEAKERChief Operating Offi cer, Lomond Investment Management, EdinburghLomond Investment Management enables institutions and high net worth individuals to invest in the private rental sector. It is part of Lomond Capital which manages over £2bn assets, with shareholders including MML and Investec. Mr. Robertson, a Chartered Surveyor, started out in the construction industry as a surveyor, then project manager, before heading up a program offi ce for Motorola in Europe. He also served as transformation director at RBS Group Property Operations and the Direct Line Group.

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“We have really seen the REIT (Real Estate Investment Trusts) renaissance that we predicted three years ago.” He cited Spain as a market where the upgrading of REIT legislation quickly brought a rush of new companies to the sector starting from last year. “The Spanish story is also obviously about recovery but demographics around Europe also plays a large role. There is a lot of demand from pension funds and other institutions – but an important role has been the upgrade to the state of the art in REIT legislation. Too many countries have muddled through for many years with imperfect regimes.”

He said the French and the UK REIT regimes are the model for others, and the introduction of REITs in Ireland is one successful case in point. “EPRA has lobbied very hard behind the scenes, and not always in the public eye, to get people to understand our asset class,” Charls said. Germany has been one of the success stories for listed property in general, with dramatic growth in the sector.

In all IPOs in Europe last year, real estate was disproportion-ately high, he added. “European listed real estate companies have been extremely popular with investors globally, and this is not just a case of a rising equities market tide lifting all boats. The industry has punched far above its weight in capital raising in comparison with most other stock sectors. Low interest rates and strong divi-dend yields obviously have a lot to do with the bullish picture, but our members also own many of the best quality real estate assets in the recovering markets of Europe’s cities.” Strong structural growth is occurring in emerging listed property markets such as Germany, Spain and Ireland. “All the conditions are now in place for the European listed sector to come of age,” Charls said.

He quoted figures that showed that over 13%, €7.6bn, of the total €57bn raised in all IPOs in Europe last year was for property companies, but real estate’s share of the FTSE European Equities Index is only 1.4%. Total capital raised in by European property firms in the FTSE EPRA/NAREIT Developed Europe index since 2012 has been over €28bn. In 2014 alone, fresh equity of €12.5bn was raised, compared with €5.5bn in 2013 – and this year to date the figure is €10bn. “More IPOs may be in the pipeline for the re-mainder of 2015 depending on market developments,” he said.

Meanwhile, the average dividend yield of companies in the €207bn market capitalisation FTSE EPRA/NAREIT Developed Europe Index over the past three years was 3.3%. “The dividend has been income very attractive to investors compared with, for exam-ple, a near zero yield on five-year German government bonds... When EPRA last held its annual conference in Berlin in September 2012, some market commentators said the European listed real es-tate industry was in danger of losing its relevance in the eyes of glob-al investors as its share of the global listed property market had fallen to 11% and was heavily overshadowed by the sectors in the US and Asia. Since that point, Europe’s share of the FTSE EPRA/NAREIT Global Real Estate index has grown strongly to 18% – close to its long-term average of 20% – and a significant turnaround.”

Charls also sees expansion in the large mature listed markets of the UK and France. “EPRA has been actively making the case for REITs, and listed real estate generally, with politicians and regula-tors on the significant contribution these companies make to in-vestment in the urban landscapes of Europe’s cities and on the

attractive stable long-term dividend income they can provide to pension funds striving to match their long-term liabilities,” he said. This lobbying work is bearing fruit. “In markets such as Ger-many, Spain, Ireland and Italy, there is still much to be done in levelling the regulatory playing field in areas like punishingly high Solvency II capital weightings and national taxation regimes.” But at the EU level, “we are moving from a defensive play after the crisis - with a lot of new legislation and saying this should never happen again – to now where we see the new Commission which is a lot more business friendly, saying we might have gone over-board a bit.” A meeting recently with EU Commissioner Lord Hill showed he is ready to launch capital markets initiatives and make capital more accessible across Europe.

One area that needs EU action is to ensure mutual recognition of national REIT regimes, and EPRA is addressing these issues within the context of the EU’s Capital Market Initiative.” ■ pie

Hudsons Bay-SPG German Kaufhof JV plans RE strategyThe German Kaufhof department store joint venture between Canada’s Hudson’s Bay Co and giant US REIT Simon Property Group will partly follow a real estate strategy, redeveloping some of the sites and creating a platform to expand in Europe, SPG CEO David Simon said Wednesday.

HBC in June acquired Galeria Kaufhof from Düsseldorf-based Metro for an enterprise value of €2.42bn and including 135 stores across Germany. It simultaneously announced plans to sell a min-imum 40 stores to a joint venture with Simon for at least €2.4bn. “The Kaufhof acquisition price is expected to be largely financed by proceeds received from the Kaufhof real estate transaction and, as a result, HBC does not intend to issue equity and expects to incur limited additional debt,” the Canadian group said after the transaction. It will retain a 65%-85% interest in the SPG-HBC joint venture, depending on further investments.

Asked by PIE at the EPRA annual meeting in Berlin if the JV will follow a real estate strategy, Simon said: “Yes, I think you will see that over time - not immediately but over time.” HBC CEO Richard Baker made a very good trade in purchasing Kaufhof, considering the cash-flow from the properties. “From Richard’s point of view he is assuming liabilities and he’s a big partner in real estate, but he’s assuming a positive cash-flow business on the retail,” he added.

SPG values the real estate at about €200 per square foot and Kaufhof stores are paying about €12 of rent for the space, Simon said. “We think with the redevelopment opportunity, that’s not a bad .. spot to be in - with great city centre real estate that’s too big for them in a lot of cases, that we can over time redevelop, and ultimately use that as a platform to do more in Europe whether it’s department stores or other street retail... But to me it looks like the right platform if we are successful... And that’s why we’re in it - to create a platform and use the real estate to take advantage of opportunities, and we’re in the real estate at a decent price.” pie


German investors missing higher RE returns – EPRAGerman pensions and insurers’ focus on direct property invest-ments and funds - to the virtual exclusion of stocks - means they are missing out on much higher returns, says research prepared for the European Public Real Estate Association.

Consilia Capital CEO Alex Moss told a press briefing at the EPRA annual conference in Berlin Wednesday: “The improve-ment in performance by blending real estate stocks into a non-listed German institutional property portfolio is dramatic, for a limited rise in volatility or risk... The additional benefits of invest-ing in real estate equities, such as improved liquidity, the scope for strategic property-sector diversification and yield enhancement, are not reflected in these figures.”

By adding a ‘buy-and-hold’ 30% global listed real estate ele-ment to a 70% German Special Fund over a 10-year period to March 2015, annualised raw returns nearly doubled to 5.42% from 2.88% - but with an increase in volatility to 6.53% from 1.03%. Using a 70/30 blended portfolio the improvement over buy-and-hold was significant with annualised investment returns rising by over 150bp to 6.94% from 5.42%. Taking other mixes also showed better returns. “The results showed clearly how in-creasing the listed element of the real estate allocation .. can ben-efit overall portfolio performance with an improvement in the raw return to 8.28% from 7.66%,” Moss said.

The report also noted that in a recent survey by consultant Tow-ers Watson of German pension funds responsible for nearly €120bn in investments, only one respondee had exposure to listed real estate. Anna Weickart, Senior Investment Consultant and Re-search Manager at Towers Watson, commented in the report: “Global real estate security investing is a quick and efficient way to get a well-diversified exposure to some unique property assets and top management teams, using only a small amount of capital and low governance needs... German investors do not appear to have yet recognised this and it is important that all market stake-holders .. work together to rectify this education gap.” ■ pie

Rates, rents give positive 2yr outlook for listed RE - JPM Low interest rates, rental growth and rising asset values support a positive two-year outlook for investors in listed property stocks, JP Morgan Chase Analyst Tim Leckie said Wednesday at the EPRA annual conference in Berlin.

He told a press briefing: “Rental growth is spreading to Ger-many, Spain and Ireland after appearing first in the UK and this is very positive for net asset values of listed property companies. The summer’s turmoil in financial markets has probably pushed back the lift-off point for interest rates or flattens the speed at which they will rise. This means for the next 24 months or so we will have a continuation of the positive environment for the prop-

erty industry: broadening rental growth and rising property values against a backdrop of historically low interest rates.”

The slide in global stock markets on China concerns presents an attractive buying opportunity, Leckie added, presenting research prepared with J.P. Morgan analyst colleague Neil Green. The UK currently offers the best prospects in Europe, with rents up 1.2% since March, though the pace will slow steadily through 2019, the paper showed. Europe’s fastest rental growth is in London City or West End offices – while office rents in Europe’s other major cities have fallen or grown by no more than 5% in the same period. In continental Europe, rental growth is concentrated mainly in the German, Spanish and Irish markets.

But Leckie said supply constraints and falling vacancy will lift rents in Frankfurt, and German residential rents are rising by 2-3% a year. Shopping centre rents will strengthen as low unem-ployment, consumer confidence and low inflation drive retail sales higher. In Amsterdam, office rents may be approaching their low point. However in Paris there is no evidence of a pick-up to support the considerable appreciation of capital values, suggesting they may be overvalued.

“The benign interest rate outlook means that with property yields still at a significant premium to benchmark interest rates, there is still scope for capital appreciation for real estate across Europe. This is particularly the case when there is rental growth to support these higher values. These conditions underpin why we see good value in Europe’s listed property sector, offering a poten-tial 16% upside to investors.” ■ pie

German 1H corporate RE deals slip to €530mFirst half transaction volumes in German corporate real estate fell to €530m from €664m in 1H14 as supply has dried up or assets are perceived as too expensive, says the Berlin-based IUi interest group of firms active in the sector.

Founded last year to enhance transparency in the segment – which includes converted properties, light manufacturing, busi-ness parks and warehouse/logistics assets – the association (Initia-tive Unternehmensimmobilien) groups Atos Asset Management, Aurelis Real Estate, Beos, Corpus Sireo Asset Management Com-mercial, Garbe Logistic, GSG, Hansteen, Investa, M7 Real Es-tate, Segro, Sirius Facilities, Valad, and research firm bulwiengesa.

The latter’s CEO Andreas Schulten, commenting on the fall in 1H15 volume, said: “The trend matches observations in other as-set classes. Wherever portfolios stop changing hands in the form of big-ticket transactions, the supply in investment-grade assets dries up – or becomes unaffordable.” Average yields for business parks, currently the largest corporate real estate sub-market, fell 63bp to just below 10%, and in this segment, nearly €200m were traded.

The most active region overall for corporate real estate in 1H15 was Rhine-Ruhr in northern west Germany, with €134m transac-tions. “In our view, investments in the Rhine-Ruhr and Rhine-


Main-Neckar regions, with their strong economies, are the most promising in the medium to long term,” said Alyssa Huse of M7 Real Estate, a new member of the initiative. “Quite simply, these regions have the largest numbers and diversity of potential occu-piers of commercial parks and warehouse/logistics properties, and smaller amounts of land for development. This stabilises demand and therefore rental values.”

On the four sub-markets, the grouping found that many high-spec buildings and projects already changed hands last year, a fact reflected in the easing yield pressure of prime properties in 2015. Light manufacturing was the only sub-segment where yields rose. Prime assets registered gross initial yields as low as 6%, a level that surprised even the experts, said the report. Average yield across corporate property was just below 10%, up from 9.6% in 2014. Total return in the sector is at 9% now and should fall to 7.5% in 2019, bulwiengesa said - still significantly higher than in other asset classes. Rental volumes rose by 37% to 660,000 sq.m., reflecting the momentum of the German econo-my as a whole. ■ pie

NYSE’s Gramercy buys €71.5m Germany/NL DIYNew York-listed Gramercy Property Trust has bought a 54,800 sq.m. portfolio of four Hornbach DIY stores in Germany and The Netherlands for €71.5m for its Gramercy Property Europe fund which pursues a single-tenant, net sale-leaseback strategy.

The fully occupied home product stores, two Dutch and two German, are leased to Hornbach and have a weighted average lease term of nine years, Gramercy said in a release. Alistair Cal-vert, Head of Investments and MD Gramercy Europe, said: “This transaction demonstrates our investment strategy perfectly, spe-cifically through the acquisition of long-term leased, single tenant assets in two of our target markets. Hornbach Baumarkt is a strong tenant for the fund and the assets are quality retail units in supportable locations.”

Gramercy Property Europe targets single-tenant net leased as-sets and sale-leaseback deals across Europe and has initial equity commitments of €350m to invest in industrial, office and special-ity retail assets in Germany, Netherlands, the Nordics, UK and other European markets. Its first deal in Europe came in April when it bought a warehouse in Germany for €21m and indicated it could spend €500m-€700m annually. ■ pie

German student housing to continue strong - JLL Advisor CBRE Global Investors has bought the Ribera del Xúquer shopping centre in the Spanish province of Valencia for a new fund, and said it expects income and capital growth. Local media said it paid around €40m and the seller was a UBS fund.

The shortening to 12 years of time needed to reach high school qualification (Abitur) means significantly more students are entering university, said JLL’s Konstantin Kortmann, team leader residential investment in Germany. “Demand for housing is rising according-ly.” The educational framework will support this development as well. “The federal government supports academics and student mo-bility is rising at the same time,” he added in a report. Many of the 2.7m students in German higher learning are increasingly moving to more distant cities rather than studying close to home where they remain in accommodation with their parents. While students do not have to pay fees for their first courses at public universities, demand is high for initial learning streams, putting pressure on affordable living space. Other positive factors for investors are limited legal re-quirements for student housing compared to other asset classes. Sev-eral new projects entail conversions of office or residential space into student flats in less desirable districts.

JLL said some 90% of student accommodation is still in public ownership, but demand for private capital for new construction and renovation is high. While international direct acquisitions are still rare, several funds have been launched in the segment. ■ pie

Eurozone office offers value, especially South – DAWMAs Eurozone office markets recover and property investment re-mains attractive, core and core-plus strategies show best opportu-nities, says Deutsche Asset & Wealth Management, part of Deutsche Bank. Southern markets offer highest returns.

The outlook for the European economy improved over the past six months, despite ongoing concerns in Greece and the Ukraine, DAWM found in its latest Europe Real Estate Strategic Review. With confidence rising, jobs are being created, and this has fed through to office take-up. “The final quarter of last year together with the first quarter of 2015 represented the strongest six-month office take-up figures since before the financial crisis,” DAWM said.

Low new supply is also helping to balance the market; the near-term pipeline remains low as developers are still cautious. As a result, vacancy rates fell to 10% at end-March from a 10.4% peak in 2014. Prime rents also rose, by 2.1% in 1Q15, and are set to recover further, by around 3.5% in 2015 and 2016. With a sig-nificant premium over government bonds, yields should fall fur-ther over the next few years, though this trend may reverse slight-ly by the end of the decade.

DAWM sees investment opportunities in this environment mainly in the core to core-plus segment, reflecting the attraction of prime property pricing compared to other asset classes such as government bonds. Global capital will continue to seek these op-portunities, which it estimates are currently best in Paris and the top seven German cities. German housing and high street retail also offer good prospects for these types of investors. For institu-tions seeking higher income returns, DAWM identifies the logis-tics sector, B cities and mezzanine debt. Highest returns over the next five years should be achieved in core locations in major cities


of Spain, Italy and Portugal. Development projects and refurbish-ments in constrained city centres are also in high demand. It cau-tioned that improvements are not uniform across the region, with some markets to remain oversupplied for the foreseeable future, such as fringe office locations in large cities. ■ pie

CBRE GI in €40m Spain shop-ping mall buy Advisor CBRE Global Investors said it has bought the Ribera del Xúquer shopping centre in the Spanish province of Valencia for a new fund, saying it now expects income and capital growth. Local media said it paid around €40m and the seller was a UBS fund.

The shopping centre in the town of Carcaixent opened in Sep-tember 2005 and covers 34,119 sq.m. including 12,958 sq.m. of Eroski hypermarket which is not part of the deal, CBRE GI said in a release. It has 76 retail units and an occupancy rate of 95% with tenants including Zara, Massimo Dutti, H&M and C&A. Valencia has 265 municipalities and 2.6m people. Fund Manager Florencio Beccar added: “We have acquired a well let dominant shopping centre with solid property fundamentals. It is the first shopping centre that we have bought in Spain for this particular vehicle. We believe we are entering at a time when we can realise both income and capital growth.”

Sources at the Spanish Association of Shopping Centres valued the deal at €35m-€45m and said the centre was sold by a fund managed by Swiss bank UBS, newspaper Expansión reported. CBRE Global Investors has €14.8bn of non-listed retail assets un-der management, 736 retail assets (of which 85 are shopping cen-tres) across 15 countries and over 6,800 retail tenants. In Spain and Portugal, it owns around €2bn of assets and a portfolio of 20 shopping centres comprising more than 1.3m sq.m. ■ pie

France mulls fund to support social housingThe French government is planning to set up a new public fund that will take over all support measures for the construction of social housing, but critics say the move represents a government retreat from direct support for the sector.

“Public funding measures remain essential to support the build-ing of social housing. They will be maintained. To increase their efficiency, the government is studying the creation of a national fund for social housing support in the 2016 budget. This would be governed by a partnership of social landlords, local authorities and central government,” it said. Contributions to the fund from social landlords and central government are still being worked out.

But Paris Mayor Anne Hidalgo expressed concern about the possible elimination of some support measures, and deputy may-or for housing Ian Brossat said the creation of the fund will herald a government withdrawal from social housing support, with the

pooling of resources in the new fund replacing current govern-ment support measures. “It is absolutely scandalous,” he said.

However, the government insisted that social housing remains a priority, with the sector benefiting from more than €4bn of public support, as well as subsidised loans from state financing institution Caisse des Dépôts. The creation of the fund would lead to better coordination of support spending so that social housing is built in the areas where it is really needed, the Housing and Finance Min-istries said in a statement. “For (Housing Minister) Sylvia Pinel and (Budget Minister) Christian Eckert, this large-scale national fund will give more visibility and stability to operators and local authorities as they seek to meet the need for additional housing,” they said. The 2016 budget will be presented on 30 September and is expected to include €19.5bn of spending cuts. ■ pie

Finland’s Citycon raises €300m more in eurobondHelsinki-listed shopping mall firm Citycon has raised a further €300m via a seven-year eurobond at a fixed 2.375% mainly to prepay debts from its recent €1.5bn purchase of Norway’s Sektor group. The issue comes just weeks after it raised €284m in a Nor-wegian bond.

The eurobond is rated BBB by Standard & Poor’s and Baa2 by Moody’s, in line with Citycon’s corporate credit rating. Apart from paying down Sektor debt the proceeds will be used for gen-eral corporate purposes, repayment of other debt, development of properties, acquisition of new properties or an increase in share of existing joint ventures, Citycon said in a release.

CFO Eero Sihvonen said the reception for the eurobond was strong and it was allocated to a broad base of European investors. “The transaction was oversubscribed and closed within a few hours. Following this eurobond and the NOK bonds issued a few weeks ago, the majority of the bridge debt for the Sektor acquisi-tion has been refinanced.” ■ pie

Care homes said best opportunity in Nordic resiCare homes have the best risk-return profile in Nordic residential property at the moment, says Michael Schönach, CEO of Co-penhagen-based investment manager Northern Horizon Capital and panelist at PIE’s European Residential Breakfast in London on 16 September.

“Northern Horizon Capital is investing heavily into residential care homes, which from a risk-return balance perspective, is the most attractive residential subsector in the Nordics now,” Schönach told PIE in a pre-event statement. Main reasons are the accelerated aging of the population, plus the fact that cash flow are quasi-guaranteed by all Nordic governments, which happened to be the financially healthiest in all of Europe.


“For standard residential and relative value within that sector, I like Copenhagen, and also generally secondary but growing uni-versity cities in the other Nordic countries,” added Schönach. At the same time, valuations and yields in Stockholm and even more so in Helsinki, have him concerned. Yet he generally finds resi-dential strategies more secure than commercial ones.

“I see many commercial real estate strategies being under sig-nificant pressure now, with the primary drivers being employ-ment (relevant for office) and discretionary consumer spending (relevant for retail), neither of which are strong now,” he told PIE. These strategies also suffer from uncertainties arising from a change in work structures, including mobility, and e-commerce. “Housing, on the other hand, is a basic need not easily substituted or postponed,” he said. The urbanisation trend continues to cause significant location-dependent supply and demand imbalances – and thus opportunities – in the housing market.

Schönach will be part of a panel of experts discussing housing across the European continent and the UK at the PIE European Residential Breakfast on 16 September at the London offices of law firm Dentons. For more information, visit: www.pie-mag.com/events. ■ pie

German student housing to be strong niche - specialist ICStudent housing is an increasingly important investment class and, given the rising trend for people living alone and greater in-flow of foreign students, demand in Germany is unlikely to be covered for years, says Munich specialist International Campus.

In its latest newsletter it says German residential real estate yielded 8.1% per year between 1992 and 2014, outperforming the 6.3% from fixed-interest bonds and 6.9% from international stocks. Since 1999, rent returns have been around 3pt above Ger-man government bond yields. Students and young professionals are being squeezed out of the private rental market so that student housing has become a niche, offering attractive, relatively non-cyclical returns, better than traditional real estate, and particularly appealing to institutional and semi-professional investors.

Citing forecasts of 620,000 new students in 2025, IC also said foreign students in Germany last year exceeded 300,000 for the first time. The government and federal states intend to attract around 350,000 foreign students by 2020, particularly from Chi-na and India. Germany has already become. “the primary invest-ment location for international investors in student accommoda-tion within Europe – well ahead of the Netherlands and Spain.”

German Acadamic Exchange Service figures show foreign stu-dents generate gross added value of €292m each year and more than 3,100 new jobs. Public spending on education would be to-tally covered if just 2% of these students started working in Ger-many after graduation.

According to one estimate 500,000 apartments are needed in Germany now and the newsletter noted the capital Berlin is top for singles with some inner city districts consisting of more than

60% single households. The federal states of Berlin and Hamburg are forecast to have the youngest populations in Germany by 2030 with an average age of 43. While the population of Ger-many is expected to decline to 78.2m by 2035 from 80.5m in 2012, the number of households will grow by 2%. ■ pie

French OPCI returns beaten by listed propertyFrench OPCI institutional property funds generated an average return of 5.8% in the first half, but listed property stocks contin-ued to offer investors stronger gains, according to MSCI’s IPD property index unit.

French listed property, mainly REIT/SIICs yielded a 9.0% re-turn in 1H15, while the broader stock market returned 14.9%. Over the past 12 months, institutional OPCIs achieved a return of 9.6% compared with 12.2% for the broad stock market, 6.5% for listed property stocks and 4.6% for government bonds.

Highly leveraged OPCI funds did better than those with little or no debt in 1H15. Vehicles with debt ratios over 50% generated an average return of 14.1% compared with 4.3% for funds with debt of less than 50% and 5.4% for those carrying no debt. The MSCI-IPD figures cover 103 OPCIs operated by 20 of the big-gest French real estate fund managers. Net asset value of the funds totalled €18.2bn at end-June, with gross assets at €27.1bn. ■ pie

Swiss Züblin postpones CHF72m raise due volatility Swiss listed Züblin has postponed its planned CHF71.7m (€66m) capital increase as its main shareholder Lamesa, controlled by Russian oligarch Viktor Vekselberg, said it will not subscribe in the current troubled market conditions.

Züblin said in a statement that it approved capital restructuring measures and the capital increase on 30 June. “Swiss law requires that an ordinary capital increase be implemented within three months after the date of the shareholders’ resolution,” the firm said. Main shareholder Lamesa, which which currently holds 33.02%, an-nounced that it will not underwrite the transaction within the period “due to the current turmoil and volatility in the financial markets.”

Lamesa however confirmed to Züblin that it remains commit-ted to supporting the firm’s recapitalisation and to fully under-write a discounted rights offering at a later date. It also agreed to extend its existing shareholder loan until the capital restructuring measures have been implemented. Züblin now plans an Extraor-dinary General Meeting on 29 October to propose to sharehold-ers to re-approve the capital measures. Lamesa has been attempt-ing to restructure the firm, whose equity was nearly wiped out by write-downs across its portfolio. It sold off the French subsidiary to two Paris-based groups, TwentyTwo Real Estate and Massena Partners this summer. ■ pie


Investors launch green infra-structure benchmark A group of global institutional infrastructure investors including AIMCo, APG, ATP, Aviva Investors, CalPERS, Mirova, Ontario Teachers’ Pension Plan and PGGM, have launched a global sus-tainability benchmark for the asset class, GRESB Infrastructure.

The investors, which represent $1.5tr in assets, are partnering with Amsterdam-based Global Real Estate Sustainability Bench-mark which already offers portfolio-level sustainability assessment real estate classes. The new initiative aims to develop and establish a consistent global framework to increase transparency and mar-ketability of infrastructure as well as to raise ‘green’ levels.

“With governments around the world increasingly looking to the private sector to fund infrastructure investments, the asset class is presenting attractive opportunities for investors,” said GRESB in a release. Infrastructure is becoming an integral part of diversified strategies, especially for long-term institutional investors. Some 28% of pension funds now invest in the sector though allocations are still low, below 1% of total assets. But this is set to increase.

GRESB notes that infrastructure and sustainability are closely re-lated since investments offer paths to sustainable economic growth by delivering key societal benefits such as transportation links, (re-newable) energy sources, social infrastructure, water and waste man-agement systems, smart grids and low-carbon transportation sys-tems. “Given the long-term horizon and the societal impact of infrastructure investment, sustainability and broader environmental, social and governance considerations are critically important for in-frastructure investors,” said Patrick Kanters, MD for Global Real Estate and Infrastructure at Dutch APG Asset Management.

Aviva Investors CEO Euan Munro said the GRESB measure is also a tool to collect and compare key environmental, social and governance, plus related performance metrics across assets. “For the first time asset managers will have the data to evaluate wheth-er infrastructure assets are – or are not – sustainable – and can make investment decisions accordingly,” he said. “It should mean more capital flowing into more sustainable infrastructure – and reliable long term returns for investors.” GRESB expects the first assessments under the new framework in 1Q16. ■ pie

JLL adds in Sweden with AGL debt advisorUS-based property advisor JLL has agreed to buy Swedish AGL, a consultant specialist in real estate debt, boosting its position in property investment advice in the hot Nordic market. No finan-cial details were revealed.

The deal for AGL follows JLL’s acquisition of Tenzing last year, which elevated the Chicago-based firm to market leader for capi-tal markets advice in Sweden. The addition of AGL’s 15 staff brings further real estate debt expertise in areas including debt advice and management, treasury management, risk management

and derivatives. AGL was founded in 1994 and has a track record of helping over 200 clients with deal financing.

“The AGL business makes an ideal complementary fit alongside JLL’s existing capital markets capabilities, enabling the combined team of 45 to become a full service provider across the whole real estate capital stack, which means we can offer a truly comprehen-sive service package for our clients,” said Daniel Gorosch, managing director JLL Sweden. “Knowledge of the right financial solutions plays a greater role in today’s world as intrnational capital increases and as transactions become larger and more complex. This knowl-edge is a crucial factor for success in the real estate business.”

JLL has been expanding its property services business in Sweden to reflect the country’s growing appeal to international investors, as well as its well-established and dominant domestic investment scene. JLL bought corporate real estate services firm Nextport in April this year to expand its business advising tenants and helping them relocate offices. Overall, JLL now employs 115 people in Swe-den, including the 45 in its Capital Markets group. ■ pie

Lone Star said seeking €2bn for Paris Coeur DéfenseOnly 18 months after paying €1.3bn, US private equity group Lone Star is looking for €2bn in its sale of the Coeur Défense of-fice complex in Paris, the largest single office block in Europe, says Le Figaro newspaper. But sources close to Lone Star said the man-date has not yet been issued..

Located in the heart of the La Défense business district, Coeur Défense, the largest office complex in Europe, encompass-es160,000 sq.m. of space in five towers. Previously owned by the now defunct Lehman Brothers which bought it in July 2007 just before the financial crisis for €2.1bn through special purpose ve-hicle Heart of La Défense SAS (Hold) - just over a year before the bank’s collapse - the complex was purchased by Lone Star in 2014 when it took over Hold’s debts.

Le Figaro said Lone Star is now seeking a buyer with a price tag of €2bn and, even if it may not be able to achieve this valuation, could still pocket a sizeable capital gain. “Lone Star did not pay a very high price for this asset because it was a complicated opera-tion,” Caroline Dheilly, of Bank Degroof, told the newspaper. However sources close to Lone Star told PIE, without giving de-tails, that the sale mandate has not yet been issued.

The purchase price was also affected by the low ebb of the La Défense office market in early 2014. “There were a lot of empty offices, recently delivered towers without tenants and uncertain-ties about rental levels,” said Dheilly. The market has picked up since then, with the vacancy rate easing to 11% from 14% in 2014 as owners have reduced rents to secure lettings. Few new deliveries are scheduled in the next few years, so vacancies should continue to decline. Low government bond yields also mean that institutional investors are ready to accept lower returns from real estate assets and therefore willing to pay higher prices than a year or two earlier, said Philippe Perello, CEO of Knight Frank France.


Potential buyers may still be deterred by Coeur Défense’s vacancy rate, currently 10% but set to rise to 25% in mid-2016 when AXA Investment Managers leaves to take up space in Unibail-Rodamco’s Tour Majunga. And the price tag for the asset limits potential buyers to wealth management giants like Blackrock, and sovereign wealth funds such as Norway’s giant Pension Fund Global Norges and Abu Dhabi’s ADIA, Le Figaro said. Unless they team up, insurance groups do not have the resources to compete for the asset and will have to focus on smaller operations such as the headquarters of French indus-trial group Saint-Gobain, acquired by Perella Weinberg for €110m in 2014 but which could also soon be put on the market. ■ pie

Fmr Westgrund mgrs launch German Velero housing Two former Westgrund managers and a privatisation specialist have launched new German housing firm Velero Partners, which will focus on acquisition of small to mid-sized portfolios which it then aims to optimise to create value.

The Berlin-based Velero will buy assets across Germany for its own book, with privatisation a major part of the strategy, it said in a release. The firm is headed by Sascha Giest, previously co-CEO of listed residential group Westgrund, which was recently taken over by Frankfurt peer Adler Real Estate. During his time at West-grund, the firm’s portfolio rose to 20,000 from 5,000 flats and entered the SDAX German small-cap stock exchange index. Pre-viously head of transactions at Westgrund, Thomas Lange will be responsible for acquisitions and asset management.

Frank Wildhirt who has privatised over 7,500 units across Ger-many, in the last 10 years will be responsible for privatisations in Velero. “Our business model is fairly simple: We are buying resi-dential portfolios in order to optimise them and raise their value,” said Giest in a release. “Whether we want to manage them long-term or sell them will hinge on the .. market situation and invest-ment horizon of our investors. We will preferably look at small to mid-sized portfolios as competition in the segment is not as strong, which is feeding through to pricing. But we are also not afraid to tackle large or supposedly difficult portfolios.”

Wildhirt said: “Demand for owner-occupier flats in Germany is high .. not only in the large cities.” Together with Lange, he will also be responsible for determining exit strategies. Velero is al-ready in negotiations on acquisitions and expects first successful closings soon. ■ pie

German ImmoScout24 internet platform readies IPO German online trading platform Scout24, which includes the na-tion’s largest home sales platform ImmoScout24, is preparing an initial public offering for this year, including a €200m capital in-crease, to seize on growth opportunities and reduce debt.

Proceeds from the capital increase, as well as the sale by current shareholders should reach €200m, said Scou24 without giving de-tails. UK-based hedge fund Hellman & Friedman and investment manager Blackstone control around 67% of Scout24, with German telecoms giant Deutsche Telekom at 29% and management 4%. Blackstone last year provided finance for Hellman & Friedman’s 70% takeover of the firm from Deutsche Telekom. Current shareholders intend to remain significantly invested post-IPO, said the firm.

“Together with our shareholders, we have worked hard to posi-tion Scout24 in all regards for a successful future,” said CEO Greg-ory Ellis, an American brought in by H&F to ready the firm for flotation. “The planned IPO is the logical next step in the compa-ny’s development path, and now is the right time to take it.”

Scout24 operates digital marketplaces in the real estate and au-tomotive sectors in Germany and some other European countries: ImmobilienScout24 and AutoScout24. It recently streamlined its business to focus on these two core areas. However, it still also operates FinanceScout24, FriendScout24, JobScout24 and Trav-elScout2. Last year, the firm said it generated revenues of €342m and EBITDA of €149m, representing a 44% margin. Based in Berlin it has 1,064 staff.

The offer will consist of IPOs in Germany and Austria as well as private placements in select jurisdictions. Credit Suisse and Gold-man Sachs International are acting as joint global coordinators and joint bookrunners; Barclays, Jefferies and Morgan Stanley as joint bookrunners. ■ pie

Swiss Corestate plans to absorb Youniq student housingSwiss private equity group Corestate Capital is in talks to absorb listed German student housing specialist Youniq, aiming to squeeze-out the remaining 7.8% minority shareholders. It wants to delist the firm and recapitalise it for future investments.

Corestate subsidiary Corestate Ben BidCo, which holds 92.2% of Youniq shares, has started negotiations on a merger agreement with Youniq, said the latter in a statement. Corestate will go ahead with the merger if Youniq’s AGM agrees to a squeeze-out of remain-ing minority shareholders against adequate cash compensation.

Youniq has been one of very few companies that did not profit from the general run on German property in recent years. Its shares, listed at €17 in 2006, have been falling since 2011, hitting €1 last summer. The firm reported a loss in 2014, though falling to €6m from €54m in 2013, and predicts another small shortfall this year. “The main reasons for the failure of Youniq on the stock market are management mistakes and lack of capital,” Corestate Founder Ralph Winter told PIE earlier this year. “A project devel-opment company with little capital simply does not belong on the stock market.” In October, its majority owners, including the Corestate German Residential Fund, sold their shares to Cor-estate Ben BidCo - which has since increased its stake by making a mandatory takeover bid following the acquisition, and another voluntary offer at €1.40 per share.


After the delisting, Corestate plans to recapitalise Youniq to ac-quire additional land plots for student living and micro apart-ment projects. “We continue to believe in the potential of this asset class,” Winter told PIE. Youniq currently has 2,500 student apartments under management or construction in 12 cities in Germany. The share closed around €1.78 on Tuesday. ■ pie

Christie + Co selling Austrian, Czech hotelsHotel specialist Christie + Co has been mandated by Vienna-based operator Falkensteiner to sell three hotels in the Austrian Alps and in Czech Republic’s Marienbad spa. Without naming a prospective value, it said the assets can be purchased individually or as a portfolio.

Christie + Co said in a release it received an exclusive mandate to sell the hotels, which together offer over 500 rooms. Two assets are located in the Carinthian Alps, the Falkensteiner Club Funi-mation Katschberg and the Falkensteiner Hotel & Spa Carinzia, one in the famous Czech spa: Falkensteiner Hotel Grand MedSpa Marienbad. A precondition of the deal is that Falkensteiner re-mains operator of the hotels. “The hotels are in an excellent con-dition are offering a rare investment opportunity due to their good performance and long-term contracts with top operator Falkensteiner,” said MD Lukas Hochedlinger.

Chairman of the Falkensteiner Group Otmar Michaeler said that the sale of the properties is part of an expansion strategy. While the group focused on investment in its own hotel projects in the past, it is now ready to sell properties as part of its new strategy. “At the same time, we are focusing on growth through new man-agement contracts, especially in our core regions but also increas-ingly in Germany and Italy,” said Michaeler. The operator has 31 hotels and residences in central Europe under management. ■ pie

UK’s Tristan buys Poitiers mall, seeks more France London-based Tristan Capital Partners has bought the Cordeliers shopping centre in Poitiers, central France, for its core-plus fund Curzon Capital Partners IV, and said it is actively looking for more with CCP IV ‘firepower’. The fund has raised €450m in equity.

Vendor of the mall was Munich-based GLL Real Estate Part-ners, and no price for the deal was disclosed. The 9,000 sq.m. mall hosts national and international brands including Zara, Mango, Fnac, Décimas and Nature & Découvertes, Tristan said in a re-lease. Tristan Capital MD Jean-Philippe Blangy said: “Improving consumer confidence benefits retail, an investment theme that we have been pursuing actively elsewhere in Europe, particularly in Germany and the UK, so this purchase fits well within that strat-egy. The firepower of the CCP IV fund means that we are ac-tively looking for fresh opportunities to invest in France, where

pricing has taken time to adjust and economic growth is begin-ning to pick up.”

The final equity capital raised by the CCP IV fund was €425m and this purchase is its third investment, continuing its predeces-sor fund’s strategy of acquiring retail properties in established catchment areas in smaller western European cities which require fresh asset management input. Tristan, an employee-owned in-vestment manager, runs pan-European real estate funds includ-ing core‐plus and value-added/opportunistic strategies and man-ages total assets of over €5bn. ■ pie

BNPP REIM, Cording start fund with Düsseldorf tower BNP Paribas Real Estate’s German investment manager is launch-ing, together with Frankfurt-based Cording co-headed by Eng-lishman Rodney Bysh, the Real Value Fund. Targeting €150m equity for value-add assets its first purchase is a Düsseldorf media tower.

The targeted asset category will be properties that can be sig-nificantly increased in value through asset management, said BNP Paribas Real Estate Investment Management Germany and Cord-ing Real Estate said in a joint release. The fund has already won institutional commitments for over one-third of volume and its first asset is Media Tower in the Dusseldorf Media Harbour.

“Traditional core real estate increasingly fails to meet the return expectations of institutional investors because of movements in real estate prices,” said BNP Paribas REIM Germany Chairman Reinhard Mattern in a release. “For that reason there is a great interest in non-core properties that can be developed into core. Our Real Value Fund uses a manage-to-core approach and there-fore is able to unlock the latent value of a property.” Mattern is confident that the vehicle will win additional capital commit-ments in the coming months.

Bysh added: “We believe there is a compelling opportunity in the value-add segment for specialist real estate managers with a local presence and understanding of the market. Over time, many core properties have become value-add buildings with va-cant space and renovation needs. We acquire these kinds of properties and apply our proven management approach to repo-sition them.”

At 64 m., Düsseldorf Media Tower is one of the tallest build-ings at the Media Harbour with 18 floors and some 9,000 sq.m. of flexible space, including a restaurant on the ground floor, and 7,600 sq.m. of office space above. Opened in 2006, it has completed its first-use cycle and is only about 50% occupied, with the average remaining term of remaining leases only 2.8 years. The tenants are diversified and most of the lease agree-ments are indexed, the firms said. The property is located with good access to motorways and public transport and, as part of the gradual development of the Dusseldorf Media Harbour since 1989, is in a sought-after location where office vacancies run at just 7%. ■ pie


Polish tycoon Hajdarowicz boosts property focusPolish listed KCI has secured a building permit for an office project in Kraków, southern Poland, as its head, media-cum-real estate ty-coon Grzegorz Hajdarowicz, boosts its focus on property. The group expects PLN126m (€30m) profit from its two Kraków schemes.

Part of Gremi Group, which also includes media, film and publish-ing interests, Kraków-headquartered KCI is a real estate investor and manager that also owns some of the nation’s largest media companies including leading national daily Rzeczpospolita, business daily Parki-et, and current affairs and lifestyle titles. Following an April acquisi-tion of state-owned Jupiter with real estate and media assets, KCI announced the two sectors will underpin its business going forward.

The 50,310 sq.m. office project Gremi Business Park, scheduled to begin in 2H15, is expected to generate PLN50m (€12m) prof-it. “The project will be delivered in five stages and we want to complete one stage a year,” said CEO Grzegorz Hajdarowicz. The firm has previously worked with French Bouygues but it has not said if the cooperation extends to this project.

In the next three-four years KCI is also expecting some PL-N76m (€18m) from its residential project, already in develop-ment. The scheme includes 14 buildings covering 94,000 sq.m. residential and 7,500 sq.m. commercial space. By end-2019 hous-ing is forecast to generate some €7.4m in annual income with €11.6 expected to come from the sales of commercial space. “The entire project, which we started in 2007, totals 150,000 sq.m. but we have already delivered 50,000 sq.m. The developer for the re-maining 94,000 sq.m. is LC Corp. The firm has already delivered the first of the six stages,” said Hajdarowicz.

KCI earlier announced first half net profit of €8.23m, turning round a loss of €297,000 in 1H14. Profit from real estate ac-counted for €2.21m. In 1H14, real estate was the only sector to generate profit, which came to €1.73m. “Such good financial re-sults of the group are the effect of the actions we have taken this year,” said Hajderowicz. ■ pie

Low Euro hotel yields push in-vestors east - ChristieOverheated competition and low yields in some western Europe-an hotel markets are pushing investors towards secondary central Europe capitals where lucrative opportunities exist, according to hospitality advisor Christie+Co.

CEE hotel markets are considered immature in comparison to western counterparts, which is a great bet for negotiating attrac-tive prices on assets, says Christie+Co’s latest CEE Hotel Market Snapshot II. The report looks into three of the biggest cities in the region –Romanian capital Bucharest, Bulgaria’s Sofia and the cap-ital of Serbia, Belgrade. “Through our day-to-day conversations with our clients, it is apparent that investors are keeping an eye on the peripheral markets of Bucharest, Sofia and Belgrade,” said Lu-

kas Hochedlinger, MD Germany, Austria & CEE in the report. “Western European players in particular are attracted by the cities’ strategic geographical positions, western-style cultures and their highly educated yet affordable workforce.” The three cities are dominated by privately operated hotels, accounting for 61% of the market in Bucharest, 67% in Belgrade and 84% in Sofia. But Christie + Co believes this shortfall will be actively addressed by major hotel groups as the economic climate improves in the indi-vidual markets, alongside rising visitor numbers. ■ pie

STOCKS REPORT: Losses ease; Sweden, Germany outperform European property shares edged lower last week as China’s plunge slowed and firms in Sweden and Germany outperformed the re-gion. The EPRA Developed Europe Index ended Friday 0.97% lower on the week.

Sweden’s large contingent of listed property groups delivered the best performance in the week to 4 September with a 1.97% rise. They were led by top performer Kungsleden, which rose 5.38%, making up for sharp falls in the second half of August. It was followed by Hemfosa and Dios which also ate into previous slides with rises of 2.72% and 2.26% respectively.

UK shares occupied the next four top spaces with Safestore Holdings up 4.02%, after analysts at Citigroup, Investec and Nu-mis re-iterated their “Buy” ratings for the UK’s largest self-storage group. It was followed by Target Healthcare on a 3.96% rise, Re-define International up 3.79% and recent addition Assura – med-ical centre owner and developer – up 3.43%. However, despite the strong showing in the top five spots, the UK underperformed the wider index with a 1.35% fall. The country’s largest property owners and developers, including British Land, Hammerson and Land Securities registered share price falls of over 2%. Covent Garden property owner Capital & Counties was the weakest UK performer with a 2.73% after the stock went ex-dividend ahead of a 0.5 pence interim dividend payment later this month.

Germany was a stronger performer in the index with a 0.44% rise, led by Germany’s largest landlord Deutsche Annington – due to change its name to Vonovia later this month. The firm, which has a market cap of around €13bn, is expected to move into the DAX index of leading German shares later in September, making it the only real estate representative in the 30-member club. Adler was the weakest German share, falling back 4.61%, despite an-nouncing that funds from operations will more than double from the half-year point to €14 million by the end of 2015.

France was the weakest performing country as its shares fell 2.48% and all its companies finished the week in negative terri-tory. Icade was the worst performer in the index, down 6.14%, following a downgrade to “Neutral” by Goldman Sachs. The of-fice owner has recently unveiled a new strategy under recently-appointed CEO Olivier Wigniolle and launched a €500m bond offering to trim the cost of its debt. Mixed property REIT Affine also lost 4.45% to finish in the bottom five.


Spain’s Immobiliaria Colonial was the second-worst performer of the week on a 5.51% decline, dragging Spain 1.70% lower. Hispania Activos Inmobiliarios also lost 2.52% as it revealed that it is analysing up to €1.5bn of deals in hotels, offices and homes. Norwegian Property also finished in the bottom five for the week after a 4.90% share price fall. The slide erased the 3.48% gain made in August and led Norway 0.83% lower. ■ pie

AEW hires debt head pre-€750m fund launchProperty investment manager AEW Europe has hired Cyril Hoy-aux from JLL France to head and expand its debt fund manage-ment ahead of the launch of its second debt fund Senior European Loan Fund 2 targeting investment of €750m.

The firm, part of the Natixis banking group, said in a release Monday that SELF2 will seek to finance senior loan transactions mainly across France, the United Kingdom and Germany in of-fice, retail, multifamily and logistic assets. AEW Europe launched its debt platform in 2012 and raised €323m of equity for its first fund SELF, which recently completed its investment program having invested in France, UK and elsewhere in Europe.

Hoyaux has been active in real estate and debt financing throughout his 25 years career, and was previously JLL France co-Director and co-founder of its Debt Advisory platform. Prior to this at Morgan Stanley he was responsible for helping source and structure in excess of €4bn of real estate financing, as well as their ultimate distribution through CMBS or syndication. He also spent five years as head of the valuation division of Ad Valorem.

Hoyaux will be based in Paris and report to Raphaël Brault, Head of Separate Accounts and Funds AEW Europe. “We have strong ambitions for our real estate debt platform in Europe in which inves-tors continue to show a high level of interest,” Brault said in a release.

AEW Europe CEO Rob Wilkinson added: “Having recently com-pleted the investment program for our first debt fund we are now focused on continuing our strategy of expanding our debt platform through the launch of SELF2. There is still a clear appetite from our investor clients and contacts to invest in real estate debt, attracted by the yields available, particularly when compared to those from other forms of credit such as corporate bonds and gilts.” ■ pie

German Art-Invest said buying B&B hotels for €41mGerman Art-Invest Real Estate, the funds platform of Bremen-based Zech Group, has bought three hotels and three land plots from the German arm of French B&B economy hotel chain in a sale-leaseback. PIE sources said the price was around €41m.

The deal marks Art-Invest’s entry into the budget hotel seg-ment, which is outperforming other segments in Germany, which in turn outperforms Europe, the firm said. “Other countries, such

as France – where B&B Hotels is established with over 230 hotels – show the enormous market potential of the segment,” said Head of Hotels Peter Ebertz. Added B&B MD Mark Thompson: “B&B Hotels is the hotel chain with strongest growth in Germany.” The 76th B&B hotel opened in Erfurt in August, the 10th new hotel opened so far this year. “We are thus close to our goal of starting operations of a new B&B hotel each month,” said Thompson. The development and financing deal with Art-Invest will support the firm’s expansionary strategy, he added.

The portfolio will become part of the Hotel-Manage to Core fund, said Art-Invest in a release, which did not detail the deal price. It includes a hotel at Cologne fair, one in Passau in Bavaria, and a hotel that is to open soon in Basel/Weil on the Rhine river at the Swiss border. The three plots are located in Berlin, Ludwig-shafen and Mainz, and Art-Invest plans to develop B&B hotels on sites by 2016. All six hotel locations will offer 689 rooms and are leased to B&B for 20 years. The hotel in Berlin, with 185 rooms, will become the largest B&B Hotel in Germany. Cologne-based Art-Invest focuses on development and investment in Germany’s largest cities through funds aimed at institutions. ■ pie

German bricks at regulatory disadvantage – ZIAGerman online retail is growing exponentially, and while retailers and investors are becoming more flexible to accommodate the structural shift, strict regulation is putting ‘bricks’ at a disadvan-tage to ‘clicks’, says Property Association ZIA.

Non-food online retail in Germany has now reached a 15.3% share and is set to reach 25% in 2025 - especially with younger consumers, research institute forsa found in a new survey com-missioned by ZIA (Zentraler Immobilien Ausschuss). As a result, retailers are increasingly linking online and stationary retail, while developers and operators are more flexible on space. But strict regulations and administrative hurdles are hindering the sector from tackling this in a way that cities can retain their status as marketplaces, and placing ‘bricks’ at a disadvantage to ‘clicks’.

Customers now expect stationary retail to have better service, a larger variety of goods and longer opening hours. “Regarding ser-vices, the retailer has to act,” said Iris Schöberl, MD of BMO Real Estate Partners Germany and head of the ZIA retail and commu-nal committee. The other two expectations are limited by restric-tive regulation: The variety of goods and retail space is limited by local administration, and opening hours is regulated by federal law. “To keep cities lively is of vital interest to all retailers with a stationary shop,” said Schöberl.

Klaus Striebich, chairman of the German Council of Shopping Centres, added that the historic link between inner cities and sta-tionary retail is becoming unbalanced. “We need to have an in-tensive and broad public discussion about equal opportunities and fairness between online and stationary retail,” he said in a re-lease. Ultimately, the consumer should be able to decide when to buy what and where. ■ pie


Dutch family in €100m mandate to Cologne firmA Dutch family office has given a mandate to Cologne-based pri-vate wealth manager Dereco to invest €80m-€100m in German commercial real estate with a focus on high street retail and new residential that include retail space.

Dereco said in a release that the portfolio will focus on high street assets in pedestrian zones with an investment volume above €10m as well as new residential developments that include retail space in cities with over 50,000 inhabitants. It will invest in mixed-use assets that include office and/or housing,and will also look at retail warehouses in singular cases. The firm prefers recent-ly-built assets or development projects at least 40% pre-let, that can be secured in a forward deal. Depending on the use and loca-tion of the asset, multiples can reach up to 20x rental income.

“The ideal asset would be a new retail project directly on the market square of a sustainable mid-sized city with a high central-ity or a new residential project that includes a full-range retailer in a good residential area,” said Dereco Senior Investment Manager Marc Ludwig. The firm has bought similar assets for other man-dates by family offices in the past, for example in Siegburg, Det-mold and Stade. After the acquisition, Dereco will also take over asset management. Since 1993, the firm offers asset and invest-ment management services to private and semi-institutional cli-ents in the property sector. ■ pie

Foreigners help double Italy RE flows to €3.6bn - BNPPRE First half investment in Italian commercial property jumped 106% to €3.6bn, with foreigners putting in 73% and the city of Milan taking 59% of total inflows, says realtor BNP Paribas Real Estate. Yields are down and should fall further.

The investment of €900m in Milan’s Porta Nuova project by Qatar was a significant element in first half, but even without it volume would have been 55% up from 1H14, showing how the recovery in 2013-14 is consolidating. “It is now considered to be the right moment to enter or even return to Italy and the main investors are still from abroad,” BNPPRE said.

The return of large transactions, single asset and portfolios, shows high liquidity and strong competition for offices in prime locations has depressed prime yields. “This trend is expected to continue, at least for prime product. Indeed, a dearth of such product, combined with the strong interest that it encounters, lead us to predict a further reduction of 20bp over the coming months, thus returning to 2011 levels. Non-prime products, par-ticularly vacant or value-added opportunities considered too risky, will continue to struggle .. and may only be sold at high yields.”

Milan was particularly lively, attracting €2.12bn in 1H15. But the strong performance was concentrated in 1Q15 and overall first half take-up fell 13%. Investment in Rome improved but with only 11%

share of total was still far behind Milan. The Italian capital’s €404m in transactions was also below average for recent years. Gross take-up volume was around 50,000 sq.m., up 46% on the same period last year but even the largest transactions were below 5,000 sq.m.

“We continue to observe a dichotomy between .. Milan and Rome in terms of both investment and letting activity,” the report said. Milan has well-positioned and well-let class-A properties, but supply does not satisfy demand in Rome which is “too closely tied to the public sector, whose short term real estate strategy remains unclear.” ■ pie

TIAA-CREF boosts Spain with Neinver outlet JVUS pension fund manager TIAA-CREF has reinforced its pres-ence in Spain with the purchase of 50% in Viladecans, The Style Outlets being developed in Barcelona by partner Neinver, a Span-ish specialist. No price was given.

The deal was brokered by TH Real Estate, TIAA-CREF’s whol-ly-owned investment subsidiary, and is the third deal under the US group’s joint venture with Neinver since it was set up in Janu-ary. The partners said they plan to build a significant investment platform with the initial focus on Neinver’s existing portfolio and development pipeline across Europe. The equal partners’ assets include The Style Outlets in Roppenheim, France, acquired in January and the summer purchase of Factory Annopol in Warsaw, plus Factory Krakow and Futura Park in Krakow, Poland.

Phase 1 of Viladecans, due to complete in 2016, will provide 100 retail units over a total lettable area of 19,800 sq.m. The acquisition adds to TH Real Estate’s Iberian management portfolio, apart from the JV, of around €1bn in nine shopping centres across the region.

David Turner, Head of TIAA European Investment, commented: “European outlet malls, as an asset class, has regularly outperformed other retail sub sectors and continues to form a key component of our growth strategy in Europe. Our partnership with Neinver con-tinues to provide access to a strong portfolio of outlet malls, diversi-fied across key European markets.” Neinver Spain head Eduardo Ceballos said the firm is confident the project will be successful.

TH Real Estate’s Jamie Acheson noted that Spain has under-gone considerable economic reforms that have put it in a good position to continue out-performing the Eurozone in growth. “Madrid and Barcelona are leading the national recovery and this has been reflected in soaring liquidity levels in the retail invest-ment market.” ■ pie

France’s Ardian targets €2bn with new property armFrench alternatives investment firm Ardian has launched a real estate arm to complement its private equity businesses and hired former Société Foncière Lyonnaise CEO Bertrand Julien-Lafer-rière to lead its drive to €2bn of assets within five years.


The announcement effectively adds a fifth investment division to Ardian which has carved a large position as a private equity secondaries investment specialist – buying private equity fund po-sitions from banks and institutional investors. Ardian also invests directly in companies, private debt, infrastructure and runs funds of funds. The company spun off from French insurer AXA two years ago and now manages assets of some €45bn for about 350 investors globally. AXA retains a 23% stake in the business and agreed to commit €4.8bn over five years to Ardian funds. It is unclear whether that backing will extend to Ardian’s real estate offerings, which will enter into the same crowded market as AXA’s own €60bn global real estate arm.

Ardian Real Estate said it will focus on commercial property deals across Europe, aiming to become a quality player. Its presi-dent, Dominique Senequier, said in a release: “Ardian has estab-lished itself as a leading player in the global investment industry. The founding of this fifth pillar is a natural progression for us as we continue to evolve and develop. It will not only strengthen and diversify our offering for clients but also provide a substantial growth opportunity... We aim for Ardian Real Estate to be man-aging over €2bn in the next five years.”

Julien-Laferrière will build and lead Ardian’s new real estate team. With 30 years’ experience in real estate, including senior roles at hotels group Accor and shopping centre giant Unibail-Rodamco, he briefly served earlier this year as CEO of Middle East shopping centre developer and manager Majid Al Futtaim. No reason was given for his departure in April after just two months in the role. ■ pie

German GrandCity sees no rea-son for share riseA spokesperson for GrandCity Properties, a listed specialist in dis-tressed German housing, said the firm saw no reason for share price gains as high as 5% Monday, compared with a flat or lower sector overall. It ended just over 3% higher.

“The share currently trades with a 3% plus; we don’t see this as unusual,” a GCP spokesperson told PIE in late afternoon. How-evr, the share booked over 5% gains earlier in the day but closed only 3.13% higher at €16, though the sector ended lower.

The Luxembourg-based GCP in summer reported a rise in 1H15 FFO and net profit by 60% to €55m and €195m, respec-tively. “Generally speaking, GrandCity published good half-year results and has since booked gains in its share price,” one analyst told PIE, asking not to be identified. “The current move could come from closing a larger portfolio deal.”

In June, GCP bought 10,500 units in several transactions for a total €330m, and was at the same time in negotiations to sell 4,500 units. The firm has been on a steep growth curve for the last few years, with the portfolio rising to 43,000 housing units in December from 26,000 in December 2013 - and this year to date surging to 66,000. The group focuses on turnaround residential property opportunities in larger German cities. ■ pie

France leads 2Q Euro funds 2.55% higher - INREVFrench real estate funds in 2Q15 delivered their best quarterly per-formance in almost five years to help boost INREV’s unlisted prop-erty funds index by 2.55%. Returns in France soared 5.67%, UK and Finland were also strong, but Germany lagged and Italy fell.

The index performance rose from 2.45% in first quarter, taking the annual performance for unlisted real estate funds to 9.85%, the highest annual recorded level since the INREV Quarterly In-dex was established in 2010. French returns were driven by strong performance from a handful of funds, and marked a significant catch-up on the segment’s 1Q15 return of 1.16%. The second quarter result is its highest level since 4Q10 and indicates the country’s rebounding performance and continued investment ap-peal, INREV said in a report. Higher capital values accounted for the vast majority of French funds’ quarterly return.

After France, UK funds delivered a 3.34% return, while Fin-land also performed well with a 2.45% return matching the in-dex. However, Germany lagged its peer group with a 1.07% re-turn and Italian funds finished the quarter deep in negative territory, losing 9.06% due to falls in capital values. ■ pie

French Amundi names fmr Francaise exec Coly CEO Jean-Marc Coly, former head of UFG/La Francaise REM, is to succeed Nicolas Simon as CEO of property investment manager Amundi Immobilier, PIE sources say, supporting French media reports. Created in 2010 by merging units of French banks Crédit Agricole and Société Générale, the group manages over €9bn in real estate.

PIE sources, asking not to be named, said Simon’s CIO role, alongside that of CEO, had created frictions inside the firm, and Amundi Global Head of Alternative Assets Pedro Arias was obliged to act - reassigning Simon to a senior position in Asia. Coly, highly respected and widely known in French real estate, worked for 20 years with UFG, the forerunner to La Francaise REM, before leaving in December 2013 after that group’s head Xavier Lépine began a strategy of external growth through a joint venture with the London-based Forum group. He has since been running investment unit Alta REIM for retail REIT/SIIQ Altarea Cogedim.

“I’m sure he’s going to be the perfect person for the role,” one PIE source said of Coly. “Arias is a former investment banker, very charismatic - and has been really driving the effort to find the best people and looking for talent.” The changes at executive level have delayed plans announced by Crédit Agricole and Société Générale in spring to float Amundi Immobilier, with SocGen committing to sell its entire 20% stake. Amundi earlier this year said it aims to grow assets to €15bn over the next three years, after doubling AUM since launch. ■ pie


Hong Kong family takes 25% UK M7 optionA large Hong Kong-based family office has taken an option on a 25% stake in London-based pan-European property asset man-ager M7 Real Estate, joining the board, and also contributing to enlarging M7’s Jersey listed bond to £30m.

M7 did not name the Hong Kong-based partner in a release but said the new bond will allow it to increase co-investments in its JVs and funds as well as to acquire assets directly. As part of the transaction the family office has agreed an option to acquire 25% of the business for an undisclosed price, and two representatives have joined the board. In addition, the two firms have entered a strategic partnership to invest in high-yielding real estate in the locations covered by the M7 platform, and to provide a distribu-tion for M7 funds into Asian markets.

“This is obviously a highly exciting development for the busi-ness and we are very much looking forward to working with our new partners to grow the business over the next few months,” M7 CEO Richard Croft said in a statement.

M7 was founded in late 2008, early 2009 by Charles Alcock, Matthew Cheyne, John Croft and Richard Croft, who worked previously at GPT Halverton, owned prior to the global financial crisis by Austrian listed property trust GPT. M7 focuses on multi-let real estate with emphasis on light industrial parks across Eu-rope and the UK, as well as retail assets. It runds funds and JV’s, of which one of the biggest is the MStar series of vehicles funded substantially by US opportunity investor Starwood Capital.

Wholly owned until now by management, M7 now has 85 staff in the UK, Denmark, the Netherlands, France, Germany and Po-land who manage some 370 assets comprising 2.7m sq.m with a capital value in excess of €1.3bn. Aside from Starwood, joint ven-ture partners include Oaktree Capital Management, H.I.G Capi-tal, Goldman Sachs and M&G Investments. ■ pie

Vonovia, fmr Annington, confirmed to enter DAXThe German Stock Exchange last week confirmed that Bochum-based Vonovia, the rebranded Deutsche Annington, will from 21 September become the first property company ever included in the DAX 30 large cap index.

On the recommendation of the indices committee, the Deutsche Börse said in a release Thursday that the officially rebranded Vono-via will be included in the DAX. The move follows the group’s merger with Berlin peer Gagfah this year, which has made it into Europe’s largest listed housing firm with close to 370,000 units and a portfolio worth €23bn. Important for the DAX inclusion is its market capitalisation, last week around €13bn, with 95.44% in free float. It said its largest individual shareholders are pension funds and other institutions with a long-term focus. The Vonovia share closed down in line with the market Friday at €29.57.

“The inclusion of real estate in the DAX benchmark index for the first time with the addition of Vonovia is a strong signal for the entire industry and will make this important sector of the economy all the more visible,” said CEO Rolf Buch in a state-ment. “I would like to take Vonovia’s inclusion in the DAX in particular as an opportunity to thank our employees, who laid the foundations for Vonovia’s development with all their hard work in recent years.”

Vonovia-Annington was floated in an IPO in July 2013 by its owner, UK private equity fund Terra Firma. At the time holding 130,000 residential units, it has integrated various large portfolios since then including Vitus, DeWAG and Franconia and, in July 2015 the Südewo portfolio in southern Germany. The last pur-chase came after its agreed merger with listed Gagfah in early 2015 which brought in around 145,000 units. ■ pie

German DIC names Bilfinger’s Karaduman new CEO Frankfurt-listed DIC Asset has appointed Aydin Karaduman, current head of Bilfinger Real Estate, to succeed Ulrich Höller as CEO when he moves full time to the German Estates Group, the new joint venture between its core shareholder and US private equity giant KKR.

Höller will transfer to the firm’s supervisory board on 1 January when Karaduman takes over as CEO and chairman, DIC Asset said in a release. Karaduman, who holds a degree in industrial engineering, has been managing Bilfinger RE for the last year in tandem with Rob Bould, head of UK-based property adviser GVA after the two firms merged last year. At Bilfinger Real Estate, Karaduman will be succeeded by Joachim Ott, current Head of Corporate Business Development & Key Account Management.

Höller said in January that DIC Asset was not part of new GEG because returns did not match, but added that its addition to the deal may be an option for the future. Established in 2002, DIC Asset manages 230 properties with a market value of around €3.2bn. Its core shareholder, Deutsche Immobilien Chancen, which set up the company originally with a Morgan Stanley fund, announced the GEG JV this year with KKR, and last month re-ported its first investment. ■ pie

German hotels with growth perspectives – Colliers German hotels, especially in the budget and economy segment, outperformed wider Europe in first half and have excellent growth perspectives for investment, particularly in larger cities, says real-tor Colliers International.

“The current development, in which especially budget and economy hotels are in the focus of both travellers and investors, will continue,” said Director of Hotel Investments Detlef Kaiser


in a study. German hotels outperformed their European peers in first half, with room occupancy of 67.9%. Average net room rates have also picked up since last year and are now only €1 below the €89 European average. “The most pertinent reason for that is the rising amount of international guests,” said Kaiser.

The most prominent destinations are still cities with over 500,000 inhabitants but airport hotels are now almost as success-ful, posting a 5% rise in average room rates in first half. Since 2004, net room rates rose to €84 from €63, and have thus almost reached large city levels. Budget and economy hotels reported highest occupancy. “Against this backdrop, we see ourselves con-firmed in our recommendation to prefer budget and economy hotels in cities with over 500,000 inhabitants in investment deci-sions,” said Andreas Erben, D of Colliers International Hotels. “At the same time, we recommend seizing investment opportuni-ties in airport hotels, especially in Munich and Frankfurt.” ■ pie

Spanish REIT assets surge 80% YTD to €8bn - ExpansiónSince last year, Spanish real estate investment trusts (SOCIMI) have grown portfolios fast and this year to date have added 80% in size to €8bn, with first half profits reaching €181m, newspaper Expansión reported.

The largest independent firms Merlin Properties, Hispania, Axi-are and Lar España were created between March and July 2014 with no property on balance sheets and quickly turned the €2.56bn raised from international investors in IPOs into €3.54bn of assets by year-end. Merlin, the largest, is now buying builder Sacyr’s unit Testa by stages for €1.79bn and already controls 77.01% and a portfolio worth €5.62bn. To make the purchase Merlin increased its capital €1.03bn and revalued its own securities to a current cap-italisation of €3.32bn compared with €1.25bn in March 2014. In the first half it earned €119.6m, with €65.4m coming from rentals.

Hispania, externally managed by the Madrid-based Azora Group, sought to buy listed property group Realia but was thwarted by a counter-offer from Mexican billionaire Carlos Slim. Hispania, due to its complex structure only partly incorporate a REIT/SOCIMI, is not subject to the limitation of investing 80% in rental assets and thus has a more diverse portfolio which includes hotels and residen-tial. Despite the setback with Realia it expanded its portfolio this year to €710m from €422m and also created a dedicated hotel REIT/SOCIMI named Bay with the Barceló hotel chain. Overall it will invest €340m in Bay, retaining 80.5% of the capital.

Lar España, managed by the Lar property group, has been the most active REIT/SOCIMI in the last two months, Expansión said in a report monitored by property agent Aura REE. It purchased the Megapark business park in Bilbao for €170m and El Rosal mall - taking its portfolio to €873m against €593m at mid-year.

Axiare, which went public in July 2014 with no assets and €360m of capital, raised another €395m in June and has since spent 58% of this with purchases worth €229m. The company is aiming to double in size. First half profits were €31.3m.

The Spanish REIT/SOCIMI sector was created in 2013 legisla-tion but became active only last year after Madrid changed fiscal rules to conform with other European jurisdictions - dropping cor-porate tax in exchange for the firms distributing a minimum 80% of their rental revenues to shareholders. Many smaller REIT/SOCIMIs have been floated in the interim, but many are ‘captive’ firms set up for fiscal efficiency by larger groups such as Blackstone and Unibail-Rodamco, and holding small portfolios or even single assets. ■ pie

French Cegereal raises operat-ing, ‘green’ rankingFrench REIT/SIIC Cegereal, controlled by a fund managed by Ger-many’s Commerz Real, tripled first half operating income to €40m, and said it is now Europe’s third-highest listed office property firm in the ‘green’ Global Real Estate Sustainability Benchmark.

A surge in its portfolio value to €902m from €844m - all of which comprises office property in Paris - was the main cause for Cegereal’s first half operating income rise, the firm said. Despite a sluggish rent-al market, Cegereal signed seven new leases for a 10,000 sq.m. total, taking its occupancy to 92%. EPRA net asset value rose to €35.80 per share from €34.80 at end-December - which compares to its share price close on Friday at €27.91. “Our NAV is growing steadily, lifted by the trend toward investment in the office property market and our recent realisations on assets,” said CEO Raphaël Tréguier. “We an-ticipate an increase in market rents over the coming year and, in the meantime a further compression in cap rates.”

Tréguier has laid strong emphasis on environmental efficiency of the firm’s assets in recent years. Cegereal last year was the first French property firm to announce it was going ‘fully green’, and its entire portfolio now has an HQE and BREEAM ‘Very Good’ certification. Cegereal debuted last year in the highest Green Star category GRESB, and this year has taken third rank among listed office property companies in Europe. The firm worked to-gether with clients and partners as part of its collaborative ‘Up-green your business’ project, to improve its overall performance by 28%.

GRESB, founded by Dutch real estate professor Nils Kok in 2009, is an non-profit industry-driven private company incorpo-rated in the Netherlands, committed to assessing the sustainabil-ity performance of real estate portfolios around the globe. Its 2015 report covered 707 companies and real estate funds, with 61,000 buildings with a total value of €2.3bn. ■ pie

Housing rises in investor taste - InternosInstitutional appetite for residential property is robust, with 69% planning to invest over the next three years, and over half aiming to boost at the expense of sectors such as UK retail and European office, says London-based manager Internos Global Investors.


In a survey of 63 UK and European institutional real estate in-vestors, it found that 62% plan to invest in housing in the next 12 months Preference is for the private rented sector, followed by student housing, hotels, care homes, social housing and shared ownership. “The residential investment sector has now come of age as an institutional-grade asset class in the UK,” said Andrew Taylor, Internos head of residential investment. This is likely to continue amid global market volatility and low bond yields as investors look to diversify in a search for long-term returns.

Internos CEO Andrew Thornton added: “Given the impor-tance of quality residential .. for the economic vibrancy of a na-tion, and an ageing population with a desperate need for invest-ment income that keeps pace with inflation, the opportunity for institutional investors looking for liability matching returns is obvious in the four pillars of residential: PRS (Private Rental Sec-tor), Shared Ownership, Student Housing and Care Homes.”

The survey showed most investors seek core returns of 5% to 7.5% in the segment, and that development risk is not seen as a barrier to entry. Some 60% of respondees favour undeveloped sites with planning permission, and only 15% prefer a standing investment with verified income. In mainland Europe investors using gearing, even at a fairly modest 33% to 50%, is four times that of institutions buying UK housing. Most investors consider key worker housing to be the most socially responsible invest-ment, thereafter allocating priority according to level of owner-ship between state and individual. Student accommodation is a favourite but there is lack of knowledge about the sector. With care homes it found an absence of appreciation of risk and likely future demand. ■ pie

Lone Star’s Polish GTC to raise €42m after profit turnroundListed Warsaw developer Globe Trade Centre, now controlled by US opportunity fund group Lone Star, has won approval for a rights issue set at €1.29 a share to raise around €42m. The firm said it also returned to profit in the first half.

GTC shareholders agreed in May to issue up to €33m new shares and set the minimum price at €1.18 a share, having previ-ously voted down the issue in October 2014 and in April 2015. Since then, Lone Star increased its stake to 55.25% following a tender offer. The group said last week it secured approval of its issue prospectus by the Polish Financial Supervision Commission.

CEO Thomas Kurzmann announced earlier that some 45% of funds raised will be invested in Poland, while the rest will go to projects in other central European capitals such as Bucharest, Bu-dapest and Belgrade. “GTC is now proceeding full steam ahead on a path to growth,” he said in a results release in summer. “The re-cent shareholders’ approval of a capital increase will enable GTC to use its expertise and presence in its core markets to execute new developments and acquisitions.” He added that the firm has achieved much in the last few months, restructuring borrowings and making significant progress in the disposal of non-core assets.

“On the other hand, we commenced construction of Galeria Północna, Warsaw, one of GTC’s key shopping mall projects. In Belgrade, the first building of the FortyOne office park was handed over to its tenants. We are analysing a number of invest-ment opportunities across the CEE and SEE regions and we re-main focused on our mission to invest in assets with upside po-tential and other selected development projects.”

GTC earlier announced first half pre-tax profit of €11m, turn-ing round a loss of €68m in 1H14, and net profit for the half of €6m, compared to a €72m loss. Aside from its home market, GTC has projects in Romania, Croatia, Serbia, Bulgaria, Czech Republic, Russia, Slovenia, Hungary and Ukraine. Total value of its properties at end June was €1.23bn, down slightly from De-cember after its disposal of Kazimierz Office Centre. ■ pie

UK’s Rockspring takes Berlin retail from Metro British investment manager Rockspring has bought a retail warehouse park south of Berlin from Düsseldorf-based Metro Group on behalf of a separate account mandate. The purchase price was not disclosed.

The Südring Center in Rangsdorf on the Berlin orbital motorway offers 41,500 sq.m. retail space, said Rockspring in a release. The asset holds planning permission to extend the park by a further 6,000 sq.m. Anchor tenant in the fully-leased building is a Real hypermarket; further tenants include DIY-store OBI and Adler fashion. “With the advantage of conservative financing, this core investment property delivers a solid income yield and will provide a source of secure cash flow,” said Head of Acquisitions Ulf Christian-sen. “Additionally, the area to the south and south-east of Berlin is set to benefit from population growth and, in due course, from the opening of the BER international airport, which should help drive increased footfall, as well as asset valuation growth.”

Added Partner Stuart Reid: “Following a period of research into eastern Germany, this transaction marks our seventh major strategic investment into dominant retail warehouse investments located in the region’s strongest catchment areas.” He expects ris-ing tenant demand for retail schemes and increasing appetite from institutions to invest in the east. The acquisition brings Rockspring’s total retail warehouse investment program in Ger-many and German-speaking Switzerland to €1.75bn across six funds. ■ pie

Polish PHN eyes €23.5m divestment amid rejigPolish listed PHN, privatised in 2013, doubled first half consoli-dated net profit to PLN29.2m (€6.9m) and said it plans to divest around €23.5m of assets this year, reinvesting proceeds as it re-structures its portfolio.


PHN (Polski Holding Nieruchomosci) is a leading investor in commercial property and one of the nation’s largest domestic firms by portfolio value, which includes 142 properties and near-ly 700 ha of land in Warsaw, Poznań, Wrocław and the Tri-City on the Baltic coast. Its holdings include the Warsaw Property Group, Agroman, Intraco, Budexpo, Dalmor and Wrocław Press Centre. Floated on the Warsaw Stock Exchange in February 2013 by the government, it owns 83 assets earmarked for divestment, and has 16 projects worth €155.3m and 43 schemes in develop-ment worth €199.5m.

“We continue to hand over projects to tenants, while at the same time increasing the number and pace of construction pro-jects implemented by PHN,” said President Artur Lebiedziński in a statement. “We also purchase carefully selected assets which generate rental revenue, thus enriching our real estate portfolio with modern commercial space.”

Over the past few months the firm has been restructuring its portfolio and earmarked 83 properties worth €147m for divest-ment. Earlier, it announced it plans to make purchases of more than €230m in the next two to 2-1/2 years. “This year, it is our ambition to make sales of up to PLN100m (€23.6m),” Lebiedziński told a press conference. As much as 50% of the target may be gen-erated from the ‘prestigious’ property portfolio of 18 projects in the capital Warsaw worth €23.5m. “The process of selling our pres-tigious property is well advanced. We’ve had a lot interest from potential buyers who are either interested in individual projects or the entire portfolio,” said Lebiedziński. “By the end of the year we should have sold at least half of that portfolio and the remaining half during the first six months of 2016.” ■ pie

Augsburg’s Patrizia adds in Copenhagen for €200mAugsburg-listed Patrizia has bought the Galleri K building in Co-penhagen for €200m in a co-investment with a German pension fund, making Patrizia one of the largest retail landlords in the centre of the Danish capital.

Patrizia bought the block on the Stroget high street in two sep-arate transactions from Unipension, the pension administration service for the Architects’ Pension Fund (AP), the Pension Fund for Danish MA’s, MSc’s and PhD’s (MP) and the Pension Fund for Agricultural Academics and Veterinary Surgeons (PJD), and the Bank of Ireland. “In Denmark alone, Patrizia’s real estate as-sets under management have thus increased to around €800m,” said Rikke Lykke, MD of Patrizia Nordic, in a release.

The six-storey block, made up of several buildings built between 1752 and 1900, houses over 20 shops on 13,100 sq.m. GLA, 10,000 sq.m. office and 1,900 sq.m. apartment space. It was ex-tensively renovated and modernised in 2005/06. Tenants include fashion retailers H&M, Topshop and Urban Outfitters and Nes-presso. “The property Galleri K offers a rare and exceptional in-vestment opportunity on Copenhagen’s main shopping street with a first-class retail and office market,” said Lykke. “We ob-

tained the unique chance to acquire the entire block by ensuring an off-market exclusivity on the upper part of the building before the lower part of the building was offered on the market.”

Patrizia is now one of the biggest retail lessors in central Copen-hagen. Just at the turn of the year, the firm bought a commercial property portfolio with 10 office and high street retail properties for €170m in the city, with six of the high street properties located on Stroget, for its Nordic Cities fund for two German institu-tional investors. It now has €17bn AUM, primarily as a co-inves-tor and portfolio manager for insurers, pension funds, sovereign funds and savings banks. ■ pie

Invesco eyes rental growth with Stockholm officeUS-headquartered investment manager Invesco has bought a complex of three offices in Stockholm from fund manager Areim as it bets on strong rental growth in the outperforming Nordic economy. No financial details were disclosed.

The 31,000 sq.m. complex, known as Lindhagensporten, has been undergoing refurbishment since Areim’s acquisition in 2011. The final phase of the project to create 11,000 sq.m. of new of-fices is expected to be completed in the fourth quarter of 2016 and will now be carried out by Invesco, alongside Areim. Security firms Securitas and Stanley Security Solutions are among the ten-ants occupying the modernised part of the buildings. Lindhagens-porten is in the Western Kungsholmen of Stockholm, one of capital’s best established office zones outside the CBD. “In our view, the Swedish real estate market is one of the strong European economies which we believe offers one of the best opportunities for rental growth,” said Paddy Bingham, managing director – fund management at Invesco Real Estate.

Invesco, which manages €725bn of assets globally, including some $58bn in real estate, acquired the property through its Nor-dic operating and origination partner Scius. The US firm has been active in Sweden since 2008 when it bought a retail park for some €40m on the outskirts of Stockholm. Last year it bought part of developer Skanska’s offices for €110m in its seventh deal in the country. The latest deal gives Invesco a portfolio that includes core offices, retail and logistics. Scius manages €1.3bn of assets for In-vesco and other clients including Swedish national pension fund AP3 and US private equity and banking firms Lone Star, Star-wood and Goldman Sachs. ■ pie

Sweden’s AP3 JV seeded with €75m propertiesJust days after peer national pension funds announced a new JV for investing abroad, Sweden’s AP3 has set up a regional office and retail real estate venture with domestic manager Sveafastigheter seeded with 15 assets worth €75m.


The new venture will focus on Sweden’s growing regional cities and is majority-owned by the €32bn public pension fund. The venture’s initial acquisitions, made through three separate transac-tions, are for commercial properties in Eskilstuna, Skövde, Halm-stad, Trollhättan and Östersund and two retail properties in Karl-skrona. The partners aim is to build a portfolio that can generate high and stable returns through active asset management by Svea-fastigheter’s local teams. “We see great potential in this type of investment since it is a complement to our existing property hold-ings. Together with a company like Sveafastigheter, with its local network, I am certain that we can reach an attractive risk-adjusted return,” said Klas Åkerbäck, senior portfolio manager at AP3.

The deal follows hot on the heels of US pension fund manager TIAA-CREF’s deal with Swedish peer funds AP1 and AP2 to cre-ate a €4bn European property venture, incorporating the assets the Swedish funds’ former Citycon property vehicle.

Sveafastigheter, part of investment banking and management group Brunswick Real Estate, manages €1.3bn of property assets in Sweden, Finland, Denmark and Estonia. It claims to be one of the region’s top-performing property managers and earlier this week unveiled the sale of a €336m portfolio of assets to Switzerland’s Partners Group, bringing its second fund close to liquidation. The groups’ aim is to create a long-term, sustainable property invest-ment project, said Sveafastigheter CEO Johan Tengelin. “The ven-ture fits well with Sveafastigheter’s broadened strategy to offer at-tractive and clearly structured investment opportunities, with another time horizon than the traditional funds,” he added. ■ pie

Paris housing rents decline as new controls biteParis housing rents fell in August after the introduction of new rent controls, with supply of rental properties holding up well despite fears that the legislation would deter investors, according to price monitoring web portal MeilleursAgents.

The controls, which came into force in Paris on 1 August, cap rents at 20% above a median reference rent. The French govern-ment originally planned to introduce the rent controls nation-wide but the measure met with stiff opposition from the real estate sector and Prime Minister Manuel Valls subsequently de-cided to introduce the rent controls only in Paris and on an ex-perimental basis.

The number of lettings more than 20% above the relevant refer-ence rent declined to 29% in August from 46% in January-July, MeilleursAgents chairman Sébastien de Lafond told Le Figaro newspaper. The figures are based on data on 30,000 lettings by estate agents.

The legislation allows owners to charge rent above the 20% cap if a property benefits from unusual features, but the 29% of new tenancies at “excessive” rents are also likely to include prop-erties where landlords have been slow to apply the new rules. This figure is likely to come down further in the months ahead, said de Lafond.

The number of rental properties on the market held steady in August despite the new controls, MeilleursAgents said. Paris dep-uty mayor for housing Ian Brossat welcomed the study. “Some people wrongly said that the rent controls served no purpose or that they would lead to a contraction in supply. We now see that the opposite is the case,” he said. “We are delighted that positive results have been recorded from the first month.” However, de Lafond said supply had already been affected in the run-up to the measure’s introduction. “The announcement of the policy two years ago acted as a deterrent to investors. Their numbers have almost halved in the capital since then,” he said.

The rent controls still face some legal challenges. Property own-ers association UNPI said it is considering an appeal against the measure. However, housing association “Bail à part - tremplin pour le logement” has lodged appeals seeking changes in the op-posite direction. It wants the measure extended to other cities. The idea of introducing controls is also under discussion in the Belgian capital. Socialists in the Brussels region administration have expressed interest in such a measure, but their allies in the liberal FDF party are opposed. ■ pie

Quantum Berlin retail deal said at €100mHamburg-based developer and investor Quantum has closed the acquisition of a high street asset in Berlin from a fund held by a Spanish bank, says realtor JLL. PIE cited sources earlier this year, who identified the Santander eyeing a deal worth around €100m.

The office and retail asset, built in 1999, with anchor tenant Uniqlo, a Japanese fashion chain, offers 10,000 sq.m. GLA, said JLL, which advised the seller. Sources told German specialist property newspaper Immobilien Zeitung earlier this year that the asset is to become part of a Quantum fund. On the upper floors, office tenants include notary and law firm Gniosdorz and prop-erty company NW Real Estate. The deal is financed by German property financier DG Hyp.

Quantum focuses on project development, institutional invest-ment products and asset management in Germany, and holds €3.8bn AUM. In the deal, it was advised by Pöllath+Partners. ■ pie

French Icade trims debt costs with €500m bondFrench REIT/SIIC Icade has further cut its cost of debt with the issue of a €500m bond with a 1.875% coupon. Newly appointed CEO Olivier Wigniolle said the issue will help improve cash-flow from Icade’s investments.

The seven-year bond was placed with investors across Europe and was substantially oversubscribed, Icade said in a statement. “The order book reveals a diversification of the investor base across Europe, with orders from central banks and sovereign


funds,” it said. The interest rate represented a 125bp spread over the reference rate.

Icade said the issue will further reduce its average cost of debt and extend its average debt maturity. The group’s average debt cost declined 28bp to 2.79% after hedging in 1H15, while aver-age debt maturity declined to 4.3 years from 4.7. Net financial debt stood at €4bn at end-June. The new bond issue will also help refinance healthcare unit Icade Santé’s acquisition of a clinics portfolio owned by healthcare group Vitalia.

“The success of this new bond issue shows Icade’s ability to issue financing at very attractive conditions and to improve significant-ly the cash-flows from its future investments,” said Wigniolle, who recently launched a strategic review of Icade’s assets and op-erations after taking over as CEO earlier this year.

Icade only entered the bond market in 2013 after acquiring SIIC status in 2007. Controlled by French state financing institu-tion Caisse des Dépôts et Consignations, the group always had excellent access to bank financing, but had to wait until it had a fully developed business model before it could get similar terms in the bond market, then CFO Nathalie Palladitcheff said last year. The group launched its first bond issue in September 2013, con-sisting of a €500m five-year tranche and a €300m 10-year line. This was followed in April 2014 with a further €500m seven-year bond issue with a 2.25% coupon. ■ pie

German Union adds mall in Poland’s GdyniaHamburg co-operative manager Union Investment Real Estate has bought the Riviera shopping centre in Gdynia, the largest mall in the Tri-City area on Poland’s Baltic coast, from a unit of French Foncière Euris. The purchase price was not disclosed.

The Riviera centre has 230 stores on 70,540 sq.m. GLA., said Un-ion in a statement. The asset was completed in 2011 and expanded and reopened last year. It is the largest mall in the so-called Tri-City area, which encompasses Gdansk, Gdyna and Sopot. Anchor tenant is an Auchan hypermarket, which leases 7,400 sq.m., other tenants include TK Maxx, H&M, Mango, Massimo Dutti, Pull & Bear, Re-served, Saturn, Stradivarius, Van Graaf and Zara. The shopping cen-tre also offers a 4,700 sq.m. cinema, and a fitness centre is being added. It has a catchment area of around 630,000 people.

“The Polish regional markets offer excellent opportunities to diversify the portfolios of our institutional products and reduce the average age of our holdings,” said Christoph Schumacher, member of the management team at Union Investment Institu-tional Property. “Key for our retail investments is the combina-tion of good macro-economic conditions with a stable popula-tion, high purchasing power and low unemployment rate. Gdynia offers precisely that combination.”

The asset will be added to open-ended real estate fund UniInstitu-tional European Real Estate. The mall’s developer Mayland Real Es-tate will continue in its role as property manager. In the deal, Union was advised by Hogan Lovells, Cushman & Wakefield and EY. ■ pie

Strong inflows for French SCPI funds, retail OPCIs Inflows to French SCPI real estate funds continued to surge in the first half while the newer OPCI funds for retail investors also gained traction. SCPI inflows climbed 47.5%y/y to a first half record of €1.86bn, said property funds association Aspim.

SCPIs are aimed at retail investors and have enjoyed a marked increase in popularity since the financial crisis. Inflows rose 16.6% to an annual record of €2.93bn in 2014. Total capitalisation in the funds reached a new peak of €35bn at end-June, up from €32.9bn in 2014, almost doubling since 2009. OPCIs were launched in 2007 but initially only attracted institutional investors. However, OPCI funds aimed at retail investors have been developed in re-cent years and these have now started to take off. Inflows to retail OPCIs rose to €1.25bn in 1H15 from €813m in the whole of 2014. Aspim said this increase is the result of more active market-ing by banking and insurance networks. The total capitalisation of retail OPCIs grew to €2.04bn, up 61% from end-2014.

“The historically high level of inflows into SCPIs and retail OP-CIs confirms that these vehicles are complementary because they have different technical characteristics and tax treatments. This suc-cess also demonstrates households’ need for long-term savings solu-tions and their confidence in real estate funds regulated by the EU AIFM directive,” said Apim general manager Arnaud Dewachter.

Aspim said 27 companies managed 166 SCPIs (Sociétés Civiles de Placement Immobilier) in France at end-June, with eight firms offering 11 retail OPCIs (Organismes de Placement Collectif Im-mobilier) ■ pie

DTZ/Cushman & Wakefield com-plete merger, with clients at heartReal estate advisors DTZ and Cushman & Wakefield announced completion of their merger Wednesday, unveiling a new group corporate logo under the C&W brand. “Our commitment to our clients is at the heart of all we do, and you can expect a strong bias for action,” said Chairman and CEO Brett White.

The merger follows the takeover of C&W by DTZ in May, just seven months after DTZ was bought from Australian conglomer-ate UGL by a consortium of TPG Capital - part of the Texas Pa-cific Group - Asia-based alternative investment manager PAG Asia Capital and Ontario Teachers’ Pension Plan for $2bn. Seller of C&W was Exor, the investment firm of the Italian Agnelli fam-ily which controls the Fiat Chrysler auto empire. White, a former CEO of realtor CBRE and investor in DTZ, assumed the role of chairman and CEO of the combined company which will now operate under the Cushman & Wakefield brand.

The new group will have revenues of over $5.5bn and more than 43,000 employees managing 4bn sq.ft. of space for institu-tional, corporate and private clients. White said in May: “The companies have remarkably complementary skills and reach in


different geographies – whether in New York, London or Shang-hai, this will be a formidable combination.” Carlo Barel di Sant’Albano, international and EMEA CEO of the former C&W, will chair the European operations of the new group, while John Forrester, previously European CEO of DTZ, will take the same role at the merged group.

“The new Cushman & Wakefield is a top-tier global commercial real estate firm in every service line and across every major geogra-phy in the world,” White said in a statement early Wednesday. “Put simply, we now have more resources and experience to serve the needs of our clients—from local real estate projects to the most complex global initiatives… We view today’s announcement as a milestone on our journey to be the best firm in our industry. As our business is growing and evolving, some things will remain un-changed. Our commitment to our clients is at the heart of all we do, and you can expect a strong bias for action, a rigorous focus on results, and a dedication to creating value through insight.”

The merger comes less than a year after TPG, PAG and OTPP in November 2014 finalised the purchase of DTZ from UGL, and eight months after DTZ in January 2015 took over US prop-erty service firm Cassidy Turley. Specialists say the merged group will be the second largest commercial real estate advisor after Los Angeles-based CBRE and before Chicago-based JLL in terms of commission income. ■ pie

Swiss Partners buys in Nordics for €336mSwiss asset manager Partners Group has bought a portfolio of 32 Nordic and Baltic state property assets from private manager Sveafastigheter for €336m, bringing the seller close to liquidating its top-performing second fund.

Partners bought the portfolio, which includes retail, office, ho-tel and public use properties in Sweden, Finland and Estonia on behalf of its clients. Sveafastigheter will continue to manage the 250,000 sq.m. portfolio for Partners, which has been building scale in the Nordic region through similar deals. Partners, one of Europe’s largest so-called alternative asset groups with €42bn un-der management, bought a Finnish and Swedish portfolio last year from regional manager Niam for €300m. “We forecast con-tinued strong performance in Nordic real estate markets, along with Estonia, and see a lot of potential in the assets we have ac-quired from Sveafastigheter Fund II. We were able to buy the portfolio at an attractive price in a proprietary transaction on be-half of our clients. We also secured new debt financing for the portfolio, positioning the assets well for further value creation ef-forts in partnership with Sveafastigheter,” said Fabian Neuen-schwander, senior vice-president at Partners Group.

The portfolio sold includes a mix of development and income-producing properties and comes from Sveafastigheter’s second fund which raised €126m in equity between 2006 and final close 2009. The fund has been a top-quartile performer and following the deal holds just €24m of property assets. Sveafastigheter man-

ages €1.3bn of property assets in Sweden, Finland, Denmark and Estonia. It is part of Stockholm-based investment banking and management firm Brunswick Real Estate. ■ pie

Savills IM’s SEB deal to boost Europe assets to €15bnSavills Investment Management said it has completed its purchase of Germany’s SEB Asset Management from the Swedish banking parent, taking European assets under management to some €15bn and closing the gap on larger international rivals.

Formerly known as Cordea Savills Savills IM agreed to buy the German fund manager in March for up to €21.5m in cash. The deal effectively doubled the British firm’s assets under manage-ment, though included up to €6bn of assets managed by SEB in German open-ended funds that are going through liquidation. Savills IM now manages about €15bn of assets in Europe, as well as €2bn in Asia, with 280 employees in 16 offices globally. “SEB Asset Management will add to our critical mass and enhance our ability to offer investment opportunities to clients. Our aim is to continue building on our organic growth and strengthen our po-sition as one of the leading investment management propositions in Europe and Asia,” Savills IM CEO Justin O’Connor said.

Alongside the acquisition, Savills IM has signed a co-operation agreement to provide real estate services to SEB Group institu-tional and wealth management clients. Frankfurt-based SEB As-set Management was owned by Swedish banking group Skandi-naviska Enskilda Banken AB and will be fully integrated under the recently-introduced Savills IM brand name. The investment management firm is also planning to offer a broader range of po-tential investments to its expanded client base, including new pan-European and pan-Asian funds and mandates and market-specific and sector-specific funds. ■ pie

Francaise Forum’s German in-vestment reaches €140mParis- and London-based La Française Forum Real Estate Partners has bought a Munich office block, taking the French investment group’s investment in Germany to €140m since the start of the year. Vendor was private LHI Group.

Formed last year after the combined takeover of Cushman & Wakefield Investors by managers La Française and Forum Part-ners, LFF is investing on behalf of a French SCPI – a collective property investment vehicles aimed at retail investors. The 11,500 sq.m. property is in the Munich-Laim district, some 4.5km from Munich’s Central Station. The building is let to a number of ten-ants, including German rail group Deutsche Bahn.

“Munich offers a rare combination of a high level of stability with strong growth prospects from a vibrant local economy. The low vacancy rate (a little over 5%) and the limited develop-


ment pipeline are working in our favour and should support high occupation rates and rental growth prospects. The multi-let profile is a good combination with our first acquisition (in Offenbach) for the SCPI, being a single tenant asset on a long lease,” said Jens Göettler, LFF managing director in Germany. LFF’s other deals this year include €20m paid for a six-storey property let to Saint Gobain in Offenbach, on the edge of Frankfurt, in March. The group also bought two German retail assets for its joint venture with British asset manager Aberdeen for €78.5m in April.

LFF has also been preparing a UK shopping centre fund of up to £500m as it expands and draws in new investment from Euro-pean and Asian investors in particular. LFF, together with its par-ent groups La Française and Forum, manages €18bn of assets, of which some 12.5bn are in direct European real estate. ■ pie

Allianz debuts in Ireland with €150m RE loanAllianz Real Estate has lent €150m for Starwood Property Trust’s acquisition of a large Dublin office and residential portfolio from Lone Star, marking the German insurer’s first commercial prop-erty loan in reinvigorated Irish real estate.

Allianz’s loan is part of a larger €300m financing deal arranged by US bank Morgan Stanley. The loan finances a portfolio of 11 office buildings and one residential property bought by US pri-vate equity firm Starwood’s listed European property trust from Lone Star earlier this year in a €452.5m deal. The portfolio has a gross lettable area of almost 56,000 sq.m. and is almost entirely let to blue chip corporations and government-related bodies.

The deal is Allianz Real Estate’s first debt deal in Ireland and helps the €33bn real estate manager expand its commercial prop-erty finance interests in Europe. Allianz appointed Roland Fuchs as head of its real estate finance unit two years ago as part of a €5bn drive into property lending. The firm has predominantly focused its efforts on Germany and France, but rolled out its lend-ing to the Netherlands and Spain last year. Earlier this year, Fuchs told a briefing at real estate conference Mipim that Allianz was considering lending in Ireland as well as Italy. ■ pie

Warimpex-led group closes an-del’s Berlin sale for €105mAustrian developers Warimpex and UBM have closed the sale of a 4-Star andel’s hotel in the German capital of Berlin to one of Eu-rope’s leading real estate investment managers for €105m.

The buyer, German-based Union Investment Real Estate GmbH, is the institutional unit of Union Asset Management Holding and specialises in budget and midscale hotel real estate, office properties, with an above-average location and operator concept.

“For us, the sale of the andel’s Hotel Berlin represents the suc-cessful conclusion of our strategic investment in a project which, thanks to its combination of hotel and conference space, not only meets the needs of the city of Berlin but has also greatly enhanced its location in the eastern part of the capital,” Warimpex CEO Franz Jurkowitsch said in a release.

The Vienna and Warsaw-listed company has numerous residen-tial projects in the German capital and is also developing the Holiday Inn Express Alexanderplatz near Berlin’s city hall. Andel’s Berlin was completed in 2009 and offers 557 rooms and facilities spreading over an area of 3,800 sq.m. opposite the Velodrom sports arena in Berlin’s Lichtenberg district.

Warimpex, a listed real estate investment and development firm headquartered in Vienna, is one of the largest hotel investors in central and eastern Europe and owns or operates 18 business and luxury hotels with more than 4,600 rooms. It also has five com-mercial and office buildings with a total useable area of roughly 43,000 sq.m. ■ pie

EMEA prime office rental growth accelerating - CBREIncreasing demand for prime office space across EMEA is prompt-ing rent rises to accelerate in a number of cities, advisor CBRE says in a report. Its EMEA Prime Office Rent Index of 41 cities is up an annual 2.1% and poised to continue upward.

Apart from strengthening economic indicators, demand for prime office space is driven by firms wanting to locate in amenity-rich areas to attract and retain the best employees, be close to their peers and work from best quality properties. But new supply has been subdued since the global financial crisis and it tightened again in 2Q thus inflating rents and maintaining the upward trend.

Irish capital Dublin’s prime office rents are now only just below 2009 pre-crisis levels at €538 sq.m. per annum and set to increase until supply responds to demand. In German capital Berlin office rent has reached a 12-year high of €276 as a strong local economy strengthens while in London City rents rose 3.1% last quarter and are nearly 15% higher year-on-year at €721.

Looking ahead, the office development response is set to pick-up, albeit slowly and only in certain locations. In CEE, Bucharest, Warsaw and Moscow have the strongest forecast completion levels and development is starting to pick up in some western parts with London, Paris, Munich and Dublin forecasting some of the high-est two year projections.

Richard Holberton, EMEA Head of Occupier Research, CBRE said: “Office prime rents continue on an upward trajectory due to the current competitive landscape. Companies are vying for the best space which is in short supply in many cities. This is consist-ent with a broadly positive economic environment and reflected in sharply increased take-up levels. Office development activity is showing some signs of picking up which will help bridge the sup-ply to demand gap, but not immediately. So prime rents will re-main on an upward path.” ■ pie


US broker Coldwell Banker debuts in Germany Coldwell Banker, the global real estate broker franchise owned by New Jersey-based listed Realogy, has entered Germany, focusing on upmarket and high-end residential properties in Berlin.

Under the name Coldwell Banker–Urban Living, the new firm will advise on projects and sales of residential and commercial real estate as well as development, it said in a release. The Coldwell Banker brand already has a global network of 86,000 agents in 3,000 offices in more than 43 countries.

The new firm’s managing partners are veteran real estate execu-tives Roman Menzel and Markus Feldt. “We benefit from our af-filiation with an international brand and outstanding access to a global network,” said Menzel. “We not only have a rich knowledge base to draw on, we can also rely on a firm that has established its excellent reputation on the back of high training standards and strict ethical principles.” He added: “Change is on the horizon .. and more professional standards will have to be developed here.”

Added Feldt: “Berlin real estate is undergoing seismic change. Demand for residential properties in Berlin from investors out-side Germany has risen significantly but in Germany there are barely any international players in the residential real estate bro-kering segment. In the current market, about 70% of demand for high-end projects in central locations come from international buyers. Given that prices are rising by roughly 10% every year, properties for investors are becoming smaller and more compact.”

Menzel was formerly with Bouwfonds Deutschland, Deutsche Bank Real Estate, and Bankgesellschaft Berlin. Feldt has held po-sitions with Zabel Property Group, HVB Immobilien, Berliner Volksbank, Apellas, ORCO and STOFANEL. ■ pie

Global real estate carbon foot-print declines – GRESB Global property firms significantly cut their carbon footprint last year, reducing greenhouse gas emissions by 3% and boosting on-site renewable energy generation by 50%, according to the latest Global Real Estate Sustainability Benchmark (GRESB) industry report.

Based on an assessment of 707 property companies and private equity real estate funds that represent 61,000 assets and $2.3tr in asset value the also found a 19% improvement in environmental, social and governance performance, and strong evidence that more sustainably designed and operated buildings also create val-ue for real estate investors and shareholders. “The 2015 GRESB Report and data show that the global property industry increas-ingly incorporates sustainability issues, making them a core part of business strategies,” said CEO Nils Kok. “The recent reduc-tions in energy, carbon and water consumption achieved by the commercial real estate sector are impressive, yet in absolute terms, the sector’s environmental impact is significant and more work remains to be done.”

GRESB found that property companies are not only increas-ingly integrating ESG considerations into their corporate policies and strategies – 93% of property companies and funds have in-corporated sustainability into business objectives and 54% have climate risk policies in place – but are also actually implementing energy and water efficiency programs to improve sustainability performance. On average, the sector last year reduced greenhouse gas emissions by 3.04%, energy consumption by 2.87% and wa-ter use by 1.65%. On-site renewable energy generation rose to 445GWh, corresponding to 0.5% of total energy consumption, from 296GWh in 2014. Australia and New Zealand continue to significantly outperform other regions.

GRESB assesses sustainability performance of real estate port-folios around the globe. It has over 150 members, of which more than 50 are pension funds and their fiduciaries, which use the GRESB benchmark results in investment management to opti-mise their risk/return profile. The organisation has covered more than 1,000 property companies and funds globally since its launch in 2009. ■ pie

Green RE funds to win €850m by 2016 - CatellaEuropean sustainable real estate funds are likely to win €850m in commitments by mid-2016 but managers will have to watch out as not all green projects will generate short-term returns, says Stockholm listed asset manager Catella.

Sustainable investing is booming worldwide with European schemes alone reaching €5.2 trillion in 2014. However, the vol-ume for sustainably designed and managed real estate funds came up to only €495m, according to Catella’s Market Tracker for Sep-tember.

This is partly due to the relatively small number of new builds in Europe in recent years, complexities involved in modernising existing stock and lack of uniform standards for assessing and cer-tifying buildings. “There is neither a universal seal of approval for sustainable real estate funds nor a benchmark for peer-group comparisons, which are absolute prerequisites that trigger compe-tition,” says Dr Thomas Beyerle, Head of Group Research at Ca-tella.

But pressure from institutional investors for sustainable real es-tate funds is soaring and developers across Europe are modernis-ing prime stock in line with energy efficiency recommendations. Sustainability criteria have also become an integral part of due diligence processes and transaction standards.

“Many existing properties have potential for optimisation and many of them are in prime locations,” says Catella’s Beyerle. But he also warns: “It will be crucial for funds relying on sustainability to structure their investments well, especially because not all sus-tainable investments can provide returns in the short term. In ad-dition, there is the risk of over-investment in sustainability from regulatory policy incentives, such as for solar, the latest to join the segment.” ■ pie


Stockholm’s Nordika launches €500m RE vehicle Stockholm-based Nordic investment and asset manager Nordika, owned by Nordic pension funds and management, is launching a new core-plus structure vehicle Nordika Income with a target in-vestment of €500m.

Operating in Denmark, Finland and Sweden, Nordika said in a release Wednesday that Terje Björsell will join the company as managing partner to manage Nordika Income, moving over from private equity group Niam. “Nordika Income will invest in stable cash flow generating properties in attractive Nordic sub-markets,” the firm said. “The structure is intended to deliver regular divi-dends to the investors and is intended to help pension funds to match .. liabilities. In effect, Nordika Income will be the creation of a long-term sustainable property company.” The new structure will have a longer investment horizon and has the ambition to grow to some €500m over the coming years.

Nordika CEO Jonas Grandér commented: “In a strong invest-ment market it is tempting to step up the risk curve to achieve greater return. With Nordika Income we will do the opposite and instead look for lower risk and in exchange, accept lower returns. In a low interest rate environment, we feel this is the right step to take.” Björsell comes with a solid real estate background spanning more than 15 years and previously successfully established and managed Niam’s core-plus fund, Grandér noted.

Björsell said investors seek stable returns in an environment where real estate is playing an increasingly important role, “while we at the same time see that there is underlying growth that drives demand for premises supporting Nordika Income’s strategy.” He said he is excited to have the chance to launch and develop the new company, together with other employees of Nordika, create a long-term dynamic company that will meet investors’ return re-quirements and provide regular dividends out-performing bond alternatives. ■ pie

UK & European pays Union €65m for Marriott HamburgPrivate UK-based property investment manager UK & European Investments has paid €65m to Germany’s Union Investment Real Estate to purchase the Marriott Hamburg Hotel, its second hos-pitality acquisition in the German port city.

Located in the inner city a few minutes walk from well-known locations Gaensemarkt, Neuer Wall and Jungfernstieg, the ho-tel, operated by Marriott since construction in 1988, comprises a luxury 270-room and eight-suite asset, four retail units and a 128-space public parking garage. The purchase marks the sec-ond hotel acquisition in Hamburg for UK & European follow-ing its 2012 investment in debt collateralised by the Interconti-nental Hotel and the subsequent sale of the asset to Kuhne Immobilien. The Marriott Hamburg deal follows the acquisi-

tion of a 20,000 sq.m. office building in Paris in January in a joint venture with Red Tree Capital, and a June purchase of a residential site in Spanish capital Madrid, bought from Ponte Gadea. There it is working with Spanish developer Uniq to cre-ate new apartment space.

“We are delighted to be back in Hamburg,” said Adam Gole-biowski, European Acquisitions Director at UK & European Investments in a statement. “We see Hamburg as one of the most attractive real estate investment markets in Europe with high liquidity and strong economic fundamentals. The Marriott Hamburg is a rarely available property in an outstanding loca-tion, combining strong income yield with significant asset man-agement opportunities in the long term.” It has consistently been one of the best performing in Hamburg through the last cycles.

UK & European Investments CEO Barney Kelham comment-ed: “We are very pleased with our progress in Europe this year and are on track to achieve our investment objectives. Our focus in 2015 continues to be on key metropolitan areas with opportuni-ties to unlock value over the long-term. Our transaction pipeline in continental Europe is very strong and we expect to invest fur-ther in Germany, France and Spain before the end of the year.” The transaction was financed by HSH NordBank. UK & Euro-pean was advised by legal firm White & Case. ■ pie

Finnish Sirius launches €100m grocery fund with 56 stores Finnish fund manager Sirius has launched its maiden fund to buy grocery property in the northern European country, and has al-ready committed more than 80% of the €100m raised into deals for 56 stores.

Sirius, which spun out of Nordic real estate private equity firm Sveafastigheter last year, said it reached its upper fundrais-ing limit of €100m at the end of August. The fund was oversub-scribed and won backing from international institutions, in-cluding asset managers and pension funds. More than three quarters of the capital was committed by US investors, with the rest coming from Europe. “The interest among investors for this fund was very high on both sides of the Atlantic, enabling us to have a final closing already after only a year since the launch of the firm,” said CEO Patrick Gylling. “We do see a lot of inter-esting investment opportunities in other real estate segments in Finland as well, and will start looking into ways of exploring them soon.”

Sirius has already completed 11 investments, ranging from sin-gle grocery stores to small portfolios. Its largest deal was the €76m acquisition of a portfolio of 13 non-core grocery stores from listed Citycon in July. Sirius has signed purchase agreements that will take its portfolio to 56 stores, and account for over 80% of the equity raised from investors.

Sirius was founded in June 2014 by Gylling, CIO Jonas Ahlblad and CFO Matti-Pekka Sävelkoski, who previously worked for


Stockholm-based Sveafastigheter. Sirius continues to run the Finn-ish holdings of Sveafastigheter Fund III, consisting of a large com-mercial real estate portfolio, which includes city centre offices, car showrooms and logistics assets. ■ pie

French ValueState enters Ger-many with 20yr Berlin leaseFrench ValueState Hotels has taken a 20-year lease on the 5-Star Pullman Berlin Schweizerhof hotel from Hamburg’s Union In-vestment Real Estate, entering Germany for the first time.

ValueState, which manages a portfolio of 1,500 hotel rooms across Europe, took out a 20-year lease with an option to extend, said Union in a release. The previous lease with French AccorHo-tels was terminated prematurely but the operator will stay on until 2019 to manage the hotel under its Pullman brand. The 383-room hotel, in the City West district near iconic Kurfürstendamm shop-ping street, has been part of the €10bn fund UniImmo: Europa since 1999.

“Working with two strong partners within this new structure, we look forward to further improving the hotel’s operational per-formance and continuing the long-term success of our invest-ment,” said Volker Noack, member of the management team at Union Investment Real Estate. The new contracts include a profit-sharing clause which allows Union Investment to participate in the hotel’s success. As part of the new letting, the hotel will undergo major refurbishment, carried out over a period of three years while the hotel remains open. It includes complete refurbishment of all guest bathrooms and the kitchen, remodelling of the food and bev-erage area and partial refurbishment of the conference areas.

Paris-based ValueState Hotels is controlled by its founders, François Dubrule and Alexis Caude. Before taking out the Ger-man lease, it held four hotels in France. ■ pie

Immofinanz offers €375m bond swap for Buwog stockAustrian Immofinanz is offering to exchange its €375m 1.5% sen-ior unsecured bond into shares of its Buwog associate at a premi-um to improve financing. It retained a 49% stake after spinning out Buwog in an IPO last year.

Immofinanz said it aims to reduce overall debt and improve its financial results with the move. The offer, which started yesterday and expires on 7 September, offers bondholders either a fixed cash consideration equal to the value of the shares, or delivery of the number of shares to which the bondholder is entitled plus a pre-mium for holders who elect the cash option.

Immofinanz plans to sell bonds tendered to institutions by way of accelerated bookbuilding. The offer is conditional upon accept-ance of 85% of the nominal bond amount. Investing mainly in Austria, Germany and CEE, Immofinanz has been shifting strat-

egy since the arrival of new CEO Oliver Schumy in May, and on Tuesday unveiled a new corporate identity, logo and claim, ex-tending its repositioning under new management. It has already announced sale of all logistics assets to focus on value-creating growth in retail and office, and at the half year confirmed a 17% rise in operating profit for 2014/15 but a €361m net loss, mainly due to writedowns in Russia.

Buwog this week also reported an increase in funds from opera-tions in its 2014/15 fiscal year by 33% to €92m and said it expects between €98m-€100m in the year ahead, following the scheduled closing of portfolio acquisitions of 19,400 units in Germany. ■ pie

French resi sales driven by investors not ownersFrench new home sales rose strongly in second quarter as govern-ment measures boosted demand, but the upturn was dominated by a two-thirds rise in investor buying, says property developers federation FPI. Owner-occupiers are still reluctant to commit.

New home sales rose 23.1% to 30,764 in 2Q15. While sales of individual homes rose 34.1% to 26,486, home sales to investors surged 67% to 13,875. Purchases by owner-occupiers lagged at just 10% higher, 12,611. Buying by investors has now recovered to 2011 levels, the FPI said.

“Since the end of 2014, exceptionally favourable market condi-tions have increased the appeal of real estate to investors but there has been no such upturn in demand from owner-occupiers,” FPI said. Prime Minister Manuel Valls announced a package of meas-ures for the housing sector in 2014, including a tax incentive for investment in buy-to-let housing, a scheme that now bears the name of Housing Minister Sylvia Pinel. Exceptionally low interest rates have also made purchases more affordable, with French mortgages often fixed for the duration of the loan.

“The upturn in activity is encouraging but the outlook is uncer-tain,” said FPI president Alexandra François-Cuxac. “The govern-ment now needs to consolidate this recovery by measures to boost home ownership, decisive action to reduce procedural delays and the elimination of obstacles to construction.” Supply is still ham-pered by difficulties in launching new construction. The volume of new homes available to purchase fell slightly to 92,500 at end-June. “The increased demand for new housing could lead to some market tensions if the number of new projects remains insuffi-cient,” the FPI said. Prices were already starting to rise slightly in 2Q15.

“The improvement in demand, which has been driven by the Pinel scheme, should not mask the overall fragility of the sector. Purchases by owner-occupiers and sales of serviced accommoda-tion remain weak. And the overall rebound in sales comes after a particularly weak 2014. The structural difficulties of the profes-sion remain unchanged - a scarcity of available building land, ex-cessive complexity in the building permit process, the abuse of appeal procedures, burdensome rules and regulations, and fiscal and legal instability.” ■ pie


Spain’s Santander adds €130m Metrovacesa stakeSpanish lender Santander has paid €130m to Banco Sabadell to take its stake to 72.5% of heavily-indebted real estate group Metrovacesa, local newspaper Expansión says. A strategic plan for 2015-20 envisages €20.2m profit this year.

Santander believes Metrovacesa can recover to become a leading firm and thus paid €1 per share for the increased stake, which had been virtually worthless, Expansión said in a report monitored by the Aura REE agency. Last December the bank raised its stake to a con-trolling 55.8% in a €100m purchase from Bankia - one of the first major deals by Ana Botin who took the chair of the Santander group last year after the death of her father Emilio Botin. The other remain-ing shareholders in Metrovacesa - BBVA with 19.4% and Popular with 7.9% - comprise the two other banking groups that swapped debt into equity in the real estate firm to prevent its collapse.

Metrovacesa, chaired since May by Santander executive Rodri-go Echenique, has a strategic plan for 2015-20 which envisages €20.2m profit this year, mainly from the sale of assets, and ending a run of losses since 2008, Expansión said. “The company has potential in the medium term,” it quoted financial sources saying. “That’s why Santander bet on it before.” The bank’s large holding could now attract operators such as mutual funds to provide new cash injections.

Metrovacesa at end-2014 owned assets valued at €4.8bn, in-cluding €1bn in land and residential property which may now be sold off. It has hired investment bank Goldman Sachs to restruc-ture debt of €2.4bn. The sale of Sabadell’s stake to Santander was said to take into account €300m of debt. In May 2013, when Metrovacesa delisted, it had debts of €5bn and has since gone through three restructurings. Part of the liabilities were covered by sale of its 26.67% stake in French REIT/SIIC Gecina. ■ pie

Spanish REIT Merlin logs €120m 1H net profitSpain’s biggest REIT/SOCIMI Merlin Properties reported first half net profit of €119.6m, including a €94.9m revaluation of its real estate portfolio. The figures exclude new holdings in builder Sacyr’s real estate unit Testa.

The gross asset value of the portfolio at the half year - excluding Testa - was €2.42bn, up 3.6% year to date, but Merlin said in a release that including the Testa stake at that time it wold have been €2.86bn. Earlier this month Merlin took its ownership of Testa up to 77.01%, well ahead of schedule in its plan to acquire 99.6% in stages by June 2016.

Merlin says the results were driven by strong cash-flow genera-tion and the increased portfolio valuation. Its portfolio now has 906 assets of 758,851 sq.m. Net asset value was €2.03bn or €10.64 per share, which compared with a closing share price yes-terday of €10.29. The firm said the portfolio generates annual

gross rental income of €134.5m. The portfolio has occupancy of 95.8% with average lease of 16.8 years. In 2015 through the end of July it has signed leases for 48,748 sq.m. under new contracts and 11,525 sq.m. for renewals.

Merlin, which floated on the Madrid stock exchange in June last year, is expected to have assets of around €5.5bn when it com-pletes its Testa acquisition next year. ■ pie

French REITs post positive 1H, more gains ahead - SofidyFrench REITs’ first half results were positive, with rental income and portfolio values rising and financing costs down, says Lau-rent Saint Aubin of asset manager Sofidy. Full-year earnings should be even better.

“The 1H15 results were as encouraging as could be expected in the context of Europe’s slow economic recovery,” he said in a re-search note. Growth in rental income was surprisingly strong, par-ticularly in Paris CBD, where Société Foncière Lyonnaise achieved a 5.7% increase in like-for-like rents. But CBRE’s forecast of a 15.2% rise in office rents in the City of London this year highlights the potential for further rental growth in the French office sector if the Eurozone economic recovery gathers pace, narrowing the growth gap with the UK, Saint Aubin said. Meanwhile in the retail sector, Unibail-Rodamco recorded a 19.5% rental uplift on renew-als and relettings in its large shopping centres in 1H15, demon-strating the pricing power of the best shopping malls, he added.

French REITs/SIICs cut average debt costs by around 10% to just under 3% while also lengthening their average debt maturi-ties. Shopping centre SIIC Mercialys had the lowest debt cost among French REITs, at 2.1%, although even lower financing costs are available in Germany, where Deutsche Wohnen cut its average debt cost to 1.85%, Saint Aubin noted. SIICs’ asset values rose around 2% in 1H15 amid extremely favourable investment conditions, but trends varied widely depending on whether a portfolio consists mainly of prime or secondary assets. SFL’s triple net asset value per share rose 7.1% while that of Société de la Tour Eiffel declined 3.4%.

Further progress is expected in the second half, with full year earnings likely to include a positive impact on valuations from further yield compression. The gap between financing costs and property yields will remain attractive, although the timing of fur-ther rental rises remains uncertain, he said. ■ pie

Investors turn to speculative Paris office projectsDeliveries of new office space in Paris Ile-de-France are set to grow markedly this year but most has already been let, realtors say. In-vestors are focusing on speculative developments to avert a poten-tial supply shortage.


“Office deliveries will top the symbolic 1m sq.m. mark in 2015, with around 1.2m sq.m. of new office space expected. We need to go back to 2008-2009 to see Ile-de-France office deliveries at that sort of level,” DTZ said in a study. Around 565,000 sq.m. of of-fice construction projects started in 1H15, 30% more than the half-year average since 2010.

“The rate of deliveries will be much stronger in 2015 than last year, but few of these buildings will be available for letting,” said JLL. Around 685,000 sq.m. of new offices are due to be delivered over the next six months but 70% of these have already been pre-let.

More speculative developments are therefore needed to avert a shortfall, and investors are increasingly focusing on such opportuni-ties. Speculative projects made up 42% of offices under construc-tion in 2Q15 compared with 35% at the end of 2014. “These pro-grams will boost the supply of available space in areas where there is a shortage, particularly in central Paris,” it added. Developers are also frequently open to selling unsecured projects to investors, as an alternative to their preferred strategy of finding tenants themselves. Some €827m was invested in future completion contracts in 1H15 and such deals could total €2bn this year, JLL reckons.

While Paris itself accounts for a large slice of recent Ile-de-France supply, the bulk of the deliveries expected in 2017-2018 will be in the suburbs of the French capital, suggesting that com-panies will need to relocate increasingly to these areas, according to DTZ. “The contrast between the areas where offices are under construction and locations for longer-term office projects is really striking,” said research director Magali Marton. ■ pie

Liquidity is key for Italian real estate - ULI’s Scotti Improved liquidity in Italian real estate through more domestic insti-tutional engagement is key for taking the market forward now, says Giancarlo Scotti, former head of Generali Real Estate, named as new chairman of ULI Italy. New REIT/SIIQs could foster the process.

“The Italian market is attracting more and more international investors and the economy is reacting to some profound and long-awaited reforms, but there is still more work to be done to make these opportunities happen,” he told PIE in an interview this month. “We definitely need to improve market liquidity, par-ticularly if you compare us to Spain at the moment where a num-ber of new players have come to market, and already made several large portfolio transactions. International investors like transpar-ency and consistency, and this is what we need to achieve.”

Particularly with new legislation that has freed up rules sur-rounding Italian REITs (Società di Investimento Immobiliare Quotata, SIIQ), domestic institutions need to become more in-volved. “What is totally necessary - and this is part of the new SIIQ regime - is to have a deep pool of institutional investors such as in France or Spain, who can supply liquidity to the market,” Scotti said. “This is the key issue for Italy. This attracts foreign capital to move domestic capital and to facilitate the sale of port-folios of banks and so on. Liquidity is the main issue for sure.”

Scotti heads his own consultancy firms GCS & Partners, and before this served for seven years as CEO and Managing Director of Generali Real Estate, the nation’s largest institutional property investor whose European operations are headquarterd in Paris. Prior posts included consultancy roles with investment bank La-zard, where he was also CEO of Lazard & Co. Real Estate. A long-standing member of ULI (Urban Land Institute), Scotti has contributed to several panels, and chaired the ULI Europe An-nual Conference in 2014.

Starting his term as chair of ULI Italy on 1 July, Scotti said one of his main goals is to help foster connections with international property professionals. “ULI Italy can serve as a bridge between local and international professionals as the Italian market becomes increasingly open to foreign investors,” Scotti said in a ULI re-lease. “We can work to share best practices and educate the inter-national real estate community on the challenges and opportuni-ties we face.”

ULI Europe CEO Lisette van Doorn added: “Giancarlo knows ULI inside out. His extensive knowledge of both Italian and inter-national markets and his commitment to fostering dialogues make him a great addition to the leadership our National Council network.” ■ pie

STOCKS REPORT: China worries replace Greece in August Concerns about China’s slowing growth replaced worries about Greece to bring widespread European property stock falls in Au-gust, pulling the EPRA Developed Europe Index down 3.67%.

Greece’s only stock in the index, Grivalia, returned 5.98% for the month to August 28. It clearly beat a handful of top risers, including Spain’s Merlin on 4.02% and Austria’s conwert with a 3.98% rise after a change in core shareholder. More prevalent however were the underperformers as heavy losses of 12% for the month in China’s leading stock indices brought stock market falls globally. Germany’s Adler was the weakest performer with a 10.78% share price fall after it unveiled a deal to buy a 25% stake in conwert for €285m. Office group alstria was the second sharp-est German faller on 4.98% following its all-share buyout offer for rival Deutsche Office, which itself was 4.36% lower. In con-trast, Deutsche Wohnen gained 3.93% after a strong increase in first half FFO, and an increase in full-year target to €290m from €285m. As a result, Germany was one of the strongest performing countries in the index, registering a 1.1% rise.

UK and US property owner Daejan recorded the second-worst result of the month in the UK which itself was the worst-perform-ing large country in the index with a 5.8% fall. London offices operator Workspace Group registered a 7.9% fall to be the fifth weakest performing stock. They were followed by a 6.5% drop at logistics group SEGRO, as well as poor performances at Britain’s largest listed real estate groups British Land (down 3.54%), Ham-merson (down 4.54%) and Land Securities (2.50% lower). Only student accommodation firm Unite truly outperformed.


French stocks also underperformed even the weak index, regis-tering a 4.29% decline. ANF was the country’s worst performer with a 9.09% fall, after it agreed to sell a Lyon retail complex at. Icade fell by 4.98%, Foncière des Régions by 4.74% and Klépierre by 4.63%.

Sweden outperformed with a more modest 1.50% fall, despite an 8.30% slide at Dios, placing the Northern Swedish property specialist fourth worst performer. Norwegian Property was Nor-dic region’s best performing stock with a 3.48% rise following confirmation of interim CEO Svein Hov Skjelle to a permanent position. While Skjelle and chairman Henrik Christensen made share purchases in August, Geveran Trading, controlled by ship-ping tycoon John Fredriksen, bought 1m shares at the start of the month taking his stake to 48.27%. Despite the gain, Norway was the weakest country overall, finishing 6.61% lower after a 7.07% fall at Entra. ■ pie

Pfandbriefbank loans €150m for Düsseldorf project German CRE lender pbb Deutsche Pfandbriefbank, floated by parent Hypo Real Estate in summer, has provided a €150m devel-opment loan to finance purchase of land in Düsseldorf slated for a 60m. office building, with some pre-let.

The loan was made to a property company called die developer and finances a major part of the project in an established office area on Kennedydamm. The developer has designed a striking 16-storey building together with well-known architects HPP Ar-chitekten, pbb said in a release. The developer has already com-pleted office projects in the area and is known for project KöBo-gen in the heart of Düsseldorf. When built the property will have rental space of some 22,500 sq.m. and is scheduled for comple-tion by the end of 2017.

The project already has considerable pre-letting in the shape of the German subsidiary of French global cosmetics company L’Oréal, which intends to move in with some 900 staff, pbb said. “We are happy to be a partner in this pioneering project in Düs-seldorf,” said Gerhard Meitinger, pbb Head of Real Estate Finance Germany in the statement. ■ pie

German office price rises slow, but should continue – JLL’s VictorPrime office prices in Germany’s Big Five cities rose by 1.1% in 2Q15, considerably slower than in prior quarters, according to JLL’s Victor Index. Price rises are set to continue but investors need to adjust yield requirements.

“International investor interest in the German property market remains unbroken, despite or probably because of continuing geo-political insecurities such as in the Ukraine,” said Head of Valua-tion & Transaction Advisory Germany Ralf Kemper in a release

earlier this month. German prime office property should gain fur-ther in attractiveness, with hardly any impact from a rise in US interest rates or a potentially escalating Greek crisis. “The top Ger-man property markets are particularly profiting from capital flows. Against this backdrop, further price growth cannot be precluded.”

The index gained 4.9% over the 12 months to June, but the second quarter decelerated from 1.7% in 1Q15 and 2.2% in 4Q14, JLL’s Victor Index showed. Top performer over the quarter was Berlin’s inner city, which gained 3.5%, followed by Munich at 3%. Both cities reported a significant reduction in yield and JLL expects a rise only in the mid- to long-term. “Until end-2015 and probably also next year, the high liquidity and extremely low pur-chase price yields .. are set to continue,” said Kemper. “Both should force market participants to adjust their yield requirements.”

Frankfurt’s banking district gained 0.4% over the quarter, while Hamburg and Düsseldorf even reported falls of 0.4% and 1% respectively. Looking at the 12 month performance, Munich topped the ranking with an 8.7% gain - but Kemper said Berlin is an especially attractive market for investors at the moment: “The top locations in the German capital are already performing about one fifth over the peak value of the 2007 boom phase, underlining the importance of the Berlin market.” Total return across the cities fell to +9.4% from +9.9% in the previous quarter, with Munich offering best investment opportunities at +13%, followed by Ber-lin (+9.9%), Frankfurt (+9.6%), Hamburg (+7.8%) and Düssel-dorf (+5.4%). ■ pie

ECB risks housing bubbles in some Europe – Moody’s Analytics House prices in German, Norwegian and UK cities are becoming increasingly overvalued and, with the ECB’s quantitative easing driving prices even higher, there is a real possibility of housing bubbles, research group Moody’s Analytics says.

Since March the ECB has been buying €60bn of government bonds a month, cutting yields to unprecedented levels and en-couraging investment in higher-returning property.The program is due to last until September 2016.

Authorities in the countries at risk are monitoring develop-ments and responding with policies to ease excessive price growth, but, “house price increases in some regions within these countries have steamed ahead at an alarming rate,” said the firm’s July Dis-mal Scientist report, written by European economist Anna Za-brodzka. “While the Bundesbank already indicated at the end of 2013 that average national house prices could be overvalued by 5% to 10%, in the biggest cities the upward deviations may be as high as 20%,” she wrote. “This is also evident in London and Oslo, giving some cause for concern.”

The International Monetary Fund already in 2012 lowered its growth forecast for Norway because of the risk of a housing bub-ble and this year the nation’s financial authority said falling rates were pushing the housing market to breaking point. While oil has created substantial wealth, household debt has soared to a record


230% of disposable income. But the recent slump in oil prices has forced the central bank to cut its rate to 1%, further fuelling pric-es. Among the measures taken to head off a bubble has been high-er capital requirements and risk weightings that lenders must as-sign to mortgages and capping home loans at 85% of value.

In Germany house prices have been rising steadily since mid-2009, but growing demand is leading to overvaluation amid tight supply, Moody’s Analytics said. Germany has only recently in-creased construction, issuing 10% more building permits. But it will be years before supply matches demand. “Although the price-to-income and price-to-rent ratios are still relatively low com-pared with Germany’s long-term average, if this trend persists, the housing market could overheat. While the outright risk of a hous-ing bubble forming in Germany is relatively low, the Bundesbank is monitoring the situation.”

In the UK the Bank of England warned of a possible housing bubble in 2014 and introduced tighter loan standards. The Finan-cial Conduct Authority also tightened rules to ensure banks as-sessed borrowers ability to repay after interest rates start to rise again. However, the report noted loan standards are still relatively loose since the government’s help-to-buy scheme enables buyers to put down as little as 5% on properties up to £600,000 and the number of mortgages with high loan-to-value ratios has spiked. “Although the growth of house prices moderated at the beginning of this year, it is still running hot and the moderation is unlikely to last into the next month or so,” the report said, noting the ruling party’s recently won parliamentary majority has ended political uncertainty and should unleash pent-up demand for residential property. ■ pie

Austria’s Buwog raises FFO 33%, expects €100m Listed housing firm Buwog, spun off last year by Austria’s Im-mofinanz, raised 2014/15 FFO by 33% to €92m and said it ex-pects €98m-€100m for the coming year after adding 19,400 units in Germany.

“Buwog developed very favourably in the fiscal year 2014/15,” said CEO Daniel Riedl. “The excellent development in operating performance and the significant expansion of our activities in Ger-many via the integration of the DGAG portfolio, including its man-agement platform, contributed to this, as did the successful stock exchange listing.” Buwog was spun off in April 2014 by Immofi-nanz, which retained 49% of equity. Its fiscal year ends in April.

The firm bought the DGAG portfolio of 18,000 units in north-western Germany for €892m last year from Solaia RE, a joint venture between Italian listed Prelios and an investment fund managed by Deutsche Asset & Wealth Management, part of Deutsche Bank. Buwog also took over the residential asset and property management business of Prelios Germany with 300 staff. At end-April, the Buwog’s portfolio included 51,670 units, equally distributed between Austria and Germany, with a fair value of €3.6bn, 41% higher than at the end of the previous fiscal

year. Annualised in-place rent rose by 61.4% to €198m after ac-quisitions. The vacancy rate fell to 4.8% from 4.2%. Net rental yield rose to 5.6% from 4.9%.

The operating result rose by 63% to €185.5m, partly driven by strong margins from the Austrian property sales segment. The firm sold 617 units with a margin of 59% on fair value, up from 54% the previous year. In the development department, 369 units were completed, a further 844 units with a total investment volume of €253m are currently under construction. A key area is Berlin, where 394 of the units are located and more are planned in the near future. The overall development pipeline includes 5,000 units with a total volume of €1.4bn.

EPRA net asset value per share rose to €17.79 from €17.21 last year. The firm proposes to pay out a dividend of €0.69 per share for the 2014/15 fiscal year. “We want to continue this dividend policy until the dividends reach a payout ratio of 60%-65% of recurring FFO,” said Riedl. The share, which has a triple listing in Vienna, Frankfurt and Warsaw, closed up 1% to €18.70. ■ pie

Heitman, Orange invest €45m in NL social housingChicago-based RE investment giant Heitman is moving into low-income housing, and has agreed a €45m deal with Dutch Orange Capital Partners for 498 social-housing apartments being built in the capital Amsterdam.

Capital Value, who advised the developers Change=, said in a release the deal would be one of the first foreign direct invest-ments in a major new-build project for rental properties in the Netherlands. The project, due for completion in late 2016, is the first of 20 properties and 10,000 apartments that Change= plans to build in the four largest cities for employed people aged 18-30 with elementary or secondary vocational education. The apart-ments will cost around €530 a month, more than €100 less than could be charged.

Ralph Mamadeus, CEO of Change=, said: “there are 180,000 young people in Amsterdam, 40,000 of whom have a low or me-dium-skilled level of education. Research…shows that 13,000 young people in this group are actively searching every day for suitable, affordable accommodation.” Rob Reiskin, MD and Co-Head of Heitman Europe, commented: “We are delighted to fur-ther expand our position on the Amsterdam market through this acquisition. We believe in the Change= formula to develop homes for starters on the residential market.”

Marijn Snijders, Director of Capital Value, added: “The Neth-erlands is a country with myriad options for investors from home and abroad. A new, pioneering residential formula like Change= has made it possible to deliver properties in a sector facing enor-mous shortages. Rents have been kept at an affordable level with an excellent Risk-Return-Ratio for the investor.”

The project was financed by ABN AMRO while Heitman and Orange Capital Partners are being financed by ING Bank. Heit-man and Orange have been jointly investing in Dutch housing


since 2014, assembling a portfolio mostly located in Amsterdam and consisting of over 1,000 properties. Orange was set up last year by former Goldman Sachs staff. ■ pie

Euro CRE values to hit record, then taper - Cap EconInvestors have poured €109.6bn into Eurozone commercial prop-erty in the past four quarters, a post-2007 high, says UK research group Capital Economics. It sees capital values hitting a post-cri-sis peak in 2015 and tapering off by 2019.

The report predicts positive returns in all cities and sectors through 2019 but highest in Barcelona and Dublin industrial and Barcelona offices, averaging an annual 12.7%-14.1%. Low yields for Vienna and Amsterdam retail as well as Paris offices, “suggest that total returns will be lowest, averaging 6.1% to 6.6% a year.” Madrid and Dublin will drive growth in retail values through 4Q19, at 32% and 41% respectively, while Lyon and Vienna bring up the rear. For office, Capital Economics picks Barcelona to stand out, with a predicted 36% growth in value, and likes Dublin for industrial space, predicting 36% capital value growth.

Yields will play a shrinking role. “The yield spread between property and bonds is high by pre-crisis standards, but the already low level of property yields suggests that yield compression will no longer be the main driver of capital value gains,” the report says. “Instead, rental value growth will help to drive capital values high-er each year, albeit at a slower pace than in 2014 and 2015.” Re-gionally, yield compression is more likely in Finland, Greece, Ire-land, Portugal and Spain -while industrial yields are likely to fall further in office or retail sectors. ■ pie

Polish CRE shortage halves in-flows but demand strong – C&WRobust development in Polish commercial real estate suggests an-nual figures may exceed 2014, but a shortage of prime product in the first six months halved investment to €794m, says realtor Cushman & Wakefield.

Not a single transaction in the first six months of this year ex-ceeded €100m - compared with five such deals in 2014, including two that exceeded €200m. The slide - which compared with €1.4bn in 1H14 - was caused by lack of large, good-quality devel-opments as investor demand for Polish property remained high. Inflows from the US rose, to account for nearly half of the volume in 1H15, increasing their share in the Polish investment market by 14pp compared with 2014. The German share fell by 15pp to 19%, with Polish investment in the third place at a stable 9%-share.

Cushman & Wakefield’s Charles Taylor commented: “Investor interest in Polish commercial properties remains very strong across all asset classes. Focus in the office sector is shifting to re-gional cities, which in 1H15 outperformed Warsaw in terms of

trading volumes for the first time ever. Kraków is now the top spot for regional office investment.”

Nationwide office stock reached 7.54m sq.m., with more than 60% located in the capital Warsaw. However development in first half was driven by projects in regional cities, with as much as 189,000 sq.m. new space delivered, 99,300 sq.m. more than in 1H14. Completions in Warsaw came up to only 147,000 sq.m. New retail space reached 176,800 sq.m. bringing Poland’s total to 10.5m sq.m. Some 800,000 sq.m are under construction, includ-ing 439,000 sq.m. for completion this year. New build drove completions, while extensions of existing schemes accounted for 43%. Yet retail supply was down by more than 30% on 1H14 overall. In industrial and warehouse both supply and take-up climbed steadily. More than 450,000 sq.m. was delivered, 33% up from 1H14, while take-up reached 1.2m sq.m., pushing the vacancy rate to 6.2% from 6.8%. New supply is likely to exceed 1m sq.m. this year with vacancies staying low. ■ pie

French BPCE sells further 7% of Nexity for €150mFrench banking group BPCE, the second largest in the nation, has sold another stake in developer Nexity - 6.9% for around €150m - as it continues to cut investments in non-core assets, including real estate businesses.

BPCE sold 3.75m Nexity shares to institutional investors at €40.15 per share following an accelerated book-building process, cutting its stake to 12.8%. “This disposal forms part of the imple-mentation by BPCE of its strategic plan aiming at reducing or disposing of its investments in its non-core assets,” the banking group said in a statement.

BPCE held more than 40% of Nexity until last year but has reduced its interest in a series of disposal moves. In May it sold 10.2% to Crédit Agricole insurance unit Predica and cooperative banking and insurance group Crédit Mutuel Arkéa, along with the disposal of 0.5% to New Port SAS, a new investment vehicle set up by Nexity’s top managers and Crédit Mutuel Arkéa. These operations brought in €206m. New Port then exercised an option to buy a further 1.5% of Nexity from BPCE in July. BPCE also sold a 4% stake to institutional investors last December, followed by the disposal of a 3% interest to New Port in January.

New Port is owned by Nexity’s key managers, which control 60% of the vehicle, and Crédit Mutuel Arkéa, which owns the remaining 40%. New Port now owns more than 5% of Nexity’s share capital, while the concert group formed by New Port, Crédit Mutuel Arkéa and 188 Nexity key managers and employees hold 17.43%.

Groupe BPCE, is the central banking group of the French sav-ings bank system, with 108,000 employees and 36m customers, 8.9m of whom are cooperative shareholders. The group’s different subsidiaries pursue their activities in banking and insurance, and include 18 Banque Populaire banks, 17 Caisses d’Epargne, Natix-is, Crédit Foncier, and Banque Palatine. ■ pie


Chinese HNA buys £200m-plus in Ldn Canary Wharf Chinese tourism and airlines operator HNA has bought the £200m-plus London office of Thomson Reuters in Canary Wharf from German fund manager KanAm as the seller continues to liquidate one of its open-ended funds.

No financial details were revealed in a Kanam release, though earlier reports suggested it was seeking about £215m for the build-ing in the heart of the Canary Wharf district. The sale takes Kanam one step closer to liquidating its open-ended KanAM grundinvest Fonds, and represents a second attempt to sell the iconic property, renowned for the news ticker running on its exterior.

KanAm in 2012 was in talks to sell to Malaysian state-backed fund manager PNB (Permodalan Nasional Berhad) but while the Malaysian investor bought two London landmarks from the Ger-man fund for some £500m, Thomson Reuters European headquar-ters and Deutsche Bank’s UK headquarters were not in the final deal. Recent reports have also suggested the media group is looking for another London office, though no new letting has been announced.

The deal is the first major London investment for HNA Group, which operates Hainan Airlines among other carriers. It also marks a departure from HNA’s European tourism and hospitality deals, including its high-profile acquisition of a 29.5% stake in Spain’s NH Hoteles. The Haikou, Hainan-based HNA also oper-ates in financial services, asset management and logistics. It owned assets of some €68bn at the end of 2014 and reported annual revenues of about €19bn. ■ pie

First outlet in Finland’s Kotka targets 2017 Tall ShipsA group of international developers and investors have received the go-ahead for the first waterfront outlet village in Kotka on the Gulf of Finland, and target a first phase of 100 stores in time for the international Tall Ships Race in 2017.

Looking to tap into demand from Russians crossing the border 50km distant for shopping and entertainment, construction of the initial phase of the Kotka Old Port outlet village is scheduled to start this year after the city council gave the green light. Kotka Old Port will also include two new hotels, restaurants, museums, event arenas and housing, as well as a new marina. Kotka is a popular sailing destination in Finland and also a terminal for cruise ships and Baltic Sea ferries.

No investment volume has been given. But the investment group includes Russian outlet specialist GVA Sawyer, retail devel-oper Milligan, US Kitebrook Partners, Italian DEA Real Estate Advisor and real estate financier Gerald Parkes’ PCPE Property Capital Partners Europe. The group is planning a first phase of 100 stores in time for the arrival of the Tall Ships Race in 2017. When fully complete the outlet village will have some 200 stores. The leasing process is now under way with retailers responding

well to the leisure and retail concept, Milligan head of leasing Melanie Taylor said in a release.

The new outlet village will be located close to Finland’s border with Russia, and is some 75 minutes’ drive east of Finnish capital Helsinki, allowing it to attract both domestic shoppers and cross-border trade from Russia, organisers say. Almost 5m Russians cross the border to Finland every year, while the Greater Helsinki region is home to some 1.7m. ■ pie

Spanish Axiare posts €31m 1H earnings, assets rise 11% Spanish REIT/SOCIMI Axiare Patrimonio posted first half net profit of €31.3m and rental revenue of €18.7m and said the value of its assets has grown 11% since initial public flotation on the Madrid stock market in July 2014.

In June the company doubled in size with a capital increase of €395m and it has already invested 60% of the proceeds, and plans new investments in the coming months, it said in a release. Ear-lier this month it invested €173m in eight properties in Madrid and Catalonia which took its investments since IPO to €761m. The company now says total investment to be completed in Sep-tember has reached €806m, totalling 550,506 sq.m. of leasable area with 72% consisting of offices in CBD, especially in Madrid and Barcelona. Rental revenue of €18.7m up to mid-year came from 21 assets with an average occupancy rate of 90.9% and aver-age gross yield of 6.8%.

The firm said in addition to financial agreements signed to date, total debt funding is €264m through bilateral agreements with an average maturity of nine years, mainly on a full payment at matu-rity or bullet basis. The company says it will soon enter into new financing agreements to further boost investment capacity. CEO and company founder Luis López de Herrera‐Oria said: “We thank our shareholders for the support and continuous confidence, both when the company was first created, a year ago, and on its recent share capital increase. This trust allows us to continue investing, building a high‐quality portfolio to keep on creating value.”

Axiare focuses on Class A or potential Class A offices with sig-nificant potential for appreciation in the business centres of Ma-drid and Barcelona, as well as logistics centres in strategic indus-trial parks and retail properties across Spain. ■ pie

Kuwaiti firm eyes $120m for Serbia projectKuwait-based Alghanim National, one of the largest privately owned firms in the Gulf region, is interested in investing around $120m in the construction of a spa and tourist resort in Becej, southern Serbia, local media report.

The deal has been in the making since May, when the Serbian economy ministry signed a memorandum of understanding with the


Arab firm and Novi Sad, Serbia-based Arab Invest for the project’s implementation. The 25-ha development will include hotels, an en-tertainment park, restaurants, conference rooms, office premises, vil-las and apartments, a river marina and a shopping mall. The investors hope to attract tourists from the region, but also from the Arab world.

According to Serbian news website krastavica, most of the plot where the project will unfold is quite attractive. Situated in direct proximity to the picturesque Tisa River, it comprises a 7-ha island and is just several hundred metres away from the town centre.

Becej Mayor Vuk Radojević told the ekapija portal that he has completed initial discussions with Bašir Alganim, president of the Kuwaiti group, and, “they expressed a clear intention to build a complex like no other in a wide region, on 25 hectares of the banks of the Tisa and an island at the very confluence of the Great Bački Canal and the river.”.

Becej already has some positive foreign investor experience be-hind its back – German seed maker KNjS made its first €30m greenfield investment in the town’s industrial zone. ■ pie

Frankfurt’s Demire, amid takeo-ver, reports EBIT surgeFrankfurt-listed property group Demire, formerly called Magnat and in the middle of an all-share takeover offer for Munich’s Fair Value REIT, reported a first half rise in operating profit to €16m after adding substantial external assets in the period.

The EBIT figure thus mainly resulted from rental income from the German commercial real estate portfolio, which expanded in the first half of 2015. After financing and other expenses as well as one-off expenses for the expansion, DEMIRE (Deutsche Mittel-stand Real Estate) said it reached break-even level on net profit for the period. Total assets increased 15.1% to €429.7m from end-2014 and liabilities rose 10.7% to €341.9m. Equity amounted to €87.7m up from €54.6m in December. The equity ratio improved to 20.4% from 14.6%. Over the medium term, the company said it is aiming for a significant improvement in equity ratio.

By the end of July, DEMIRE holdings more than doubled from December and by mid-year therefore already exceeded targets. The firm currently owns total rental space of over 810,000 sq.m., and plans to continue the targeted expansion of its portfolio. While in 2014, DEMIRE mainly focused on office, the targeted expansion in 2015 to included logistics and retail. “This diversification led to a further im-provement in the risk profile of the entire portfolio,” the firm said.

“Rental income from our growing portfolio is becoming a key source of earnings as planned,” said CEO Andreas Steyer in a re-lease. “We plan to continue to grow steadily in the future.” One key step is the voluntary public takeover offer for the Fair Value REIT made at the end of July. “If the offer is accepted, our com-pany would become one of Germany’s leading holders of commer-cial real estate focussed on secondary locations with a combined portfolio of roughly €1bn as early as 2016,” he added. “Since the announcement of the takeover offer, we have received very positive feedback on our plans during numerous discussions.”

DEMIRE is offering a 2:1 exchange for Fair Value, which gained a 22% senior shareholder this year from Obotritia Capital, the pri-vate holding of Rolf Elgeti, former CEO of Hamburg listed housing firm TAG and now chairman of both TAG and Fair Value. DEMIRE is seeking an acceptance threshold of 50.1% for the transaction to be successful. Its shares closed Friday at €4.49, and those of Fair Value at €7.95. It said the premium offered on the implied valuation, “is justified by combined valuation potential.” ■ pie

Record tourists, strong dollar drive CEE hotels - C&WA flood of travellers to Europe is likely to boost demand for hotel rooms in an industry where indicators are already pointing up-ward, realtor Cushman & Wakefield said. Hotel investment in central Europe surged 20%.

“The main factors driving growth in 2015 include the contin-ued strength of inbound international tourism into Europe sup-ported by Asian travellers, strong dollar driving demand from Americans and the challenges in North Africa that push leisure travellers to stay in Europe,” said Frédéric Le Fichoux of Cushman &Wakefield’s CEE Hospitality Team.

In CEE, hotel investment was up 20% and the number of prop-erties changing hands doubled in 1H15. Sixteen hotels in the re-gion were sold, up from eight in 1H14, and investors poured €265mn. into the sector, compared with €221mn. the year before.

Solid industry fundamentals, including rising occupancy and revenue, also buoyed investment. Of the region’s major cities, Prague did especially well in 1H15, posting the highest revenue per available room (€54.7), an 18% hike from the same period one year ago. Warsaw came second, at €50.8, although Bratislava and Budapest posted faster growth than the Polish capital. While hotels in much of Europe hosted record numbers of visitors and overnight stays in 2014, hotel specialists Christie + Co. said in May that Prague, Bratislava and Budapest still have room to de-velop compared with the continent’s top hotel markets. About 764 rooms are set to open in Warsaw, 500 in Budapest and 727 in Prague in the next two years, Cushman & Wakefield said. ■ pie

Cohen&Steers halve stake in Spain’s Lar España to 3%US listed property investment manager Cohen & Steers has halved its stake in Spanish REIT/SOCIMI Lar España to just un-der 3%, local media say. The firms have not commented. Franklin Templeton remains the largest shareholder, alongside PIMCO.

Lar Espana has made no comment on the move. But the US firm was reported by the Expansión newspaper to have cut its stake to 2.97% of outstanding capital from 6.54%. Franklin Tem-pleton holds some 15%, PIMCO - part of the Allianz insurance group, 12%, with Cohen & Steers formerly third largest and a


number of other large institutions holding substantial stakes. Lar España went public in March 2014 in an IPO that raised gross proceeds of €400m. Its managers, the Lar Group controlled by the Pereda family, hold around 4% of equity only. Miguel Pereda is CEO and a director of Lar Espana.

Expansion said the Cohen & Steers sale took place at around €9 per share, near the closing price on Friday. It notes that this resistance level has held stable in recent trading days despite the deep volatilty caused in the entire market by worries over a Chinese economic crisis.

At the beginning of August Lar Espana closed a capital increase raising €134.9m, which is now allocated for new investments, and said at the time that the operation involved placed €19.9m shares and was oversubscribed 9.2 times. In July, Lar España raised a €50m loan from CaixaBank to acquire its largest single asset yet - a shopping centre in northwest Spain for €87.5m.

Lar plans to invest about 80% of assets in commercial real estate, principally offices in Madrid and Barcelona as well as shopping malls and retail parks across Spain, with the remainder going into residential. Lar Espana was the first Spanish REIT to IPO on the Spanish stock exchange in February 2014 and expects to reach its €750m investment target, with a 50% loan-to-value, within 24 months of launch. ■ pie

Jump in portfolio boosts Swiss Zug Estates by 86%Swiss listed Zug Estates boosted first half net income by a massive 86% including a significant jump in portfolio revaluations. Prop-erty income rose 4.3%, said the firm, which manages over CHF1.1bn in assets, 28% of which is residential.

Based in Zug near Zurich, the firm said property income rose to 3% compared with the first half of 2014 to CHF19.1m. At CHF39.4m, net income thus practically doubled. Zug Estates in-vested CHF22.2m in the further development of its sites in first half, and the book value of investment properties increased by CHF32.8m net as a result of revaluation. This tripled income from the revaluation of investment properties from 1H14.

“The main contributing factors here were the above-average qual-ity of the locations and properties in the portfolio (high proportion of residential property), the continuous development and position-ing of the Suurstoffi site as a preferred location for housing and busi-ness, and market-related factors,” it said. With some 350m of inter-est bearing debt - up from €320m in June 2014 - it said its equity ratio at this year’s half year point slipped slightly to just below 60%.

Looking ahead, the group said in a statement: “In operating terms, we expect rental income in the real estate business unit to rise overall. However, the disposal of two properties and the lowering of the reference rate for apartment rents as of October 1, 2015 will reduce annual rental income by about CHF1.9m. The vacancy rate is expected to decline by the end of 2015. The carefully planned development of the Suurstoffi site will remain an important priori-ty. In 2015, we expect overall investment in the real estate portfolio to total about CHF50m. In the hotel & catering segment, our as-sessment of the earnings outlook remains unchanged.” ■ pie

Blackstone ups Spanish housing with €54m buyUS-based wealth manager Blackstone has extended exposure to Span-ish residential property, closing the purchase of the firm FIP which owns almost 500 subsidised homes in the capital Madrid. Local media say Blackstone paid €54m. Working through its captive REIT/SOCIMI Fidere, Blackstone has closed the purchase of FIP (Ferrocarril Intermedi-ación y Patrimonios), the Expansión newspaper reported. Blackstone al-ready held 35% in FIP after buying the holding belonging to nationalised lender Bankia. FIP, until last year controlled by Bankia, acted as a holding with national firms in about 20 partnerships to promote low-cost housing in the Community of Madrid. Others firms included Hercesa, OHL, and Bigeco Gestesa. FIP owns some 406 subsidised homes under lease in Las Rozas and another 80 in Alcalá de Henares.

The 500 homes will be managed by Fidere, the IPO of which Blackstone sponsored on the junior MAB (Mercado alternativo Bursatil) junior market on 29 June and holding 3,000 rental housing units at the time. It has since built this to almost 5,000 unitls after portfolio purchases from the City of Madrid, FCC and Martinsa Fadesa. Valued at €212m at float, Fidere closed Fri-day at €21.61, giving a market capitalisation of €217.7m.

In addition to residential assets, Blackstone also hold significant commercial real estate in Spain. Its purchases last year included the headquarters of Capgemini and Citibank, in Madrid, and central offices of HP and Mediapro in Sant Cugat and Esplugues de Llobregat (Barcelona), respectively, the newspaper noted. Its logistics subsidiary Logicor is actively acquiring assets in several European countries, including Spain. ■ pie

NEPI’s €86m for Romania ex-tends S. African CEE focus Just a week after South Africa’s listed Rockcastle signed to buy two shopping malls in Poland for €221m, its national peer NEPI has announced a €86m mall acquisition in Romanian capital Bucha-rest, confirming strong S.African interest in central Europe.

Already the biggest single real estate investor in Romania, New Europe Property Investments, registered in the Isle of Man as an external South African holding, acquired the Iris Titan mall in Bucharest from the German unit of Aberdeen Asset Management. The asset, also known as Auchan Titan, is one of Bucharest’s busi-est shopping centres with a leasable area of 44,730 sq.m. attract-ing an average of 33,000 visitors daily, it said. The property an-chor is the first and largest Auchan hypermarket in Romania and contains numerous international brands such as Adidas, C&A, CCC, Deichmann, dm, Flanco, H&M, New Yorker and Takko.

The deal was done via two holdings: Nepi Sixteen Real Estate In-vestment SRL and Nepi Bucharest Two SRL agreed to acquire all the issued shares in and shareholders’ claims against Degi Titan SRL from Aberdeen Asset Management Deutschland and Degi Beteiligungs GmbH - and also to repay Degi’s entire outstanding debt. ■ pie


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