Alstria in sell-off of €117m German non-core office assets

Germany's first REIT, the Hamburg-based Alstria Office REIT AG, has just completed a splurge of disposals of what it described as 'non-core' office properties. In a series of transactions it sold seven office properties valued at €116.8m at what it said was a book gain of 3.7% over the most recent appraised value.

The company's recently-acquired subsidiary Deutsche Office sold the properties, which generate an income of €8.6m annually, but did not disclose any buyer information, other than that the sales were via multiple transactions.

Two of the properties are in the Munich area and three are in the Nuremberg area. Deutsche Office is also selling a hotel and office property in Heilbronn and a logistics property near Frankfurt. With the sale of the Munich-area properties, Deutsche Office no longer has any assets in the area. The properties are all part of the company's €200m of non-core assets.

The company said in a statement, "The remaining part of Deutsche Office's noncore portfolio is expected to be sold in the course of 2017. The company plans to reinvest the proceeds in Germany's major office markets in line with the group's acquisition criteria."

It also said it had picked up, for €8.4 million, a Berlin office property "in parallel" with the sales. That Berlin property generates €526,000 per year in rental income and has a weighted average remaining lease term of 7.9 years.

Alstria CEO Olivier Elamine said in a statement earlier this summer, "The second quarter of 2016 shows further improvement in the overall performance of the company. We signed a number of attractive lease contracts, de-risked and de-levered our balance sheet faster than expected and made further progress on the integration of Deutsche Office."

Alstria and subsidiary Deutsche Office owned 117 office buildings in Germany, worth about €3.3bn at end-June. Alstria reported €102.1m in FFO from operations in the first half.

Last week CEO Elamine re-iterated the company's strategy after the latest disposals, saying "Alstria will remain focused on office properties located in the German main office market. The concentration on just one asset class and the establishment of sizable sub-portfolios in Germany's most attractive markets is the key for Alstria's efficiency and competitiveness in the German office market."