Austria's S IMMO cashes in on German residential holdings

Austrian real estate company S Immo AG has sold about a third of its German residential portfolio to a fund subsidiary of capital investment firm Deutsche Investment. The fund, Deutsche Investment Wohnen III, teamed up with Berlin property investor EB Group to clinch the portfolio deal. Both companies are heavily focused on residential in northern Germany, particularly Berlin and Hamburg.

The sale of about 1,500 residential units in Berlin and Hamburg (known internally as the "Berolina" project) will earn Vienna-based S Immo AG a net inflow of about €140m in the coming months when the deal is expected to close, the company said in a statement late last week

S Immo AG said the property sale will make a positive contribution to its first-half revaluation result of about €106m, with final six-month results due on Aug. 25th. The deal will significantly strengthen S Immo's balance sheet and increase its equity, the company said.

According to CEO Ernst Vejdovszky, "We bought most of these properties about nine years ago and have earned well on them since." Observers in Frankfurt and Vienna estimate the portfolio value at about €250m.

There would have been no shortage of interest in buying the portfolio, particularly in Berlin where listed specialists like Deutsche Wohnen and Ado Properties are snapping up any good quality assets coming on the market to meet the huge housing demand.

S Immo is almost certainly cashing in on strong price appreciaton in the portfolio's value, rather than lowering its commitment to the German market. The new emphasis, however, is on commercial property. Just recently the group bought two mixed-use buildings in Hamburg and Leipzig.

The Spaldingtor office-led building in the south of Hamburg (City-Süd) has a total surface area of 12,250 sqm over nine floors, including 500 sqm dedicated to retail, and was renovated between 2009 and 2012. The seller is Leipzig-based project developer Vicus, who bought the asset only a year ago.

In Leipzig, the Gohlis Arkaden building was built in 1994 and renovated in 2014. It has a total leasable area of 19,500 sqm and includes retail and office space as well as fitness and health facilities. Almost 10% of the space is residential. The seller is Göpel Vermögensverwaltung.

Robert Neumüller, CEO of S IMMO Germany, commented: “Both assets have great potential. Hamburg’s City South area has shown very good occupancy rates compared to other districts and Leipzig’s Gohlis area is becoming more and more attractive through development projects.”

S IMMO Germany is a subsidiary of Austrian S IMMO, which was the first Austrian real estate company to be listed on the Vienna Stock Exchange, in 1987. The firm manages properties in Berlin, Hamburg and other large German cities. Prior to last week's residential sale, the company’s portfolio had a total leasable area of 468,000 sqm divided between 62% of residential property and 38% of office and retail commercial space.