DB Real Estate Investment GmbH has sold a portfolio of office properties for €500 million to Eurocastle Investment Limited.
The six office properties are located in Berlin, Frankfurt, Dusseldorf, Wiesbaden, Eschborn and Sulzbach and the purchase price reflects an unleveraged initial yield on in-place cash flow of approximately 5.5%.
The properties have an average age of less than 10 years and total 190,600 sqm. The portfolio has stable cash flows with an average lease term of seven years and over 80% of annual revenue contributed by major corporate tenants.
An initial occupancy rate of approximately 93% gives an opportunity for future income growth.
The manager of Eurocastle – Fortress Investment Group’s managing director Bruce Snider said the transaction sets the course to achieving the group’s targeted €1 billion of new investments for the year.
So far the group has bought €840 million worth of properties this year.
Fortress’ managing director and head of German commercial real estate acquisitions Guido Piñol said the acquisition fits with the group’s property investment strategy of acquiring high quality commercial real estate let to credit tenants with an opportunity for significant value creation through active management.
Eurocastle expects to initially fund the purchase with a combination of debt financing using existing lines and a committed long-term fixed loan facility secured by the portfolio. The closing of this purchase is expected to occur early in the fourth quarter of 2006.
By Adam Parsons
