Avignon Capital supports expansion with new Berlin office

UK-based property investment and asset manager Avignon Capital is following up on its recent German acquisitions by opening its first office outside the UK in Berlin to support its European expansion.

The office will be located in the Umspannwerk Prenzlauer Berg (“Ampere”) building, a former electricity transformer station acquired by Avignon Capital in July 2016. The unique listed property is located in in Berlin’s Prenzlauer Berg district, widely regarded as a ‘tech-cluster’ in the city.

According to Patrick Flaton, CFO at Avignon Capital, “Berlin is a city that encapsulates the key values of Avignon Capital: innovation, creativity and a drive for growth. The office will allow us to directly interact with our Berlin assets on a regular basis; moreover, it will help us grow our portfolio in continental Europe through increased proximity to key investment hubs."

In July Avignon bought the so-called Ampere building in Berlin as its thrid acquisition in Berlin and reached its own initial target of investing €100m in the German capital. At the time the company did not disclose the financial details of the transaction, although the previous owners, Signature Capital, bought the property for about €22m at the end of 2014. Avignon now plants to "rebrand the property, and to make a significant investment in modernization and lease vacant space."

Avignon Capital aims to build a portfolio of campus-style buildings in "tech-clusters" to attract companies from the TMT sector, and now owns about 52,000 sqm of lettable space in Berlin. Companies operating nearby the Ampere building include Twitter, Soundcloud and Uber.

Built in 1926, the listed building is a former electricity transformer station (Umspannwerk). It was converted into offices in 2010 and offers 11,842 sqm of lettable office and event space today. The building’s nine tenants primarily include technology start-ups. The Ampere building is the sister building to the Umspannwerk Kreuzberg, which Avignon Capital acquired in 1Q15, and Avignon plans to unite the two buildings, both designed by Berlin architect Hans Heinrich Müller, under one umbrella.

In May, the London-based firm had also bought the Berliner Union Film Campus, located between the Tempelhof and Neukölln neighbourhoods, from Becker & Kries, who had owned the site overlooking the famous Tempelhof airport for more than 50 years. The deal also included buying Berliner Union-Film (BUFA), an operational film and media company on the 24,000 sqm campus.

Avignon’s core markets are the UK, Germany, the Nordic countries and Spain. The firm’s clients include private investors, family offices and the listed Cubic Property Fund. Avignon’s assets under management amount to €650m as of 2Q16, with 105 properties in five countries.

In a recent media interview, CFO Flaton said the immediate priority for the group was to expand in the Netherlands and Switzerland, along with building out a broader German footprint. The ONLY asset class not of interest to his company is residential, he said, while the company is looking intensely at office properties, followed by retail and hotels.

Office properties with a chequered 'non-traditional' office history are of particular interest, value-add properties in good locations, such as the two existing ex-power stations in Berlin the company owns. The company plans to hold for the medium- to long-term, not to flip after two years, said Flaton. The next key steps are building up its Berlin team to four or five people, he said.